SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934.
For the quarter ended June 30, 1998 Commission file number 33-12664-D
Worldwide Golf Resources, Inc.
(Exact name of registrant as specified in its charter)
Nevada 88-0335511
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
251 Saulteaux Crescent
Winnipeg, MB, Canada R3J 3C7
(Address of principal executive offices) (Zip Code)
(204) 885-5555
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No _____
As of June 30, 1998, there were 16,528,748 shares of common stock
outstanding.
<PAGE>
WORLDWIDE GOLF RESOURCES, INC.
AND SUBSIDIARIES
FOR THE QUARTER ENDED
JUNE 30, 1998
INDEX
PART I - FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Balance Sheet as of June 30, 1998 and
June 30, 1997 3
Statement of Operations for the three months
ended June 30, 1998 and 1997 4
Statement of Operations for the six months
ended June 30, 1998 and 1997 5
Statement of Cash Flows for the six months ended
June 30, 1998 and 1997 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operation 7-10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 11
Item 3. Defaults by the Company upon its
Senior Securities 11
Item 4. Submission of Matter to a Vote of
Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports of Form 8-K 11
SIGNATURES 12
<PAGE>
WORLDWIDE GOLF RESOURCES, INC.
CONSOLIDATED BALANCE SHEET
JUNE 30, 1998 AND JUNE 30, 1997
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
ASSETS
1998 1997
<S> <C> <C>
Current
Cash $ 63,051 $ (13,872)
Accounts Receivable 144,344 223,624
Prepaids 18,836 39,758
Inventory 200,412 72,855
--------- ----------
426,643 322,365
--------- ----------
Property and Equipment - Net
Equipment 1,276,103 371,419
Land, Driving Ranges 2,411,497 -
Buildings 364,205 -
Golf Course and Clubhouse 2,783,613 2,118,001
---------- ----------
6,835,418 2,489,420
---------- ----------
Other
Patents 51,075 -
Goodwill 269,519 257,910
Advances - 837,575
---------- ---------
320,594 1,095,485
---------- ----------
$7,582,655 $ 3,907,270
========== ===========
</TABLE>
<TABLE>
LIABILITIES
<S> <C> <C>
Current
Accounts Payable and Accrued Liabilities $ 667,236 $ 234,641
Other accruals 886,269 387,390
---------- ----------
1,553,505 622,031
---------- ----------
Long-Term
Shareholders Advances 1,427,165 -
Mortgages Payable 3,144,831 1,712,596
Obligations Under Capital Lease 559,648 238,787
---------- ----------
5,131,644 1,951,383
---------- ----------
6,685,149 2,573,414
---------- ----------
</TABLE>
<TABLE>
STOCKHOLDERS' EQUITY
<S> <C> <C>
Common Shares 1,653 710
Preferred Shares 26 -
Paid in Capital 2,192,864 1,639,319
Accumulated Deficit (4,893,672) (943,335)
Contributed Surplus 3,596,635 637,162
----------- ----------
897,506 1,333,856
----------- ----------
$ 7,582,655 $ 3,907,270
============ ===========
</TABLE>
<PAGE>
WORLDWIDE GOLF RESOURCES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS PERIOD ENDED JUNE 30, 1998 AND 1997
UNAUDITED
<TABLE>
1998 1997
<S> <C> <C>
Sales $1,116,459 $1,060,186
Cost of Goods Sold 530,454 916,215
----------- ----------
Gross Profit 586,005 143,971
Operating Expenses
Selling, General and Administrative 1,454,738 880,650
------------ -----------
Net Loss $(868,733) $ (736,679)
============ ===========
</TABLE>
<PAGE>
WORLDWIDE GOLF RESOURCES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS PERIOD ENDED JUNE 30, 1998 AND 1997
UNAUDITED
<TABLE>
1998 1997
<S> <C> <C>
Sales 639,897 728,217
Cost of Goods Sold 281,719 545,450
---------- ---------
Gross Profit 358,178 182,767
Operating Expenses
Selling, General and Administrative 827,103 812,002
---------- -----------
Net Loss $(468,925) $ (629,235)
========== ===========
</TABLE>
<PAGE>
WORLDWIDE GOLF RESOURCES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS PERIOD ENDED JUNE 30, 1998 AND 1997
UNAUDITED
<TABLE>
1998 1997
<S> <C> <C>
Cash Provided by (used in)
Operations
Net loss $(868,733) (736,679)
Add Items Not Affecting Cash
Purchase Services Though Issuance of 185,900 -
Shares
Depreciation 98,311 15,116
Amortization 34,848 36,844
---------- -----------
(549,674) (684,719)
Net Change in Non-Cash Working Capital
Accounts Receivable 2,251 (740,124)
Prepaid 48,286 (39,136)
Inventory (13,500) (72,855)
Accounts Payable and Accrued 192,844 748,970
Liabilities
Deferred Revenue 22,310 (3,056)
---------- -----------
Cash Provided by (used in) Operations (297,483) (790,920)
---------- -----------
Investments
Acquisition of Equipment (86,998) -
Addition to Clubhouse (221,160) (315,968)
---------- -----------
Cash (used in) investments (308,158) (315,968)
---------- -----------
Financing
Issuance of Capital Stock - 1,480,000
Advances form Shareholder 665,188 (368,479)
Payments on Capital Lease (16,922) (3,716)
Payments on Mortgage (49,368) (26,659)
---------- -----------
Cash Provided by Financing 598,898 1,081,146
---------- -----------
Effect of Exchange Rate Changes on Cash Flows 31,246 7,668
---------- -----------
Cash Increase for Period 24,503 (18,074)
Cash, Beginning of Period 38,548 4,202
---------- -----------
Cash, End of Period
63,051 (13,872)
========== ===========
Cash Paid for
Interest $ 69,363 $ 5,884
========== ===========
Income Taxes - -
========== ===========
</TABLE>
<PAGE>
WORLDWIDE GOLF RESOURCES, INC.
NOTED TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
STATEMENT OF INFORMATION FURNISHED
1. Statement of Information Furnished
The accompanying unaudited consolidated financial statements have been
prepared in accordance with Form 10-Q instructions and in the opinion of
management contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial position as of June 30,
1998, the results of operations for the six months ended June 30, 1998 and
1997 and the cash flows for the six months ended June 30, 1998 and 1997.
These results have been determined on the basis of generally accepted
accounting principles and practices and applied consistently with those
used in the preparation of the Company's 1997 Annual Report on Form 10-K.
Certain information and footnote disclosures included in the financial
statements presented in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that the
accompanying consolidated financial statements be read in conjunction with
financial statements and notes thereto incorporated by reference in the
Company's 1997 Annual Report on Form 10-K.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Overview
Worldwide Golf Resources, Inc. (together with its subsidiaries, unless
the context requires otherwise, the "Company") is currently and has been
engaged in several golf-related ventures; the manufacture and sale of an
innovative golf practice and teaching device (680104 Alberta Ltd. d/b/a
GolfJackT); an 18 hole golf course and club house in Manitoba, Canada,
(Pelican Beach Golf and Country Club); and golf centers designed to provide
a wide variety of practice opportunities, including facilities for driving,
chipping, putting, pitching and sand play, (Worldwide Golf Centers, Inc.).
In addition, the Company manufactured and installed synthetic turf for use
in driving ranges, as well as other applications (Worldwide Golf Resources
of Georgia, d/b/a American Turf, Inc.).
Results of Operations for the three months ended June 30, 1998 and 1997
Synthetic Turf Manufacturing, Sales and Installation
Worldwide Golf Resources, Inc., a Georgia Corporation, earned revenues
for the second quarter of 1998 of $373,542, an decrease of $156,384 (30%)
from American Turf Manufacturing's $529,886 in the second quarter of 1997.
The Georgia subsidiary provided 58% of the Company's second quarter
revenues. Management expects this subsidiary to increase its revenue impact
through the addition of increased working capital to fill orders presently
on hand.
The net loss for the second quarter of 1998 decreased $95,317 (123%)
to a profit of $17,459 from a loss of $77,768 in the second quarter of
1997. The revision was primarily due to a reduction of operating
expenditures.
<PAGE>
Golf Course Operations
Pelican Beach Golf Course and Country Club, located in Gimli,
Manitoba, Canada, was acquired by the Company on February 1, 1997. The Golf
Course recorded sales of $96,703 during the second quarter of 1998. The net
loss for the second quarter of 1998 was $101,062. Pelican Beach Golf Course
provided 15% of the Company's second quarter revenues. The Country Club
showcases a 12,000 square foot, three-level clubhouse which accommodates a
pro-shop, a state of the art family amusement center, two cocktail lounges,
and a large open seat restaurant. The third floor's principal attraction
will be Video Lottery Terminal machines and off-track horse race betting.
This facility sustains year-round operations; complementing winter
activities such as cross-country skiing and snowmobiling, which enables the
Company to maintain year-round revenues.
GolfJackT
In October of 1997, the Company purchased 680104 Alberta Ltd. d/b/a
GolfJackT. GolfJackT developed an innovative and revolutionary new golf
practice and teaching product which enables the user to adjust a hitting
platform to create any type of downhill, sidehill or uphill lie, thereby
bringing the golf course to the driving range. The GolfJackT recorded
sales of $25,279 during the second quarter of 1998. The net loss for the
second quarter of 1998 was $12,761.
Worldwide Golf Centers
In January of 1998, the Company formed Worldwide Golf Centers, Inc.,
("WGC") for purposes of operating golf centers designed to provide a wide
variety of practice opportunities, including facilities for driving,
chipping, putting, pitching and sand play. The Golf Centers recorded sales
of $144,374 during the second quarter of 1998. The net loss for the second
quarter of 1998 was $121,001.
Results of Operation for the six months ended June 30, 1998 and 1997
Synthetic Turf Manufacturing, Sales and Installation
Worldwide Golf Resources, Inc., a Georgia Corporation, earned revenues
for the first six months of 1998 of $706,811, an decrease of $17,218 (2%)
from American Turf Manufacturing's $718,029 in the first six months of
1997. The Georgia subsidiary provided 63% of the Company's first six
months revenues. Management expects this subsidiary to increase its revenue
impact through the addition of increased working capital to fill orders
presently on hand.
The net income for the first six months of 1998 increased $214,705 to
$1,162 from loss of $213,534 in the first six months of 1997. The revision
was primarily due to a reduction in operating costs.
<PAGE>
Golf Course Operations
Pelican Beach Golf Course and Country Club, located in Gimli,
Manitoba, Canada, was acquired by the Company on February 1, 1997. The Golf
Course recorded sales of $96,703 during the six months of 1998. The net
loss for the six months of 1998 was $184,320. Pelican Beach Golf Course
provided 9% of the Company's second quarter revenues. The Country Club
showcases a 12,000 square foot, three-level clubhouse which accommodates a
pro-shop, a state of the art family amusement center, two cocktail lounges,
and a large open seat restaurant. The third floor's principal attraction
will be Video Lottery Terminal machines and off-track horse race betting.
This facility sustains year-round operations; complementing winter
activities such as cross-country skiing and snowmobiling, which enables the
Company to maintain year-round revenues.
GolfJackT
In October of 1997, the Company purchased 680104 Alberta Ltd. d/b/a
GolfJackT. GolfJackT developed an innovative and revolutionary new golf
practice and teaching product which enables the user to adjust a hitting
platform to create any type of downhill, sidehill or uphill lie, thereby
bringing the golf course to the driving range. The GolfJackT recorded
sales of $34,915 during the six months of 1998. The net loss for the six
months of 1998 was $33,247.
Worldwide Golf Centers
In January of 1998, the Company formed Worldwide Golf Centers, Inc.,
("WGC") for purposes of operating golf centers designed to provide a wide
variety of practice opportunities, including facilities for driving,
chipping, putting, pitching and sand play. The Golf Centers recorded sales
of $278,031 during the six months of 1998. The net loss for the six months
of 1998 was $177,600.
Currency Fluctuations
Although substantially all of the Company's contracts are denominated
in United States dollars, fluctuations in the value of foreign currencies,
namely the Canadian dollar, relative to the United States dollar impact the
Company's results of operations. The company does not currently engage in
hedging activities with respect to currency fluctuations, but may do so in
the future.
Forward-Looking Statements and Associated Risks
This Quarterly Report on Form 10-Q contains forward-looking statements
made pursuant to the safe harbor provisions of the Securities Litigation
Reform Act of 1995. These forward looking statements are based largely on
the Company's expectations and are subject to a number of risks and
uncertainties, many of which are beyond the Company's control, including,
but not limited to, economic, competitive and other factors affecting the
Company's operations, markets, products and services, expansion strategies
and other factors discussed elsewhere in this report and the documents
filed by the Company with the Securities and Exchange Commission. Actual
results could differ materially from these forward-looking statements. In
light of these risks and uncertainties, there can be no assurance that the
forward-looking information contained in this report will in fact prove
accurate. The Company does not undertake any obligation to revise these
forward-looking statements to reflect future events or circumstances.
<PAGE>
Liquidity and Capital Reserves
The Company continues to be funded through loans from major
shareholders of the Company, which funding is anticipated to continue until
such time as the Company has sufficient to cover its operating expenses
from ongoing revenues.
Year 2000 Issues
Certain of the Company's computer systems and software may interpret
the year 2000 as some other date. The operating system generally employed
by the Company is Windows 95, which is year 2000 compliant. The networking,
general ledger and accounts payable and facility point-of-sale and software
programs require software updates or modifications to address the year 2000
problem. The Company is further addressing the matter by replacing certain
older computers and installing off-the-shelf and other third-party software
that is year 2000 compliant, at an estimated cost of less than $1,000. The
Company anticipates that installation of year 2000 compliant software and
hardware will be completed by the end of 1998. The Company does not believe
that the year 2000 problem will have a material affect on the Company's
operations, however, no assurance can be given that the software updates
and new computers will resolve the problem as scheduled or at all.
Change in Management
On May 19, 1998, Donald Stoecklein resigned as President and the Board of
Directors made the following changes:
1. Mac Shahsavar was elected President
2. Anthony DeMint was elected Vice President
On May 19, 1998, Donald J. Stoecklein and Dr. Srini Chary resignation as
Directors and the following were appointed by the present Board of
Directors to serve on the Board of Directors:
1. Reg Ebbeling
2. Anthony DeMint
PART II--OTHER INFORMATION
Item 1. Legal Proceedings.
Pending litigation is deemed not to have any material impact on the
Company's financial position.
Item 2. Changes in Securities.
None.
<PAGE>
Item 3. Defaults by the Company upon its Senior Securities.
None.
Item 4. Submission of Matter to a Vote of Security Holders.
None
Item 5. Other Information.
On August 31, 1998 Worldwide Golf Resources, Inc. executed a stock purchase
agreement to sell its wholly owned subsidiary, Worldwide Golf Resources,
Inc. (a Georgia Corporation), doing business as American Turf. The sale of
American Turf falls in line with Management's reorganization plan that was
implemented in late 1997, wherein Management vowed to eliminate
unprofitable subsidiaries and focus on the profitability of Worldwide Golf
Resources, Inc.
Item 6. Exhibits and Reports of Form 8--K.
A Form 8-K filed on May 19, 1998 to report a change in the Officers
and Directors of the registrant.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
WORLDWIDE GOLF RESOURCES, INC.
(Registrant)
By:/s/Mac Shahsavar By:/s/Jack Tapper
Mac Shahsavar Jack Tapper
President Chief Financial Officer
Date: October 20, 1998 Date: October 20, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 63,051
<SECURITIES> 0
<RECEIVABLES> 144,344
<ALLOWANCES> 0
<INVENTORY> 200,412
<CURRENT-ASSETS> 426,643
<PP&E> 6,835,418
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,582,655
<CURRENT-LIABILITIES> 1,553,505
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 7,582,655
<SALES> 1,116,459
<TOTAL-REVENUES> 1,116,459
<CGS> 530,454
<TOTAL-COSTS> 530,454
<OTHER-EXPENSES> 1,454,738
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 91,673
<INCOME-PRETAX> (868,733)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
