UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ________________
Commission File Number 0-21337
GOLF VENTURES, INC.
(Exact name of registrant as specified in its charter)
UTAH 87-0402088
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
102 WEST 500 SOUTH, SUITE 400, SALT LAKE CITY, UTAH, 84101
(Address of principal executive offices, including zip code)
(801) 363-8961
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant has: (1) 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) been subject to such
filing requirements for the past 90 days. Yes No X
Number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
Class Outstanding as of December 13, 1996
Common Stock, par value $.001 1,852,828
<PAGE>
TABLE OF CONTENTS
================================================================================
Heading Page
PART I. FINANCIAL STATEMENTS
Item 1. Balance Sheets - September 30, 1996 and
March 31, 1996 4
Statements of Operations and Accumulated Deficit
Six months ended September 30, 1996 and 1995 and
three months ended September 30 , 1996 and 1995 5
Statements of Stockholders Equity--March 31, 1995
through September 30, 1996 6
Statements of Cash Flows - Six months ended
September 30, 1996 and 1995 and three months ended
September 30, 1996 and 1995 7-8
Notes to Financial Statements 9-14
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 15-16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 2. Changes in Securities 17
Item 3. Defaults Upon Senior Securities 17
Item 4. Submission of Matters to a Vote of Securities Holders 17
Item 5. Other Information 17
Item 6. Exhibits and Reports on Form 8-K 17
SIGNATURES 18
2
<PAGE>
PART I
Item 1. Financial Statements
The following, unaudited Financial Statements for the period ended
September 30, 1996, include all adjustments which management believes are
necessary for the financial statements to be presented in conformity with
generally accepted accounting principals.
(THIS SPACE INTENTIONALLY LEFT BLANK)
3
<PAGE>
GOLF VENTURES, INC.
Balance Sheets
ASSETS
<TABLE>
<CAPTION>
September 30, March 31,
1996 1996
(Unaudited)
CURRENT ASSETS
<S> <C> <C>
Cash $ 1,567,898 $ 784,380
Accounts receivable, net (Note 1) 96,778 92,153
Inventory (Note 1) 673,965 748,010
--------------- ----------------
Total Current Assets 2,338,641 1,624,543
PROPERTY AND EQUIPMENT 5,822 -
LAND HELD FOR DEVELOPMENT (Note 3) 6,590,211 5,287,605
--------------- ----------------
TOTAL ASSETS $ 8,934,674 $ 6,912,148
=============== ================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Construction loans payable (Note 1) $ 185,775 $ 185,775
Current portion of long-term debt (Note 6) 281,848 942,574
Accrued expenses 919,238 1,031,814
--------------- ----------------
Total Current Liabilities 1,386,861 2,160,163
--------------- ----------------
LONG-TERM DEBT (Note 6) 3,969,337 1,410,532
--------------- ----------------
Total Liabilities 5,356,198 3,570,695
--------------- ----------------
CONTINGENCIES (Notes 5 and 9) - -
--------------- ----------------
STOCKHOLDERS' EQUITY
Preferred stock (10,000,000 shares authorized
at par value of $.001) 27,000 class "A" and 259,427
class "B"; shares issued and outstanding, respectively 284 284
Common stock (25,000,000 shares authorized
at par value of $.001) 1,852,828 and 1,628,828
shares issued and 1,839,837 and 1,615,837 shares
outstanding, respectively (Note 8) 1,853 1,629
Additional paid-in capital 7,672,767 7,173,573
Accumulated deficit (4,096,428) (3,834,033)
--------------- ----------------
Total Stockholders' Equity 3,578,476 3,341,453
--------------- ----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,934,674 $ 6,912,148
=============== ================
</TABLE>
The accompanying notes are an integral part of these financial statements
4
<PAGE>
GOLF VENTURES, INC.
Statements of Operations
<TABLE>
<CAPTION>
For the Six Months Ended For the Three Months Ended
September 30, September 30,
--------------------------------- ----------------------------------
1996 1995 1996 1995
--------------- --------------- --------------- ----------------
REVENUE (Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Real estate sales $ 161,000 $ 341,800 $ 28,000 $ 254,000
Cost of sales - real estate 92,484 279,047 15,902 233,813
--------------- --------------- --------------- ----------------
Gross Profit 68,516 62,753 12,098 20,187
GENERAL AND
ADMINISTRATIVE EXPENSES 365,272 182,633 208,753 105,474
------- ------- ------- -------
NET LOSS FROM OPERATIONS (296,756) (119,880) (196,655) (85,287)
OTHER INCOME
Interest income 25,137 3,426 23,144 -
Other income 9,224 7,701 6,343 -
--------------- --------------- --------------- ----------------
NET LOSS $ (262,395) $ (108,753) $ (167,168) $ (85,287)
=============== =============== =============== ================
LOSS PER SHARE $ (0.15) $ (0.05) $ (0.09) $ (0.04)
=============== =============== =============== ================
</TABLE>
The accompanying notes are an integral part of these financial statements
5
<PAGE>
GOLF VENTURES, INC.
Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Additional
Preferred Stock Common Stock Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit
<S> <C> <C> <C> <C> <C> <C>
Balance, March 31, 1995 92,694 $ 93 1,532,607 $ 1,533 $ 3,140,391 $ (227,742)
Class "A" preferred stock
converted to common
stock (2,000) (2) 1,221 1 1 -
Class "B" preferred stock
issued for cash (Note 4) 193,733 193 - - 968,473 -
Common stock issued for
services - - 95,000 95 424,905 -
Common stock subscriptions
paid in services (Note 8) - - - - 2,835,000 -
Distribution to parent
company - - - - (195,197) -
Income (loss) for the
year ended
March 31, 1996 - - - - - (3,606,291)
------------ --------- ------------- ----------- -------------- --------------
Balance, March 31, 1996 284,427 284 1,628,828 1,629 7,173,573 (3,834,033)
Distribution to parent
company (Unaudited) - - - - (338,103) -
Common stock issued
for cash (Unaudited) - - 224,000 224 1,046,297 -
Stock issuance costs
(Unaudited) - - - - (209,000) -
Income (loss) for the
six months ended
September 30, 1996
(Unaudited) - - - - - (262,395)
------------ --------- ------------- ----------- -------------- --------------
Balance,
September 30, 1996
(Unaudited) 284,427 $ 284 1,852,828 $ 1,853 $ 7,672,767 $ (4,096,428)
============ ========= ============= =========== ============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements
6
<PAGE>
<TABLE>
<CAPTION>
GOLF VENTURES, INC.
Statements of Cash Flows
For the Six Months Ended For the Three Months Ended
September 30, September 30,
--------------------------------- -------------------------------
1996 1995 1996 1995
--------------- --------------- --------------- -------------
OPERATING ACTIVITIES (Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net income (loss) $ (262,395) $ (108,753) $ (167,168) $ (85,287)
Adjustments to reconcile net
income (loss) to net cash used
in operating activities:
Depreciation 166 - 166 -
Changes in assets and liabilities:
(Increase) decrease in accounts
receivable (4,625) 27,844 14,000 -
(Increase) decrease in inventory 74,045 211,620 12,691 169,260
Increase (decrease) in accrued
expenses (112,576) 216,372 7,257 38,371
--------------- --------------- --------------- ----------------
Net Cash Provided (Used)
by Operating Activities (305,385) 347,083 (133,054) 122,344
--------------- --------------- --------------- ----------------
INVESTING ACTIVITIES
Property and equipment (5,988) - (5,988) -
Land held for development (1,302,606) (269,264) (888,767) (103,247)
--------------- --------------- --------------- ----------------
Net Cash Provided (Used)
by Investing Activities (1,308,594) (269,264) (894,755) (103,247)
--------------- --------------- --------------- ----------------
FINANCING ACTIVITIES
Stock offering costs (209,000) - (109,000) -
Common stock issued for cash 1,046,521 - 46,521 -
Long-term borrowings 2,558,805 168,382 558,805 -
Distribution to parent company (338,103) (210,288) (163,157) -
Principal payments on
long-term debt (660,726) (6,192) (448,783) -
--------------- --------------- --------------- ---------------
Net Cash Provided (Used)
by Financing Activities 2,397,497 (48,098) (115,614) -
--------------- --------------- --------------- ---------------
INCREASE (DECREASE) IN CASH 783,518 29,721 (1,143,423) 19,097
CASH AT BEGINNING
OF PERIOD 784,380 20,091 2,711,321 30,715
--------------- --------------- --------------- ----------------
CASH AT END OF PERIOD $ 1,567,898 $ 49,812 $ 1,567,898 $ 49,812
=============== =============== =============== ================
</TABLE>
The accompanying notes are an integral part of these financial statements
7
<PAGE>
<TABLE>
<CAPTION>
GOLF VENTURES, INC.
Statements of Cash Flows (Continued)
For the Six Months Ended For the Three Months Ended
September 30, September 30,
--------------------------------- -------------------------------
1996 1995 1996 1995
--------------- --------------- --------------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
SUPPLEMENTAL CASH
FLOW DISCLOSURES
Cash Paid For:
<S> <C> <C> <C> <C>
Interest $ - $ - $ - $ -
Income taxes $ - $ - $ - $ -
NON CASH FINANCING
ACTIVITIES
Preferred stock issued for debt $ - $ 168,382 $ - $ -
</TABLE>
The accompanying notes are an integral part of these financial statements
8
<PAGE>
GOLF VENTURES, INC.
Notes to Financial Statements
March 31, 1996 and September 30, 1996
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Golf Ventures, Inc., (the Company), has acquired real estate in
St. George, Utah and is engaged in the business of real estate
development, primarily golf courses with residential real
estate. The following is a summary of the more significant of
its accounting policies:
A. INCOME TAXES
The Company has adopted SFAS 109, Accounting for Income Taxes.
No provision has been made for federal income taxes due to net
operating loss carryforwards, sufficient to offset any current
tax liabilities. No deferred tax asset is being recognized
currently based on the Company's past operating performance.
The net operating losses are expected to expire as summarized
below.
Year ended
to expire Amount
------------------ -------------
2007 $ 16,000
2008 114,000
2009 97,000
2010 3,623,000
2011 350,000
----------------
Total $ 4,200,000
================
The Company has elected a March 31 fiscal year end for book and
tax purposes.
B. EARNINGS (LOSS) PER SHARE OF COMMON STOCK
The computation of net loss per share is based on the weighted
average number of shares outstanding during each period. There
common stock equivalents are anti-dilutive and accordingly not
used in the loss per share computation.
C. INCOME RECOGNITION
Income on real estate is recognized in accordance with the
provisions of FASB-66.
D. CONCENTRATION OF RISK
The Company maintains its cash in bank deposit accounts at high
credit quality financial institutions. The balances, at times,
may exceed federally insured limits. At March 31, 1996 and
September 30, 1996, the Company exceeded the insured limit by
approximately $584,380 and $1,367,898, respectively.
The Company builds and develops real property in Southern Utah.
In the normal course of business the Company extends secured
credit to its customers.
The accompanying notes are an integral part of these financial statements
9
<PAGE>
GOLF VENTURES, INC.
Notes to Financial Statements
March 31, 1996 and September 30, 1996
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
E. CONSTRUCTION LOANS PAYABLE
An officer of the Company has arranged for short term loans to
finance the construction of homes held in inventory for resale.
The loans are secured by the homes and accrue interest at
variable rates.
F. CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash
equivalents.
The changes in operating assets and liabilities are shown net
of non cash transactions.
G. INVENTORY
The Company carries in inventory the cost of the developed lots
and condominiums it has available for sale. The inventory is
recorded at the lower of cost or market.
H. ACCOUNTS RECEIVABLE
The Company's accounts receivable are from the sale of lots and
condos in its Cotton Manor and Cotton Acres projects. The
Company has recorded an allowance for doubtful accounts of
$5,000. The Company holds a trust deed on the properties sold
and the Company expects that its sales backlog will allow it to
immediately resell any property which it foreclosed upon.
I. ESTIMATES
Management uses estimates and assumptions in preparing
financial statements. Those estimates and assumptions affect
the reported amounts of assets and liabilities, the disclosure
of commitments and contingencies, and the reported revenues and
expenses.
J. UNAUDITED FINANCIAL STATEMENTS
In the opinion of management, the accompanying unaudited
statements of operations, stockholders' equity (deficit) and
cash flows for the three months and six months ended September
30, 1995 and 1996 include all of the adjustments necessary for
a fair statement of results. All such adjustments are of a
normal recurring nature.
NOTE 2 - REORGANIZATION, NAME CHANGE AND STOCK SPLIT
On December 28, 1992, at a meeting of the shareholders the name
of the Company was changed to Golf Ventures, Inc. Also a
reverse stock split was approved of one share for ten shares of
the Company's outstanding common stock. The financial
statements have been restated to reflect the reverse stock
split on a retroactive basis.
On February 1, 1996, the Company reverse split its common stock
on a 1 share for 5 shares basis. The financial statements
reflect the reverse stock split on a retroactive basis.
The accompanying notes are an integral part of these financial statements
10
<PAGE>
GOLF VENTURES, INC.
Notes to Financial Statements
March 31, 1996 and September 30, 1996
NOTE 3 - LAND HELD FOR DEVELOPMENT
On December 28, 1992 the Company purchased the Red Hawk real
estate development and the Cotton Manor/Cotton Acres real
estate development. The land was purchased for 654,746 shares
of common stock and the assumption of debt. The Red Hawk land
is undeveloped and in order for the Company to realize its
investment it will need to obtain adequate financing. The land
was acquired from a company which ended up with control of the
Company as a result of the transaction, therefore the land was
recorded at predecessor cost.
The purchase of the Red Hawk property is recorded on a "cash
basis" whereby the cost in the financial statements reflects
only the cash invested in the land and debts assumed from the
seller. The trust deed note is excluded because of the
uncertainty of obtaining adequate development financing. The
Company is not able to record its interest in the property
until the property is refinanced. The principal paid on the
trust deed note is added to the cost when it is paid.
For the year ended March 31, 1996, the Company capitalized
$514,687, in construction period interest costs. The cost of
the land is less than the estimated net realizable value of the
land.
NOTE 4 - RELATED PARTY TRANSACTIONS
During the year ended March 31, 1996, the Company issued
193,733 shares of class "B" preferred stock to a shareholder
for $968,666. (See Note 6)
During the six months ended September 30, 1996 the Company
completed a private placement of 200,000 shares of its common
stock at $5.00 per share. The Company incurred $100,000 of
costs in connection with the stock offering for net proceeds of
$900,000.
The accompanying notes are an integral part of these financial statements
11
<PAGE>
GOLF VENTURES, INC.
Notes to Financial Statements
March 31, 1996 and September 30, 1996
NOTE 5 - COMMITMENTS AND OBLIGATIONS
Commitments include a trust deed note not recorded for
accounting purposes (See Note 3) which the Company has
committed to pay to acquire the Red Hawk real estate
development. The liability of $2,283,690 and accompanying asset
will be recorded when the Company resolves the uncertainty
described in Note 3.
The Company's condensed financial statements would appear as
follows if the real estate transaction were recorded.
<TABLE>
<CAPTION>
September 30, March 31,
1996 1996
(Unaudited)
<S> <C> <C>
Current assets $ 2,338,641 $ 1,624,543
Property and equipment 5,822 -
Land held for development 8,873,901 7,678,330
--------------- ---------------
$ 11,218,364 $ 9,302,873
=============== ===============
Current liabilities $ 1,386,861 $ 2,160,163
Long-term debt 6,253,027 3,801,257
Stockholders' equity 3,578,476 3,341,453
--------------- ---------------
$ 11,218,364 $ 9,302,873
=============== ===============
NOTE 6 - LONG-TERM DEBT
September 30, March 31,
1996 1996
(Unaudited)
Promissory note secured by land. Interest accrued at 10% per
annum, payable in shares of the Company's common stock.
$120,000 principal plus a percentage of the proceeds of lot
sales payable annually beginning on February 1, 1991 through
February 1, 1997 at which time the balance will be due as a
balloon payment. $2,000 from each Red Hawk lot sale also
applies to the note. The note is in default. Payments are
being made but not in accordance with the contract. The note
holder has taken no action against the Company. $ 646,502 $ 721,502
Promissory note secured by land. Annual
payments through August 15, 2016 at $30,524
per year including interest at 10% per annum. 204,435 204,435
--------------- ---------------
Balance forward $ 850,937 $ 925,937
--------------- ---------------
</TABLE>
The accompanying notes are an integral part of these financial statements
12
<PAGE>
<TABLE>
<CAPTION>
GOLF VENTURES, INC.
Notes to Financial Statements
March 31, 1996 and September 30, 1996
NOTE 6 - LONG-TERM DEBT (Continued)
September 30, March 31,
1996 1996
(Unaudited)
<S> <C> <C>
Balance forward $ 850,937 $ 925,937
Promissory note secured by land, bearing
interest at 9.75% payable in full including
accrued interest on June 18, 1997. 913,805 355,000
Trust deed note secured by land. Interest accrued at 10% per
annum, payable monthly at $5,000 per month through January 30,
1996 at which time the balance including accrued interest will
be due.
(See Note 9) - 401,366
Trust deed note, secured by land and 50,000 shares of the
Company's common stock. Interest accrued at 15% per annum.
Principal and interest were due May 31, 1995. However, the
note holder has not demanded full payment and is accepting
partial
payments. 127,073 211,433
Trust deed note payable, secured by land. Interest
accrued at 8% per annum. Payable $100,000 per
year plus the accrued interest for that year. 359,370 459,370
Trust deed note, dated June 10, 1996, to be repaid after 36
months. The note is secured by a trust deed on 616 acres of
the Red Hawk property. The note bears interest at 10.5% per
annum which is payable monthly. 2,000,000 -
--------------- ---------------
Subtotal 4,251,185 2,353,106
Less Current Portion (281,848) (942,574)
--------------- ---------------
Long-Term Portion $ 3,969,337 $ 1,410,532
=============== ===============
</TABLE>
<TABLE>
<CAPTION>
Maturities on long-term debt are as follows:
<S> <C>
1996 $ 281,848
1997 1,144,557
1998 231,827
1999 2,196,884
2000 145,936
After 2000 250,133
---------------
$ 4,251,185
</TABLE>
The accompanying notes are an integral part of these financial statements
13
<PAGE>
GOLF VENTURES, INC.
Notes to Financial Statements
March 31, 1996 and September 30, 1996
NOTE 7 - PREFERRED STOCK
The Company has issued 27,000 shares of its Class "A" cumulative
convertible preferred stock through a private placement at $5 per
share. The preferred stock pays a cumulative dividend at the rate
of 10% per annum and is convertible into common stock per terms of
the offering. The preferred stock also has certain preferences in
liquidation. In 1996, 2,000 shares were converted into 1,221
shares of common stock. The Company has also issued 259,427 shares
of class "B" preferred stock. The class "B" preferred stock has a
preference upon liquidation of $5.00 per share, plus all accrued
and unpaid dividends, whether or not earned or declared. The
preference is secondary to the liquidation preference of the class
"A" stock. The class "B" preferred stock is convertible at anytime
before March 31, 1998 at the rate of 1 share of common stock to be
valued at 40% of the low bid price for free trading shares at my
time during the eighteen months preceding the conversion. The
Company may redeem the class "B" preferred stock on or before
March 31, 1998 at $5.00 per share plus dividends accrued at 10%
per annum.
NOTE 8 - COMMON STOCK SUBSCRIBED
On March 22, 1994 the Company entered into an agreement to issue
2,835,000 shares of common stock pursuant to Regulation S at $3.00
per share. In May of 1994 the Company terminated the offering due
to non performance by the sales agent. In 1996 the shares were
issued for services rendered and valued at $1.00 per share.
The Company has issued an additional 51,932 shares which have been
offered to creditors in settlement of accrued expenses but the
creditors have not yet accepted the shares. These shares are
considered issued but not outstanding for financial statement
purposes.
<PAGE>
Item 2. Management's Discussion & Analysis of Financial Condition and Results
of Operations
Results of Operations
Three Months ended 9/30/96 compared to Three Months ended 9/30/95
Sales for this period decreased $226,000, (89%) from $254,000 to
$28,000. The net loss also increased from the same period last year by $81,881,
(96%) from $85,287 to $167,168.
Sales include the sale of real estate from the Cotton Manor and Cotton
Acres subdivisions. During the current period one lot was sold from the Cotton
Acres subdivision for $28,000 compared to three condominiums from Cotton Manor
sold for an average of $84,667 in the prior year. The cost of the lot sold was
$12,691, 45% of sales, and the average cost of the condominiums was $56,420, 67%
of sales. The volume of lot sales has been adversely affected by the
non-availability of funds needed to develop new lots. Inventory levels of
completed lots remain very low. GVI has completed building two model townhomes
within the Cotton Manor subdivision. GVI is considering selling these units to
generate funds to continue the development of both lots and townhomes.
Total general and administrative expenses increased $103,279 (98%) from
$105,474 last year to $208,753 this year. The increase is due primarily to the
cost of travel and fees paid for promotional services incurred in an effort to
increase awareness and expand the markets for the Company's common stock.
Interest income was $23,144 this period compared with $0 for the same period
last year. Interest income relates to the interest earned on the $2,000,000 CD
placed in the bank for Granite Construction's work on Red Hawk.
Management believes that the future of the Company will depend on its
ability to find long term financing for its Red Hawk project.
Six Months ended 9/30/96 compared to Six Months ended 9/30/95
Sales for this period decreased from the same period in the prior year
by $180,800, (53%) from $341,800 to $161,000. The net loss also increased for
the same period by $153,642, (141%) from $108,753 to $262,395.
Sales include the sale of real estate from the Cotton Manor and Cotton
Acres subdivisions. During the current period, six lots were sold from the
Cotton Acres subdivision for an average of $26,833 compared with four lots sold
for an average of $21,950 and three condominiums from Cotton Manor sold for an
average of $84,667 in the prior year. The average cost of lots sold this year
was $12,341 and total cost of sales was $92,484, 57% of sales, compared with the
average cost of the lots and condominiums sold last year of $11,641 and $56,420,
respectively, and total cost of sales of $279,047, 82% of sales. The cost of
sales is higher due to the sale of three condominiums last year compared with no
condominiums sold in the current period.
Total general and administrative expenses increased $182,639 (100%)
from $182,633 last year to $365,272 this year. The increase is due primarily to
the cost of travel and fees paid for promotional services incurred in an effort
to increase awareness and expand the markets for the Company's common stock.
15
<PAGE>
Additionally, a $100,000 fee was paid by the Company to a landowner to
renegotiate the terms of the land purchase. This fee was expensed during the
period.
Liquidity and Capital Resources
At September 30, 1996, the Company had total assets of $8,934,674,
total liabilities of $5,356,198 and total stockholders equity of $3,578,476
compared with total assets of $6,912,148, total liabilities of $3,570,695 and
total stockholders equity of $3,341,453 at March 31, 1996. At September 30, 1996
cash increased by $783,518 (100%) to $1,567,898 from $784,380 on March 31, 1996.
The increase in total assets was due primarily to the cash received from a
$2,000,000 loan from Miltex Industries, Geneva, Switzerland (Miltex) during the
first quarter and an additional $558,000 loan received from Banque SCS, Geneva,
Switzerland (Banque SCS) during the second quarter, capitalized payments of
$323,464 to Granite Construction for the Red Hawk project and related
capitalized interest. Total liabilities at September 30, 1996 increased by
$1,785,503 (50%) to $5,356,198 from $3,570,695 at March 31, 1996. The increase
was due to an increase in long-term debt of $2,558,000, related to the loans
from Miltex and Banque SCS as described above, offset by loan paydowns and a
reduction in accrued expenses.
As of September 30, 1996, the Company had total current assets of
$2,338,641 and total current liabilities of $1,386,861 which results in a
current ratio of 1.69:1; compared with a current ratio of 0.75:1 as of March 31,
1996. The current ratio increase was due to the substantial increase in cash, as
explained above. Real estate inventory as of September 30, 1996 decreased by
$74,045 (10%) to $673,965 due primarily to the sale of six lots in the Cotton
Acres subdivision since March 31, 1996.
Current liabilities at September 30, 1996 decreased by $773,302, (36%),
from March 31, 1996 due primarily to a loan payoff of $401,366, additional loan
paydowns and a reduction in accrued expenses of $112,576,(11%).
The Company has historically satisfied its cash needs through the sale
of real estate, the private placement of securities and secured borrowings. In
June 1996, the Company completed an offering under Section 504 of the Securities
Act of 1933 (the "Securities Act"). Net proceeds to GVI were $889,424. Also in
June, GVI borrowed $2,000,000 from Miltex and borrowed an additional $558,805
from Banque SCS, a stockholder of GVI. With this cash GVI escrowed sufficient
funds to allow Granite to commence construction on Phase I of the Red Hawk
project in July, 1996. Through November, 1996 GVI has paid to Granite $1,981,613
toward the Phase I improvements.
Construction on the Red Hawk project has now slowed significantly due
to the lack of sufficient financing. The Company has land and debt payments due
during the current year of approximately $600,000 and liquidity for the coming
year will be dependent on its ability to secure long- term financing for the Red
Hawk project, upon the cash flow generated from the closing of lot sales in Red
Hawk, and from sales related to Cotton Manor and Cotton Acres projects. If the
Company does not receive sufficient financing for the Red Hawk project, the
Company intends to meet its obligations through private offerings of common
and/or preferred stock for cash and additional borrowings. No assurance can be
given that the Company will succeed in obtaining sufficient financing for Red
16
<PAGE>
Hawk or, if unsuccessful, that it will raise sufficient cash to meet its
obligations through the sale of securities or additional borrowings. Without the
additional financing, the Company has sufficient cash for operations to continue
for only two or three months.
PART II
Item 1. Legal Proceedings
Mid Valley Ventures, ( Mid Valley) was the holder of a mortgage on
certain of the Company's properties and had recorded a notice of default in the
Washington County recorders office. On April 12, 1996 the Company filed an
action in the U.S. District Court of Utah, Central Division, to enjoin the
foreclosure. On June 19, 1996 Mid Valley filed a counter claim against the
Company. On August 30, 1996 in an effort to mitigate damages, the Company paid
$436,025.39 as payment for sums due under the trust deed being foreclosed on by
Mid Valley, subject to the Company reserving its claims against Mid-Valley. The
note is now considered paid in full, and a deed of reconveyance has been
executed and received by the Company. The Company's complaint for damages and
Mid Valley's counter claim were referred to mediation which was unsuccessful.
The matter will probably proceed to trial.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the Company's securities holders
during the quarter ended September 30, 1996.
Item 5. Other Information
On November 21, 1996, George H. Badger, President and Director, Leasing
Technology Incorporated, a major shareholder of the Company, appeared in the
U.S. Federal District Court for the Southern District of New York on a complaint
charging him with one count of conspiracy to commit securities fraud and one
count of criminal contempt.
Item 6. Exhibits and Reports on Form 8-K
(a) This Item is not applicable to the Company.
(b) No Report on form 8-K was filed by the Company during the three
month period ended September 30, 1996.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
GOLF VENTURES, INC.
(Registrant)
BY: /s/ Duane H.Marchant
DUANE H. MARCHANT, President
Dated: December 20, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
Signature Title Date
/s/ Duane H. Marchant President, Chief Executive
Officer and Director
DUANE H. MARCHANT (Principal Executive Officer) -----------------------
/s/ Stephen B. Spencer Secretary / Treasurer and
Director (Chief Financial -----------------------
STEPHEN B. SPENCER Officer, Chief Accounting
Officer and Controller)
18
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 1567898
<SECURITIES> 0
<RECEIVABLES> 96778
<ALLOWANCES> 0
<INVENTORY> 673965
<CURRENT-ASSETS> 2338641
<PP&E> 5822
<DEPRECIATION> 0
<TOTAL-ASSETS> 8934674
<CURRENT-LIABILITIES> 1386861
<BONDS> 0
0
284
<COMMON> 1853
<OTHER-SE> 3576339
<TOTAL-LIABILITY-AND-EQUITY> 8934674
<SALES> 161000
<TOTAL-REVENUES> 161000
<CGS> 92484
<TOTAL-COSTS> 92484
<OTHER-EXPENSES> 330911
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (262395)
<INCOME-TAX> 0
<INCOME-CONTINUING> (262395)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (262395)
<EPS-PRIMARY> (0.15)
<EPS-DILUTED> (0.15)
</TABLE>
