UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark one)
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _________ to __________
Commission File Number: 33-32966
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The Great American Golf Works, Inc.
(Exact name of small business issuer as specified in its charter)
Delaware 22-2999829
------------------------- -------------------------------
(State of incorporation) (IRS Employer ID Number)
2 Cottage Place, Nutley NJ 07110
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(973) 667-5901
---------------------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
The number of shares outstanding of the Issuer's Common Stock, $0.0005
par value, as of August 4, 2000, was 38,124,000.
Transitional Small Business Disclosure Format (check one): YES No X
<PAGE>
The Great American Golf Works, Inc.
Form 10-QSB for the Quarter ended September 30, 1999
Table of Contents
Page
------
Part I - Financial Information
Item 1 Financial Statements 3
Item 2 Management's Discussion and Analysis or Plan of Operation 8
Part II - Other Information
Item 1 Legal Proceedings 9
Item 2 Changes in Securities 9
Item 3 Defaults Upon Senior Securities 9
Item 4 Submission of Matters to a Vote of Security Holders 9
Item 5 Other Information 9
Item 6 Exhibits and Reports on Form 8-K 9
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1 - Financial Statements
Report of Independent Accountants
To the Board of Directors of The Great American Golf Works, Inc.
We have reviewed the accompanying balance sheet of The Great American Golf
Works, Inc. (the "Company") as of 31 March, 2000 and the related statements of
income and comprehensive income, shareholders' equity and statement of cash
flows for the period then ended. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with auditing standards generally accepted in the
United States of America, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole. Accordingly, we
do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying interim financial statements for them to be
in conformity with accounting principles generally accepted in the United
States of America.
This report is intended solely for the information and use of the Board of
Directors of the Company and is not intended to be and should not be used by
any other persons.
/s/ PricewaterhouseCoopers
----------------------------------------------
PricewaterhouseCoopers
Beijing, P.R. China
1 August, 2000
<PAGE>
The Great American Golf Works, Inc.
Unaudited Balance Sheet
As at 31March, 2000
(Expressed in U.S. Dollars)
Assets
Current assets:
Cash and cash equivalents $ 8,349,751
-----------
Total assets $ 8,349,751
===========
Liabilities and Stockholders' Equity
Current liabilities:
Accrued expenses $ 42,400
Payable to related parties 503,000
Other payables 1,555
-----------
Total liabilities 546,955
-----------
Stockholders' equity:
Common stock
$0.0005 par value, 110,000,000 shares authorized;
38,124,600 shares issued and outstanding 19,062
Additional paid-in capital 7,915,912
Accumulated deficit (132,178)
-----------
Total stockholders' equity 7,802,796
-----------
Total liabilities and stockholders' equity $ 8,349,751
===========
<PAGE>
The Great American Golf Works, Inc.
Unaudited Statement of Income and Comprehensive Income
For three months ended 31 March, 2000
(Expressed in U.S. Dollars)
General and administrative expenses
Office rental $ 9,000
Professional services 30,000
Others 5,861
-----------
Total general and administrative expenses 44,861
-----------
Other income (expenses)
Interest income 47,952
Other expenses (56)
-----------
Total other income, net 47,896
-----------
Income before income taxes 3,035
Provision for income taxes -
-----------
Net income 3,035
Other comprehensive income -
-----------
Comprehensive income $ 3,035
===========
Basic earnings per weighted-average
common stock outstanding $ -
===========
Weighted average number of shares
of common stock outstanding 31,201,522
===========
<PAGE>
The Great American Golf Works, Inc.
Unaudited Statement of Changes in Stockholders' Equity
For three months ended 31 March, 2000
(Expressed in U.S.Dollars)
<TABLE>
<CAPTION>
Common Stock Additional
Paid-in Accumulated
Shares Amount Capital deficit Total
-------------- ------------- -------------- ----------------- -------------
<S> <C> <C> <C> <C> <C>
Balance at 31 December, 1999 624,600 $ 312 $ 134,957 $ (135,213) $ 56
Issuance of Common stock 37,500,000 18,750 7,780,955 - 7,799,705
Net income for the period - - - 3,035 3,035
-------------- ------------- -------------- ----------------- -------------
Balance at 31 March, 2000 38,124,600 $ 19,062 $ 7,915,912 $ (132,178) $ 7,802,796
============== ============= ============== ================= =============
</TABLE>
<PAGE>
The Great American Golf Works, Inc.
Unaudited Statement of Cash Flows
For three months ended 31 March, 2000
(Expressed in U.S. Dollars)
Operating activities:
Net income $ 3,035
Adjustments to reconcile net income to
net cash used in operating activities:
Increase in accrued expenses 42,400
Increase in other payables 1,555
-----------
Cash provided by operating activities 46,990
-----------
Financing activities:
Proceeds from issuance of common stock 7,799,705
Increase in payable to related parties 503,000
-----------
Cash provided by financing activities 8,302,705
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Net increase in cash and cash equivalents $ 8,349,695
Cash and cash equivalents at beginning of period 56
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Cash and cash equivalents at end of period 8,349,751
===========
<PAGE>
Independent Accountants' Compilation Report
To the Board of Directors of The Great American Golf Works, Inc.:
We have compiled the accompanying balance sheets of The Great American Golf
Works, Inc. as of March 31, 2000, and the related statements of income and
comprehensive income, changes in stockholders' equity and cash flows for the
three months ended March 31, 2000, in accordance with Statements on Standards
for Accounting and Review Services issued by the American Institute of
Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and accordingly, do not express
an opinion or any other form of assurance on them.
Beijing, People's Republic of China
July 24, 2000
<PAGE>
The Great American Golf Works, Inc.
Balance Sheets
(Unaudited-See Accompanying Accountants' Compilation Report)
(Expressed in U.S. Dollars)
<TABLE>
<CAPTION>
<S> <C> <C>
Assets March 31, December 31,
2000 1999
----------------- ---------------
Current assets:
Cash and cash equivalents $ 8,349,751 $ 56
---------- ---------
Total assets $ 8,349,751 $ 56
========== =========
Liabilities and Stockholders' Equity
Current liabilities:
Accrued expenses $ 42,400 $ -
Payable to related parties 503,000 -
Other payables 1,555 -
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Total liabilities 546,955 -
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Stockholders' equity:
Common stock
$0.0005 par value, 110,000,000 (December
31, 1999-50,000,000) shares authorized
38,124,600 (December 31, 1999-624,600)
shares issued and outstanding 19,062 312
Additional paid-in capital 7,915,912 134,957
Accumulated deficit (132,178) (135,213)
---------- ---------
Total stockholders' equity 7,802,796 56
---------- ----------
Total liabilities and stockholders' equity $ 8,349,751 $ 56
========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
The Great American Golf Works, Inc.
Statement of Income and Comprehensive Income
Three months ended March 31, 2000 and 1999
(Unaudited-See Accompanying Accountants'
Compilation Report)
(Expressed in U.S. Dollars)
<TABLE>
<CAPTION>
Three months ended March 31,
--------------------------------------------
2000 1999
----------------- -------------
<S> <C> <C>
General and administrative expenses
Office rental $ 9,000 $ -
Professional services 30,000 -
Other 5,861 -
----------- -----------
Total general and administrative expenses 44,861 -
---------- -----------
Other income (expenses)
Interest income 47,952 -
Other expenses (56) -
----------- -----------
Total other income, net 47,896 -
----------- -----------
Income before income taxes 3,035 -
Provision for income taxes - -
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Net income 3,035 -
Other comprehensive income - -
----------- -----------
Comprehensive income $ 3,035 $ -
=========== ===========
Basic earnings per weighted-average
common stock outstanding $ - $ -
=========== ===========
Weighted average number of shares
of common stock outstanding 31,201,522 624,600
=========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
The Great American Golf Works, Inc.
Statement of Changes in Stockholders' Equity
Three months ended March 31, 2000
(Unaudited-See Accompanying Accountants' Compilation Report)
(Expressed in U.S.Dollars)
Additional
<TABLE>
<CAPTION>
Common Stock Paid-in Accumulated
Shares Amount Capital deficit Total
------------- -------------- ------------- -------------- ----------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1999 624,000 $ 312 $ 128,788 $ (129,100) $ -
Operating capital contributed
by controlling shareholder - - 6,169 - 6,169
Dividend-in-kind of
marketable equity securities
to shareholders - - - (2,730) (2,730)
Net loss for the year - - - (3,383) (3,383)
---------- --------- --------- --------- --------
Balance at December 31, 1999 624,600 $ 312 $ 134,957 $ (135,213) $ 56
Issuance of common stock 37,500,000 18,750 7,780,955 - 7,799,705
Net income for the period - - - 3,035 3,035
---------- ---------- --------- ---------- ---------
Balance at March 31, 2000 38,124,600 $ 19,062 $ 7,915,912 $ (132,178) $ 7,802,796
========== ========== ========= ========== =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
The Great American Golf Works, Inc.
Statement of Cash Flows
Three months ended March 31, 2000 and
1999 (Unaudited-See Accompanying Accountants'
Compilation Report)
(Expressed in U.S. Dollars)
<TABLE>
<CAPTION>
Three months ended March 31,
--------------------------------------
2000 1999
----------------- -----------
<S> <C> <C>
Operating activities:
Net income $ 3,035 $ -
Adjustments to reconcile net income to
net cash used in operating activities:
Increase in accrued expenses 42,400 -
Increase in other payables 1,555 -
----------- ----------
Cash provided by operating activities 46,990 -
-------------- ----------
Financing activities:
Proceeds from issuance of common stock 7,799,705 -
Increase in payable to related parties 503,000 -
----------- ----------
Cash provided by financing activities 8,302,705 -
----------------- ----------
Net increase in cash and cash equivalents $ 8,349,695 $ -
Cash and cash equivalents at beginning of period 56 -
----------- ----------
Cash and cash equivalents at end of period 8,349,751 -
========== ==========
</TABLE>
There were no interest or income tax payments made during the three months
ended March 31, 2000 and 1999.
See accompanying notes to financial statements.
<PAGE>
The Great American Golf Works, Inc.
Notes to Financial Statements
Three months ended March 31, 2000
(Unaudited-See Accompanying Accountants' Compilation Report)
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
The Great American Golf Works, Inc. (the "Company") was initially
incorporated as Equix Corporation on November 30, 1989 under the laws of
the State of Texas as a wholly-owned subsidiary of C Square, Inc. for the
purpose of investigating and acquiring or combining with a privately
owned business.
On January 12, 1990, the Company merged with and into The Great American
Golf Works, Inc. a privately owned company incorporated on July 28, 1989
under the laws of the State of Delaware. Upon the consummation of the
merger between Equix Corporation and The Great American Golf Works, Inc.,
the Company changed its corporate domicile to Delaware and changed its
corporate name to The Great American Golf Works, Inc.
On May 14, 1990, pursuant to the terms of the merger agreement and a
Registration Statement filed with the U.S. Securities and Exchange
Commission, C Square, Inc. received and distributed 90,000 shares of
common stock, 135,000 Class A warrants, exercisable at $ 5.00 per share,
and 135,000 Class B warrants, exercisable at $ 10.00 per share, to C
Square, Inc.'s shareholders. The Class A and Class B warrants were
exercisable for periods of 36 months and 48 months, respectively,
commencing on June 3, 1990. A total of 24,600 Class A warrants were
exercised during 1990 for gross proceeds of $123,000 to the Company. No
other warrants were exercised and all remaining outstanding warrants
expired in 1993 and 1994, respectively.
It was the intent of the Company to design, construct, operate and, in
some instances, franchise entertainment facilities combining an indoor
miniature golf course and old fashioned ice cream parlor. These efforts
were unsuccessful and all assets, liabilities and proposed operations
were liquidated by the end of 1990.
On January 7, 2000, pursuant to a stock purchase agreement, the Company's
then controlling shareholder sold 329,330 shares (the "Shares") of the
common stock of the Company to Resplendent Investment Limited, a British
Virgin Islands Corporation ("Resplendent"). The Shares represented
approximately 53% of the total number of issued and outstanding shares of
the Company on January 7, 2000.
<PAGE>
The Company's current plan of operation is to seek, investigate, and if
such investigation warrants, acquire an interest in one or more business
opportunities presented to it. Although the Company is not required to
restrict its search to any specific business, industry, or geographical
location, it has decided to focus its search on companies in the cable
television industry in People's Republic of China (the "PRC"). Management
is currently in the process of identifying suitable candidates for
acquisition. However, if management subsequently decides that these
companies are not suitable candidates, or if a suitable candidate in
another industry is located, management reserves the right to complete
transactions with another company or companies, including those in other
industries. As of March 31, 2000, the Company had not signed any letters
of intent or entered into any agreements with suitable acquisition
candidates.
The PRC currently has extensive restrictions on foreign investment and
participation in its cable television industry. The Company will attempt
to structure its prospective projects in order to comply with such laws.
However, there can be no assurance that such legal and regulatory
restrictions will not increase in the future, or, as currently
promulgated, will not be interpreted in a manner giving rise to tighter
restrictions, and thus may have a material adverse effect on the
Company's prospective projects in the PRC.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Cash and cash equivalents
The Company considers all cash on hand and in banks, including accounts
in book overdraft positions, certificates of deposit and other
highly-liquid investments with maturities of three months or less, when
purchased, to be cash and cash equivalents.
(b) Income taxes
The Company files its own separate federal income tax return. The Company
has operating loss carryforwards of approximately $ 300 available to
reduce financial statement income in future periods.
(c) Earnings per share
Basic earnings per share is computed by dividing the net income by the
weighted- average number of shares of common stock and common stock
equivalents (primarily outstanding options and warrants). Common stock
equivalents represent the dilutive effect of the assumed exercise of the
outstanding stock options and warrants, using the treasury stock method.
The calculation of fully
<PAGE>
diluted earnings per share assumes the dilutive effect of the exercise of
outstanding options and warrants at either the beginning of the
respective period presented or the date of issuance, whichever is later.
As of December 31, 1999 and March 31, 2000, the Company had no
outstanding warrants.
3. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash, accounts receivable, accounts payable and
notes payable, as applicable, approximates fair value due to the short
term nature of these items and/or the current interest rates payable in
relation to current market conditions.
4. COMMON STOCK TRANSACTIONS
On May 14, 1990, pursuant to the terms of the merger agreement and a
Registration Statement filed with the U.S. Securities and Exchange
Commission, C Square, Inc. received and distributed 90,000 shares of
common stock, 135,000 Class A warrants, exercisable at $ 5.00 per share,
and 135,000 Class B warrants, exercisable at $ 10.00 per share, to C
Square, Inc.'s shareholders. The Class A and Class B warrants were
exercisable for periods of 36 months and 48 months, respectively,
commencing on June 3, 1990. A total of 24,600 Class A warrants were
exercised during 1990 for gross proceeds of $123,000 to the Company. No
other warrants were exercised and all remaining outstanding warrants
expired in 1993 and 1994, respectively.
On December 22, 1999, the Company's Board of Directors authorized a
change to the authorized shares from 2,000,000 to 50,000,000 shares.
There was no change in the Company's stated par value of $ 0.0005 per
share.
On January 7, 2000, pursuant to a stock purchase agreement, the Company's
then controlling shareholder sold 329,330 shares (the "Shares") of the
common stock of the Company to Resplendent Investment Limited, a British
Virgin Islands Corporation ("Resplendent"). The Shares represented
approximately 53% of the total number of issued and outstanding shares of
the Company on January 7, 2000.
On January 11, 2000, pursuant to the Company's Board of Directors
resolution, the Company issued 30,000,000 restricted common shares to
Resplendent, for gross proceeds of $ 300,000 which was received on
February 22, 2000. Restricted common shares have not been registered
under the Securities Act of 1933, as amended (the "Act") or applicable
state securities laws. Accordingly, restricted shares cannot be
transferred or sold unless subsequently registered under the Act or an
exemption from such registration is available.
On January 21, 2000, pursuant to the Company's Board of Directors
resolution, the Company issued 10,000,000 restricted common shares to
certain investors that had subscribed to these shares at $ 1.00 per
share.
<PAGE>
On February 8, 2000, the Company's Board of Directors authorized a
further increase of the authorized shares from 50,000,000 to 110,000,000
shares. There was no change in the Company's stated par of value $ 0.0005
per share.
As of March 31, 2000, the Company had received $ 7,500,000 for 7,500,000
of the restricted common shares issued on January 21, 2000. On June 27,
2000, the remaining 2,500,000 restricted common shares that had been
subscribed were reclassified as authorized but unissued shares because
the related subscriptions receivable had not been collected.
5. RELATED PARTY TRANSACTIONS
In February 2000, the Company entered into subscription agreements with
various investors for 100,600 restricted common shares of the Company $
5.00 per share. In connection with these subscription agreements, the
investors advanced a total of $ 503,000 to the Company. Subsequent to
March 31, 2000, the Company and the investors agreed to cancel the
related subscription agreements and the Company returned the advances to
the investors.
<PAGE>
Item 2 - Management's Discussion and Analysis or Plan of Operation.
Information contained in this report of The Great American Golf Works, Inc.
(the "Company"), contains forward-looking statements such as statements of
plans, expectations and intentions, that can often be identified by the use of
forward-looking terminology, such as "may", "will", "expect", "anticipate",
"believe", "plan", "intend", "could" or "estimate", or other variations of
these terms or comparable terminology. All forward-looking statements involve
risks and uncertainties, and actual results could differ materially from those
set forth in the forward-looking statements. The cautionary statements made in
this Report should be read as being applicable to all forward-looking
statements wherever they appear in this Report. The Company's actual results
could differ materially from those discussed herein.
The Company's plan of operation is to seek, investigate, and if such
investigation warrants, acquire an interest in one or more business
opportunities presented to it. Although the Company is not required to
restrict its search to any specific business, industry, or geographical
location, it has recently decided to focus its search on companies in cable
television related business in China. Management is currently in the process
of identifying suitable candidates for acquisition. However, if management
subsequently decides that these companies are not suitable candidates, or if a
suitable candidate in another industry is located, management reserves the
right to complete transactions with another company or companies including
those in other industries. As of March 31, 2000, the Company had not signed
any letters of intent or entered into any agreements with suitable acquisition
candidates.
The PRC currently has extensive restrictions on foreign investment and
participation in its cable television industry. The Company will attempt to
structure its prospective projects in order to comply with such laws. However,
there can be no assurance that such existing or future legal and regulatory
restrictions will not have a material adverse effect on the Company's
prospective projects in the PRC.
Currently, the Company has sufficient cash resources to meet its immediate
needs. In the next 12 months, the Company will determine whether to raise
additional funds according to accomplishment of the Plan of Operation.
<PAGE>
PART II
OTHER INFORMATION
Item 1 - Legal Proceedings.
None
Item 2 - Changes in Securities.
None
Item 3 - Defaults on Senior Securities.
None
Item 4 - Submission of Matters to a Vote of Security Holders.
None
Item 5 - Other Information.
On April 28, 2000, the sole shareholder of Resplendent Investment
Limited, which is the controlling shareholder of the Registrant, was changed
from Mr. Qing Feng to Mr. Hongsheng Wang.
Item 6 - Exhibits and Reports on Form 8-K
Exhibits -- Change to Articles of Incorporation
Form 8-K -- None
Signatures
/s/Hongsheng Wang
-----------------------------------------
Hongsheng WANG
President
