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 June 30, 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
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(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 November 2, 2000, was 38,124,000.
Transitional Small Business Disclosure Format (check one): YES No X
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2
The Great American Golf Works, Inc.
Form 10-QSB for the Quarter ended June 30, 2000
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
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3
PART I
FINANCIAL INFORMATION
Item 1 - Financial Statements
THE GREAT AMERICAN GOLF WORKS, INC.
FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JUNE 30, 2000
The Great American Golf Works, Inc.
Condensed Balance Sheet (unaudited)
(Expressed in U.S. Dollars)
<TABLE>
<CAPTION>
<S> <C> <C>
June 30, 2000 December 31, 1999
--------------- --------------------
Assets
Cash and cash equivalents 3,979,914 56
Other receivable 6,000 -
--------------- --------------------
Total assets 3,985,914 56
=============== ====================
Liabilities and Stockholders' Equity
Current liabilities:
Payable to related party 103,000 -
Other payables 118,926 -
--------------- --------------------
Total liabilities 221,926 -
=============== ====================
Stockholders' equity:
Common stock
$0.0005 par value, 110,000,000
(1999: 50,000,000) shares authorized;
38,124,600 (1999: 624,600) shares
issued and outstanding 19,062 312
Additional paid-in capital 7,915,912 134,957
Due from shareholder (4,055,685) -
Accumulated deficit (115,301) (135,213)
Total stockholders' equity 3,763,988 56
Total liabilities and stockholders' 3,985,914 56
equity ================== =====================
</TABLE>
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4
The Great American Golf Works, Inc.
Condensed Statement of Income (unaudited)
(Expressed in U.S. Dollars)
<TABLE>
<CAPTION>
<S> <C> <C>
Three months ended June 30, Six months ended June
30,
--------------------------- --------------------------
2000 1999 2000 1999
--------------- --------- ------------- ---------
Revenue - - - -
General and administrative expenses breakdown 69,072 - 113,934 -
Other income (expenses)
Interest income 105,438 - 153,391 -
Other expenses - - (56) -
----------------- ---------- --------------- ----------
Total other income, net 105,438 - 153,335 -
----------------- ---------- --------------- ----------
Income before income taxes 36,366 - 39,401 -
Provision for income taxes 19,489 - 19,489 -
----------------- ---------- --------------- ----------
Net income 16,877 - 19,912 -
================= ========== =============== ==========
Basic earnings per weighted-average common
stock outstanding - - - -
================= ========== =============== ===========
Weighted-average number of shares of common
stock outstanding 38,124,600 624,600 34,663,061 624,600
================= ========== ================ ==========
</TABLE>
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5
The Great American Golf Works, Inc.
Condensed Statement of Changes in Stockholders' Equity (unaudited)
(Expressed in U.S. Dollars)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Additional
Common Stock paid-in Due from Accumulated Total
Shares Amount capital Shareholder deficit
---------- -------- ----------- ------------ -------------- ------------
Balance at December 31, 1999 624,000 312 134,957 - (135,213) 56
Issuance of common stock 37,500,000 1,750 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
Loan to shareholder - - - (7,000,000) - (7,000,000)
Loan repayment from - - - 3,000,000 - 3,000,000
shareholder
Loan interest receivable from - - - (55,685) - (55,685)
shareholder
Net income for the period - - - - 16,877 16,877
Balance at June 30, 2000 38,124,600 19,062 7,915,912 (4,055,685) (115,301) 3,763,988
=========== ======== ========== ============ ============= ===========
</TABLE>
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6
The Great American Golf Works, Inc.
Condensed Statement of Cash Flows (unaudited)
(Expressed in U.S. Dollars)
<TABLE>
<CAPTION>
<S> <C> <C>
Six months ended June 30,
2000 1999
------------------- --------------------
Operating activities
Net income 19,912 -
Adjustments to reconcile net income to net cash
used in operating activities:
Increase in other receivables (6,000) -
Increase in other payables 118,926 -
Cash provided by operating activities 132,838 -
------------------- ---------------------
Financing activities:
Proceeds from issuance of common stock 7,799,705 -
Loan to shareholder 7,000,000) -
Repayment of loan from shareholder 3,000,000 -
Interest on loan to shareholder (55,685) -
Increase in payable to related party 103,000 -
Cash provided by financing activities 3,847,020 -
------------------- ---------------------
Net increase in cash and cash equivalents 3,979,858 -
Cash and cash equivalent at beginning of period 56 -
Cash and cash equivalents at end of period 3,979,914 -
=================== =====================
</TABLE>
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7
The Great American Golf Works, Inc.
Notes to Condensed Financial Statements (unaudited)
For the period ended June 30, 2000
1. Common stock transactions
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 Company's outstanding common stock 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 resolution of Board of
Directors, 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 resolution of Board of
Directors, the Company issued 10,000,000 restricted common shares to
certain investors for a subscription price of $ 1.00 per share. On
February 28, 2000, the Company received $ 7,500,000 for 7,500,000 of
the restricted common shares issued on January 21, 2000. The remaining
2,500,000 restricted common shares that had been subscribed are
classified as authorized but unissued shares because the related
subscriptions receivable have not been collected.
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
value of $ 0.0005 per share.
2. Related party transactions
(a) In February 2000, the Company entered into subscription
agreements with various investors for 100,600 restricted common
shares of the Company for $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 $400,000 of the
advances to certain investors. Subsequent to June 30, 2000, the
Company returned the remaining advances of $103,000 to an
investor.
(b) On May 17, 2000, pursuant to a loan agreement, the Company made a
loan to Chatterton Resources Limited ("Chatterton"), a
shareholder of the Company, in the amount of $7,000,000. The term
of the loan is from May 19, 2000 to
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8
November 18, 2000 and carries an annual interest rate of 7.5%.
Interest is payable on August 18, 2000 and on maturity of the
loan. Chatterton has pledged 4,000,000 common shares of the
Company in escrow as security for the loan. On June 21, 2000,
Chatterton repaid $ 3,000,000 of the loan to the Company. The
outstanding amount of the loan has been classified as a reduction
of stockholders' equity.
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9
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 decided to focus its search on companies in cable
television related businesses 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 June 30, 2000, the
Company had not signed any letters of intent or entered into any agreements
with suitable acquisition candidates.
The P.R.C. 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 the Company will be able to do so
or that the P.R.C. laws will not be changed in a manner that would
adversely affect the Company or its planned projects.
In the coming quarters, the Company intends to continue its efforts to
identify suitable acquisition candidates, and, if a suitable candidate is
found, to seek to complete a business acquisition.
Currently, the Company believes it 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 its Plan of Operation.
The Company does not expect any purchase of plant and significant equipment
and does not expect any significant changes in the number of employees.
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10
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.
None.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Exhibit Description
10.1 Loan Agreement between the Company and
Chatterton Resources Limited
(b) Form 8-K -- None
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11
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.
/s/ Hongsheng WANG
----------------------------
Hongsheng WANG
President
Date: November 13, 2000
<PAGE>
Exhibit 10.1
LOAN AGREEMENT
This Loan Agreement (this "Agreement") is entered into in Beijing, China on
May 17, 2000 by and between The Great American Golf Works. Inc., a company
incorporated in the of State of Delaware, USA ("GAGW") and Chatterton
Resources Limited, a company incorporated in Hong Kong ("Chatterton").
WHAREAS, GAGW wishes to provide a loan to Chatterton.
WHEREAS, Chatterton will pledge 4,000,000 common shares of GAGW as security
for the loan.
NOW, THEREFORE, the parties agree as follows.
1. Loan
GAGW hereby agrees to make a loan to Chatterton in the amount of
US$7,000,000.00. The term of the loan shall be from May 19, 2000 to
November 18, 2000 and will carry an annual interest at the rate of 7.5%.
Interest shall be payable on August 18, 2000 and on maturity. Chatterton
hereby promises to repay the loaned amount plus any interest accrued upon
maturity on November 18, 2000.
2. Security non-recourse
Chatterton hereby pledges 4,000,000 common shares of GAGW as security
for the loan and agrees to remit forthwith endorsed certificate to Beijing
Shengguang Investment Co. Ltd ("Escrow Agent") as escrow agent pursuant to
the Escrow Agreement dated May 17, 2000 among GAGW, Chatterton and the
Escrow Agent. Failure to make the payment in full on the maturity date
shall entitle GAGW to cancel the said shares in satisfaction of the loan.
The parties agree that Chatterton's liability to GAGW shall be limited to
the said shares. Upon cancellation of the said shares, if any, GAGW shall
have no further recourse to Chatterton or any of its officers, directors or
shareholders.
3. Chatterton as Shareholder
GAGW hereby agrees that until actual cancellation of the said shares,
Chatterton shall still be entitled with the ownership of the shares, and
Chatterton shall be able to exercise all rights of a shareholder of GAGW,
including the right to participate and vote in shareholders meetings of
GAGW.
THIS AGREEMENT IS DUELY SIGNED BY THE AUTHORIZED REPRESENTATIVES OF THE
PARTIES ON THE DATE FIRST ABOVE WRITTEN.
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Exhibit 10.1
The Great American Golf Works, Inc.
By: s/Qing Feng
----------------------------
Name: Qing FENG
Title: President
Chatterton Resources Limited
By: s/Zhiyuan Liu
-----------------------------
Name: Zhiyuan LIU
Title:
