SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1999
Commission File No. 33-32966
The Great American Golf Works, Inc.
(formerly Equix Corporation)
(Name of Small Business Issuer in its Charter)
<TABLE>
<S> <C> <C>
Delaware 16910 Dallas Parkway, Suite 100, Dallas, TX 75248 22-2999829
(State or Other Jurisdiction (Address of Principal Executive Office, (I.R.S. Employer
of incorporation or organization) including Zip Code) Identification No.)
</TABLE>
(972) 248-1922
(Registrant's telephone number, including area code)
Securities Registered pursuant to Section 12(b) of the Act: NONE
Securities Registered pursuant to Section 12(g) of the Act: NONE
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 ___
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ X ]
The issuer's revenues for its most recent fiscal year were $-0-.
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of December 31,1999 was $-0- (computed by reference to the average
bid and asked prices of such stock as of December 31, 1999 as reported on the
OTC Bulletin Board).
The number of shares outstanding of the registrant's common stock as of
December 31, 1999 was 624,600 shares ($0.0005 par value).
Transitional Small Business Disclosure Format: Yes No X
<PAGE>
PART I
Item 1. Description of Business.
General
The Great American Golf Works, Inc. (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 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, 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 pursuant to a
Registration Statement filed with the Securities and Exchange Commission. The
Class A and 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.
The Company's majority shareholder has continued to maintain the
corporate status of the Company and provides all nominal working capital support
on the Company's behalf. Due to the Company's lack of operating assets, its
continuance is fully dependent upon the majority shareholder's continuing
support. The majority shareholder intends to continue the funding of nominal
necessary expenses to sustain the corporate entity.
The Company is considered in the development stage and, as such, has
generated no significant operating revenues and had incurred cumulative
operating losses of approximately $135,213 as of December 31, 1999. No
additional losses have been incurred.
It is the intention of the management to bring its SEC periodic
reporting to date in order that the Company might be potentially attractive to a
private business that has interest in becoming a publicly-held company, without
the expense and time delay involved in distributing its securities to the
public.
<PAGE>
Proposed Business
The Company intends to locate and combine with an existing,
privately-held company, which is profitable, or, in management's view, has
growth potential, irrespective of the industry in which it is engaged. However,
the Company does not intend to combine with a private company, which may be
deemed to be an investment company subject to the Investment Company Act of
1940. A combination may be structured as a merger, consolidation, exchange of
the Company's common stock for stock or assets or any other form which will
result in the combined enterprise's becoming a publicly-held corporation.
Pending negotiation and consummation of a combination, the Company
anticipates that it will have, aside from carrying on its search for a
combination partner, no business activities, and, thus, will have no source of
revenue. Should the Company incur any significant liabilities prior to a
combination with a private company, it may not be able to satisfy such
liabilities as are incurred.
If the Company's management pursues one or more combination
opportunities beyond the preliminary negotiations stage and those negotiations
are subsequently terminated, it is foreseeable that such efforts will exhaust
the Company's ability to continue to seek such combination opportunities before
any successful combination can be consummated. In that event, the Company's
common stock will become worthless and holders of the Company's common stock
will receive a nominal distribution, if any, upon the Company's liquidation and
dissolution.
Combination Suitability Standards
In its pursuit for a combination partner, the Company's management
intends to consider only combination candidates which are profitable or, in
management's view, have growth potential. The Company's management does not
intend to pursue any combination proposal beyond the preliminary negotiation
stage with any combination candidate which does not furnish the Company with
audited financial statements for at least its most recent fiscal year and
unaudited financial statements for interim periods subsequent to the date of
such audited financial statements, or is in a position to provide such financial
statements in a timely manner. The Company will, if necessary funds are
available, engage attorneys and/or accountants in its efforts to investigate a
combination candidate and to consummate a business combination. The Company may
require payment of fees by such combination candidate to fund the investigation
of such candidate. In the event such a combination candidate is engaged in a
high technology business, the Company may also obtain reports from independent
organizations of recognized standing covering the technology being developed
and/or used by the candidate. The Company's limited financial resources may make
the acquisition of such reports difficult or even impossible to obtain and,
thus, there can be no assurance that the Company will have sufficient funds to
obtain such reports when considering combination proposals or candidates. To the
extent the Company is unable to obtain the advice or reports from experts, the
risks of any combined enterprise's being unsuccessful will be enhanced.
Company's management expects that in connection with any acquisition or
merger transaction, that the Management of Company will be transferred to the
<PAGE>
new controlling shareholders. Company's management will require a declaration
from any such company or controlling shareholders, that, within five (5) years
prior to the filing of this statement, they have not been convicted in any
criminal proceedings or are named subject of a pending criminal proceeding
(excluding traffic violations and other minor offenses), nor have they been
subject of any order, judgment, or decree, not subsequently reversed, suspended
or vacated, of any court of competent jurisdiction, permanently or temporarily
enjoining them from, or otherwise limiting the engagement in any type of
business practice; or engaging in any activity in connection with the purchase
or sale of any security or commodity or in connection with any violation of
Federal or State securities laws.
Item 2. Description of Property.
The Company has no properties.
Item 3. Legal Proceedings.
The Company is not a party to any material pending nor is it aware of
any threatened legal proceeding.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to securities holders during the year ended
December 31, 1999.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
Market Information
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of December 31,1999 was $-0- (computed by reference to the average
bid and asked prices of such stock as of December 31, 1999 as reported on the
OTC Bulletin Board.
The number of shares outstanding of the registrant's common stock as of December
31, 1999, was 624,600 shares.
Dividend Policy
The Company has never paid any dividends on its common stock and does
not have any current plan to pay any dividends in the foreseeable future.
Item 6. Management's Discussion and Analysis of Financial
Condition and Plan of Operation.
<PAGE>
Discussion of Financial Condition
The Company currently has no revenues, no operations and owns no
assets. The Company will remain illiquid until such time as a business
combination transaction occurs, if ever. No prediction of the future financial
condition of the Company can be made.
The Company's independent auditor, S.W. Hatfield, CPA, expressed, in
its opinion on the Company's audited financial statements, substantial doubt
about the Company's ability to continue as a going concern. Reference is made to
the financial statements of the Company included elsewhere herein, and,
specifically, to the Independent Auditor's Report and Note A in the financial
statements of the Company.
Plan of Business
General. The Company intends to locate and combine with an existing,
privately-held company, which is profitable or, in management's view, has growth
potential, irrespective of the industry in which it is engaged. However, the
Company does not intend to combine with a private company, which may be deemed
to be an investment company subject to the Investment Company Act of 1940. A
combination may be structured as a merger, consolidation, exchange of the
Company's common stock for stock or assets or any other form which will result
in the combined enterprise's becoming a publicly-held corporation.
Pending negotiation and consummation of a combination, the Company
anticipates that it will have, aside from carrying on its search for a
combination partner, no business activities, and, thus, will have no source of
revenue. Should the Company incur any significant liabilities prior to a
combination with a private company, it may not be able to satisfy such
liabilities as are incurred.
If the Company's management pursues one or more combination
opportunities beyond the preliminary negotiations stage and those negotiations
are subsequently terminated, it is foreseeable that such efforts will exhaust
the Company's ability to continue to seek such combination opportunities before
any successful combination can be consummated. In that event, the Company's
common stock will become worthless and holders of the Company's common stock
will receive a nominal distribution, if any, upon the Company's liquidation and
dissolution.
Combination Suitability Standards. In its pursuit for a combination
partner, the Company's management intends to consider only
combination candidates which are profitable or, in
management's view, have growth potential. The Company's
management does not intend to pursue any combination proposal
beyond the preliminary negotiation stage with any combination
candidate which does not furnish the Company with audited
financial statements for at least its most recent fiscal year
and unaudited financial statements for interim periods
subsequent to the date of such audited financial statements,
or is in a position to provide such financial statements in a
timely manner. The Company will, if necessary funds are
available, engage attorneys and/or accountants in its efforts
to investigate a combination candidate and to consummate a
business combination. The Company may require payment of fees
by such combination candidate to fund the investigation of
such candidate. In the event such a combination candidate is
engaged in a high technology business, the Company may also
obtain reports from independent organizations of recognized
standing covering the technology being developed and/or used
<PAGE>
by the candidate. The Company's limited financial resources
may make the acquisition of such reports difficult or even
impossible to obtain and, thus, there can be no assurance that
the Company will have sufficient funds to obtain such reports
when considering combination proposals or candidates. To the
extent the Company is unable to obtain the advice or reports
from experts, the risks of any combined enterprise's being
unsuccessful will be enhanced.
Company's management expects that in connection with any acquisition or
merger transaction, that the Management of Company will be transferred to the
new controlling shareholders. Company's management will require a declaration
from any such company or controlling shareholders, that, within five (5) years
prior to the filing of this statement, they have not been convicted in any
criminal proceedings or are named subject of a pending criminal proceeding
(excluding traffic violations and other minor offenses), nor have they been
subject of any order, judgment, or decree, not subsequently reversed, suspended
or vacated, of any court of competent jurisdiction, permanently or temporarily
enjoining them from, or otherwise limiting the engagement in any type of
business practice; or engaging in any activity in connection with the purchase
or sale of any security or commodity or in connection with any violation of
Federal or State securities laws.
<PAGE>
Item 7. Financial Statements.
Page
Report of Independent Certified Public Accountants F-3
Balance Sheets as of December 31, 1999 and 1998 F-4
Statement of Operations F-5
for the years ended December 31, 1999 and 1998
Statement of Changes in Shareholders' Equity F-6
for the years ended December 31, 1999 and 1998
Statement of Cash Flows F-7
for the years ended December 31, 1999 and 1998
Notes to Financial Statements F-8
<PAGE>
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures.
None.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act.
The following table sets forth the officers and directors of the Company.
Name Position Age
- ---- --------- ---
Kevin B. Halter, Jr. President and Director 39
Kevin B. Halter Vice President and Director 64
Set forth below is a description of the background of the President and director
of the Company.
Kevin B. Halter, Jr. currently serves as President and Director of the Company.
Mr. Halter has served as Vice President, Secretary and a director of Millennia,
Inc. since January 1994. He is also President of Securities Transfer
Corporation, a registered stock transfer company, and a position he has held
since 1987. Mr. Halter has served as Vice President and Secretary of Halter
Capital Corporation since 1987. Mr. Halter has also served as a Director of
Digital Communications Technology Corporation since January 1994. Mr. Halter is
the son of Kevin B. Halter.
Kevin B. Halter currently serves as Vice President and Director of the Company.
Mr. Halter has served as President, Chief Executive Officer and Chairman of the
Board of Millennia, Inc. since June 1994. He also served as Vice Chairman of the
Board of Millennia, Inc. from January 1994 until June 1994. In addition, Mr.
Halter has served as Chairman of the Board and Chief Executive Officer of Halter
Capital Corporation, a privately held investment and consulting company, since
1987 and as its President since June 1995. Mr. Halter has also served as
Chairman of the Board of Digital Communications Technology Corporation since
June 1994. Mr. Halter is the father of Kevin B. Halter, Jr.
Item 10. Executive Compensation.
The Company's management is not currently compensated for services
provided to the Company, and no compensation has been accrued and none is
expected to be accrued in the future.
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth the names and addresses of each of the
persons known by the Company to own beneficially 10% or more of the common stock
of the Company, as well as the common stock ownership of each of the officers
and directors of the Company.
Name and Address Number of Shares Percentage of Ownership (1)
Halter Capital Corporation* 329,330 52.7%
16910 Dallas Parkway, Suite 100
Dallas, TX 75248
** Halter Capital Corporation is 100% owned by Kevin B. Halter, Jr. and Kevin B.
Halter, who are the only Directors and Officers of the Company. This corporation
and both Messrs. Halter are affiliates of the Company, as that term is defined
by the Securities Act of 1933.
Item 12. Certain Relationships and Related Transactions.
The Company's President, Kevin B. Halter, Jr., has agreed to provide funds to
the Company sufficient to cover the Company expenses relating to its SEC
periodic reporting and other minor corporate expenses.
Item 13. Exhibits and Reports on Form 8-K.
Exhibits
None.
Reports on Form 8-K
No Current Report on Form 8-K was filed during the year ended December 31, 1999.
<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.
The Great American Golf Works, Inc.
By: /s/ Kevin B. Halter, Jr. January 4, 2000
-----------------------------------
Kevin B. Halter, Jr., President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons in the capacities and on the
dates indicated:
/s/ Kevin B. Halter, Jr. January 4, 2000
-------------------------
Kevin B. Halter, Jr.
President & Director
/s/ Kevin B. Halter January 4, 2000
-------------------------
Kevin B. Halter
Vice President & Director
<PAGE>
THE GREAT AMERICAN
GOLF WORKS, INC.
Financial Statements
and
Auditor's Report
December 31, 1999 and 1998
S. W. HATFIELD, CPA
certified public accountants
Use our past to assist your future sm
<PAGE>
The Great American Golf Works, Inc.
CONTENTS
Page
Report of Independent Certified Public Accountants F-3
Financial Statements
Balance Sheets as of December 31, 1999 and 1998 F-4
Statements of Operations and Comprehensive Income
for the years ended December 31, 1999 and 1998 F-5
Statement of Changes in Shareholders' Equity
for the years ended December 31, 1999 and 1998 F-6
Statements of Cash Flows
for the years ended December 31, 1999 and 1998 F-7
Notes to Financial Statements F-8
F-2
<PAGE>
S. W. HATFIELD, CPA
certified public accountants
Member: American Institute of Certified Public Accountants
SEC Practice Section
Information Technology Section
Texas Society of Certified Public Accountants
Report of Independent Certified Public Accountants
Board of Directors and Shareholders
The Great American Golf Works, Inc.
We have audited the accompanying balance sheets of The Great American Golf
Works, Inc. (a Delaware corporation) as of December 31, 1999 and 1998 and the
related statements of operations and comprehensive income, changes in
shareholders' equity and cash flows for each of the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Great American Golf Works,
Inc. as of December 31, 1999 and 1998, and the results of its operations and its
cash flows for each of the years then ended, in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note A to the
financial statements, the Company is dependent upon its majority shareholder to
maintain the corporate status of the Company and to provide all nominal working
capital support on the Company's behalf. Because of the Company's lack of
operating assets, its continuance is fully dependent upon the majority
shareholder's continuing support. This situation raises a substantial doubt
about the Company's ability to continue as a going concern. The majority
shareholder intends to continue the funding of nominal necessary expenses to
sustain the corporate entity. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
S. W. HATFIELD, CPA
Dallas, Texas
January 3, 2000
Use our past to assist your future sm
P. O. Box 820395 9002 Green Oaks Circle, 2nd Floor
Dallas, Texas 75382-0395 Dallas, Texas 75243-7212
214-342-9635 (voice) (fax) 214-342-9601
800-244-0639 [email protected]
F-3
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The Great American Golf Works, Inc.
Balance Sheets
December 31, 1999 and 1998
1999 1998
--------- ---------
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Assets
Cash in bank $ 56 $ --
========= =========
Liabilities $ -- $ --
--------- ---------
Commitments and Contingencies
Shareholders' Equity Common stock - $0.0005 par value
50,000,000 shares authorized
624,000 shares issued and outstanding, respectively 312 312
Additional paid-in capital 134,957 128,788
Accumulated deficit (135,213) (129,100)
--------- ---------
Total shareholders' equity 56 --
--------- ---------
Total Liabilities and Shareholders' Equity $ 56 $ --
========= =========
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The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
The Great American Golf Works, Inc.
Statements of Operations and Comprehensive Income
Years ended December 31, 1999 and 1998
1999 1998
--------- ---------
Revenues $ -- $ --
--------- ---------
Expenses
General and administrative 3,383 --
--------- ---------
Loss before income taxes (3,383) --
Provision for income taxes -- --
--------- ---------
Net Loss (3,383) --
Other Comprehensive Income -- --
--------- ---------
Comprehensive Income $ (3,383) $ --
========= =========
Income per weighted-average share
of common stock outstanding,
computed on Net Loss - basic
and fully diluted $(0.01) nil
==== ===
Weighted-average number of shares
of common stock outstanding 624,600 624,600
========= =========
The accompanying notes are an integral part of these financial statements.
F-5
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<CAPTION>
The Great American Golf Works, Inc.
Statement of Changes in Shareholders' Equity
Years ended December 31, 1999 and 1998
Additional
Common Stock paid-in Accumulated
Shares Amount capital deficit Total
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Balances at January 1, 1998 624,600 $ 312 $ 128,988 $(129,100) $ --
Net loss for the year -- -- -- -- --
--------- --------- --------- --------- ---------
Balances at December 31, 1998 624,600 312 128,788 (129,100) --
Operating capital contributed
by controlling shareholder -- -- 6,169 -- 6,169
Property dividend of marketable
equity securities to shareholders -- -- -- (2,730) (2,730)
Net loss for the year -- -- -- (3,383) (3,383)
--------- --------- --------- --------- ---------
Balances at December 31, 1999 624,600 $ 312 $ 134,957 $(135,213) $ 56
========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
The Great American Golf Works, Inc.
Statements of Cash Flows
Years ended December 31, 1999 and 1998
1999 1998
-------- --------
Cash Flows from Operating Activities
Net loss for the period $ (3,383) $ --
Adjustments to reconcile net loss to
net cash provided by operating activities
Gain on disposition of marketable securities -- --
-------- --------
Net cash used in operating activities (3,383) --
-------- --------
Cash Flows from Investing Activities
Purchase of marketable equity securities (10,000) --
-------- --------
Net cash used in investing activities (10,000) --
-------- --------
Cash Flows from Financing Activities
Advances from controlling shareholder 13,439 --
-------- --------
Net cash provided by financing activities 13,489 --
-------- --------
Increase (Decrease) in Cash 56 --
Cash at beginning of period -- --
-------- --------
Cash at end of period $ 56 $ --
======== ========
Supplemental Disclosure of Interest and Income Taxes Paid
Interest paid for the period $ -- $ --
======== ========
Income taxes paid for the period $ -- $ --
======== ========
Supplemental Disclosure of Non-Cash Investing
and Financing Activities
Distribution of marketable equity securities to
shareholders as property dividend $ 2,730 $ --
======== ========
Distribution of marketable equity securities to
controlling shareholder for repayment of
cash advances $ 7,270 $ --
======== ========
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
The Great American Golf Works, Inc.
Notes to Financial Statements
Note A - Organization and Description of Business
The Great American Golf Works, Inc. (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, 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 pursuant to a
Registration Statement filed with the U. S. Securities and Exchange Commission.
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.
The Company's majority shareholder has continued to maintain the corporate
status of the Company and provides all nominal working capital support on the
Company's behalf. Because of the Company's lack of operating assets, its
continuance is fully dependent upon the majority shareholder's continuing
support. The majority shareholder intends to continue the funding of nominal
necessary expenses to sustain the corporate entity.
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.
Note B - Summary of Significant Accounting Policies
1. 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.
2. Organization costs
------------------
Organization costs incurred with the initial formation of the Company were
charged to operations in their entirety on January 12, 1990, concurrent
with the above mentioned merger transaction.
F-8
<PAGE>
The Great American Golf Works, Inc.
Notes to Financial Statements - Continued
Note B - Summary of Significant Accounting Policies
3. Income taxes
------------
The Company files its own separate federal income tax return. The Company
has no net operating loss carryforwards available to offset financial
statement or tax return taxable income in future periods.
4. Earnings (Loss) per share
-------------------------
Basic earnings (loss) per share is computed by dividing the net income
(loss) 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 diluted earnings (loss) 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 1998, the Company
has no outstanding warrants.
Note C - 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.
Note D - Marketable Securities
During the third quarter of 1999, the Company purchased 100,000 shares of Origin
Investment Group, Inc. pursuant to a Registration Statement Under The Securities
Act of 1933 for $10,000 cash. The Company then distributed 27,300 of these
shares to Company shareholders as a property dividend. Origin Investment Group,
Inc. is in the process of obtaining regulatory approval for its securities to
trade in an open market administered by the National Association of Securities
Dealers (NASD). As of the October 22, 1999 filing of the Company's Form 10-QSB
as of and for the quarter ended September 30, 1999, there was no quoted market
for these securities.
On December 31, 1999, the Company distributed the remaining 72,700 shares of
Origin Investment Group, Inc., at its historical founders cost, to its
controlling shareholder as partial repayment of various cash advances made
during 1999.
As of the close of business on December 31, 1999, the Company has no remaining
marketable securities.
F-9
<PAGE>
The Great American Golf Works, Inc.
Notes to Financial Statements - Continued
Note E - Common Stock Transactions
On May 14, 1990, pursuant to a Registration Statement filed with the U. S.
Securities and Exchange Commission, 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. (the Company's
former parent). C Square, Inc. then distributed 100.0% of these securities to
its shareholders.
Between July and December 1990, an aggregate total of 24,600 Class A Warrants
were exercised resulting in the sale of 24,600 shares of common stock for gross
proceeds of approximately $123,000 to the Company.
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.
Note F - Common Stock Warrants
In May 1990, the Company issued 135,000 Class A and 135,000 Class B Warrants.
The Class A Warrants were exercisable at $5.00 per share, became exercisable on
June 3, 1990 and all unexercised warrants expired on July 3, 1993. The Class B
Warrants were exercisable at $10.00 per share, became exercisable on June 3,
1990 and all unexercised warrants expired on June 3, 1994.
Note G - Related Party Transactions
During 1999, the Company's controlling shareholder advanced an aggregate of
$13,439 to the Company for operating capital purposes. During the fourth quarter
of 1999, the Company transferred approximately 73,700 shares of Origin
Investment Group, Inc. common stock held by the Company to the controlling
shareholder at its original founders cost of approximately $7,270 in partial
repayment of these advances. No gain or loss was recognized on this transaction.
On December 31, 1999, the controlling shareholder forgave all remaining unpaid
advances (approximately $6,169) and contributed the remaining debt to the
Company as additional paid-in capital.
F-10
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