United States
Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly Report Under Section 13 or 15(d ) of the Securities Exchange Act
of 1934 For the Period Ended September 30, 1996
or
[ ] Transition Report Under Section 13 or 15(d ) of the Securities Exchange Act
of 1934 For the TransitionPeriod Ended From to
Commission file number 0-25332
GOLF TRAINING SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 58-1963120
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3400 Corporate Way, Suite G
Duluth, Georgia 30136
(Address of principal executive offices) (Zip Code)
(770) 623-6400
(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter periods 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
Applicable Only to Issuers Involved in Bankruptcy
Proceedings During the Preceding Five Years
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by the court. Yes No
Applicable Only to Corporate Issuers
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date:
Common Stock, $.01 Par Value - 3,033,791 shares as of October 25, 1996.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
GOLF TRAINING SYSTEMS, INC.
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30, June 30,
1996 1996
------------ -------------
(Unaudited) (Note)
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 1,184,474 $ 2,009,820
Receivables, net 127,611 164,304
Inventories 513,563 430,141
Prepayments 88,517 62,807
------------ -------------
Total Current Assets 1,914,165 2,667,072
Equipment and Improvements, net 519,816 225,626
Other Assets:
Intangible assets, net 2,679,492 2,760,771
Other 115,523 271,123
------------ -------------
$ 5,228,996 $ 5,924,592
============ =============
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Accounts payable $ 387,205 $ 300,316
Accrued expenses 113,963 112,682
------------ -------------
Total Current Liabilities 501,168 412,998
Stockholders' Equity:
Preferred stock, $.01 par value;
3,000,000 shares authorized:
Series A, $.01 par value; 600 shares authorized,
312 and 398 shares issued, respectively 3,120,000 3,980,000
Common stock, $.01 par value;
10,00,000 shares authorized; 3,033,791 and
2,393,050 shares issued, respectively 30,338 23,931
Additional paid-in capital 9,628,652 8,775,059
Accumulated deficit (8,051,162) (7,267,396)
------------ -------------
Total Stockholders' Equity 4,727,828 5,511,594
------------ -------------
$ 5,228,996 $ 5,924,592
============ =============
Note: The balance sheet at June 30, 1996 has been derived from the audited
financial statements at that date but does not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements.
The accompanying note is an integral part of the
condensed consolidated financial statements.
<PAGE>
GOLF TRAINING SYSTEMS, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
<CAPTION>
Three Months Ended
September 30,
---------------------------
1996 1995
------------ -----------
<S> <C> <C>
Net sales $ 286,190 $ 268,663
Cost of sales 222,264 213,063
------------ -----------
Gross margin 63,926 55,600
Operating expenses:
Selling and marketing 319,307 310,806
General and administrative 565,131 238,843
------------ -----------
884,438 549,649
------------ -----------
Operating loss (820,512) (494,049)
Other income (expense) 36,746 22,532
------------ -----------
Net loss $ (783,766) $ (471,517)
============ ===========
Net loss per share $ (.26) $ (.21)
============ ===========
Weighted average common shares 2,971,980 2,206,570
============ ===========
The accompanying note is an integral part of the
condensed consolidated financial statements.
<PAGE>
GOLF TRAINING SYSTEMS, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<CAPTION>
Three Months Ended September 30,
-------------------------------------
1996 1995
------------- -------------
<S> <C> <C>
Cash flows used in operating activities $ (659,388) $ (468,071)
Cash flows used in investing activities (165,958) (31,642)
Cash flows from financing activities -- --
------------- -------------
Net increase (decrease) in cash and cash equivalents (825,346) (499,713)
Cash and cash equivalents at beginning of period 2,009,820 1,658,178
------------- -------------
Cash and cash equivalents at end of period $ 1,184,474 $ 1,158,465
============= =============
The accompanying note is an integral part of the
condensed consolidated financial statements.
<PAGE>
GOLF TRAINING SYSTEMS, INC.
Notes to Condensed Consolidated Financial Statements
September 30, 1996
(Unaudited)
1. Basis of Presentation The accompanying unaudited condensed financial
statements of Golf Training Systems, Inc. (the Company) have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Regulation S-B.
Accordingly, they do not include all the information and footnotes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
items) considered necessary for a fair presentation have been included.
Operating results for the three month period ended September 30, 1996 are not
necessarily indicative of the results that may be expected for the year ended
June 30, 1997. For further information, refer to the audited financial
statements and notes thereto included in the Company's Form 10-KSB for the year
ended June 30, 1996.
2. Inventories The components of inventory consist of the following:
<CAPTION>
September 30, June 30,
1996 1996
--------------- ---------------
<S> <C> <C>
Raw materials $ 312,405 $ 237,021
Finished goods 201,158 193,120
--------------- ---------------
$ 513,563 $ 430,141
=============== ===============
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Net sales (gross sales less returns and allowances) for the three month
period ended September 30, 1996 increased to $286,190 from $268,663 for the
three month period ended September 30, 1995, an increase of approximately 7%.
The backlog of unshipped orders at September 30, 1996 was approximately
$105,000.
The final introduction of products in The Leadbetter Collection, as
introduced at the annual PGA Show in January 1996, completed the initial product
line in the area of swing improvement for golfers. The Company has committed to
additional sales resources which the Company anticipates will add sales growth
in the retail golf products market. During February 1996, the Company also
announced an alliance with a leading sports psychologist. The Company has
developed and added an entire line of products on an exclusive basis, targeted
to .performance enhancement for business people, initially, and to be expanded
to golf and all other sports, ultimately. During August and September 1996, The
Company continued to introduce new products being developed by Dave Pelz in the
area of putting and the short game, and through Sports Training Systems, LLC,
(STS) a business venture with Biomechanics, Inc, which management believes will
continue to enhance its strategy of full product lines and the use of advanced
computer aided teaching technology. STS owns certain technology licensing rights
for three-dimensional human movement analysis and computer animation in the
sports training industry. The Company believes that such technology provides the
most accurate full body swing evaluation and makes the results easier to
understand through real-time three-dimensional virtual reality computer
animation of body and golf club motions and instant feedback of all
biomechanical performance data.
Cost of sales as a percentage of net sales was approximately 78% in the
three month period ended September 30, 1996, as compared to approximately 79% in
the three month period ended September 30, 1995. These changes reflect the
impact of the increased sales of other new higher margin products.
Selling and marketing expenses increased approximately 3% in the three
month period ended September 30, 1996, as compared to the three month period
ended September 30, 1995. The increased selling and marketing expenses reflect
the growth in sales and increased selling effort by the Company. General and
administrative, depreciation and amortization and research and development
expenses increased approximately 137% for the three month period ended September
30, 1996 over comparable amounts for the three month period ended September 30,
1995. The increase reflects the Company's increase in operations, specifically
those associated with the development of STS and the newer product lines from
Pelz and Rotella.
The Company had a net loss of $783,766 ($.26 per share) for the three month
period ended September 30, 1996 compared to a net loss of $471,517 ($.21 per
share) for the three month period ended September 30, 1995. The net loss and net
loss per share amounts primarily reflect the increased cost of operations from
the additional expenses from Pelz and Rotella product lines as well as
additional expenses of STS.
Liquidity and Sources of Capital
At September 30, 1996, the Company had working capital of $1,412,997,
including $1,184,474 of cash and cash equivalents. The Company's strategy of
growth into the retail market and international sales and the continued
introduction of new products including the STS 3D products will require
additional funds to implement. The Company has no commitments and no assurance
additional funds will be available or if so, will be sufficient to continue to
implement such strategy. The Company had a negative cash flow from operations of
$659,388 for the three month period ended September 30, 1996 and a negative cash
flow from operations of $468,071 for the three month period ended September 30,
1995. The negative cash flow from operations reflects the increased expenses
discussed above.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
There are no material pending legal proceedings to which the Company is a
party or of which any of their property is subject.
Item 2. Changes in Securities.
(a) Not applicable.
(b) Not applicable.
Item 3. Defaults Upon Senior Securities.
(a) Not applicable.
(b) Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 5. Other Information.
Not applicable.
Item 6. Other Information.
(a) Exhibits.
Exhibit 11 Statement Re: Computation of Earnings Per Share.
(b) Reports on Forms 8-K. The Company filed one report on Form
8-K dated October 4, 1996 regarding the appointment of
Director Thomas W. Tripp.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GOLF TRAINING SYSTEMS, INC.
(Registrant)
Date November 1, 1996 /s/ Wayne C. McDonald
-------------------- -------------------------
Wayne C. McDonald
Chairman and Chief Executive Officer
<PAGE>
GOLF TRAINING SYSTEMS, INC.
EXHIBIT 11 - Statement Re: Computation of Earnings Per Share
Three Months ended
September 30,
---------------------------
1996 1995
------------ -----------
<S> <C> <C>
Primary and fully diluted:
Weighted average shares outstanding
during the period 2,971,980 2,188,021
Effect of common stock acquisition rights
and warrants granted subsequent to
October 19, 1993 computed in accordance
with the treasury stock method as required
by the SEC (1). -- 18,549
------------ ----------
Total weighted average common shares 2,971,980 2,206,570
============ ==========
Net loss $ (783,766) $ (471,517)
============ ==========
Net loss per share $(.26) $(.21)
===== =====
(1) Pursuant to Securities and Exchange Commission Staff Accounting
Bulletin No. 83, Common and Preferred Stock issued and stock options and
warrants granted at prices below the assumed initial public offering price of
$6.00 per share during the twelve-month period immediately preceding the initial
filing date of the Company's Registration Statement for its initial public
offering have been included as outstanding for all periods presented using the
treasury stock method.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-1-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,184
<SECURITIES> 0
<RECEIVABLES> 129
<ALLOWANCES> 1
<INVENTORY> 514
<CURRENT-ASSETS> 1,914
<PP&E> 749
<DEPRECIATION> 229
<TOTAL-ASSETS> 5,229
<CURRENT-LIABILITIES> 501
<BONDS> 0
0
3,120
<COMMON> 30
<OTHER-SE> 1,577
<TOTAL-LIABILITY-AND-EQUITY> 4,728
<SALES> 286
<TOTAL-REVENUES> 286
<CGS> 222
<TOTAL-COSTS> 222
<OTHER-EXPENSES> 821
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (784)
<INCOME-TAX> 0
<INCOME-CONTINUING> (784)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (784)
<EPS-PRIMARY> (.26)
<EPS-DILUTED> 0
</TABLE>
