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, 1997
or
[ ] Transition Report Under Section 13 or 15(d ) of the Securities Exchange
Act of 1934 For the Transition Period 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 former 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 - 3,720,886 shares as of October 10, 1997.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
GOLF TRAINING SYSTEMS, INC.
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30, June 30,
1997 1997
------------ -------------
(Unaudited) (Note)
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents .......................................... $ 145,666 $ 74,047
Receivables, net ................................................... 217,507 247,289
Inventories ........................................................ 310,476 329,141
Prepayments ........................................................ 64,977 38,814
------------ -------------
Total Current Assets ............................................... 738,626 689,291
Equipment and Improvements, net ....................................... 147,690 171,036
Other Assets:
Patents, trademarks and license agreements, net .................... 104,891 114,488
Goodwill, net ...................................................... 1,356,768 1,405,224
Net assets of discontinued operations .............................. 1,304,655 1,329,940
Other .............................................................. 5,650 6,523
------------ -------------
$ 3,658,280 $ 3,716,502
============ =============
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Accounts payable ................................................... $ 392,847 $ 126,535
Accrued expenses ................................................... 254,856 184,188
------------ -------------
Total Current Liabilities .......................................... 647,703 310,723
Stockholders' Equity:
Preferred stock, $.01 par value;
3,000,000 shares authorized:
Series A, 600 shares authorized,
160.5 shares issued ........................................... 1,605,000 1,605,000
Series B, 50 shares authorized,
8 shares issued ................................................ 200,000 --
Common stock, $.01 par value;
10,00,000 shares authorized; 3,689,305 shares issued ............. 36,893 36,893
Additional paid-in capital ......................................... 11,118,464 11,138,464
Accumulated deficit ................................................ (9,949,780) (9,374,578)
------------- -------------
Total Stockholders' Equity ......................................... 3,010,577 3,405,779
------------ -------------
$ 3,658,280 $ 3,716,502
============ =============
</TABLE>
Note: The balance sheet at June 30, 1997 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 notes are an integral part of the condensed
consolidated financial statements.
<PAGE>
GOLF TRAINING SYSTEMS, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
---------------------------
1997 1996
------------ -----------
<S> <C> <C>
Net sales ...................................................................... $ 435,951 $ 286,190
Cost of sales .................................................................. 319,944 222,264
------------ -----------
Gross margin ................................................................... 116,007 63,926
Operating expenses:
Selling and marketing ....................................................... 294,112 319,307
General and administrative .................................................. 330,918 311,653
------------ -----------
625,030 630,960
------------ -----------
Operating loss .............................................................. (509,023) (567,034)
Other income (expense) ......................................................... 4,458 36,746
------------ -----------
Net loss from continuing operations ............................................ (504,565) (530,288)
Loss from discontinued operations .............................................. (70,637) (253,478)
------------ -------------
Net Loss ....................................................................... $ (575,202) $ (783,766)
============ =============
Net loss per share:
Continuing operations ....................................................... $ (.14) $ (.18)
Discontinued operations ..................................................... (.02) (.08)
---------- ----------
$ (.16) $ (.26)
========== ==========
Weighted average common shares ................................................. 3,689,305 2,971,980
=========== ===========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
<PAGE>
GOLF TRAINING SYSTEMS, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended September 30,
-------------------------------------
1997 1996
------------- -------------
<S> <C> <C>
Cash flows used in operating activities .............................. $ (107,363) $ (659,388)
Cash flows used in investing activities .............................. (1,018) (165,958)
Cash flows from financing activities ................................. 180,000 --
------------- -------------
Net increase (decrease) in cash and cash equivalents .............. 71,619 (825,346)
Cash and cash equivalents at beginning of period ..................... 74,047 2,009,820
------------- -------------
Cash and cash equivalents at end of period ........................... $ 145,666 $ 1,184,474
============= =============
</TABLE>
The accompanying notes are an integral part of the condensed
consolidated financial statements.
<PAGE>
GOLF TRAINING SYSTEMS, INC.
Notes to Condensed Consolidated Financial Statements
September 30, 1997
(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, 1997 are not
necessarily indicative of the results that may be expected for the year ended
June 30, 1998. 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, 1997.
2. Inventories The components of inventory consist of the following:
<TABLE>
<CAPTION>
September 30, June 30,
1997 1997
--------------- ---------------
<S> <C> <C>
Raw materials $ 149,028 $ 133,592
Finished goods 161,448 195,549
--------------- ---------------
$ 310,476 $ 329,141
=============== ===============
</TABLE>
<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, 1997 increased to $435,951 from $286,190 for the three month
period ended September 30, 1996, an increase of approximately 52%. The backlog
of unshipped orders at September 30, 1997 was approximately $207,000.
Gross margins continue to improve to approximately 27% in the three month period
ended September 30, 1997, as compared to approximately 22% in the three month
period ended September 30, 1996. These changes reflect the impact of the
increased sales of other new higher margin products as well as continued efforts
to achieve the best possible purchase price for inventory items.
Selling and marketing expenses and general and administrative expenses decreased
slightly (1%)to $625,030 for the three months ended September 30, 1997 from
$630,960 for the three months ended September 30, 1996 reflecting the effort of
the Company to manage its overhead expense level to achieve more efficiency and
profitability.
At June 30, 1997, management determined that its Sports Training Systems (STS)
operations should be classified as a discontinued operation. (See Note 2 to the
consolidated financial statements included in the Company's annual report on
Form 10-KSB at June 30, 1997). Management's decision to cease operations was the
result of an alleged breach of contract by Biosports, LLC, the licensor of
certain motion capture technology that STS intended to develop and market for
golf and other applications. The loss from discontinued operations decreased
from $253,478 for the three months ended September 30, 1996 to $70,637 for the
three months ended September 30, 1997 as the Company continued to shut down the
operations. Expenses for the three months ended September 30, 1997 relate
primarily to amortization of certain assets and legal costs.
The Company reduced its net loss to $575,202 ($.16 per share) for the three
month period ended September 30, 1997 from a net loss of $783,766 ($.26 per
share) for the three month period ended September 30, 1996. The net loss and net
loss per share amounts primarily reflect the increased gross margins and
reduction of STS expenses.
Liquidity and Sources of Capital
At September 30, 1997, the Company had working capital of $90,923, including
$145,666 of cash and cash equivalents. The Company had a negative cash flow from
operations of $107,363 for the three month period ended September 30, 1997 and a
negative cash flow from operations of $659,388 for the three month period ended
September 30, 1996. The reduction in the negative cash flow from operations
reflects the increased gross margins and reduced expenses discussed above. The
Company has also accumulated a significant deficit during the period of fully
developing its product lines and requires additional financing to achieve
profitable operations. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. Management is seeking
additional funds through private financings in order to continue operations.
There can be no assurance that any such financings can be accomplished.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
There have been no changes in pending legal proceedings to which the Company is
a party or of which any of their property is subject from the items disclosed in
the Annual Report on Form 10-KSB for the year ended June 30, 1997.
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.
None
(b) Reports on Forms 8-K
None
<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 13, 1997 /s/ Daniel A. Gordon
---------------------------------------- ------------------------------
Daniel A. Gordon
Chief Executive Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Jun-30-1998
<PERIOD-START> Jul-01-1997
<PERIOD-END> Sep-30-1997
<CASH> 146
<SECURITIES> 0
<RECEIVABLES> 259
<ALLOWANCES> 41
<INVENTORY> 310
<CURRENT-ASSETS> 739
<PP&E> 482
<DEPRECIATION> 334
<TOTAL-ASSETS> 3,658
<CURRENT-LIABILITIES> 648
<BONDS> 0
0
1,805
<COMMON> 37
<OTHER-SE> 1,169
<TOTAL-LIABILITY-AND-EQUITY> 3,011
<SALES> 436
<TOTAL-REVENUES> 436
<CGS> 320
<TOTAL-COSTS> 320
<OTHER-EXPENSES> 625
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (505)
<INCOME-TAX> 0
<INCOME-CONTINUING> (505)
<DISCONTINUED> (71)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (575)
<EPS-PRIMARY> (.16)
<EPS-DILUTED> (.16)
</TABLE>
