<PAGE>
_______________________________________________________________________________
_______________________________________________________________________________
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 quarterly period ended JUNE 30, 1996
OR
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
EXCHANGE ACT
For the transition period from __________ to __________
Commission File Number 1-12532
RENAISSANCE GOLF PRODUCTS, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 86-0664849
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5812 MACHINE DRIVE, HUNTINGTON BEACH, CALIFORNIA 92649
(Address of Principal Executive Offices)
(714) 897-8213
(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
------ ------
As of June 30, 1996, the registrant had 5,461,163 shares outstanding of its
Common Stock, $.001 par value.
Transitional Small Business Disclosure Format (check one);
Yes No X
------ ------
_______________________________________________________________________________
_______________________________________________________________________________
<PAGE>
RENAISSANCE GOLF PRODUCTS, INC.
TABLE OF CONTENTS
_______________________________________________________________________________
_______________________________________________________________________________
PAGE
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements:
Balance Sheets as of June 30, 1996 1
and December 31, 1995
Statements of Operations for the six months 2
ended June 30, 1996 and 1995
Statements of Operations for the three months 3
ended June 30, 1996 and 1995
Statements of Cash Flows for the six months 4
ended June 30, 1996 and 1995
Notes to Financial Statements 5
Item 2. Management's Discussion and Analysis of 6
Financial Condition and Results of Operations
PART II. OTHER INFORMATION 7
SIGNATURES 8
_______________________________________________________________________________
_______________________________________________________________________________
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RENAISSANCE GOLF PRODUCTS, INC.
BALANCE SHEETS
AS OF JUNE 30, 1996 AND DECEMBER 31, 1995
_______________________________________________________________________________
_______________________________________________________________________________
June 30, December 31,
1996 1995
------------ ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $46,200 $96,927
Accounts receivable, net 277,765 734,366
Inventories, net 657,256 946,055
Prepaid expenses 86,930 45,206
------------ -----------
Total current assets 1,068,151 1,822,554
PROPERTY AND EQUIPMENT, net 271,378 310,393
INTANGIBLE ASSETS, net 6,925 6,925
OTHER ASSETS 22,105 22,942
------------ -----------
Total assets $1,368,559 $2,162,814
------------ -----------
------------ -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $430,621 $615,623
Accrued liabilities 195,295 173,802
Accrued royalties 836,738 587,502
Lines of credit - 287,901
Notes payable, net of discount 97,974 169,500
------------ -----------
Total current liabilities 1,560,628 1,834,328
------------ -----------
Deferred revenue 267,723 221,628
------------ -----------
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 150,000 shares
authorized; 250 issued and outstanding 3 3
Common stock, $.001 par value, 20,000,000
shares authorized; 5,461,163 issued and
outstanding 5,461 5,461
Additional paid-in capital 11,438,741 11,438,741
Deficit (11,903,997) (11,337,347)
------------ -----------
Total stockholders' equity (459,792) 106,858
------------ -----------
Total liabilities and stockholders'
equity $1,368,559 $2,162,814
------------ -----------
------------ -----------
1
<PAGE>
RENAISSANCE GOLF PRODUCTS, INC.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND JUNE 30, 1995
_______________________________________________________________________________
_______________________________________________________________________________
1996 1995
---------- ----------
NET SALES $1,206,158 $2,924,010
COST OF SALES 862,295 2,049,443
---------- ----------
Gross profit 343,863 874,567
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 885,449 1,813,011
---------- ----------
Operating loss (541,586) (938,444)
OTHER INCOME (EXPENSE):
Miscellaneous 71 2,546
Interest income 77 6,409
Interest expense (24,412) (66,101)
---------- ----------
Net other expense (24,264) (57,146)
---------- ----------
LOSS BEFORE INCOME TAX EXPENSE (565,850) (995,590)
INCOME TAX EXPENSE (800) (800)
---------- ----------
NET LOSS ($566,650) ($996,390)
---------- ----------
---------- ----------
NET LOSS PER COMMON AND COMMON
EQUIVALENT SHARE ($0.10) ($0.18)
WEIGHTED AVERAGE OUTSTANDING COMMON
AND COMMON EQUIVALENT SHARES 5,461,163 5,438,163
2
<PAGE>
RENAISSANCE GOLF PRODUCTS, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1996 AND JUNE 30, 1995
_______________________________________________________________________________
_______________________________________________________________________________
1996 1995
---------- ----------
NET SALES $810,497 $1,693,438
COST OF SALES 600,305 1,110,973
---------- ----------
Gross profit 210,192 582,465
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 414,613 942,762
---------- ----------
Operating loss (204,421) (360,297)
OTHER INCOME (EXPENSE):
Miscellaneous 0 (313)
Interest income 76 1,271
Interest expense (13,654) (37,791)
---------- ----------
Net other expense (13,578) (36,833)
---------- ----------
LOSS BEFORE INCOME TAX EXPENSE (217,999) (397,130)
INCOME TAX EXPENSE 0 0
---------- ----------
NET LOSS ($217,999) ($397,130)
---------- ----------
---------- ----------
NET LOSS PER COMMON AND COMMON
EQUIVALENT SHARE ($0.04) ($0.07)
WEIGHTED AVERAGE OUTSTANDING COMMON
AND COMMON EQUIVALENT SHARES 5,461,163 5,438,163
3
<PAGE>
RENAISSANCE GOLF PRODUCTS, INC.
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND JUNE 30, 1995
_______________________________________________________________________________
_______________________________________________________________________________
1996 1995
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($566,650) ($996,390)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Depreciation and amortization 39,068 58,295
Gain on sale of property and equipment - 1,057
Bad debt expense 36,796 6,781
Compensation related to stock issuance 46,000 -
Net change in operating assets and
liabilities:
Accounts receivable 419,805 (19,826)
Inventories 288,799 454,387
Prepaid expenses (41,724) (174,073)
Other assets 837 1,601
Accounts payable and accrued expenses (163,509) (147,283)
Accrued royalties 249,236 266,624
Deferred revenue 46,095 -
---------- ----------
Net cash provided by (used in)
operating activities 308,753 (502,827)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (53) (11,636)
Proceeds from sale of property and equipment - 2,215
---------- ----------
Net cash used in investing activities (53) (9,421)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in asset-based line
of credit (287,901) 411,615
Payoff of bank line of credit - (905,000)
Payments on notes payable, net of disount (121,526) -
Proceeds from notes payable 50,000
Proceeds from stock issuance related to
Bridge financing 25,000
---------- ----------
Net cash used in financing activities (359,427) (468,385)
---------- ----------
NET DECREASE IN CASH (50,727) (980,633)
CASH and cash equivalents, beginning of period 96,927 1,060,380
---------- ----------
CASH and cash equivalents, end of period $46,200 $79,747
---------- ----------
---------- ----------
4
<PAGE>
RENAISSANCE GOLF PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
For the six months and three months ended June 30, 1996 and June 30, 1995
_______________________________________________________________________________
_______________________________________________________________________________
1. BASIS OF PRESENTATION
The financial statements reflect, in the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position and results of operations for the periods
indicated.
The accompanying interim financial statements should be read in conjunction
with the financial statements and related notes included in the Company's 1995
10-KSB as filed with the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
omitted pursuant to the Securities and Exchange Commission rules and
regulations.
The results of operations for the interim period covered by this report may
not necessarily be indicative of operating results for the full fiscal year.
Net loss per common and common equivalent share was computed based on the
net loss divided by the weighted average number of common and common equivalent
shares outstanding (unless antidilutive) during the years presented.
2. STOCKHOLDERS' EQUITY
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 123 "ACCOUNTING FOR STOCK BASED COMPENSATION"
("Statement 123"). Statement 123 is primarily a disclosure standard for the
Company because the Company will continue to account for employee stock options
under Accounting Principle Board Opinion No. 25. The Company adopted Statement
123 effective January 1, 1996.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net sales for the six months ended June 30, 1996 were $1,206,000
compared to $2,924,000 for the comparable period in 1995, a decrease of
$1,718,000 or 58.8%. Net sales for the three months ended June 30, 1996 were
$810,000 compared to $1,693,000 for the comparable period in 1995, a decrease
of $883,000 or 52.2%. This decrease is due mainly to the lack of sufficient
working capital to fund inventory purchase requirements. The Company's
business is seasonal in nature. Therefore, operating results for one or more
quarters may not be indicative of future trends or operating results for the
full fiscal year.
Cost of sales decreased from $2,049,000 for the six months ended June 30,
1995 to $862,000 for the comparable period in 1996, a decrease of $1,187,000 or
57.9%. Cost of sales decreased from $1,111,000 for the three months ended June
30, 1995 to $600,000 for the comparable period in 1996, a decrease of $511,000
or 46.0%. The gross profit margin decreased from 29.9% for the six months ended
June 30, 1995 to 28.5% for the comparable period in 1996. The gross profit
margin decreased from 34.4% for the three months ended June 30, 1995 to 25.9%
for the comparable period in 1996. These decreases are due primarily to lower
margins on certain product lines which represented a higher percentage of the
sales mix in 1996 as compared to 1995.
Selling, general and administrative costs were $885,000 during the six
months ended June 30, 1996 compared to $1,813,000 for the comparable period in
1995, a decrease of $928,000 or 51.2%. Selling, general and administrative
costs were $415,000 during the three months ended June 30, 1996 compared to
$943,000 for the comparable period in 1995, a decrease of $528,000 or 56.0%.
The decrease resulted primarily from lower sales and marketing expenses
($363,000 for the first six months of 1996 as compared to $959,000 for the same
period in 1995 and $162,000 for the three months ended June 30, 1996 as compared
to $510,000 for the same period in 1995), mainly consisting of advertising,
athletic endorsements, demo program, outbound freight expenses, sales promotion,
tour promotion, and sales commissions; a decrease in finance and administrative
expenses ($216,000 for the first six months of 1996 as compared to $221,000 for
the same period in 1995 and $86,000 for the three months ended June 30, 1996 as
compared to $102,000 for the same period in 1995), mainly consisting of
insurance, office expense, and telephone expenses; a decrease in professional
costs ($42,000 for the first six months of 1996 as compared to $122,000 for the
same period in 1995 and $16,000 for the three months ended June 30 ,1996 as
compared to $66,000 for the same period in 1995), mainly consisting of
consulting and legal expenses.
The Company's interest expense decreased from $66,000 for the six months
ended June 30, 1995 to $24,000 for the comparable period in 1996 and decreased
from $38,000 for the three months ended June 30, 1995 to $14,000 for the
comparable period in 1996 as a result of decreased interest bearing debt in
1996.
The Company experienced a net loss of $567,000 for the six months ended
June 30, 1996 compared to $996,000 for the comparable period in 1995, a decrease
of 43.1%. The Company experienced a net loss of $218,000 for the three months
ended June 30, 1996 compared to $397,000 for the same period in 1995, a decrease
of 45.1%.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash from operations is generated by sales of golf products
to domestic retailers and international distributors at wholesale prices. Sales
to domestic accounts are typically due 30 to 90 days after shipment while sales
to international distributors are generally paid by letter of credit facilities
or wire transfer upon shipment.
6
<PAGE>
Net cash provided by operating activities for the six months ended June
30, 1996 was $309,000 compared to net cash used in operating activities of
$503,000 for the comparable period in 1996. The Company had a working capital
deficit of $492,000 at June 30, 1996 compared to a deficit of $12,000 at
December 31, 1995. Cash and cash equivalents at June 30, 1996 were $46,000
compared to $97,000 at December 31, 1995. Inventories at June 30, 1996 were
$657,000 compared to $946,000 at December 31, 1995, a decrease of $289,000.
Also, accounts receivable decreased $456,000 from $734,000 at December 31, 1995
to $278,000 at June 30, 1996. The outstanding line of credit amount pursuant to
an asset based lending arrangement was $0 at June 30, 1996. Notes payable for
$98,000 were outstanding at June 30, 1996. Accounts payable and accrued
liabilities decreased $164,000 from December 31, 1995 to June 30, 1996. Accrued
royalties increased $249,000 from December 31, 1995 to June 30, 1996.
The Company strives to maintain a sufficient inventory of golf club
components, bags, and accessories to fulfill orders. Generally, the Company
does not maintain a substantial finished product inventory. Management believes
that all of the golf club components and other products manufactured for the
Company by suppliers are readily available from a variety of sources.
Management believes that additional capital will be required to meet
operating needs and capital expenditures for the 12 months ending December 31,
1996. In March 1995 the Company obtained a $1,000,000 borrowing facility with a
national asset-based lender to assist in funding its domestic and international
operations. The availability of this line is contingent upon the Company's
amount of eligible accounts receivable. As of June 30, 1996 this line of credit
has been paid in full and the asset-based lending arrangement has been
terminated. The Company's royalty payments to Fila Sport S.p.A. for use of the
FILA-Registered Trademark- trademark are $671,000 in arrears as of June 30,
1996. The Company has been informed that it must bring this amount current and
comply with all other conditions of the license agreement by June 30, 1996 or
the license is subject to termination. As of the date of this report, the
Company has received a verbal commitment from Fila Sport S.p.A. to continue the
license, subject to completed negotiation of the terms and conditions of an
amended license agreement. The Company is actively pursuing alternative sources
of capital to fund ongoing operations and anticipated growth. With additional
capital, management believes sales can be increased by focusing marketing
efforts on the golf bag and accessory lines, demand for which has remained
strong through the date of this report. Management will also continue to pursue
the club market and product innovation. The Company strives to increase
revenues and reduce selling, general, and administrative expenses in an effort
to attain profitability.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 123 "ACCOUNTING FOR STOCK BASED COMPENSATION"
("Statement 123"). Statement 123 is primarily a disclosure standard for the
Company because the Company will continue to account for employee stock options
under Accounting Principle Board Opinion No. 25. The Company adopted Statement
123 effective January 1, 1996.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not Applicable
ITEM 2. CHANGES IN SECURITIES
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
7
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
ITEM 5. OTHER INFORMATION
Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Not Applicable
SIGNATURES
Pursuant to 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.
RENAISSANCE GOLF PRODUCTS, INC.
Date: August 12, 1996 By: \s\ Mont E. Warren
------------------ ---------------------------------
Mont E. Warren
Chief Financial Officer
(Principal Accounting Officer)
8
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 46,200
<SECURITIES> 0
<RECEIVABLES> 477,765
<ALLOWANCES> (200,000)
<INVENTORY> 657,256
<CURRENT-ASSETS> 1,068,151
<PP&E> 595,070
<DEPRECIATION> (323,692)
<TOTAL-ASSETS> 1,368,559
<CURRENT-LIABILITIES> 1,560,628
<BONDS> 267,723
0
3
<COMMON> 5,461
<OTHER-SE> (459,792)
<TOTAL-LIABILITY-AND-EQUITY> 1,368,559
<SALES> 1,206,158
<TOTAL-REVENUES> 1,360,822
<CGS> 862,295
<TOTAL-COSTS> 885,449
<OTHER-EXPENSES> 148
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (24,412)
<INCOME-PRETAX> (565,850)
<INCOME-TAX> (800)
<INCOME-CONTINUING> (566,650)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (566,650)
<EPS-PRIMARY> 0
<EPS-DILUTED> (0.10)
</TABLE>
