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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 September 30, 2000
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)
11585 SOUTH STATE STREET, DRAPER, UTAH 84020
(Address of Principal Executive Offices)
(801) 501-0200
(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 September 30, 2000, the registrant had 11,255,214 shares outstanding
of its Common Stock, $.001 par value.
Transitional Small Business Disclosure Format (check one): Yes No X
---- ----
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RENAISSANCE GOLF PRODUCTS, INC.
TABLE OF CONTENTS
================================================================================
Page
PART I. FINANCIAL INFORMATION 3
Item 1. Financial Statements:
Balance Sheets as of September 30, 2000 and 4
December 31, 1999
Statement of Operations for the Nine Months 5
ended September 30, 2000 and September 30, 1999
Statements of Operations for the Three Months ended 6
September 30, 2000 and September 30, 1999
Statements of Cash Flows for the Nine Months ended 7
September 30, 2000 and September 30, 1999
Notes to Financial Statements for the Nine Months ended 8
September 30, 2000 and September 30, 1999
Item 2. Management's Discussion and 10
Analysis of Financial Condition and Results of Operations
PART II. OTHER INFORMATION 11
Item 1. Legal Proceedings
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 12
================================================================================
2
<PAGE>
Item 1. Financial Statements.
The Financial Statements of the company required to be filed with this Form
10-QSB Quarterly Reports were prepared by management and commence on the
following page, together with related Notes. In the opinion of management, these
Financial Statements fairly present the financial condition of the Company, but
should be read in conjunction with the Financial Statements of the Company for
the year ended December 31, 1999 filed with the Securities and Exchange
Commission.
3
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
RENAISSANCE GOLF PRODUCTS, INC.
BALANCE SHEETS
AS OF SEPTEMBER 30, 2000 AND DECEMBER 31, 1999
=============================================================================================================================
September 30, December 31,
2000 1999
----------------------- ------------------------
(unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $41,626 $47,798
Accounts receivable, net 260,334 233,172
Inventories, net 1,502,972 1,628,248
Deposits made on inventory 106,258 155,234
Prepaid expenses 5,050 12,047
----------------------- ------------------------
Total current assets 1,916,240 2,076,499
PROPERTY AND EQUIPMENT, net 406,089 446,069
OTHER ASSETS 18,000 -
----------------------- ------------------------
Total assets 2,340,329 2,522,568
======================= ========================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Revolving line of credit, net of discount 2,000,000 5,000,000
Accounts payable 601,865 295,716
Accrued liabilities 274,288 486,161
Accrued royalties 122,180 568,355
Current portion of notes payable 678,494 532,650
----------------------- ------------------------
Total current liabilities 3,676,827 6,882,882
----------------------- ------------------------
Notes Payable, less current portion - -
----------------------- ------------------------
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, $.01 par value, 150,000 shares
authorized; 68,704 and 75,000 issued and
outstanding as of 9-30-00 and 12-31-99 , respectively 687 750
Common stock, $.001 par value, 40,000,000 shares
authorized; 11,255,214 and 9,429,475 issued and
outstanding as of 9-30-00 and 12-31-99 , respectively 11,255 9,429
Additional paid-in capital 24,497,556 20,092,443
Accumulated deficit (25,845,996) (24,462,936)
----------------------- ------------------------
Total stockholders' equity (deficit) (1,336,498) (4,360,314)
----------------------- ------------------------
Total liabilities and stockholders' equity (deficit) $2,340,329 $2,522,568
======================= ========================
</TABLE>
The accompanying notes are an integral part of the financial statements
4
<PAGE>
<TABLE>
<CAPTION>
RENAISSANCE GOLF PRODUCTS, INC.
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999
=================================================================================================================================
2000 1999
(unaudited) (unaudited)
---------------------- ----------------------
<S> <C> <C>
NET SALES $2,883,833 $3,915,870
COST OF SALES 1,695,590 2,965,471
---------------------- ----------------------
Gross profit 1,188,243 950,399
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 2,285,004 2,129,046
---------------------- ----------------------
Operating loss (1,096,761) (1,178,647)
OTHER INCOME (EXPENSE):
Interest Income 2,834 4,741
Interest Expense (274,408) (583,963)
Other 903 4,684
---------------------- ----------------------
Net other expense (270,671) (574,538)
---------------------- ----------------------
LOSS BEFORE INCOME TAX EXPENSE (1,367,432) (1,753,185)
PROVISION FOR INCOME TAXES (628) (9,059)
---------------------- ----------------------
LOSS BEFORE EXTRAORDINARY ITEM (1,368,060) (1,762,244)
EXTRAORDINARY ITEMS - 18,508
---------------------- ----------------------
NET LOSS ($1,368,060) ($1,743,736)
====================== ======================
EARNINGS PER SHARE-BASIC:
Loss before extraordinary item ($0.13) ($0.21)
Extraordinary gain-forgiveness of debt 0.00 0.00
---------------------- ----------------------
Net loss per common and common
equivalent share ($0.13) ($0.21)
====================== ======================
WEIGHTED AVERAGE OUTSTANDING COMMON
AND COMMON EQUIVALENT SHARES-BASIC 10,231,277 8,503,473
====================== ======================
</TABLE>
The accompanying notes are an integral part of the financial statements
5
<PAGE>
<TABLE>
<CAPTION>
RENAISSANCE GOLF PRODUCTS, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999
==================================================================================================================================
2000 1999
(unaudited) (unaudited)
----------------------- -----------------------
<S> <C> <C>
NET SALES $1,182,797 $1,539,297
COST OF SALES 648,957 1,149,780
----------------------- -----------------------
Gross profit 533,840 389,517
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 841,917 800,334
----------------------- -----------------------
Operating loss (308,077) (410,817)
OTHER INCOME (EXPENSE):
Interest Income 1,419 1,702
Interest Expense (38,878) (179,725)
Other 449 (7,147)
----------------------- -----------------------
Net other expense (37,010) (185,170)
----------------------- -----------------------
LOSS BEFORE INCOME TAX EXPENSE (345,087) (595,987)
PROVISION FOR INCOME TAXES 6 (4,339)
----------------------- -----------------------
LOSS BEFORE EXTRAORDINARY ITEM (345,081) (600,326)
EXTRAORDINARY ITEMS 0 18,508
----------------------- -----------------------
NET LOSS ($345,081) ($581,818)
======================= =======================
EARNINGS PER SHARE-BASIC:
Loss before extraordinary item ($0.03) ($0.06)
Extraordinary gain-forgiveness of debt 0.00 0.00
----------------------- -----------------------
Net loss per common and common
equivalent share ($0.03) ($0.06)
======================= =======================
WEIGHTED AVERAGE OUTSTANDING COMMON
AND COMMON EQUIVALENT SHARES-BASIC 11,232,621 9,390,843
======================= =======================
</TABLE>
The accompanying notes are an integral part of the financial statements
6
<PAGE>
<TABLE>
<CAPTION>
RENAISSANCE GOLF PRODUCTS, INC.
STATEMENTS OF CASH FLOWS
AS OF SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999
====================================================================================================================================
2000 1999
(unaudited) (unaudited)
---------------------- ----------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss ($1,368,060) ($1,743,736)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 90,169 83,862
Change in Inventory for Adjustments/Reserve for Inventory Obsolescence 0
Adjustment for 1999 Expense (15,000) -
Net change in operating assets and liabilities:
(Increase) Decrease in accounts receivable (27,162) (193,770)
(Increase) Decrease in inventories 125,276 898,424
(Increase) Decrease in prepaid expenses 55,973 15,900
(Increase) Decrease in other assets (18,000) 0
(Decrease) Increase in accounts payable & accrued expenses (351,900) (11,389)
Less payment with equity - 21,203
---------------------- ----------------------
Net cash used in operating activities (1,508,704) (929,506)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property & equipment (137,893) (16,008)
Leasehold Abandonment 87,704 -
---------------------- ----------------------
Net cash used in investing activities (50,189) (16,008)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable, net of disount - 6,946
Proceeds from issuance of preferred stock 222,625 1,000,000
Notes payable converted to equity (3,450,000) 0
Conversion of debt to equity 3,156,487 0
Conversion of div & int payable to preferred series B shares 571,498 0
Conversion of div & int payable to common stock 447,991 0
Conversion of preffered series A shares to series B shares (107) 0
Funds borrowed for payment of accrued royalty 525,000
Financing of computer equipment 70,846
Conversion of Accounts Payable to Equity 8,381
---------------------- ----------------------
Net cash provided by financing activities 1,552,721 1,006,946
------------------------------------------------
NET INCREASE (DECREASE) IN CASH (6,172) 61,432
CASH and cash equivalents, beginning of period 47,798 63,184
---------------------- ----------------------
CASH and cash equivalents, end of period $41,626 $124,616
====================== ======================
</TABLE>
The accompanying notes are an integral part of the financial statements
7
<PAGE>
RENAISSANCE GOLF PRODUCTS, INC.
Notes To Financial Statements For The Three Months and Nine
Months Ended September 30, 2000
================================================================================
1. BASIS OF PRESENTATION
The Company has prepared its financial statements for the three months and
nine months ended September 30, 2000 and 1999 without audit by the Company's
independent auditors. In the opinion of management, the unaudited financial
statements reflect all normally recurring adjustments necessary to fairly
present the Company's 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 10-KSB
for the period ended December 31, 1999, which has been filed with the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in the Company's annual financial statements have been omitted from the
quarterly financial statements based upon Securities and Exchange Commission
rules and regulations.
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 year presented.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards 128, Earnings per Share ("SFAS 128"), which is effective
for financial statements issued for periods ending after December 15, 1997. The
effect on the Company of adopting SFAS 128 has not yet been determined.
2. FINANCING
Subsequent to the end of the second quarter, in July 2000, the Company
renegotiated its relationship with AKA, its largest stockholder. Under this new
agreement, AKA (i) converted $3,000,000 due under a note payable into 37,500
shares of Series B Preferred Stock (which will be convertible into 18,750,000
shares of Common Stock upon the Company increasing the authorized number of
shares of Common Stock), (ii) converted 50,000 shares of Series A Preferred
stock into 12,500 shares of Series B Preferred Stock (convertible into 6,250,000
shares of Common Stock), (iii) accepted 1,791,964 shares of Common Stock and
300,000 warrants to purchase shares of Common Stock for $0.25 for payment of all
past due interest dividend, and late payment fees, and (iv) reduced the interest
rate on the remaining $2,000,000 due on the note to 5%. The effective date for
this AKA transaction is June 1, 2000.
Alvin W. Emery, a creditor owed $512,685 in principal and interest pursuant
to a promissory note, agreed to convert the entire balance due into 6,409 shares
of Series B Preferred stock (which will be convertible into 3,204,281 shares of
Common Stock upon the Company increasing the authorized number of shares of
Common Stock), to be effective June 1, 2000.
John B. Hewlett, Chief Executive Officer and Chairman of the Board, who
advanced the Company $125,000 during the first and second quarters of 2000,
agreed to convert $127,352, including principal and interest, into 1,592 share
of Series B Preferred Stock (convertible into 795,950 shares of Common Stock),
and to convert 25,000 shares of Series A Preferred Stock into 6,250 shares of
Series B Preferred Stock (which will be convertible into 3,125,000 shares of
Common Stock upon the Company increasing the authorized number of shares of
Common Stock), to be effective June 1, 2000.
In July 2000, the Company began offering Series "C" Preferred Stock for
$50.00 per share. This offering is limited to "Accredited Investors" and no more
than 35 non-accredited investors pursuant to Rules 505 and 506 of the 1933 Act.
Up to 50,000 shares are being offered, with a minimum investment per investor of
$5,000 or 100 Shares. The Shares are not registered, and we do not intend to
register the Shares. Each Share shall be convertible at the election of the
stockholder into 250 shares of restricted Common Stock. If we sell all 50,000
Shares, such Shares will be convertible into an aggregate of 12,500,000 shares
of Common Stock. No fractual shares shall be issued upon conversion, and no
conversion can be made of less than four Shares at any one time. Our Common
Stock currently trades on the OTC: BB under the symbol "FGLF." The Shares will
not have the right to any
8
<PAGE>
specific dividend, but no dividend may be paid on the Common Stock unless a
dividend is simultaneously paid on the Shares. During the third quarter of 2000,
the Company raised approximately $223,000 from the sale of approximately 4,500
shares of Series C Preferred Stock. These funds raised were used to fund daily
operations.
At September 30, 2000 the Company has (i) the equivalent of approximately
43,688,038 shares of common stock outstanding (including 18,750 shares of Series
B Preferred Stock which are convertible into 9,375,000 shares of Common Stock,
and 45,500 shares of Series B Preferred Stock, which are convertible into
22,750,231 shares of common stock upon the Company increasing the authorized
number of shares of Common Stock), (ii) the equivalent of approximately
11,058,919 stock options and warrants to purchase shares of the Company's Common
stock at prices ranging between $0.25 and $5.00, and (iii) the intent to issue
50,000 shares of Series C Convertible Preferred Stock (convertible into 250
Common Stock shares for each one share of Preferred Series C Stock or 12,500,000
shares of Common Stock in the aggregate) through the Company's present offering.
In the event of any liquidation or winding up, holders of shares in the
Company will be entitled to receive, in the following order of preference,
Series B Preferred, Series C Preferred, and Common Stock, any amount available
for distribution up to an amount equal to the issue price per share, plus any
declared but unpaid dividends.
AKA, as a creditor, currently holds a first right to all inventory and
proceeds from the sale of inventory in its sole discretion. AKA also holds a
right to terminate its loan agreement with the Company and liquidate the
inventory if at any point, in AKA's sole discretion, it determines that the
Company's business is not viable. In the event of the liquidation of the
inventory by AKA, the Company would likely liquidate the entire business. AKA is
currently requiring the Company to make payment on its note with proceeds
generated from the sale of inventory, but has not terminated the loan agreement.
The Company must raise additional outside capital to be able to continue
operations through the end of the current year.
As part of the agreement with AKA, management committed to raise $2
million to $2.5 million, the proceeds of which were to be used to pay trade
accounts payable, purchase new inventory and provide some carryover working
capital to fund operations through the winter months. Management has raised
approximately $330,000 to date, but there is no assurance that the rest of
the funds can be raised. In the event the funds are not raised in the
near term, the Company could cease operations.
The Company is currently attempting to arrange sufficient funding to
satisfy the AKA debt, but no assurance can be provided that the necessary
funding will be obtained.
3. LICENSE
Part of the Company's competitive advantage comes from its license from
Fila Sport, S.p.A. ("License Agreement") to use the Fila brand name on the
Company's golf equipment. During the last eight years, our License Agreement has
essentially remained unchanged and has not reflected the changes taking place in
the retail industry due generally to the emergence of the new business economy
and specifically to the general public embracing the Internet. Because of the
disparity between the License Agreement and the new means and methods of
distribution and sale of goods, the Company was unable to effectively attempt to
implement many of its innovative sales plans and strategies. Through the
continuous efforts of the Company's Chief Executive Officer, John B. Hewlett,
over the past four years, Fila Sport has agreed to renegotiate the License
Agreement to permit more freedom to move into the new economy. Along with newly
approved means and methods of distribution and sales of the Company's golf
products bearing the Fila name, Fila Sport has also agreed to renegotiate the
minimum royalties it charges the Company.
Although the Company has already negotiated the general terms of the new
License Agreement, which are included in a letter of intent with Fila Sport, the
Company has not completed a final document.
During August 2000, an affiliate of Mr. Hewlett, advanced $75,000 to pay an
outstanding royalty balance of $76,500 to Fila S.p.A. accrued for the period
ended June 30, 2000 and due July 31, 2000. The Company paid the third quarter
royalty balance of $38,250 during September 2000. The payments were made to Fila
Sport.
4. SUBSEQUENT EVENTS
During the fourth quarter of 2000, approximately 2,200 shares of Series C
Preferred Stock were sold in a private placement for $110,000. Total funds
raised to date for Series C Preferred Stock is $332,625.
9
<PAGE>
Under the terms of the Restated Loan and Security Agreement dated June
1, 2000, AKA may require the Company to pay down the remaining $2 million on
its loan in an amount equal to the book value of inventory sold. As of
October 1, 2000, AKA made such a demand on management. As a result of this
demand, payments totaling $27,500 have been made to AKA. Additional payments
of $67,000 for November 2000 are currently payable, but have not been paid
due to a shortage in operating funds. There is no guarantee that funds will
be available from current operations or equity financing to make the payments
due to AKA. In the event payments are not made to AKA when due, AKA may
choose at any time in its discretion to seize the inventory for liquidation.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2000
Net sales for the three months ended September 30, 2000, were $1,183,000
compared to $1,539,000 for the comparable period in 1999, a decrease of $356,000
or 23%. The decreased sales volume was attributable to the change in marketing
strategy of phasing out discounted sales in preference to selling directly to
corporate customers.
Cost of sales decreased from $1,150,000 for the three months ended
September 30, 1999, to $649,000 for the comparable period in 2000, a decrease of
$501,000 or 44%. The gross profit margin increased from 25% for the three months
ended September 30, 1999 to 45% for the comparable period in 2000. This increase
in gross margins resulted from discontinuance of volume selling to large mass
markets.
Selling, general, and administrative costs were $842,000 for the three
months ended September 30, 2000 compared to $800,000 for the comparable period
in 1999, an increase of $42,000 or 5%. The Company has hired additional selling
staff and during April 2000, opened an outlet store to sell merchandise directly
to the public resulting in additional selling expenses.
The Company's interest expense decreased from $180,000 for the three months
ended September 30, 1999 to $39,000 for the comparable period in 2000 as a
result of interest on the AKA loans interest rate being reduced from 12% to 8%
per annum during November 1999, and subsequently being renegotiated to 5% during
June of 2000 on the $2,000,000 remaining subject to the promissory note.
Additional interest on $3,450,000 was eliminated as of June 1, 2000 as a result
of AKA converting that portion of the promissory note into equity, and Al Emery
converting a $450,000 note to equity.
The Company experienced a net loss before extraordinary items and net loss
per share before extraordinary items of $345,000 and $0.03, respectively, for
the three months ended September 30, 2000 compared to a net loss before
extraordinary item and net loss per share before extraordinary item of $600,000
and $0.06, respectively, for the comparable period in 1999.
The Company's inventory decreased from $1,628,000 at December 31, 1999 to
$1,503,000 at September 30, 2000.
NINE MONTHS ENDED SEPTEMBER 30, 2000
Net assets at September 30, 2000 were $2,340,000 compared to $2,523,000 at
December 31,1999. This decrease in net assets resulted primarily from reduction
in inventory and inventory deposits of $174,000. Cash received from the
collection of accounts receivable and the sale of $223,000 in securities were
used to fund operations. Cash at September 30, 2000 was $42,000 compared to
$48,000 at December 31, 1999.
Total current liabilities decreased from $6,883,000 at December 31, 1999 to
$3,677,000. This decrease in net liabilities resulted primarily from the
conversion of $3,000,000 due on a note payable to AKA into Series B Preferred
Stock of the company. Additionally notes payable were reduced through the
conversion of debt to equity of the Company, and accrued royalties were reduced
through payment of sums due and a renegotiated royalty agreement with Fila Sport
S.p.A. The reduction in notes payable for the debt conversion into equity was
partially offset with new debt assumed to make the royalty payments due to Fila
Sport S.p.A.
10
<PAGE>
The total stockholders' deficit was reduced by approximately $3,024,000
from December 31, 2000 to September 30, 2000 as the result primarily of
conversion of debt into equity by large creditors previously discussed.
Net sales for the nine months ended September 30, 2000, were $2,884,000
compared to $3,916,000 for the comparable period in 1999, a decrease of
$1,032,000. The decreased sales volume was attributable to the change in
marketing strategy of phasing out discounted sales in preference to selling
directly to corporate customers. The Company also moved to a new location during
the second quarter which interrupted sales and shipments.
Cost of sales decreased from $2,966,000 for the nine months ended
September 30, 1999, to $1,696,000 for the comparable period in 2000, a decrease
of $1,270,000. The gross profit margin increased from 24% for the nine months
ended September 30, 1999 to 41% for the comparable period in 2000. This increase
in gross margins resulted from discontinuance of volume selling to large mass
markets.
Selling, general, and administrative costs were $2,285,000 for the nine
months ended September 30, 2000 compared to $2,129,000 for the comparable period
in 1999, an increase of $156,000. The Company hired additional selling staff
during the 2nd quarter, opened an outlet store to sell directly to the public
resulting in additional selling expenses.
The Company's interest expense decreased from $584,000 for the nine
months ended September 30, 1999 to $274,000 for the comparable period in 2000 as
a result of interest on the changed AKA loans interest rate being reduced from
12% to 8% per annum during November, 1999, and subsequently being renegotiated
to 5% during June, 2000 on the $2,000,000 remaining subject to the promissory
note. Additional interest on $3,450,000 was eliminated as of June 1, 2000 as a
result of AKA and Al Emery converting that portion of their respective
promissory notes to equity.
The Company experienced a net loss before extraordinary items and net
loss per share before extraordinary items of $1,368,000 and $0.13, respectively,
for the nine months ended September 30, 2000 compared to a net loss before
extraordinary items and net loss per share before extraordinary items of
$1,762,000 and $0.21, respectively, for the comparable period in 1999.
During the second and third quarters, an affiliate of John B. Hewlett
loaned the Company $525,000 on a promissory note bearing interest at 8% per
annum.
Based upon the operating history, the Company's auditors during the
past several years have expressed concern about the Company's ability to
continue operations without raising outside capital.
Historically the Company has funded itself through operations, the sale
of stock, and borrowing. Most recently the Company has raised equity through a
private offering of its stock and through negotiating loan agreements as are
outlined throughout this report. The Company plans to continue to pursue funding
through the same methods, but cannot provide any assurance that such methods
will be successful. The Company can provide no assurance that it will be able to
raise sufficient capital to fund operations through the end of the year.
The golf business is seasonal because of the winter condition
throughout much of the world, especially the Northern United States. This
seasonality causes the Company's sales to vary by quarter; accordingly,
operating results can vary substantially from quarter to quarter and one
quarter's results may not be representative of the Company's annual results.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See the previous report in the 10-KSB files for the year ended 1999.
11
<PAGE>
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Under the terms of the Restated Loan and Security Agreement dated June
1, 2000, AKA may require the Company to pay down the remaining $2 million on
its loan in an amount equal to the book value of inventory sold. As of
October 1, 2000, AKA made such a demand on management. As a result of this
demand, payments totaling $27,500 have been made to AKA. Additional payments
of $67,000 for November 2000 are currently payable, but have not been paid
due to a shortage in operating funds. There is no guarantee that funds will
be available from current operations or equity financing to make the payments
due to AKA. In the event payments are not made to AKA when due, AKA may
choose at any time in its discretion to seize the inventory for liquidation.
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
The Company filed an 8-K dated July 26, 2000 that reported a change in
control. This change resulted from the conversion of a portion of AKA's debt
into equity, as described above.
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: November 15, 2000 By:
----------------- ------------------------
John B. Hewlett
Chairman of the Board
Date: November 15, 2000 By:
----------------- ------------------------
Michael Hammond
Controller
Chief Financial Officer
12
