<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly report pursuant to Section 13 or 15 (d) of the Securities and
Exchange Act of 1934 for the quarterly period ended March 31, 1996; or
[ ] Transition report pursuant to Section 13 or 15(d) of the Exchange Act for
the transition period from __________ to ___________
COMMISSION FILE NO. 0-24812
BRASSIE GOLF CORPORATION
______________________________________________________________________________
(Exact name of registrant as specified in its charter)
DELAWARE 56-1781650
______________________________________ __________________________________
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5806-A Breckenridge Parkway, Tampa, FL 33610
______________________________________________________________________________
(Address of principal executive offices)
(813) 621-4653
______________________________________________________________________________
(Registrant's telephone number, including area code)
Check 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 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 [ ]
On March 31, 1996 there were 17,703,066 shares of the issuer's Common Stock,
$.001 par value, and 375,000 shares of the issuer's Preferred Stock, $.001 par
value, outstanding.
Page 1 of 40 Pages
<PAGE> 2
BRASSIE GOLF CORPORATION
QUARTERLY REPORT FOR THE THREE-MONTH
PERIOD ENDED MARCH 31, 1996
FORM 10-QSB
TABLE OF CONTENTS
PART 1. FINANCIAL INFORMATION
<TABLE>
<S> <C> <C>
Item 1. Financial Statements (unaudited)
Condensed Consolidated Balance Sheets of March 31, 1996 and December 31, 1995 ... 3
Condensed Consolidated Statements of Operations for the three-month periods ended
March 31, 1996 and 1995 ......................................................... 5
Condensed Consolidated Statements of Changes in Shareholders' Equity for the
three-month period ended March 31, 1996 ......................................... 6
Condensed Consolidated Statements of Cash Flows for the three-month periods
ended March 31, 1996 and 1995 ................................................... 7
Notes to Condensed Consolidated Financial Statements ............................ 8
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations .................................................................. 16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings ............................................................. 21
Item 2. Changes in Securities ......................................................... 21
Item 3. Defaults Upon Senior Securities ............................................... 21
Item 4. Submission of Matters to a Vote of Securities Holders ......................... 21
Item 5. Other Information ............................................................. 21
Item 6. Exhibits and Reports on Form 8-K .............................................. 21
SIGNATURES ............................................................................ 22
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
BRASSIE GOLF CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
------
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------ -------------
<S> <C> <C>
Current assets:
Cash $ 4,423,839 $ 61,437
Marketable equity securities 39,870 39,738
Trade accounts receivable, net 837,831 676,214
Accounts receivable from related parties 626,496 583,729
Inventories 168,877 166,137
Prepaid expenses and other current assets 129,836 129,718
------------ -------------
Total current assets 6,226,749 1,656,973
Property and equipment, net 18,350,473 18,503,231
Intangible assets, net 944,845 838,695
Goodwill, net 4,812,670 4,876,471
------------ -------------
Total assets $ 30,334,737 $ 25,875,370
============ =============
</TABLE>
See accompanying notes
3
<PAGE> 4
BRASSIE GOLF CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1995
-------------- ------------------
<S> <C> <C>
Current Liabilities:
Accounts payable and accrued expenses $ 1,329,652 $ 1,455,605
Accrued interest payable 240,853 182,966
Current portion of long-term debt 1,198,413 1,449,217
Current portion of long-term debt - related parties 327,667 464,863
Current maturities of capital lease obligations 31,630 31,630
------------ ------------
Total current liabilities 3,128,215 3,584,281
Long-term debt, less current portion 14,376,234 8,733,554
Long-term debt, less current portion - related parties 6,382,766 6,313,297
Long-term capital lease obligations, less current portion 102,598 110,242
Minority interest payable 93,653 43,669
Shareholders' Equity:
Preferred Stock, $.001 par value;
1,000,000 shares authorized; 375,000 shares issued 375 375
Common Stock, $.001 par value; 50,000,000 shares
authorized; 17,703,066 and 17,678,066 shares
issued and outstanding as of March 31, 1996 and
December 31, 1995, respectively 17,703 17,678
Additional paid-in capital 21,907,431 21,857,456
Accumulated deficit (15,404,859) (14,524,925)
Unrealized (loss) on investments (593) (593)
Foreign currency translation adjustment (268,786) (259,664)
------------- -------------
Total shareholders' equity 6,251,271 7,090,327
------------- -------------
Total liabilities and shareholders' equity $ 30,334,737 $ 25,875,370
============= =============
</TABLE>
See accompanying notes
4
<PAGE> 5
BRASSIE GOLF CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------------
1996 1995
----------- ------------
<S> <C> <C>
Operating revenues:
Golf revenues $ 806,717 $ 1,479,249
Food and beverage revenues 133,943 331,796
Proshop revenues 80,046 154,099
Membership fees and dues 53,466 258,411
Resident membership fees 95,000 145,000
Management and design fees 486,828 79,533
Other 6,794 3,251
----------- -----------
Total operating revenues 1,662,794 2,451,339
Operating expenses:
Golf course operations 484,960 965,074
Cost of food and beverage sales 52,385 133,793
Cost of proshop sales 50,087 105,454
Marketing expenses 75,685 35,060
Management and design expenses 315,506 159,612
General and administrative expenses 741,540 511,250
Depreciation and amortization expense 382,888 323,639
----------- -----------
Total operating expenses 2,103,051 2,233,882
----------- -----------
Operating income (loss) (440,257) 217,457
Other income (expense):
Interest expense (394,499) (392,953)
Interest and other income 4,806 7,166
----------- -----------
Net loss before minority interest (829,950) (168,330)
Minority interest expense (49,984) -
----------- -----------
Net loss $ (879,934) $ (168,330)
=========== ===========
Net loss per share $ (.05) $ (.01)
Weighted average number of shares =========== ===========
outstanding 17,689,100 13,578,200
=========== ===========
</TABLE>
See accompanying notes
5
<PAGE> 6
BRASSIE GOLF CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Additional
Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994 13,545,065 $13,545 - $ - $10,495,162 $(4,019,033)
Net loss - - - - - (10,505,892)
Exercise of Common Stock warrants 1,082,001 1,082 - - 1,513,720 -
Issuance of stock in connection with Summit
merger:
Common 1,875,000 1,875 - - 3,748,125 -
Preferred - - 375,000 375 3,749,625 -
Issuance of Common Stock in a private offering 1,301,000 1,301 - - 2,600,699 -
Retirement of Common Stock (125,000) (125) - - (249,875) -
Unrealized loss on investments - - - - - -
Translation of foreign currency financial
statements - - - - - -
----------------------------------------------------------------------
Balance at December 31, 1995 17,678,066 17,678 375,000 375 21,857,456 (14,524,925)
Net loss (879,934)
Issuance of Common Stock in connection with
settlement of litigation 25,000 25 49,975
Translation of foreign currency financial
statements
----------------------------------------------------------------------
Balance at March 31, 1996 17,703,066 $17,703 375,000 $375 $21,907,431 $(15,404,859)
======================================================================
<CAPTION>
Foreign
Currency Unrealized
Translation Gain (Loss) on
Adjustment Investments Total
------------------------------------------
<S> <C> <C> <C>
Balance at December 31, 1994 $(358,711) $5,534 $6,136,497
Net loss - - (10,505,892)
Exercise of Common Stock warrants - - 1,514,802
Issuance of stock in connection with Summit
merger:
Common - - 3,750,000
Preferred - - 3,750,000
Issuance of Common Stock in a private offering - - 2,602,000
Retirement of Common Stock - - (250,000)
Unrealized loss on investments - (6,127) (6,127)
Translation of foreign currency financial
statements 99,047 - 99,047
------------------------------------------
Balance at December 31, 1995 (259,664) (593) 7,090,327
Net loss (879,934)
Issuance of Common Stock in connection with
settlement of litigation 50,000
Translation of foreign currency financial
statements (9,122) (9,122)
------------------------------------------
Balance at March 31, 1996 $(268,786) $ (593) $6,251,271
==========================================
</TABLE>
See accompanying notes
6
<PAGE> 7
BRASSIE GOLF CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
---------------
1996 1995
----------- ------------
<S> <C> <C>
Cash flows from operating activities
Net loss $ (879,934) $ (168,330)
Adjustment to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 382,888 323,639
Net change in other working capital items (182,689) (353,848)
------------ ------------
Net cash used in operating activities (679,735) (198,539)
Investing activities:
Purchases of property and equipment, net (90,085) (402,243)
Payments for loan and amortization costs (182,394) -
Increase in accounts receivable from related parties (42,767) (203,451)
Other - (5,140)
------------ ------------
Net cash used in investing activities (315,246) (610,834)
Financing activities:
Additions to long-term borrowings 5,539,485 447,094
Payments for long-term borrowings and capital leases (402,101) (1,724,312)
Issuance of common stock 50,000 1,374,802
Proceeds on loans from officers and shareholders 179,121 500,000
------------ ------------
Net cash provided by financing activities 5,366,505 597,584
Effect of foreign currency exchange rate changes
on cash (9,122) (9,144)
------------ ------------
Increase (decrease) in cash 4,362,402 (220,933)
Cash at beginning of period 61,437 830,793
------------ ------------
Cash at end of period $ 4,423,839 $ 609,860
============ ============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 258,612 $ 272,139
============ ============
</TABLE>
See accompanying notes
7
<PAGE> 8
BRASSIE GOLF CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
NOTE A. BUSINESS OF THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES
Description of Business
Brassie Golf Corporation (the "Company"), together with its predecessors and
subsidiaries, has engaged since 1988 in the design, acquisition, development
and management of private, semi-private and daily-fee (i.e. "public") golf
courses.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of
the Company have been prepared in accordance with generally accepted accounting
principles for interim financial information and the instructions to Form
10-QSB and Rule 10-01 of Regulation S-X of the Securities and Exchange
Commission ("SEC"). Accordingly, the financial statements do not include all
of the information and footnotes required by generally accepted accounting
principles. In the opinion of management, all adjustments (consisting of
normal recurring adjustments) considered necessary for a fair presentation have
been included. Operating results for the three months ended March 31, 1996 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1996. The accompanying condensed consolidated financial
statements and notes thereto should be read in conjunction with the Company's
audited financial statements as of December 31, 1995 contained in its current
report on Form 10-K.
Revenue Recognition - Revenues of the Company include daily golf fees,
proshop merchandise sales and food and beverage sales. Golf fees include
revenue generated from green fees, cart fees and range fees. Revenues also
include sales of memberships and annual dues charged to members.
Golf fees, proshop merchandise sales and food and beverage sales are
recognized when received. Membership dues collected in advance are deferred as
"unearned income" and recognized over the period of prepayment. Membership fees
that are nonrefundable are recognized by the Company when received.
Goodwill - The Company has classified as goodwill the cost in excess of the
fair value of the net assets, including tax attributes of Summit, which was
acquired through a purchase transaction in June 1995. Goodwill is being
amortized on a straight-line basis over 20 years. Amortization charged to
continuing operations amounted to $65,600 for the three months ended March 31,
1996. No amortization expense in connection with goodwill was incurred in the
three-month period ended March 31, 1995.
8
<PAGE> 9
BRASSIE GOLF CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
NOTE A. BUSINESS OF THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
The Company carries its goodwill asset at its purchase price, less
amortized amounts, but subject to annual review for impairment. The
Company's policy for the valuation of goodwill is to calculate the undiscounted
projected future cash flows of Summit expected to be generated over the life of
the goodwill. This amount is then compared to the carrying value of the
goodwill to determine if the asset is impaired.
Income Taxes - The Company records income taxes pursuant to the
provisions of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" (SFAS No. 109). Under SFAS No. 109, deferred
taxes are provided for the difference between the tax and financial statement
bases of assets and liabilities, and a valuation allowance is established for
deferred tax assets that, based upon available evidence, are not expected to be
realized.
Net Loss Per Share - Net loss per share has been computed based on
the weighted average number of shares outstanding during the period presented.
Stock options and warrants are considered anti-dilutive and have not been
considered in the computations.
Reclassifications - Certain reclassifications have been made to the
prior periods' financial statements to conform to the classifications used in
1996. These reclassifications had no effect on net loss or shareholders'
equity as previously reported.
NOTE B. LONG-TERM DEBT
Long-term debt with financial institutions and other third
parties as of March 31, 1996 consists of the following:
Golf course development loan to St. James from
bank, payable in monthly principal installments of
$16,319, plus interest beginning August 1, 1995, with
the remaining principal balance and unpaid interest
due July 1, 2002; collateralized by land and land
improvements. Interest is payable at prime (8.25% at
March 31, 1996) plus 1.0%. $2,202,798
9
<PAGE> 10
BRASSIE GOLF CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
<TABLE>
NOTE B. LONG-TERM DEBT (CONTINUED)
<S> <C>
Golf course development loan to Laurel Valley from
bank, payable in principal payments of $250,000 due
April and December 1996 and principal payments of
$83,333, due on April 30, July 30 and October 30,
1998, with remaining principal balance and unpaid
interest due October 30, 1998; collateralized by
land and land improvements. Interest is payable
quarterly at prime (8.25% at March 31, 1996) plus
1.5%. $2,000,000
Golf course development loan to Myrtle West
from bank, payable in equal principal payments of
$83,333, due on each May 30, August 30 and November
30, 1994 through 1998, with remaining principal
balance and unpaid interest due November 30, 1998;
collateralized by land and land improvements.
Interest is payable quarterly at prime (8.25% at
March 31, 1996) plus 1.0%. 2,166,667
Golf course development loan to Curtis Park from bank,
payable in monthly principal payments of $31,875,
April through November, 1996 through 2000, with
remaining principal balance and unpaid interest due
on December 31, 2000; collateralized by leasehold
interest in land and land improvements. Interest is
payable monthly at prime (8.25% at March 31, 1996)
plus 1.0%. 2,550,000
Unsecured operating term loan from bank, with interest
at 10.75%, payable in monthly installments of
$16,723, which includes principal and interest,
through January 1999.
476,038
</TABLE>
10
<PAGE> 11
BRASSIE GOLF CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
NOTE B. LONG-TERM DEBT (CONTINUED)
Convertible 6% debentures due March 1, 1998,
unless converted into common stock, interest
payable incrementally upon conversions with
the balance, if any, at maturity. $ 5,500,000
Other notes payable 679,144
------------
15,574,647
Less current portion 1,198,413
------------
$ 14,376,234
============
11
<PAGE> 12
BRASSIE GOLF CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
<TABLE>
NOTE B. LONG-TERM DEBT (CONTINUED)
<S> <C>
Long-term debt with related parties as of March 31,
1996 consists of the following:
Acquisition loan payable to a shareholder of Myrtle West with the entire
principal balance due February 28, 1999; collateralized by a mortgage on
land and land improvements; subordinated to bank loan; bearing no
interest through August 31, 1994, then 9.5% through maturity; payable
within 90 days of each calendar year-end. $ 1,926,800
Golf Course development loan payable to a shareholder of Curtis Park; principal
due at maturity on June 30, 2001; collateralized by a leasehold interest in
land and land improvements; subordinated to bank loan; bearing no interest
through October 9, 1995, then 9.5% through maturity; payable quarterly. 1,766,810
Construction loan payable to a shareholder of Laurel Valley with entire
principal balance due April 1997, including interest at 10% which began
accruing in April 1993; collateralized by second mortgage on land and land
improvements. 2,079,995
Construction loan payable to a shareholder of St. James, payable in annual
principal payments of $100,000 beginning October 1996 with the remaining
principal balance and unpaid interest due on October 2000, collateralized by
land and improvements and various equipment, subordinated to bank loan, with
interest accruing at prime, adjusted annually (8.75% at October 1, 1995), plus
2%, payable quarterly. 936,828
-----------
6,710,433
Less current portion 327,667
-----------
$ 6,382,766
===========
</TABLE>
12
<PAGE> 13
BRASSIE GOLF CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
NOTE C. SHAREHOLDERS' EQUITY
On June 30, 1995 the Company issued 375,000 shares of preferred stock,
having a stated value of $10.00 and a $.001 par value, as partial consideration
for the Summit Merger. The preferred stock has been designated
Junior non-cumulative Convertible Preferred Stock ("Junior Preferred Stock"),
with the following provisions: 1) each share of Junior Preferred Stock is
convertible into five shares of common stock, or 1,875,000 common shares in the
aggregate, par value $.001; 2) the Junior Preferred Stock is convertible at the
option of the holder at any time for five years from closing of the Summit
merger; 3) the Junior Preferred Stock is redeemable at the option of the
Company at any time after (a) the Company's common stock trades at a price of
$5.00 or higher for 30 consecutive trading days as quoted on the NASDAQ system;
or (b) issuance of additional Company common stock in excess of 25% of the
shares then issued and outstanding, i.e., from a merger of the Company, a
public offering of its common stock under a Registration under the Securities
Act of 1993 or an additional private placement offering through an underwriter;
4) the Junior Preferred Stock is subordinate to future senior preferred shares
that the Company may later issue; 5) the Junior Preferred Stock shall not pay
dividends unless the Company fails to redeem the shares in accordance with the
above provisions, at which time the dividend will be paid at a rate of 5% from
that date; 6) the Junior Preferred Stock will have no voting rights on matters
that can be voted by the common stock and voting rights will exist only as to
preferences, rights, powers, priority or ranking of the Junior Preferred Stock;
and 7) in the event of any liquidation, dissolution or winding up of the
affairs of the Company, whether voluntary or involuntary, after payment of the
debts and other liabilities of the Company, the holder of each share of Junior
Preferred Stock then outstanding shall be entitled to be paid out of any of the
assets or surplus funds of the Company (prior to and in preference to any
distribution to the common shareholders), an amount equal to $10.00 per share
with respect to any such share of Junior Preferred Stock. If assets of the
Company are not sufficient to satisfy the $10.00 per share distributions, then
the assets of the Company shall be distributed ratably to the Junior Preferred
shareholders in proportion to their respective distributive amounts.
On July 18, 1994, the Company increased the number of authorized shares
of common stock to 50,000,000 shares.
In connection with the Company's guarantee of the value of an existing
shareholder's 79,010 shares of common stock (the "Guaranteed Shares") which
were initially issued at $400,000 (Canadian), or $5.06 (Canadian) per share, on
October 18, 1995, a related party collateralized the UA Pension Fund against a
$200,000 (Canadian) shortfall anticipated to result from the UA Pension Funds'
disposition of all 79,010 of the shares. When the disposition of the 79,010
common shares is complete, the Company intends to reimburse the related party
for the actual costs incurred.
13
<PAGE> 14
BRASSIE GOLF CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
NOTE C. SHAREHOLDERS' EQUITY (CONTINUED)
As of March 31, 1996, warrants to purchase 2,138,000 shares of the Company's
common stock were outstanding. These warrants have exercise prices ranging
from $2.00 to $3.25 per share; 100,000 warrants expire September 28, 1998;
238,000 warrants expire November 17, 1998; 150,000 warrants expire June 30,
1999; 1,400,000 warrants expire June 30, 2000, and 250,000 warrants expire
September 28, 2000.
On June 3, 1994, the Board of Directors and the stockholders of the Company
adopted the Brassie Golf Corporation 1994 Stock Option and Restricted Stock
Purchase Plan (the "Stock Option Plan") as an incentive for key employees. The
purchase price for any Stock Awards and the exercise price for any Options may
not be less than the fair market value for the common stock on the date of
grant. Unless otherwise agreed between the grantee and the Company, the Stock
Awards and Options expire 90 days after termination of the grantee's
relationship with the Company. At a meeting of the Option Committee on
June 30, 1995, and subject to consent of the aforesaid HIGSI grantees, the
Stock Awards and Options previously granted and outstanding were repriced at
$2.00 (the market trading price of the stock on the date of grant) and the
period for their exercise was extended to five years from their June 3, 1994
grant. Concurrently, the Option Committee granted further Options and Stock
Awards exercisable for five years from June 30, 1995 at an exercise price of
$2.00 to certain Directors and Officers of the Company and its subsidiaries.
<TABLE>
<CAPTION>
Options Outstanding
- -------------------
OPTIONS OUTSTANDING
SHARES -------------------
AVAILABLE NUMBER PRICE PER
FOR GRANT OF SHARES SHARE
------------------------------------
<S> <C> <C> <C>
Balances at December 31, 1994 1,100,000 400,000
Options granted (1,136,750) 1,136,750 $2.00
Options canceled 104,225 (104,225) -
Options exercised - - -
-------------------------
Balances at December 31, 1995 67,475 1,432,525
=========================
Options granted - - -
Options canceled - - -
Options exercised - - -
-------------------------
Balances at March 31, 1996 67,475 1,432,525
=========================
</TABLE>
14
<PAGE> 15
BRASSIE GOLF CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
NOTE D. SUBSEQUENT EVENT
During April 1996, the affiliated second mortgage lender at the
Company's Laurel Valley golf course extended the current maturity date for an
additional six month period to April 30, 1997. The extension replaced
approximately $2,080,000 of currently maturing debt with long-term financing.
Accordingly, the mortgage is classified in the Company's condensed consolidated
balance sheet as long-term debt to related parties.
15
<PAGE> 16
BRASSIE GOLF CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction
with the Condensed Consolidated Financial Statements included herein for the
three months ended March 31, 1996 and 1995 and for the years ended December 31,
1995 and 1994 and the nine-month period ended December 31, 1993, included in the
Company's 1995 report on Form 10-K.
Brassie Golf Corporation (the "Company") together with its predecessors
and subsidiaries, has engaged since 1988 in the design, acquisition,
development and management of private, semi-private and daily-fee (i.e.,
"public") golf courses. The Company's portfolio currently consists of 29
owned, leased and managed golf courses: three owned golf courses in the states
of North Carolina (1) and South Carolina (2); one leased golf course in
Virginia, which opened for public play in June 1995; Hale Irwin Golf Services,
Inc., an international golf course design and management company based in St.
Louis, Missouri, and, as a result of the June 30, 1995 acquisition of Summit
Golf Corporation, a portfolio of 25 facilities under management contracts at
March 31, 1996, including private, semi-private and daily-fee golf courses in
10 states throughout the U.S. For purposes of this discussion and analysis,
St. James, Laurel Valley and Myrtle West, which were constructed or acquired by
the Company prior to 1994, and Curtis Park, constructed on land leased in April
1994 are referred to hereafter as "Owned" courses.
The Company's consolidated financial statements include the accounts of
the Company and all majority-owned subsidiaries. The Company acquired or
developed its four currently owned golf courses at varying times during the
financial statement periods presented herein. The following table indicates
the number of full months each course was operating during the respective
periods:
<TABLE>
<CAPTION>
Quarter Ended March 31,
-----------------------
1996 1995
----- ----
<S> <C> <C> <C>
St. James (opened for play October 1991) 3 3
Laurel Valley (opened for play April 1993) 3 3
Myrtle West (acquired December 30, 1993) 3 3
Curtis Park (opened for play June 1995) 3 -
</TABLE>
16
<PAGE> 17
BRASSIE GOLF CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
Three golf courses, Palisades, Wedgefield and NorthShore, (the "Stanchina
Courses"), were acquired by the Company in a single transaction during April
1994, and were transferred back to the previous owners during May 1995. The
operating results of these three facilities are included only from the date of
acquisition through the date of disposition in May 1995.
RESULTS OF OPERATIONS
QUARTER ENDED MARCH 31, 1996 COMPARED TO QUARTER ENDED MARCH 31, 1995
(A) Revenues
The Company derives its revenues primarily from golf fees (including
greens fees, range fees and cart fees), management and design fees, membership
fees and annual dues, pro shop sales and food and beverage sales.
The period-to-period increase (decrease) in each of the revenue
categories is as follows:
<TABLE>
<CAPTION>
Quarter Ended March 31 Increase
----------------------- --------
1996 1995 (Decrease)
---------- ---------- ---------
<S> <C> <C> <C>
Golf Fees $ 806,717 $1,479,249 $(672,532)
Design and Management Fees 486,828 79,533 407,295
Membership Fees and Annual Dues 148,466 403,411 (254,945)
Food & Beverage 133,943 331,796 (197,853)
Pro Shop Sales 80,046 154,099 (74,053)
Other Income 6,794 3,251 3,543
---------- ---------- ---------
$1,662,794 $2,451,339 $(788,545)
</TABLE>
17
<PAGE> 18
BRASSIE GOLF CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
In the aggregate, the Company generated $1,662,794 in revenues during
the quarter ended March 31, 1996 compared to $2,451,339 during the quarter
ended March 31, 1995. The $788,545 decrease is primarily due to $1,272,000
attributable to the Stanchina Courses that were disposed of in May 1995, offset
by $86,000 related to Curtis Park and $428,000 related to Summit.
(B) Costs and Expenses
The Company's total operating expenses decreased to $2,103,051 during
the three-month period ended March 31, 1996 from $2,233,882 during the quarter
ended March 31, 1995.
Of the $130,831 decrease, approximately $1,089,000 was attributable to
the Stanchina Courses offset by approximately $232,000 for Curtis Park,
approximately $495,000 for Summit, and approximately $230,000 for general and
administrative expenses.
The Company routinely evaluates the cost of operations at each of its
facilities and establishes budgeted amounts for each significant category of
expense in the areas of pro shop, food and beverage, golf course maintenance,
and general, selling and administrative expenses. Monthly, the Company
analyzes its actual versus budgeted results. Management anticipates that, as a
result of its ongoing review process, costs and expenses will decline as a
percent of revenues.
Golf course operations include the compensation and benefits costs of
course personnel and related payroll taxes, golf cart leases, equipment rental
and maintenance, clubhouse repairs and upkeep, insurance, utilities, chemicals,
seed and fertilizers, water, supplies and other miscellaneous costs incurred in
the operation of a golf course.
Generally, costs are expected to be higher during the first three years
of operation due to higher maintenance, advertising, and other start up
expenses; operating expenses are expected to stablize after approximately the
initial three year period.
General and administrative expenses include management and
administrative compensation, related payroll taxes and benefits, professional
fees, including legal and accounting and other consultants, telephone,
utilities, insurance, other taxes, travel, meals and entertainment and office
expenses, including rents.
18
<PAGE> 19
BRASSIE GOLF CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
Interest expense increased from $392,953 during the three-month period
ended March 31, 1995 to $394,499 during the three-month period ended March 31,
1996. The increase of $1,546 is primarily due to $82,206 of interest for Curtis
Park operations and $36,195 for Summit offset by $130,185 for the Stanchina
Courses. The prime rate decreased from 9.0% at March 31, 1995 to 8.25% at March
31, 1996.
Interest and other income decreased from $7,166 during the three-month
period ended March 31, 1995 to $4,806 during the three-month period ended March
31, 1996. This $2,360 decrease resulted primarily from a decrease in the
average balance of available cash and marketable equity securities during the
respective periods.
(C) Net Loss
For the quarter ended March 31, 1996, the Company had a net loss of
$879,934, an increase of $711,604 from the net loss of $168,330 for the
three-month period ended March 31, 1995, which increase was attributable to the
reasons stated above.
(D) Inflation
Inflation has not had a material effect on the Company's operations
during the three-month periods ended March 31, 1996 or March 31, 1995.
LIQUIDITY AND CAPITAL RESOURCES
Historically, golf fees, membership fees and dues, pro shop sales, food
and beverage sales and management and design fees have been the principal
source of funds to pay the operating expenses of the Company. To fund
acquisitions and capital improvements, the Company is reliant upon long-term
borrowing and equity financing.
Working Capital
The Company had a surplus in working capital in the amount of
$3,098,534 as of March 31, 1996, compared to a working capital deficiency of
$1,927,308 as of December 31, 1995. This $5,025,842 increase in working
capital was a result of $5,500,000 in proceeds for long term 6% convertible
debentures sold in March 1996 that were used to pay down a portion of short
term obligations, offset partially by the net loss for the three-month period
ended March 31, 1996.
The total borrowings for the Company increased from $16,960,931 at
December 31, 1995 to $22,285,080 at March 31, 1996 resulting primarily from the
long term 6% convertible debentures sold in March 1996.
19
<PAGE> 20
BRASSIE GOLF CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
Proceeds from Developer's Resident Lot Sales
By agreement with developers of residential real estate developments
contiguous to certain golf courses constructed or acquired by the Company,
initial membership fees are paid to the Company by the developer on behalf of
the purchasing resident upon the closing of each lot sale pursuant to
negotiated or assumed agreements. Such arrangements are in effect at St. James
and Laurel Valley. Through June 19, 1995, the Company was required by its
secured lender at St. James to apply all such fees to reduce its bank debt upon
each payment thereof. During May 1995, the bank agreed to permit the Company
to retain the resident membership fees rather than apply them against the
outstanding loan balance. During the three months ended March 31, 1996, 19
lots were sold by the developer at St. James, the proceeds of which increased
cash by $95,000, compared to 29 lots sold during the three-month period ended
March 31, 1995, the proceeds of which reduced the bank debt by $145,000. As of
April 30, 1996, the Company estimates that there will be 296 future residential
lots to be sold, each of which when sold would generate a $5,000 resident
membership fee under the agreement at St. James. Furthermore, there are
approximately 425 lots at Laurel Valley upon the sale of which future resident
membership fees may be in the range of $3,000 - $5,000 per lot. Although lot
sales have continued to close at St. James subsequent to March 1996, there can
be no assurance as to whether any additional lot sales will continue or, if
they do occur, over what period of time the membership fees paid at closing
will be received by the Company.
Warrant Exercises
During the three-month period ended March 31, 1996, no warrants were exercised.
Warrants to purchase 1,000,000 shares expired on March 15, 1996. During March
1995, the holders of warrants to purchase 982,001 shares of the common stock
exercised their warrants, for which the Company received aggregate
consideration in the amount of $1,374,801, consisting of $1,202,494 from the
cancellation of debt and $172,307 in cash.
20
<PAGE> 21
BRASSIE GOLF CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
See the footnotes to the Consolidated Financial Statements of the Company for
the year ended December 31, 1995 incorporated herein by reference in Form 10-K.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security-Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.47 - Form of Subscription Agreement and 6% Convertible Debenture due
March 1, 1998 issued March 19, 1996 by and between Brassie Golf
Corporation and Holders
27 - Financial Data Schedule (for SEC use only)
(b) Reports
None
21
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BRASSIE GOLF CORPORATION
/s/ Steve Tucker
--------------------------------------------
Steve Tucker, Controller
(Principal Financial and Accounting Officer)
Date: May 14, 1996
22
<PAGE> 1
BRASSIE
EXHIBIT 1
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned (The HOLDER) hereby irrevocably elects to convert
_________________(USD$___________________) of the above Debenture NO.________
into ________________(__________) common share of Common Stock of Brassie Golf
Corporation (the "ISSUER") and a remaining exchange debenture in the amount of
________________________(USD$____________________) according to the conditions
set forth in such Debenture, as of the date written below. The shares are to
be issued in the "Street Name" written below.
The undersigned represents and warrants as follows:
(1) The offer to purchase the Debenture was made to it outside of the
United States, and the undersigned was, at the time the subscription form was
executed and delivered, and is now outside the United States;
(2) It is not a US person (as such term is defined in Section 902 (a) of
Regulation S ("Regulation S") promulgated under the United States Securities
Act of 1933 (the "Securities Act"); and it has purchased the Debenture and the
shares for its own account and not for the account or benefit of any US person;
(3) All offers and sales by the undersigned of the shares issuable upon
the conversion of the Debenture acquitted pursuant to the Offshore Debenture
Securities Subscription Form shall be made pursuant to an effective
registration statement under the Securities Act or pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act;
(4) It is familiar with and understands the terms and conditions, and
requirements contained in Regulations S with respect to the Shares;
(5) The undersigned has not engaged in any "directed selling efforts" (as
such term is defined Regulation S, and definitions of US person in
Regulation S, and
(6) Upon Conversion pursuant to this Notice of Conversion, the HOLDER will
not own or be deemed to beneficially own (within the meaning of the Securities
Exchange Act of 1934) 4.99% or more of the then issued and outstanding shares
of the ISSUER.
Holder:______________________________
By:__________________________________
Official Signatory of HOLDER
Title:___________________ Country of execution:________________________________
Date of Conversion__________________________________________________________
Applicable Conversion Price__________________________________________________
Name of Holder for Registration:______________________________________________
Address for Registration:____________________________________________________
________________________________________________________________________
*The original Debenture and this Notice of Conversion must be received by the
ISSUER within five (5) New York Stock Exchange Trading Days following the Date
of Conversion.
<PAGE> 2
OFFSHORE DEBENTURE SECURITIES SUBSCRIPTION AGREEMENT
This Offshore Debenture Securities Subscription Agreement is executed in
reliance upon the transaction exemption afforded by Regulation S ("Regulation
S") as promulgated by the Securities and Exchange Commission ("SEC"), under the
Securities Act of 1933, as amended ("1933 ACT").
This Agreement has been executed by the undersigned in connection with the
private placement of
Six percent (6%) convertible Debentures of
BRASSIE GOLF CORPORATION
5806-A BRECKENRIDGE PKY.
TAMPA, FL 33610
National Association of Securities Dealers Automated Quotation System Symbol
("PUTT") a corporation organized under the laws of Delaware, United States of
America (hereinafter referred to as the "ISSUER")
The undersigned
NAME: Lake Management LDC
ADDRESS: c/o Field Secretaries (Cayman) Ltd.
Butterfield House, Fort Street
Grand Cayman, Cayman Islands
a Corporation organized under the laws of _____________, a non USA Jurisdiction
(hereinafter referred to as the "HOLDER"), hereby represents and warrants to,
and agrees with ISSUER as follows:
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE.
a. The undersigned hereby subscribed for and agrees to purchase
that number of the ISSUER'S 6% Convertible Debentures convertible into
Common Stock (the "Shares"), substantially in form of the Debenture
attached as Exhibit A hereto (singly a "Debenture", and collectively the
"Debentures") at par value. (The Debentures and the Shares into which
they are convertible are collectively referred to as the "Securities")
b. FORM OF PAYMENT. HOLDER shall receive One Million US Dollars
(US$1,000,000) face amount of the Issuers Debentures for the total
consideration of One Million US Dollars (US$1,000,000), payable by wire
transfer in United States Dollars on or before March 15, 1996 into the
account as follows:
<PAGE> 3
NationsBank
Tampa, Florida
ABA #063100277
Account Name: Brassie Golf Corporation
Account #3603737679
2. HOLDER REPRESENTATIONS; ACCESS TO INFORMATION; INDEPENDENT INVESTIGATION.
A. OFFSHORE TRANSACTION, HOLDER REPRESENTS AND WARRANTS TO ISSUER
AS FOLLOWS:
i. Neither the HOLDER or any person or entity for whom the HOLDER
is acting as fiduciary is a U.S. person, meaning any one of the
following:
(1) any natural person resident in the United States of
America;
(2) any partnership or corporation organized or
incorporated under the laws of the United States;
(3) any estate of which any executor or administrator is a
U.S. person;
(4) any trust of which any trustee is a U.S. person;
(5) any agency or branch of a foreign entity located in the
United States;
(6) any non-discretionary account or similar (other than an
estate or trust) held by a dealer or other fiduciary
for the benefit or account of a U.S. person;
(7) any discretionary account or similar account (other than
an estate or trust) held by a dealer or other fiduciary
organized, incorporated, or (if an individual) resident
in the United States; and
(8) any partnership or corporation if:
(A) organized or incorporated under the laws
of any foreign jurisdiction; and
(B) formed by a U.S. person, principally for
the purpose of investing in securities not
registered under the 1933 Act, unless it is
organized or incorporated, and owned by an
accredited investor (as defined in Rule 501(a)
under the
2
<PAGE> 4
securities act) who are not natural persons,
estates or trusts (whenever such term is used
herein, it shall have the meaning given in
Regulation S);
(ii) At the time the buy order was originated, HOLDER was outside the
United States and is outside of the United States as of the date
of the execution and delivery of this agreement; no offer to
purchase the Securities was made in the United States.
(iii) HOLDER is purchasing the Securities for its own account or for
the account of beneficiaries each of whom has entered into an
offshore Debenture Securities Subscription Agreement with the
HOLDER in a form similar to this Agreement with the effect such
that all representations, warranties and agreements herein were
made directly by such beneficiary.
(iv) Each distributor participating in the offering of the Debentures
to the HOLDER, if any, has agreed in writing that all offers and
sales of the Securities prior to the expiration of a period
commencing on the date of the closing of the offering of the
Debentures and ending 40 days thereafter (the "Restricted
Period") shall only be made in compliance with the safe harbor
contained in Regulation S, pursuant to registration of
Securities under the 1933 Act or pursuant to an exemption from
registration;
(v) HOLDER represents and warrants and hereby agrees that all offers
and sales of the Securities prior to the expiration of the
Restricted Period or thereafter shall only be made in compliance
with the safe harbor contained in Regulation S, pursuant to
registration of securities under the 1933 Act or pursuant to an
exemption from registration, and all offers and sales after the
Restricted Period shall be made only pursuant to such a
registration or to such exemption from registration.
(vi) All offering documents received by HOLDER include statements to
the effect that the Debentures and the Shares have not been
registered under the 1933 Act and may not be offered or sold in
the United States or to U.S. Persons or for the account or
benefit of a U.S. person (other than distributors as defined in
Regulation S) during the Restricted Period or thereafter, unless
the Securities are registered under the 1933 Act or an exemption
from the registration requirements is available.
(vii) HOLDER acknowledges that the purchase of the
Securities involves a high degree of risk and further
acknowledges that it can bear the economic risk of the
purchase of the Securities, including the total loss of its
3
<PAGE> 5
investment. HOLDER acknowledges that it has obtained the advice
of competent legal counsel in its domicile jurisdiction that it
is qualified under the laws of their domicile to purchase the
securities offered hereunder and that the offer and sale of said
securities will not violate the laws of its domicile
jurisdiction.
(viii) HOLDER understands that the Securities are being offered and
sold to it in reliance on specific exemptions from the
registration requirements of Federal and State securities laws
and that the ISSUER is relying upon the truth and accuracy of
the representations, warranties, agreements, acknowledgments and
understandings of HOLDER set forth herein in order to determine
the applicability of such exemptions and the suitability of
HOLDER to acquire the Debentures.
(ix) HOLDER's sufficiently experienced in financial and business
matters to be capable of evaluating the merits and risks of its
investments, and to make an informed decision relating thereto.
(x) In evaluating its investment, HOLDER has consulted its own
investment and/or legal and/or tax advisors.
(xi) HOLDER understands that in the view of the SEC the statutory
basis for the exemption claimed for this transaction would not
be present if the offering of Securities, although in technical
compliance with Regulation S, is part of a plan or scheme to
evade the registration provisions of the 1933 ACT. HOLDER is
acquiring the Securities for investment purposes and has no
present intention to sell the Securities in the United States or
to a U.S. Person or for the account or benefit of a U.S. Person.
(xii) HOLDER represents and warrants that neither it nor any of its
affiliates will directly or indirectly maintain any short
position in Securities of the ISSUER from closing through the
final Conversion Date.
(xiii) HOLDER represents and warrants that no common stock of the
ISSUER will be offered, sold or traded, by the HOLDER, to
Canadian residents for a period of Ninety (90) days from the
date of issuance hereof.
IF HOLDER is purchasing the Securities subscribed for hereby in representative
or fiduciary capacity, the Holder warrant that the representations and
warranties in this Offshore Securities Subscription Agreement have been
obtained from the person or persons for whom HOLDER is so purchasing and the
HOLDER warrants them to be true. Furthermore the HOLDER shall provide the
Issuer with HOLDER representation letter upon each Conversion.
4
<PAGE> 6
The foregoing representations and warranties are true and accurate as of the
date hereof, shall be true and accurate as of the date of the acceptance by the
ISSUER of HOLDER'S subscription, and shall survive thereafter. If HOLDER has
knowledge, prior to the acceptance of its Offshore Debenture Securities
Subscription Agreement by the ISSUER, that any such representations or
warranties shall not be true and accurate in any respect, the HOLDER, prior to
such acceptance, will give written notice of such fact to the ISSUER specifying
which representations and warranties are not true and accurate and the reasons
therefore:
b. CURRENT PUBLIC INFORMATION. HOLDER acknowledges that HOLDER has
been furnished with or has acquired copies of the Company's most
recent Annual Report on Form 10-K and any Form 10-Q filed
thereafter (collectively the "SEC Filings), and other publicly
available documents.
c. INDEPENDENT INVESTIGATION; ACCESS, HOLDER acknowledges that
HOLDER in making the decision to purchase the Securities
subscribed for, has relied upon independent investigations made
by it and it's HOLDER representatives, if any and HOLDER and
such representatives, if any, have prior to any sale to it, have
given access and the opportunity to examine all materials books
and records of the Corporation, all material contracts and
documents relating to this offering and an opportunity to ask
questions of, and to receive answers from ISSUER or any person
acting on its behalf concerning the terms and conditions of this
offering. HOLDER and it's advisors, if any, have been furnished
with access to all publicly available materials relating to the
offer and sale of the Securities which have been requested.
HOLDER and its advisors, if any, have received complete and
satisfactory answers to any such inquiries.
d. NO GOVERNMENTAL RECOMMENDATIONS OR APPROVAL. HOLDER understands
that no federal or state agency has made or will make any
finding or determination relating to the fairness for public
investment in the Securities, or has passed or made, or will
pass on or make, any recommendation or endorsement of the
Securities.
e. ENTITY PURCHASE. If HOLDER is a partnership, corporation or
trust, the person executing this Offshore Securities
Subscription Agreement on its behalf represents and warrants
that:
(i) He or she has made due inquiry to determine the
truthfulness of the representations and warranties made
pursuant to this Offshore Securities Subscription
Agreement.
(ii) He or she is duly authorized (if the undersigned is a
trust, by the trust agreement) to make this investment
and to enter into and execute this Offshore Securities
Subscription on behalf of such entity.
5
<PAGE> 7
3. ISSUER REPRESENTATIONS, ISSUER REPRESENTS AND WARRANTS TO THE HOLDER AS
FOLLOWS:
a. REPORTING COMPANY STATUS. ISSUER is a reporting issuer as
defined by rule 902 of Regulation S.
b. OFFSHORE TRANSACTION. ISSUER has not offered these Securities
to any person in the United States or to any U.S. person or for
the account or benefit of any U.S. person.
c. NO DIRECTED SELLING EFFORTS. In regard to this transaction,
ISSUER has not conducted any "directed selling efforts" as that
term is defined in rule 902 of Regulation S, nor has ISSUER
conducted any general solicitation relating to the offer and
sale of the securities to U.S. persons resident within the
United States or elsewhere.
d. SECURITIES. The Securities when issued and delivered will be
duly and validly authorized and issued, fully paid and
non-assessable and will not subject the holders thereof to any
liability by reason of being such holders.
e. OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT. The Offshore
Securities Subscription Agreement, when acknowledged by the
signature of an officer of the Issuer, has been duly authorized,
validly executed and delivered on behalf of the ISSUER and is a
valid and binding agreement in accordance with its terms.
f. NON-CONTRAVENTION. The execution and delivery of the Offshore
Securities Subscription Agreement and the consummation of the
issuance of the Securities and the transactions contemplated by
the Subscription Agreement do not and will not conflict with or
result in a breach of the ISSUER of any of the terms or
provisions, of, or constitute a default under, the certificate
of incorporation or by laws of the ISSUER, or any indenture,
mortgage, deed of trust, or other material agreement or
instrument to which the ISSUER is a party or by which it or any
of its properties or assets are bound, or any existing
applicable law, rule, or regulation or any applicable decrees,
judgment or order of any court, Federal or State regulatory
body, administrative agency or other governmental body having
jurisdiction over the ISSUER or any of its properties or assets.
g. FILINGS. ISSUER undertakes and agrees pursuant to the sale of
its securities under Regulation S, to make all necessary filings
in connection with the sale of its securities as required by the
laws and regulations of all appropriate jurisdictions.
h. SEC FILINGS. ISSUER has previously delivered to Holder copies
of (i) its Form 10-K for the fiscal year ended 12/31/94, (ii)
its Form 10-Q for the three (3) month
6
<PAGE> 8
period ended 9/30/95 and (iii) all Form 8-Ks filed with the SEC
after 7/6/95 and prior to the date of this Subscription
Agreement. Each such filing was timely filed with the SEC, and
did not at the time it was filed, contain any misstatement of
material or an omission of a material fact required to be stated
therein necessary to make the statements therein not misleading
as of the time such document was filed. As of their respective
dates, such reports compiled in all material respects with
applicable requirements of the Securities Exchange Act of 1934
as amended. Since the date of the latest Form 10-Q of ISSUER
dated 09/30/95, (i) ISSUER has conducted its business in the
ordinary, regular course, (ii) there has been no change in the
financial condition of ISSUER which has had a material adverse
effect, or any event, condition or state of facts, the
occurrence of which has had a material or adverse effect, and,
(iii) except in the ordinary, regular course of its business
ISSUER has not made any dispositions of material assets,
borrowed any funds, absolute or contingent, or paid, discharged
or satisfied any claim, liability or obligation. As of January
29, 1996, 17,678,066 million shares of Common Stock of the
Issuers are issued and outstanding.
4. EXPIRATION OF RESTRICTED PERIOD. The transaction restriction in
connection with this Offshore offer and sale restrict the HOLDER from
offering and selling to U.S. persons or for the account or benefit of a
U.S. person for a forty (40) day period. The rules do not require the
placement of such a restrictive legend on the share certificate issued
pursuant to conversion of the Debenture. Rule 903(c)(2) governs the forty
(40) day transaction restriction. Title to the Securities may be
transferred by HOLDERS to other Non United States persons or entities in
accordance with Regulation S.
5. EXEMPTION; RELIANCE ON REPRESENTATIONS. HOLDER understands that the
offer and sale of the Securities is not being registered under the 1933
Act. ISSUER is relying on the rules governing offers and sales made
outside the United States pursuant to Regulation S. Rules 901 through 903
of Regulation S govern this transaction. ISSUER acknowledges that the
HOLDER may resell the Securities without violation of United States law,
provided all offers and sales by HOLDERS are made in accordance with Rule
904 of Regulation S, pursuant to Registration under the 1933 Act or an
available exemption under the 1933 Act, and this agreement.
6. TRANSFER AGENT INSTRUCTIONS.
a. DEBENTURES. Upon the conversion of the Debentures, the HOLDER
thereof shall submit such Debentures to Transfer Agent of the
ISSUER, and ISSUER shall instruct ISSUER's Transfer Agent to
issue one or more certificates within Two (2) New York Stock
Exchange trading days, representing that number of shares of
Common Stock into which the Debenture or Debentures are
convertible in accordance with the provisions regarding
conversion set forth in the Debentures.
7
<PAGE> 9
b. NO LEGENDS ON CERTIFICATES. Upon conversion of any Debenture
ISSUER's Transfer Agent will be instructed to issue one or more
share certificates representing Shares without restrictive
legend in the names of HOLDER to be specified prior to
conversion in such denominations to be specified at conversion
representing the number of shares of Common Stock issuable upon
such conversion. ISSUER further warrants that no stop transfer
instructions other than a stock transfer for the Debentures for
forty (40) days to U.S. persons have been given to the Transfer
Agent and that the Shares, when issued upon conversion after the
expiration of the (40) Day Transaction Restriction Period
applicable to the Debentures in accordance with the terms of the
Debenture, shall be freely transferable on the books and records
of the ISSUER subject to compliance with applicable securities
laws, including, without limitation, Rule 904 of Regulation S.
c. REMOVAL OF STOP TRANSFER. Upon the fortieth (40) day after
closing of the issuance of the Debentures, the ISSUER agrees to
cause the stop transfer instruction, if any, to be removed from
the Debentures forthwith in accordance with and the extent
permitted by the Conversion Dates of the Debenture. ISSUER
agrees to accept a HOLDER Notice of Conversion from the HOLDER
in the form of Exhibit '1' attached hereto and incorporated
herein by reference, as sole and sufficient evidence that the
HOLDER has complied with applicable securities laws and upon
receipt of such Notice of Conversion shall promptly instruct the
Transfer Agent to issue the Shares to the HOLDER as per (a)
above provided, ISSUER shall not be required to deliver such
instructions if it knows, or reasonably believes, any of the
representations made in the Notice of Conversion and HOLDER
Representation Letter are false.
7. CLOSING DATE. This agreement shall be effective from, and the
Debentures shall be dated as of March ___, 1996, the date of
Closing by the HOLDER. The date of this issuance of the
Debentures shall be no later than five (5) New York Stock
Exchange Trading Days after acceptance thereof or such other
mutually agreed to time. Closing shall be effected through
delivery of funds and certificates to Designated Agent. HOLDER
shall forthwith deliver the necessary funds as indicated in
Paragraph 1.
8. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
a. ISSUER'S RIGHT TO REJECT. ISSUER shall have the right
to reject any given Offshore Debenture Securities
Subscription Agreement which is tendered to the ISSUER,
but only for the reason that the ISSUER reasonably
believes any representations and warranties of such
HOLDER to be untrue, and in such event ISSUER shall
provide HOLDER written notice of such rejection and the
reason therefor and shall provide reasonable opportunity
for a response to such stated reason. HOLDER
understands that ISSUER'S obligation to sell the
Debentures is
8
<PAGE> 10
conditioned upon:
(i) The receipt and acceptance by ISSUER of a duly
executed copy of this Offshore Securities
Subscription Agreement for all of the Securities
is evidenced by execution of this subscription
agreement by the ISSUER or ISSUER'S duly
authorized agent. In the absence of a written
acknowledge of this Agreement by the ISSUER, the
delivery of Debenture Certificates to the
Designated Escrow Account and/or the transfer of
funds to the ISSUER shall be deemed to be
constructive acceptance of this Offshore
Debenture Securities Subscription Agreement.
HOLDER understands this Offshore Debenture
Securities Subscription Agreement is
irrevocable.
(ii) Delivery into the designated Issuers account by
HOLDER of good funds as payment in full for the
purchase of the Securities, and all fees and
commissions.
9. CONDITIONS TO HOLDER'S OBLIGATION TO PURCHASE. ISSUER
understands that HOLDER'S obligation to purchase the Debentures
is conditioned upon delivery of the Debenture as described
herein and the absence of any event or circumstance that could
reasonably be expected to have a material adverse effect on the
financial condition of the ISSUER, or the market price of the
ISSUER'S Common Stock, or in any such event as determined by the
HOLDER in its reasonable discretion, provided, that upon
delivery of the Debenture against payment thereof, such purchase
shall be final.
10. GOVERNING LAW. This agreement shall be governed by and
construed under the laws of the State of Delaware without regard
to conflict law.
11. ENTIRE AGREEMENT. This Offshore Securities Subscription
Agreement constitutes the entire agreement among the parties
hereof with respect to the subject matter hereof and supersedes
any and all prior or contemporaneous representations,
warranties, agreements and understandings in connection
therewith. This Offshore Securities Subscription Agreement may
be amended only by a writing executed by all parties hereto.
This agreement may be executed in counterparts and the facsimile
transmission of an executed counterpart to this Agreement shall
be effective as an original.
9
<PAGE> 11
12. FULL NAME AND ADDRESS OF HOLDER FOR REGISTRATION PURPOSES:
NAME: Lake Management LDC
--------------------------------------
ADDRESS: c/o Field Secretaries (Cayman) Ltd.
--------------------------------------
Butterfield House, Fort Street
--------------------------------------
TEL NO.
--------------------------------------
FAX NO.
--------------------------------------
CONTACT NAME: Mr. Kelly
--------------------------------------
12. DELIVERY INSTRUCTIONS: (IF DIFFERENT FROM REGISTRATION NAME):
NAME: --------------------------------------
ADDRESS: --------------------------------------
TEL NO. --------------------------------------
FAX NO. --------------------------------------
CONTACT NAME: --------------------------------------
SPECIAL INSTRUCTIONS
--------------------------------------
- ----------------------------------------------------------
- ----------------------------------------------------------
- ----------------------------------------------------------
10
<PAGE> 12
IN WITNESS WHEREOF, this Offshore Securities Subscription Agreement was duly
executed on the date first written below. This Agreement must be accepted by
the ISSUER no later than 5:00 p.m. Eastern Time, on the third New York Stock
Exchange Trading day after the date of execution by the HOLDER or it shall be
deemed to be null and void.
Dated this 14th day of the month of March, 1996.
NAME: Lake Management LDC
------------------------------------------------------------
BY:
------------------------------------------------------------
Official Signatory of HOLDER
NAME (PRINTED): Field Secretaries (Cayman) Ltd.
-------------------------------------------------
TITLE: Secretary
------------------------------------------------------------
COUNTRY OF
EXECUTION: Cayman Island
--------------------------------------------------------
Accepted this 14th day of the month of March, 1996.
BRASSIE GOLF CORPORATION
BY: [William E. Horne]
--------------------------------------------
Official Signatory of Issuer
NAME (PRINTED): William E. Horne
---------------------------------
TITLE: President/CEO
------------------------------------------
11
<PAGE> 13
Ryder 1
It is hereby mutually agreed by Lake Management LDC ("the Holder") and Brassie
Golf Corporation (the "Issuer") that the following changes have been made to
their March 14, 1996 Offshore Debenture Securities Subscription Agreement (the
"Agreement"), which changes shall be incorporated by reference into the
Agreement and Debenture issued in connection with such Agreement both of which
shall be and hereby are amended or interpreted to incorporate such changes.
1. The wiring instructions shall be changed to the following:
First Union
Atlanta, GA
Sutherland Asbill & Brennan Special Account
ABA #061000227
Account #: 2080000365714
Include: Name of Wire Orginator
Notify: Nini Grant of Sutherland Asbill & Brennan
(404) 853-8624
2. Interest: The Debenture interest shall be accrued and at the sole option
of the Issuer be due and payable in Common Stock of the Issuer on the date
of Conversion by the Holders at a Conversion Price for each share of
Common Stock equal to 100% of the Market Price (as defined in the
Debenture) of the Common Stock on the dates of Conversion by the Holder.
Agreed and accepted effective the 19th day of March, 1996.
- --------------------------- -----------------------------
For Lake Management, LDC For Brassie Golf Corporation
12
<PAGE> 14
$1,000,000.00 USD
BRASSIE GOLF CORPORATION
$5,500,000.00 6% CONVERTIBLE DEBENTURE
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED ("THE ACT"), AND MAY NOT BE OFFERED
OR SOLD IN THE UNITED STATES (AS DEFINED IN REGULATION S UNDER THE ACT) OR TO
OR FOR THE ACCOUNT OR BENEFIT OF US PERSONS (AS DEFINED IN REGULATION S UNDER
THE ACT) EXCEPT PURSUANT TO REGISTRATION UNDER THE ACT OR AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE ACT.
THIS DEBENTURE is one of a duly authorized issue of Debentures of Brassie Golf
Corporation, a corporation duly organized and existing under the laws of the
State of Delaware (the "ISSUER") designated as its Six Percent (6%) Convertible
Debenture Due March 1, 1998, in an aggregate face amount not exceeding Five
Million Five Hundred Thousand US Dollars (USD $5,500,000.00), issuable in Fifty
Thousand (USD $50,000.00) par value face amounts.
FOR VALUE RECEIVED, the ISSUER promises to pay to
Lake Management LDC
----------------------------------------
the registered holder hereof and its successors and assigns (the "HOLDER"), the
principal sum of
One Million (1,000,000.00) U.S. Dollars,
----------------------------------------
on March 1, 1998 (the "Maturity Date"), and to pay interest on the principal
sum outstanding at the rate of 6% per annum, due and payable quarterly in
arrears commencing on April 30, 1996 and subsequently on July 31, October 31,
January 31, for the term of the note or until the Debenture is completely
converted. Accrual of Interest shall commence on the first business day to
occur after the date hereof and shall continue until payment in full of the
principal sum has been made or duly provided for. The interest so payable will
be paid to the person in whose name this Debenture (or one or more predecessor
Debentures) is registered on the records of the ISSUER regarding registration
and transfers to the Debenture (the "Debenture Register"), provided, however,
that the ISSUER'S obligation to a transferee of this Debenture arises only if
such transfer, sale or other deposition is made in accordance with the terms
and conditions of the Offshore Subscription agreement dated as of March 15,
1996 between the ISSUER and HOLDER (the "Offshore Debentures Securities
Subscription Agreement"). The principal of, and interest on, this Debenture
are payable in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts, at the
address last appearing on the Debenture register of the ISSUER as designated in
writing by the HOLDER hereof from time to time. The ISSUER will pay the
principal of and all accrued and unpaid interest due upon this Debenture on the
Maturity Date, less any amounts required by law to be deducted or withheld, to
the HOLDER at the last address on the Debenture Register. The forwarding of
such check shall constitute a payment of principal and interest hereunder and
shall satisfy and discharge the liability for principal and interest on this
Debenture to the extent of the sum represented by such check plus any amounts
so deducted.
<PAGE> 15
The Debenture is subject to the following additional provisions:
1. The Debenture is issuable in integral multiples. The
Debenture is exchangeable for like Debentures in equal aggregate principal
amount of different authorized denominations, as requested by the HOLDERS
surrendering the same. No service charge will be made for such registration or
transfer or exchange.
2. The ISSUER shall be entitled to withhold from all payments
of principal of, and interest on, this Debenture any amounts required to be
withheld under the applicable provisions of the United States Income Tax or
other applicable laws at the time of such payments.
3. This Debenture has been issued subject to investment
representations of the original HOLDER hereof and may be transferred or
exchanged in the US only in compliance with the Securities Act of 1993, as
amended (the "Act") and applicable state securities laws. Prior to the due
presentment for such transfer of this Debenture, the ISSUER and any agent of
the ISSUER may treat the person in whose name this Debenture is duly registered
on the ISSUER'S Debenture Register as the owner hereof for the purpose of
receiving payment as herein provided and all other purposes, whether or not
this Debenture is overdue, and neither the ISSUER nor any such agent shall be
affected by notice to the contrary. The transferee shall be bound, as the
original HOLDER, by the same representations and term described herein and
under the Offshore Debenture Securities Agreement.
4. The HOLDER of this Debenture is entitled, at its option,
at any time commencing from and after April 30,1996, Forty One (41) days after
issue hereof, (the "First Conversion Date") to convert up to One Third (33
1/3%), of the original principal amount of this Debenture into shares of Common
Stock of the ISSUER (the"Common Stock") at a conversion price for each share of
Common Stock equal to Seventy-Five percent (75%) of the Market Price (as
defined below) of the Common Stock. Thereafter, the Holder, at its option, may
convert up to an additional One Third (33 1/3%) of the original principal
amount of this Debenture at any time on and after Twenty (20) days from the
First Conversion Date, into shares of Common Stock of the ISSUER (the "Common
Stock") at a conversion price for each share of Common Stock equal to
Seventy-Five percent (75%) of the Market Price (as defined below) of the Common
Stock. Thereafter, the Holder, at its option, may convert up to an additional
One Third (33 1/3%), of the original principal amount of this Debenture at any
time on and after Forty Five (45) days from the First Conversion Date, into
shares of Common Stock of the ISSUER (to "Common Stock") at a conversion price
for each share of Common Stock equal to Seventy Five percent (75%) of the
Market Price (as defined below) of the Common Stock. For purposes of this
Section 4, the "Market Price" shall be the lesser of the average closing bid
price of the Common Stock of the ISSUER for the Five (5) NASDAQ Trading Days
immediately preceding the applicable Conversion Date (as hereafter defined), as
reported by the National Association of Securities Dealers Automated Quotation
System (NASDAQ), or Two United States Dollars (USD $2.00). Notwithstanding the
foregoing, the conversion right of the Holder set forth herein,
2
<PAGE> 16
shall be limited such that at any time prior to ___, 1996 (One Hundred Twenty
(120) days after the date of issuance hereof), in the event that a Notice of
Conversion is issued by the Holder and the Market Price is less than One United
States Dollar and Twenty Five Cents (USD$1.25) (the "Limit Price") the Market
Price shall be Seventy-Five (75) percent of the Limit Price. Such conversion
shall be effected by surrendering the Debentures to be converted (with a copy,
by facsimile or courier), to the ISSUERS Transfer Agent, with the form of
conversion notice attached hereto as Exhibit 1 and incorporated herein by
reference, executed by the HOLDER of this Debenture or a specified portion (as
provided) hereof, and accompanied, if required by the ISSUER, by proper
assignment hereof in blank. Accrued but unpaid interest shall, at the sole
option of the ISSUER or HOLDER, be subject to conversion under the same terms
and conditions as the principal amount of this Debenture at the time of
conversion of this Debenture or any portion thereof. No fractional shares or
script representing fractions of shares will be issued on conversion, but the
number of shares issuable shall be rounded to the nearest whole share, with the
fraction paid in cash at the discretion of the ISSUER. For purposes of this
Debenture, the "Conversion Date" on which notice of conversion is given by the
HOLDER shall be deemed to be the close of business on the date on which the
Holder has delivered this Debenture, subject to the Conversion Dates aforesaid
and, with the conversion notice duly executed, to the Transfer Agent via
recognized overnight courier. The ISSUER may, at its option, cause the
automatic conversion into Common Stock of One Third (33 1/3%) of the outstanding
amounts that remain unconverted under this Debenture after One Hundred Eighty
(180) days from the date of issuance hereof at the aforesaid Conversion Price.
Thereafter, the ISSUER may, at its option, cause the automatic conversion into
Common Stock of Fifty percent (50%) of the outstanding amounts that remain
unconverted under this Debenture after Two Hundred Seventy (270) days from the
date of issuance hereof at the aforesaid Conversion Price. Thereafter, the
ISSUER may, at its option, cause the automatic conversion into Common Stock of
any and or all of the outstanding amounts that remain unconverted under this
Debenture after Three Hundred Sixty Five (365) days from the date of issuance
hereof at the aforesaid Conversion Price. The ISSUER may exercise its options
to cause automatic conversion as set forth herein in whole or in part and from
time to time. The option shall be effectively exercised on the date in which
the ISSUER mails the notice of said automatic conversion to the registered
HOLDER of the effected Debentures. Notwithstanding the foregoing, the conversion
right of the HOLDER set forth herein shall be limited such that in no instance
shall the HOLDER own or be deemed to beneficially own (within the meaning of the
Securities Exchange Act of 1934) 4.99% or more of the then issued and
outstanding shares of the common stock of the company.
5. No provision of this Debenture shall alter or impair the
obligation of the ISSUER, which is absolute and unconditional, to pay the
principal of, and interest on, this Debenture at the place, time, and rate, and
in the coin or currency, herein prescribed.
6. The ISSUER hereby expressly waives demand and presentment
for payment, notice of nonpayment, protest, notice of protest, notice of
dishonor, notice of acceleration or intent to accelerate, bringing of suit and
diligence in taking any action to collect amounts called for hereunder and
shall be directly and primarily liable for the payment of all sums owing and to
3
<PAGE> 17
be owing hereon, regardless of and without any notice, diligence, act or
omission as or with respect to the collection of any amount called for
hereunder.
7. The ISSUER agrees to pay all costs and expenses, including
reasonable attorneys' fees, which may be incurred by the Holder in collecting
any amount due or exercising the conversion rights under this Debenture.
8. If one or more of the following described "Events of
Default" shall occur:
(a) The ISSUER shall default in the payment of principal or
Interest on this Debenture and continuance for thirty (30)
days; or
(b) Any of the representations or warranties made by the
ISSUER herein, or in the Subscription Agreement shall have
been incorrect in any material respect; or
(c) The ISSUER shall fail to perform or observe any other
covenant, term, provision, condition, agreement or obligation
of the ISSUER under this Debenture and such failure shall
continued uncured for a period of seven (7) days after notice
from the Holder of such failure; or
(d) A trustee, liquidator or receiver shall be appointed for
the ISSUER or for a substantial part of its property or
business without its consent and shall not be discharged
within thirty (30) days after such appointment; or
(e) Any governmental agency or any court of competent
jurisdiction at the instance of any governmental agency shall
assume custody or control of the whole or any substantial
portion of the properties or assets of the ISSUER and shall
not be dismissed within thirty (30) calendar days thereafter;
or
(f) Bankruptcy reorganization, insolvency or liquidation
proceedings or other proceedings for relief under any
bankruptcy law or any law for the relief of debtors shall be
instituted by or against the ISSUER, and if instituted against
the ISSUER, ISSUER shall by any action or answer approve of,
consent to, or acquiesce on any such proceedings or admit the
material allegations of, or default in answering a petition
filed in any such proceeding; or
(g) The ISSUERS Common Stock is delisted from the exchange or
over-the-counter markets.
Then, or at any time thereafter, and in each and every such
case, unless such Event of Default shall have been waived in
writing by the Holder (which waiver shall not be deemed to be
a waiver of any subsequent default) at the option of the
HOLDER and in the HOLDER'S sole discretion, the HOLDER may
consider this
4
<PAGE> 18
Debenture immediately due and payable, without presentment,
demand protest or notice of any kind, all of which are hereby
expressly waived, anything herein or in any note or other
instruments contained to the contrary notwithstanding, and the
HOLDER may immediately, and without expiration of any period
of grace, enforce any and all of the HOLDER'S rights and
remedies provided herein or any other rights or remedies
afforded by law.
9. If changes or modification to the rules governing the
transaction restriction period and/or the exemptions for resales of the
securities under Regulation S are enacted during the period when any amounts
due under this Debenture remain outstanding then the ISSUER undertakes, upon
the written demand of the HOLDER for conversion of the Debentures, to file a
Registration Statement to register the Common Shares to be issued upon
conversion with the United States Securities Exchange Commission within Twenty
(20) New York Stock Exchange Trading Days of receipt of such demand. If such
Registration Statement is not effective within one hundred twenty (120)
calendar days of such demand, then the ISSUER agrees to increase the interest
rate payable any outstanding principal and interest due under this Debenture by
four (4) percent per annum effective form sixty (60) days from the date of the
demand, payable in cash, quarterly.
10. In case any provision of this Debenture is held by a
court of competent jurisdiction to be excessive in scope or otherwise invalid
or is unenforceable, such provision shall be adjusted rather than voided, if
possible, so that it is enforceable to the maximum extent possible, and the
validity and enforceability of the remaining provisions of this Debenture will
not in any way be affected or impaired thereby.
11. This Debenture and the agreements referred to in this
Debenture constitute the full and entire understanding and agreement between
the ISSUER and the HOLDER with respect hereof. Neither this Debenture nor any
terms hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the ISSUER and the HOLDER.
12. This Debenture shall be governed by and construed in
accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, the ISSUER has caused this instrument to be duly executed
by an officer thereunto duly authorized.
Brassie Golf Corporation
by:
------------------------------------------
Official Signatory of Issuer
Name (Printed):
------------------------------
Title:
------------------------------
Date:
------------------------------
5
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BRASSIE
GOLF CORPORATION CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-QSB, MARCH 31, 1996.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 4,423,839
<SECURITIES> 39,870
<RECEIVABLES> 1,464,327
<ALLOWANCES> 0
<INVENTORY> 168,877
<CURRENT-ASSETS> 6,226,749
<PP&E> 18,350,473
<DEPRECIATION> 0
<TOTAL-ASSETS> 30,334,737
<CURRENT-LIABILITIES> 328,215
<BONDS> 20,861,598
0
375
<COMMON> 17,703
<OTHER-SE> 6,233,193
<TOTAL-LIABILITY-AND-EQUITY> 30,334,737
<SALES> 213,989
<TOTAL-REVENUES> 1,662,794
<CGS> 102,472
<TOTAL-COSTS> 2,103,051
<OTHER-EXPENSES> 45,178
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 394,499
<INCOME-PRETAX> (879,934)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (879,934)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> 0
</TABLE>
