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Filed Pursuant to Rule 424(b)(4)
Registration File No.: 333-15753
PROSPECTUS
FAMILY GOLF CENTERS, INC.
217,415 Shares of Common Stock
This Prospectus relates to the offering that may be made from time to
time of up to 217,415 shares (the "Shares") of common stock, par value $.01 per
share (the "Common Stock"), of Family Golf Centers, Inc., a Delaware
corporation (the "Company"), by, or for the accounts of, the holders thereof
(the "Selling Security Holders"). See "Selling Security Holders." Of the
217,415 Shares being offered hereby, 70,000 are issuable upon the exercise of
certain warrants (the "Warrants") issued to a consultant of the Company.
The Common Stock is quoted on the Nasdaq National Market(R) (the
"Nasdaq National Market") under the symbol "FGCI." On November 20, 1996, the
last sale price of the Common Stock as reported by the Nasdaq National Market
was $31 per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 3 HEREIN FOR A DISCUSSION OF
CERTAIN MATTERS THAT SHOULD BE CONSIDERED BY POTENTIAL INVESTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION,
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Shares may be sold from time to time by the Selling Security
Holders or their transferees. No underwriting arrangements have been entered
into by the Selling Security Holders as of the date hereof. The distribution of
the Shares by the Selling Security Holders may be effected in one or more
transactions that may take place in the over-the-counter market, including
ordinary broker's transactions, privately negotiated transactions, or through
sales to one or more dealers for resale of such Shares as principals, at
prevailing market prices at the time of sale, prices related to such prevailing
market prices, or negotiated prices. Underwriting discounts and usual and
customary or specifically negotiated brokerage fees or commissions will be paid
by the Selling Security Holders in connection with sales of the Shares. To the
extent required, the number of Shares to be sold, the name of the Selling
Security Holder, the purchase price, the name of any agent or broker, and any
applicable commissions, discounts or otherwise constituting compensation to
such agents or brokers with respect to a particular offering will be set forth
in a supplement or supplements to this Prospectus (each, a "Prospectus
Supplement"). See "Plan of Distribution."
The Company will not receive any proceeds from the sale of the Shares.
By agreement with the Selling Security Holders, the Company will pay all of the
expenses incident to the registration of the Shares under the Securities Act
(other than agent's or underwriter's commissions and discounts), estimated to
be approximately $22,000.
The Selling Security Holders, and any broker-dealers, agents, or
underwriters through whom the Shares are sold, may be deemed "underwriters"
within the meaning of the Securities Act with respect to securities offered by
them, and any profits realized or commissions received by them may be deemed
underwriting compensation.
The date of this Prospectus is November 21, 1996
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), 450 Fifth Street, N.W., Washington, D.C. 20549, a Registration
Statement (the "Registration Statement") under the Securities Act with respect
to the offering and sale from time to time of the Shares. This Prospectus does
not contain all the information set forth in the Registration Statement and the
exhibits thereto, as permitted by the rules and regulations of the Commission.
For further information, reference is made to the Registration Statement and to
the exhibits filed therewith. Statements contained in this Prospectus as to the
contents of any contract or other document which has been filed or incorporated
by reference as an exhibit to the Registration Statement are qualified in their
entirety by reference to such exhibits for a complete statement of their terms
and conditions. Additionally, the Company is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and, in accordance therewith, files reports, proxy statements, and other
information statements with the Commission. Copies of such materials may be
inspected without charge at the offices of the Commission, and copies of all or
any part thereof may be obtained from the Commission's public reference
facilities at 450 Fifth Street, N.W., Washington D.C. 20549 or at the regional
offices of the Commission located at 7 World Trade Center, New York, New York
10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, upon
payment of the fees prescribed by the Commission. In addition, the Commission
maintains a Web site that contains reports, proxy and information statements and
other information regarding the Company (http://www.sec.gov). The Common Stock
is quoted on the Nasdaq National Market. Reports and other information
concerning the Company may be inspected at the offices of the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Incorporated herein by reference and made a part of this Prospectus
are the following: (1) the Company's Annual Report on Form 10-KSB, for the
fiscal year ended December 31, 1995; (2) the Company's Quarterly Report on Form
10- QSB for the three months ended March 31, 1996; (3) the Company's Quarterly
Report on Form 10-QSB for the quarter ended June 30, 1996; (4) the description
of the Common Stock, which is registered under Section 12 of the Exchange Act,
contained in the Company's Registration Statement on Form 8-A dated November 8,
1994; (5) the Current Report on Form 8-K dated February 28, 1996; (6) the
Current Report on Form 8-K dated March 6, 1996; (7) the Current Report on Form
8-K dated April 8, 1996; (8) the Current Report on Form 8-K dated May 20, 1996;
(9) the Current Report on Form 8-K dated June 7, 1996; (10) the Current Report
on Form 8-K dated July 5, 1996; (11) the Current Report on Form 8-K dated
October 11, 1996; (12) the Current Report on Form 8-K dated October 30,
1996; and (13) the Current Report on Form 8-K dated November 13, 1996. All
documents subsequently filed by the Company with the Commission pursuant to
Section 13(a), 13(c), 14, or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering made hereby will be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the respective dates of filing of such documents. Any statement
contained in any document incorporated by reference shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus. All information appearing in this Prospectus is qualified in its
entirety by the information and financial statements (including notes thereto)
appearing in the documents incorporated herein by reference, except to the
extent set forth in the immediately preceding statement.
The Company will provide without charge to each person who receives a
Prospectus, upon written or oral request of such person, a copy of the
information that is incorporated by reference herein (not including exhibits to
the information that is incorporated by reference herein). Requests for such
information should be directed to: Family Golf Centers, Inc., 225 Broadhollow
Road, Melville, New York 11747; Attention: Chief Executive Officer. The
Company's telephone number is: (516) 694-1666.
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RISK FACTORS
Prospective investors should carefully consider the specific factors
set forth below, as well as the other information included in this Prospectus,
before deciding to invest in the Shares offered hereby.
LIMITED OPERATING HISTORY
The Company opened its first golf center in March 1992 and,
accordingly, has only a limited history of operations. The Company generated
net income of approximately $488,000 during the year ended December 31, 1994,
approximately $1.1 million during the year ended December 31, 1995 and
approximately $1.6 million during the six months ended June 30, 1996. However,
the Company experienced losses prior to 1994 and there can be no assurance that
the Company will operate profitably in the future or that recent results of
operations will be indicative of future results. See "Risk Factors--Expansion
Strategy".
EXPANSION STRATEGY
The Company's ability to significantly increase revenue, net income
and operating cash flow over time depends in large part upon its success in
acquiring or leasing and constructing additional golf facilities at suitable
locations upon satisfactory terms. There can be no assurance that suitable golf
facility acquisition or lease opportunities will be available or that the
Company will be able to consummate acquisition or leasing transactions on
satisfactory terms. The acquisition of golf facilities may become more
expensive in the future to the extent that demand and competition increases.
The likelihood of the success of the Company must be considered in light of the
problems, expenses, difficulties, complications and delays frequently
encountered in connection with the construction and opening of new golf
facilities. See "Risk Factors--Additional Financing Requirements," and "Risk
Factors--Dependence Upon Key Employee; Recruitment of Additional Personnel."
To successfully implement its expansion strategy, the Company must
integrate acquired or newly- opened golf facilities into its existing
operations. As the Company grows, there can be no assurance that additional
golf facilities can be readily assimilated into the Company's operating
structure. Inability to efficiently integrate golf facilities could have a
material adverse effect on the Company's financial condition and results of
operations. In addition, a number of the golf facilities which the Company has
acquired have, and golf facilities it may acquire in the future may have,
experienced losses. On a pro forma basis, as adjusted to give effect to the
acquisitions consummated after January 1, 1995 as if they had occurred as of
January 1, 1995, the Company had a net loss before extraordinary item of
$435,000 (as compared to income before extraordinary item of $1.3 million on a
historical basis) for the year ended December 31, 1995 and income of $1.3
million (as compared to net income of $1.6 million on a historical basis) for
the six months ended June 30, 1996. There can be no assurance that golf
facilities recently acquired by the Company or those that the Company may
acquire in the future will operate profitably and will not adversely affect the
Company's results of operations.
TERMINATION OF LEASES
Although after giving effect to renewal options none of the Company's
leases, as of the date of this Prospectus, is expected to expire until 2007, the
leases may be terminated prior to their scheduled expiration should the Company
default in its obligations thereunder. Such obligations include the Company's
timely payment of rent and maintenance of adequate insurance coverage. The
termination of any of the Company's leases could have an adverse effect on the
Company. If any of the Company's leases were to be terminated, there can be no
assurance that the Company would be able to enter into leases for comparable
properties on favorable terms, or at all.
TERMINATION OF MANAGEMENT AGREEMENTS
The Company's management agreement with the City of New York (the
"City") for the Douglaston, New York golf center, which expires on December 31,
2006, is terminable by the City at will. During the year ended December 31,
1995, the management agreement accounted for 17% of the Company's total
revenue. Pursuant to the management agreement, the Company made approximately
$2.3 million of capital improvements to the Douglaston center. If the
management agreement is terminated, the City may retain, and is not obligated
to pay the Company for the value of, such capital improvements. Unless
reimbursed, for accounting purposes the Company would immediately have to write
off the undepreciated value of these capital improvements and the goodwill
related to its purchase of the limited partners' minority interest in Alley
Pond
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Associates, L.P. which are currently being depreciated and amortized over the
life of the management agreement. Accordingly, termination of the management
agreement with the City could have a material adverse effect on the Company.
The Company's management agreement with the City of El Segundo for the
El Segundo golf facility terminates on June 30, 1998, unless earlier terminated
by either party, with or without cause, as of the end of any operating year
during the term of the agreement, upon at least 90 days prior written notice.
Termination of the management agreement with the City of El Segundo may have an
adverse effect on the Company.
GOLDEN BEAR LICENSE
As of November 1, 1996, the Company operated seven of its golf
centers, and intended to operate at least one additional golf center, under the
name "Golden Bear Golf Center" pursuant to a non-exclusive license agreement
(the "License Agreement"), expiring August 2002, with Golden Bear Golf Centers,
Inc. (the "Licensor"). The License Agreement is terminable by the Licensor
prior to August 2002 under certain circumstances, including if the directors of
the Company, as of September 1995, at any time constitute less than 50% of the
Company's directors. The Company agreed to cure an alleged default of the
License Agreement (principally by making certain capital improvements by
November 1996). Failure by the Company to take the agreed upon actions by such
date could result in the termination of the License Agreement. Termination of
the License Agreement could adversely affect the Company's Golden Bear Golf
Centers and, possibly, the Company. The value of the "Golden Bear" name is
dependent, in part, upon the continued popularity of Jack Nicklaus.
Accordingly, the occurrence of any event which diminishes the reputation of Mr.
Nicklaus and the related "Golden Bear" symbol could adversely affect the
Company's Golden Bear Golf Centers. See "Risk Factors--Competition."
COMPETITION
The golf center industry is highly competitive and includes
competition from other golf centers, traditional golf ranges, golf courses and
other recreational pursuits. The Company may face imitation and other forms of
competition and the Company cannot prevent or restrain others from utilizing a
similar operational strategy. Many of the Company's competitors and potential
competitors have considerably greater financial and other resources, experience
and customer recognition than does the Company. Until September 1995, the
Company had the exclusive right to open Golden Bear Golf Centers in certain
territories. As a result of a change in the License Agreement, the Licensor now
is permitted to establish, or license others to establish, "Golden Bear" golf
centers that compete with the Company's golf centers, including its Golden Bear
Golf Centers. Golden Bear Golf, Inc., an affiliate of the Licensor, has
recently publicly indicated that it intends to focus its efforts on the direct
ownership and operation of golf facilities through the acquisition or
development of additional golf centers and to pursue new licensees and enter
into additional territorial development agreements only in locations and
territories where it and its affiliates do not intend to acquire or develop
their own facilities. There can be no assurance that such competition will not
adversely affect the Company's ability to acquire additional properties.
VULNERABILITY TO WEATHER CONDITIONS AND SEASONAL RESULTS
Historically, the second and third quarters of the year have accounted
for a greater portion of the Company's operating revenue than have the first
and fourth quarters of the year. This is primarily due to an outdoor playing
season limited by inclement weather. Although most of the Company's driving
ranges are designed to be all-weather facilities (including the domed
facilities), and although the Company has recently expanded its operations into
territories where inclement weather may have less of an impact than in the
Northeast, portions of the Company's facilities, including the miniature golf
courses, are outdoors and vulnerable to weather conditions. Also, golfers are
less inclined to practice when weather conditions limit their ability to play
golf on outdoor courses. This seasonal pattern, as well as the timing of new
center openings and acquisitions, may cause the Company's results of operations
to vary significantly from quarter to quarter. Accordingly, period- to-period
comparisons are not necessarily meaningful and should not be relied on as
indicative of future results. In addition, variability in the Company's results
of operations could cause the Company's stock price to fluctuate following the
release of interim results of operations or other information and may have a
material adverse effect on the Company and its stock price.
ADDITIONAL FINANCING REQUIREMENTS
As of June 30, 1996, the Company had a working capital deficit of
approximately $2.2 million. However, in July 1996, the Company raised
approximately $75 million of equity capital. The Company anticipates, based on
its currently proposed expansion plans and assumptions relating to its
operations, that such capital, together with availability under its primary
credit
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facility and cash flow from operations, will be sufficient to permit the
Company to conduct its operations and to carry on its contemplated expansion
through December 1997. The Company also anticipates that it will need to raise
substantial additional equity capital in the future to continue its longer term
expansion plans. There can be no assurance that the Company will be able to
obtain additional financing on favorable terms or at all.
ENVIRONMENTAL REGULATION
Operations at the Company's golf facilities involve the use and
limited storage of various hazardous materials such as pesticides, herbicides,
motor oil, gasoline and paint. Under various federal, state and local laws,
ordinances and regulations, an owner or operator of real property is generally
liable for the costs of removal or remediation of hazardous substances that are
released on or in its property regardless of whether the property owner or
operator knew of, or was responsible for, the release of hazardous materials.
The Company has not been informed by any governmental authority of any
non-compliance or violation of any environmental laws, ordinances or
regulations and the Company believes that it is in substantial compliance with
all such laws, ordinances and regulations applicable to its properties or
operations. However, the Company is aware of one notice of violation issued by
the New York Department of Environmental Conservation (the "DEC") against the
owner of the land leased by the Company in Elmsford, New York alleging that
certain hazardous materials were placed on the site. The owner has taken
remedial action and the Company does not believe it will be affected by the
alleged violation. As of the date of this Prospectus, the Company has not
incurred material costs of remediation and the Company knows of no material
environmental liability to which it may become subject. Although the Company
usually hires environmental consultants to conduct environmental studies,
including invasive procedures such as soil sampling or ground water analysis on
golf facilities it owns, operates or intends to acquire, in some cases only
limited invasive procedures are conducted on such properties. Even when
invasive procedures are used, environmental studies may fail to discover all
potential environmental problems. Accordingly, there may be potential
environmental liabilities or conditions of which the Company is not aware.
DEPENDENCE UPON KEY EMPLOYEE; RECRUITMENT OF ADDITIONAL PERSONNEL
The Company is heavily dependent on the services of Dominic Chang, its
Chairman of the Board, President and Chief Executive Officer. The loss of the
services of Mr. Chang could materially adversely affect the Company. Mr. Chang
has entered into an employment agreement with the Company which terminates on
December 31, 1999. The Company owns, and is the sole beneficiary of, key person
life insurance in the amount of $1.5 million on the life of Mr. Chang. The
Company will also be required to hire additional personnel and PGA-certified
professionals to staff the golf centers it intends to acquire, lease or
construct. There can be no assurance that the Company will be able to attract
and retain qualified personnel.
CONTROL BY CURRENT STOCKHOLDER
As of the date of this Prospectus, Dominic Chang beneficially owned
2,549,334 shares of Common Stock, constituting approximately 21.7% of the
outstanding shares. Mr. Chang is, therefore, able to exercise significant
influence with respect to the election of the directors of the Company and all
matters submitted to a vote of the stockholders of the Company, including the
acquisition or disposition of material assets.
DEPENDENCE ON DISCRETIONARY CONSUMER SPENDING
The amount spent by consumers on discretionary items, such as family
and entertainment activities like those offered by the Company's golf
facilities, have historically been dependent upon levels of discretionary
income, which may be adversely affected by general economic conditions. A
decrease in consumer spending on golf could have an adverse effect on the
Company's financial condition and results of operations.
DIVIDEND POLICY
The Company has not paid any cash dividends on the Common Stock since
inception and does not intend to pay any dividends to its stockholders in the
foreseeable future. The Company currently intends to reinvest earnings, if any,
in the development and expansion of its business.
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SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS
The sale, or availability for sale, of substantial amounts of Common
Stock in the public market pursuant to Rule 144 under the Securities Act ("Rule
144") or otherwise could materially adversely affect the market price of the
Common Stock and could impair the Company's ability to raise additional capital
through the sale of its equity securities or debt financing. In general, under
Rule 144 as currently in effect, a person (or persons whose shares are
aggregated), including a person who may be deemed to be an "affiliate" of the
Company as that term is defined under the Securities Act, would be entitled to
sell within any three month period a number of shares beneficially owned for at
least two years that does not exceed the greater of (i) 1% of the then
outstanding shares of Common Stock, or (ii) the average weekly trading volume
in the Common Stock during the four calendar weeks preceding such sale. Sales
under Rule 144 are also subject to certain requirements as to the manner of
sale, notice and the availability of current public information about the
Company. However, a person who is not deemed to have been an affiliate of the
Company during the 90 days preceding a sale by such person and who has
beneficially owned shares of Common Stock for at least three years may sell
such shares without regard to the volume, manner of sale or notice requirements
of Rule 144.
Of the 11,769,346 shares of Common Stock outstanding as of the date of
this Prospectus, 7,986,233 shares are freely tradeable without restrictions
currently, unless held by "affiliates" of the Company who are subject to
certain volume limitations and manner of sale restrictions, and 3,783,113 are
"restricted securities" as that term is defined in Rule 144. The two-year
holding period for substantially all of the "restricted securities" will have
been met by November 1996 and such securities may, subject to the agreements
described below, be sold without registration under the Securities Act, subject
to volume limitations and other restrictions. The holders of 3,161,950 shares
of Common Stock have agreed not to publicly sell or otherwise dispose of any
securities of the Company without the prior written consent of Jefferies &
Company, Inc. (the underwriter of two of the Company's public offerings) until
December 13, 1996. As of November 1, 1996, Mr. Chang has pledged 361,750 shares
of Common Stock to banks, and may in the future pledge additional shares to
secure certain personal loans, which shares are not, or would not be, subject
to such agreements.
The holders of warrants to purchase 300,000 shares of Common Stock
(the "Representatives' Warrants") issued to the underwriters in the Company's
second public offering have certain demand and "piggyback" registration rights
with respect to such warrants and/or the shares of Common Stock underlying such
warrants, commencing December 12, 1996. In addition, the holders of an
aggregate of 175,815 shares of Common Stock (including 147,415 shares
registered in this offering) have certain "piggyback" registration rights.
PREFERRED STOCK; POSSIBLE ANTI-TAKEOVER EFFECTS OF CERTAIN CHARTER AND
CONTRACTUAL PROVISIONS
The Company's Certificate of Incorporation authorizes the Board of
Directors to issue up to 2,000,000 shares of preferred stock, par value $.10
per share. The preferred stock may be issued in one or more series, the terms
of which may be determined at the time of issuance by the Board of Directors,
without further action by stockholders. Although no preferred stock is
currently outstanding and the Company currently has no plans for the issuance
of any preferred stock, there can be no assurance that the Company will not do
so in the future. The ability of the Board of Directors to issue preferred
stock could have the effect of delaying, deferring or preventing a change of
control of the Company or the removal of existing management and, as a result,
could prevent the stockholders of the Company from being paid a premium over
the market value for their shares of Common Stock. The Company's By-Laws
contain provisions requiring advance notice of stockholder proposals and
imposing certain procedural restrictions on stockholders wishing to call a
special meeting of stockholders. The License Agreement may be terminated by the
Licensor if members of the Company's Board of Directors, as of September 1995,
do not constitute at least 50% of the Company's Board of Directors.
Accordingly, such provision could discourage possible future attempts to gain
control of the Company (which attempts, if stockholders were offered a premium
over the market value of their Common Stock, might be viewed as beneficial to
stockholders).
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THE COMPANY
Family Golf Centers, Inc. operates golf centers designed to provide a
wide variety of practice opportunities, including facilities for driving,
chipping, putting, pitching and sand play. In addition, the Company's golf
centers typically offer golf lessons instructed by PGA-certified golf
professionals, full-line pro shops and other amenities to encourage family
participation. As of November 1, 1996, the Company owned, leased or managed 33
golf facilities comprised of 24 golf centers and nine combination golf center
and golf course facilities located in 13 states. Of the golf centers operated
by the Company as of November 1, 1996, seven were operated under the name
"Golden Bear Golf Centers," licensed from Jack Nicklaus' licensing company,
Golden Bear Golf Centers, Inc. Of the nine combination golf center and golf
course facilities as of November 1, 1996, six include par-3 golf courses,
generally designed to facilitate the practice of golf, and three include
regulation 18-hole golf courses. The Company has experienced significant recent
growth, primarily through the acquisition or opening of 29 facilities since the
Company's initial public offering in November 1994. The Company's total revenue
increased from $1.9 million in 1992 to $12.4 million for the year ended
December 31, 1995. During the same period, the Company's net income increased
from a net loss of $22,000 to a net profit of $1.1 million.
The Company's strategy is to grow revenue and net income by (i)
increasing the number of golf centers it owns, leases or manages by (a)
identifying and acquiring well-located ranges that have the potential for
improvement under better management and with improved or expanded facilities,
including the addition of enclosed hitting areas, full-line pro shops,
miniature golf courses and other amenities and (b) building new centers in
locations where suitable acquisition opportunities are not available and (ii)
seeking to realize economies of scale through centralized purchasing,
accounting, management information systems and cash management.
According to the National Golf Foundation (the "NGF"), there were
approximately 25 million golfers in the United States in 1995. According to the
Golf Range and Recreational Association, there are currently between 1,900 and
2,300 stand-alone driving ranges in the United States. The NGF estimates that
in 1993 92% of all stand-alone driving ranges were managed by owner-operators.
The Company believes that many of these owner-operated ranges are managed by
individuals who may lack the experience, expertise and financial resources to
compete effectively. The Company believes this highly fragmented industry
presents numerous opportunities for the Company to acquire, upgrade and
renovate golf centers and driving ranges.
The Company believes that it attracts customers to its golf centers
primarily due to the quality, convenience and comfort of its facilities and
their appeal to the whole family. The Company's golf centers are designed
around a driving range with target greens, bunkers and traps to simulate golf
course conditions. The ranges are lighted to permit night play and the hitting
tees are enclosed or sheltered from above and from the rear in a
climate-controlled environment and, in three cases, all or a portion of the
range is enclosed under an air inflated dome to permit all-weather play. There
are approximately 80 to 100 hitting tees in facilities with the two-tier design
and approximately 30 to 60 hitting tees at smaller golf centers. In addition to
the driving range, the Company's golf centers include a number of amenities
designed to appeal to golfers and their families, such as a 4,000-6,000 square
foot clubhouse (including a full-line pro shop, locker facilities, a restaurant
or snack bar and video games), PGA-certified golf instructors, landscaped
18-hole miniature golf courses and a short game practice area (with putting
green and sand traps). The Company's pro shops are stocked with clubs, bags,
shoes, apparel, videos and related accessories from a number of suppliers,
including brand name manufacturers such as Karsten Manufacturing Corporation
(Ping), Callaway Golf Company, Tommy Armour Golf, Wilson Golf Company, Mizuno
Golf Company, Spalding Sports Worldwide, Titleist and Footjoy Worldwide
(Division of American Brands, Inc.), Ashworth Clothing Company and Nicklaus
Golf Equipment Company.
The Company was incorporated in the State of Delaware on July 13,
1994. The Company operates through its wholly-owned subsidiaries, the first of
which was incorporated on March 27, 1991. The Company's principal executive
offices are located at 225 Broadhollow Road, Melville, New York 11747 and its
telephone number is (516) 694-1666.
USE OF PROCEEDS
The net proceeds to the Company from the exercise of the Warrants are
estimated to be $1.4 million. The Company is unable to predict the time, if
ever, when the Warrants will be exercised. Accordingly, it is expected that the
net proceeds from the sale of the Shares underlying the Warrants will be used by
the Company for general corporate purposes. The Company will not receive any
proceeds from the sale of the Shares by the Selling Security Holders.
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SELLING SECURITY HOLDERS
The following table sets forth the ownership of the Common Stock by
the Selling Security Holders as of the date such information was provided to
the Company. Since the dates such information was provided to the Company, such
information may have changed. Any or all of the Shares listed below may be
offered for sale by the Selling Security Holders from time to time and therefore
no estimate can be given as to the number of Shares that will be held by the
Selling Security Holders upon termination of this offering (except that in each
case, such number will represent less than 1% of the Common Stock outstanding,
assuming no additional shares of Common Stock are acquired by the Selling
Security Holders). Except as otherwise indicated, the Selling Security Holders
listed in the table have sole voting and investment powers with respect to the
Shares indicated.
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK NUMBER OF
NAME OF SELLING OWNED BEFORE THE SHARES
SECURITY HOLDER OFFERING OFFERED
- -------------------- ------------------ -----------
<S> <C> <C>
Monness, Crespi, 85,000(2) 70,000
Hardt & Co.,
Inc.(1)
Thomas C. Broyles 20,681(3) 4,014
Frank N. Bilisoly 5,171 5,171
Alfred E. 5,171 5,171
Abiouness
Marion R. Adams 1,358 1,358
Craig L. Slingluff 2,585 2,585
Grover Brook 815 815
Parker
Richard A. and 2,519 2,519
Elly D. Mladick(4)
C. Randolph 5,171 5,171
Hudgins, Jr.
W. Mackenzie 5,171 5,171
Jenkins
Catherine H. Doser 679 679
Residuary Trust
Under Declaration
of Trust
Clarence John 679 679
Doser Declaration
of Trust, FBO
Clarence John
Doser
William R. 2,402(5) 2,184
Battle III
Roger I. Hallock 1,702(6) 750
Hallock Investment 877(7) 734
Partnership
Timothy M. 1,476(8) 1,342
Halloran
JDR Enterprises, 1,577(7) 1,434
Inc. Profit Sharing
Plan, John E.
Kreikemeier &
Jeanett H.
Kreikemeier,
Trustees
DSG Inc. Profit 1,577(7) 1,434
Sharing Trust
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Henry F. 1,577(7) 1,434
McCamish, Jr.
Revocable Trust
Frances L. Mellett 2,402(5) 2,184
Sally E. Mitchell 789(9) 717
Thomas L. 2,402(5) 2,184
O'Rourke
Peter F. 1,201(10) 1,092
Shahpazian
H. Charles 1,577(7) 1,434
White, Jr.
H.P. Whitehead, 1,577(7) 1,434
Jr. & Lucinda G.
Whitehead
William M. 789(9) 717
Billingsley
Johnny M. & 1,614(11) 1,467
Donna Johnson(4)
Wilburn E. 788(9) 716
George, Jr.
Gerald F. Schmidt 3,437(12) 3,125
W. Steven Brown 8,976(13) 8,160
John A. Damico 9,218(14) 8,380
Michael McGovern 8,976(13) 8,160
Stacey A. Hart 75,000(15) 65,000
==============================================================
</TABLE>
(1) Monness, Crespi, Hardt & Co., Inc. is a consultant to the Company
pursuant to a consulting agreement and acted as one of the selected
dealers in the Company's public offerings.
(2) Includes 70,000 shares of Common Stock which are issuable upon
exercise of the Warrants issued in connection with the consulting
agreement. The exercise price of the Warrants is $19.875 per Share.
Also includes 15,000 shares of Common Stock which are issuable upon
exercise of the warrants issued in connection with the Company's
public offering in December of 1995. These warrants shall be
exercisable commencing on December 18, 1996 at the exercise price of
$20.25 per Share.
(3) Includes 16,667 shares of Common Stock which are being held in escrow
until March 6, 1997 to satisfy indemnification claims of the Company,
if any, in connection with the Company's acquisition of the Owl Creek
Golf Center in Virginia Beach, Virginia.
(4) Joint tenants with right of survivorship.
(5) Includes options to purchase 218 shares of Common Stock which are
currently exercisable.
(6) Includes options to purchase 75 shares of Common Stock which are
currently exercisable. Also includes 877 shares of Common Stock owned
by Hallock Investment Partnership, a partnership of which Mr. Hallock
is the President of the corporate Managing General Partner.
(7) Includes options to purchase 143 shares of Common Stock which are
currently exercisable.
(8) Includes options to purchase 134 shares of Common Stock which are
currently exercisable.
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<PAGE>
(9) Includes options to purchase 72 shares of Common Stock which are
currently exercisable.
(10) Includes options to purchase 109 shares of Common Stock which are
currently exercisable.
(11) Includes options to purchase 147 shares of Common Stock which are
currently exercisable.
(12) Includes options to purchase 312 shares of Common Stock which are
currently exercisable.
(13) Includes options to purchase 816 shares of Common Stock which are
currently exercisable.
(14) Includes options to purchase 838 shares of Common Stock which are
currently exercisable.
(15) Includes 10,000 shares of Common Stock which are being held in escrow
until October 30, 1997 to satisfy indemnification claims of the
Company, if any, in connection with the Company's acquisition of The
Seven Iron, Inc., a Colorado corporation, which holds the concession
license from the City of Denver to operate golf and related facilities
at the J.F. Kennedy Golf Course located in Denver, Colorado.
DESCRIPTION OF CAPITAL STOCK
A description of the Company's capital stock is contained in the
Company's registration statement on Form 8-A, which is incorporated by
reference herein. See "Incorporation of Certain Documents by Reference."
PLAN OF DISTRIBUTION
The Shares offered by this Prospectus may be sold from time to time by
the Selling Security Holders or by transferees thereof. No underwriting
arrangements have been entered into by the Selling Security Holders. The
distribution of the Shares by the Selling Security Holders may be effected in
one or more transactions that may take place in the over-the-counter market,
including ordinary broker's transactions, privately negotiated transactions, or
through sales to one or more dealers for resale of such shares as principals,
at prevailing market prices at the time of sale, prices related to prevailing
market prices, or negotiated prices. Underwriter's discounts and usual and
customary or specifically negotiated brokerage fees or commissions may be paid
by a Selling Security Holder in connection with sales of the Shares. To the
extent required, the number of Shares to be sold, the name of the Selling
Security Holder, the purchase price, the name of any agent or broker, and any
applicable commissions, discounts or other compensation to such agents or
brokers with respect to a particular offering will be set forth in a Prospectus
Supplement.
In order to comply with certain state securities laws, if applicable,
the Shares will be sold in such jurisdictions only through registered or
licensed brokers or dealers. In certain states, the Shares may not be sold
unless such Shares have been registered or qualified for sale in such state or
an exemption from registration or qualification is available and is complied
with.
Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of the Shares may not simultaneously engage in
market-making activities with respect to such Shares for a period of two or
nine business days prior to the commencement of such distribution. In addition
to, and without limiting, the foregoing, each of the Selling Security Holders
and any other person participating in a distribution will be subject to the
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including, without limitation, rules 10b-2, 10b-6, and 10b-7, which
provisions may limit the timing of purchases and sales of any of the Shares by
the Selling Security Holders or any such other person. All of the foregoing may
affect the marketability of the Shares.
Pursuant to the Warrants and certain Registration Rights Agreements,
the Company will pay all the fees and expenses incident to the registration of
the Shares (other than underwriting discounts and commissions, if any, and the
Selling Security Holders' counsel fees and expenses, if any).
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In addition, the Company has agreed to indemnify the Selling Security
Holders against certain liabilities, including liabilities under the Securities
Act. In addition, each Selling Security Holder has agreed to indemnify the
Company against certain liabilities, including liabilities under the Securities
Act. Such agreements also provide for rights of contribution if such
indemnification is not available.
LIMITATION OF LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation limits the liability of
directors to the maximum extent permitted by Delaware law. Delaware law
provides that directors of a company will not be personally liable for monetary
damages for breach of their fiduciary duties as directors, except for liability
for (i) any breach of their duty of loyalty to the company or its stockholders,
(ii) acts or omissions not in good faith or involving intentional misconduct or
a knowing violation of law, (iii) unlawful payment of dividends or unlawful
stock repurchases or redemptions as provided in Section 174 of the Delaware
General Corporation Law or (iv) any transaction from which the director derived
an improper personal benefit.
The Company's Certificate of Incorporation provides that the Company
shall indemnify its officers, directors, employees and other agents to the
fullest extent permitted by Delaware law.
The Company maintains a policy of insurance under which the directors
and officers of the Company are insured, subject to the limits of the policy,
against certain losses arising from claims made against such directors and
officers by reason of any acts or omissions covered under such policy in their
respective capacities as directors or officers, including liabilities under the
Securities Act. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the Securities and Exchange Commission
(the "Commission") such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable.
LEGAL MATTERS
The validity of the Shares has been passed upon for the Company by
Squadron, Ellenoff, Plesent & Sheinfeld, LLP, 551 Fifth Avenue, New York, New
York 10176. Kenneth R. Koch, Esq., a partner of Squadron, Ellenoff, Plesent &
Sheinfeld, LLP, holds options to purchase shares of the Company's Common Stock.
EXPERTS
The consolidated financial statements of the Company as of December
31, 1995 and for each of the years in the two year period then ended,
incorporated herein by reference to the Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 1995 have been so incorporated in
reliance on the report of Richard A. Eisner & Company, LLP, independent
auditors, given upon the authority of said firm as experts in accounting and
auditing.
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No dealer, salesman, or any other person has been authorized to give any
information or to make any representation not contained in this Prospectus
in connection with the offering made hereby, and, if given or made, such
information or representation must not be relied upon as having been
authorized by the Company. This Prospectus does not constitute an offer to
sell, or a solicitation of an offer to buy, any of the securities offered hereby
in any jurisdiction to any person to whom it is unlawful to make such an
offer or solicitation in such jurisdiction. Neither the delivery of this
Prospectus nor any sale made hereunder shall under any circumstances
create any implication that there has been no change in the affairs of the
Company since the date hereof or that the information contained herein is
correct as of any time subsequent to the dates as of which such information
is furnished.
--------------------
TABLE OF CONTENTS
Page
Available Information................................... 2
Incorporation of Certain Documents by Reference......... 2
Risk Factors............................................ 3
The Company............................................. 7
Use of Proceeds......................................... 7
Selling Security Holders................................ 8
Description of Capital Stock............................ 10
Plan of Distribution.................................... 10
Limitation of Liability and Indemnification of Directors
and Officers............................................ 11
Legal Matters........................................... 11
Experts................................................. 11
<PAGE>
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217,415 SHARES
_________________
FAMILY GOLF
CENTERS, INC.
COMMON STOCK
_________________
PROSPECTUS
_________________
NOVEMBER 21, 1996
=================================================
