U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
Commission File Number: 0-24970
SAINT ANDREWS GOLF CORPORATION
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(Exact name of small business issuer as specified in its charter)
Nevada 88-0203976
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(State of other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
5325 South Valley View Boulevard, Suite 10, Las Vegas, Nevada 89118
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(Address of principal executive offices including zip code)
(702) 798-7777
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(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the 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___
As of May 8, 1996, 3,000,000 shares of common stock were outstanding.
Transitional Small Business Disclosure Format (check one): Yes___ No X
SAINT ANDREWS GOLF CORPORATION
FORM 10-QSB
INDEX
PART I: FINANCIAL INFORMATION Page No.
Item 1. Financial Information:
Unaudited Condensed Consolidated Balance Sheets 3-4
Unaudited Condensed Consolidated Statements of Income 5
Unaudited Condensed Consolidated Statements of Cash Flows 6
Notes to Unaudited Condensed Consolidated Financial
Statements 7
Item 2. Management's Discussion and Analysis or
Plan of Operations 7-9
PART II: OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Changes in Securities 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
Signatures 10
SAINT ANDREWS GOLF CORPORATION
UNAUDITED CONDENSED BALANCE SHEETS
ASSETS
March 31, December 31,
1996 1995
----------- -----------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 310,000 $ 125,000
Accounts receivable from franchisees, net 259,000 304,000
Lease termination receivable 3,000,000 3,000,000
Inventories 61,000 57,000
Prepaid expenses and other 27,000 443,000
Total current assets 3,657,000 3,929,000
FURNITURE, EQUIPMENT AND
LEASEHOLD IMPROVEMENTS, NET 755,000 1,147,000
OTHER ASSETS 1,000 1,000
$4,413,000 $5,077,000
NOTE: The balance sheet at December 31, 1995 has been taken from the audited
financial statements at that date and condensed.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
SAINT ANDREWS GOLF CORPORATION
UNAUDITED CONDENSED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, December 31,
1996 1995
---------- -----------
(Unaudited)
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 690,000 $1,199,000
Deferred franchise fees 141,000 120,000
Other payables 54,000 3,000
Total current liabilities 885,000 1,322,000
STOCKHOLDERS' EQUITY:
Common stock 3,000 3,000
Additional paid-in capital 3,495,000 3,495,000
Common stock purchase warrants 187,000 187,000
Retained earnings (deficit) (157,000) 70,000
Total stockholders' equity 3,528,000 3,755,000
$4,413,000 $5,077,000
NOTE: The balance sheet at December 31, 1995 has been taken from the audited
financial statements at that date and condensed.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
SAINT ANDREWS GOLF CORPORATION
UNAUDITED CONDENSED
STATEMENTS OF INCOME
For the Three Months
Ended March 31,
--------------------
1996 1995
---------- ----------
REVENUES:
Franchise fees $ 80,000 $ 42,000
Royalties 240,000 219,000
Other 43,000 45,000
Total revenues 363,000 306,000
EXPENSES:
Cost of sales 6,000 29,000
Selling, general and administrative 490,000 436,000
Golf centers and driving range
development costs 94,000 0
Total expenses 590,000 465,000
LOSS BEFORE PROVISION/BENEFIT FOR
INCOME TAXES, MINORITY INTEREST (227,000) (159,000)
PROVISION/BENEFIT FOR INCOME TAXES 0 0
NET INCOME (LOSS) $ (227,000) $ (159,000)
LOSS PER COMMON SHARE: $ (.08) $ (.05)
The accompanying notes are an integral part of these condensed consolidated
financial statements.
SAINT ANDREWS GOLF CORPORATION
UNAUDITED CONDENSED
STATEMENTS OF CASH FLOWS
For the Three Months
Ended March 31,
--------------------
1996 1995
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (227,000) $ (159,000)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 5,000 6,000
Changes in assets and liabilities:
Decrease in accounts receivable 45,000 124,000
(Increase) decrease in inventory (4,000) 14,000
(Increase) decrease in prepaid expenses
and other 416,000 (228,000)
(Increase) decrease in other assets 0 (33,000)
Increase (decrease) in accounts payable (55,000) 734,000
Increase in deferred franchise fees 21,000 0
Increase (decrease) in other payables 51,000 (168,000)
Net cash provided by operating activities 252,000 290,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (152,000) (1,486,000)
Refund development costs 85,000 0
Net cash flows used by investing activities (67,000) (1,486,000)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 185,000 (1,196,000)
CASH AND CASH EQUIVALENTS - Beginning of period 125,000 3,242,000
CASH AND CASH EQUIVALENTS - End of period $ 310,000 $ 2,046,000
The accompanying notes are an integral part of these condensed consolidated
financial statements.
SAINT ANDREWS GOLF CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1. CONDENSED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by the
Company without audit. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial position, results of operations and cash flows at March 31, 1996 and
for all periods presented have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's December 31, 1995
audited financial statements. The results of operations for the periods ended
March 31, 1996 and 1995 are not necessarily indicative of the operating
results for the full year.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
SEASONALITY
Saint Andrews Golf Corporation's (the "Company") business is
seasonal. The Company typically experiences sales peaks in the Spring and
pre-Christmas seasons. Accordingly, the results of interim periods may not be
indicative of results for the full year.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31,
1995
Total revenues increased $57,000 (19%) compared to 1995. The
increase in revenues was attributable primarily to an increase in royalties
and advertising income. Since franchise fees are recognized essentially when
the applicable franchised store is opened, the increase in franchise fees
reflects an increase in stores opened in 1996 as compared to 1995. There were
3 franchise stores under development at May 8, 1996.
Selling, general and administrative expenses increased by $148,000
(34%) in 1996 as compared to 1995, primarily as a result of development
expenses associated with the All-American SportPark.
In May of 1994, the Company entered into a Ground Lease (the
"Lease") for approximately 33 acres of land on Las Vegas Boulevard which it
intended to use for the development of a golf/sports park. The lease
contained provisions which allowed the lessor to terminate the lease within
the first 6 years of the 15 year lease term in the event that the lessor
entered into a sale of property as long as the intended use of the property
after the sale was not a golf/sports park as contemplated by the Company.
In June 1995 the lessor notified the Company that it had entered
into a sale agreement for the parcel and that it was exercising its right of
termination. Pursuant to cancellation provisions contained within the Lease
the Company was entitled to reimbursement of unamortized construction costs
which it incurred, based upon criterion contained within the lease, up to an
aggregate amount of $3.5 million.
Upon notification of the Lease termination the Company ceased
construction activities and submitted substantiation for construction costs
totaling approximately $3.9 million. Utilizing applicable formulas derived
from the Lease the Company believes that, based on the maximum expenditures
available for reimbursement of $3.5 million, $3,279,465 in costs are
reimbursable by the purchaser. The purchaser has reviewed such support and
has indicated that it believes that only a portion of the construction costs
submitted are reimbursable within the context of the Lease agreement.
No settlement was reached regarding the disputed amount and on
February 27, 1996 the Company filed a complaint with the District Court, Clark
County, Nevada, against the purchaser of the parcel seeking an unspecified
amount of compensatory damages, punitive damages, attorney fees and costs.
Management believes, and legal counsel concurs, that a recovery of
$3,000,000 is probable with regards to this litigation and that the amount
will be collected in 1996. The Company has, accordingly, recorded a lease
termination receivable for this amount in the accompanying balance sheet as of
March 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1996, the Company had working capital of approximately
$2,772,000 as compared to working capital of approximately $2,606,900 at
December 31, 1995. Cash increased from $125,000 at December 31, 1995, to
$310,000 at March 31, 1996. This increase in cash was primarily attributable
to a decrease in prepaid expenses of $416,000, a decrease in accounts
receivable of $45,000 and an $85,000 refund of development costs. These
amounts were offset by the net loss of $227,000 and a $55,000 decrease in
accounts payable.
The Company incurred $152,000 of capital expenditures during the
quarter which were related to the All-American SportPark.
The Company's sources of working capital are a $400,000 line of
credit and cash flows from operations. Management believes that these sources
of cash will be adequate to fund operations through the balance of 1996. The
Company has, in the past, funded a portion of its cash needs through loans
from its Parent, however, there is no assurance that the Parent will be able
to make any loans in the future.
The Company does not expect to have any significant capital
expenditures until such time as a new site is secured for the development of
the Company's first All-American SportPark.
PART II OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
See "Results of Operations" above for a discussion of the lawsuit
filed on February 27, 1996.
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
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
SAINT ANDREWS GOLF CORPORATION
By:/s/ Ronald Boreta
Ronald Boreta, President
and Chief Financial Officer
Date: May 14, 1996
EXHIBIT INDEX
EXHIBIT METHOD OF FILING
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27. Financial Data Schedule Filed herewith electronically
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
balance sheets and statements of operations found on pages 3 and 4 of the
Company's Form 10-QSB for the year to date, and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1996
<CASH> 310,000
<SECURITIES> 0
<RECEIVABLES> 3,259,000
<ALLOWANCES> 0
<INVENTORY> 61,000
<CURRENT-ASSETS> 3,657,000
<PP&E> 27,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,413,000
<CURRENT-LIABILITIES> 885,000
<BONDS> 0
<COMMON> 3,000
0
0
<OTHER-SE> 3,525,000
<TOTAL-LIABILITY-AND-EQUITY> 4,413,000
<SALES> 0
<TOTAL-REVENUES> 363,000
<CGS> 6,000
<TOTAL-COSTS> 6,000
<OTHER-EXPENSES> 584,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (227,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (227,000)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> (.08)
</TABLE>
