<PAGE>
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 June 30, 1997
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
- ---------------------------- ---------------------------------
(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 August 12, 1997, 3,000,000 shares of common stock were outstanding.
Transitional Small Business Disclosure Format (check one): Yes___ No X
<PAGE>
SAINT ANDREWS GOLF CORPORATION
FORM 10-QSB
INDEX
Page No.
Part I: Financial Information
Item 1. Financial Information:
Unaudited Condensed Consolidated Balance Sheets 3
Unaudited Condensed Consolidated Statements of
Income 4
Unaudited Condensed Consolidated Statement of
Cash Flows 6
Notes to Unaudited Condensed Consolidated
Financial Statements 7
Item 2. Management's Discussion and Analysis or Plans
of Operations 9
Part II: Other Information
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security
Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 11
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<PAGE>
SAINT ANDREWS GOLF CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, December 31,
1997 1996
----------- -----------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 6,262,000 $ 5,818,000
Other receivables 44,000 480,000
Prepaid expenses and other 24,000 17,000
----------- -----------
Total current assets 6,330,000 6,315,000
FURNITURE, EQUIPMENT AND
LEASEHOLD IMPROVEMENTS, NET 94,000 84,000
PROJECT DEVELOPMENT COSTS 7,852,000 2,103,000
NET ASSETS OF DISCONTINUED OPERATIONS - 120,000
----------- -----------
$14,276,000 $ 8,622,000
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 2,068,000 $ 742,000
Deferred income 79,000 154,000
Other payables 218,000 -
Income taxes payable 225,000 -
----------- -----------
Total current liabilities 2,590,000 896,000
NOTE PAYABLE 1,312,000 -
MINORITY INTEREST 750,000 -
STOCKHOLDERS' EQUITY:
Common stock 3,000 3,000
Preferred stock 4,740,000 4,740,000
Options issued in connection with
preferred stock 260,000 260,000
Additional paid in capital 3,333,000 3,333,000
Common stock purchase warrants 187,000 187,000
Retained earnings (deficit) 1,101,000 (797,000)
----------- -----------
Total stockholders' equity 9,624,000 7,726,000
----------- -----------
$14,276,000 $ 8,622,000
NOTE: The balance sheet at December 31, 1996 has been taken from the
consolidated audited financial statements at that date and
condensed.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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<PAGE>
SAINT ANDREWS GOLF CORPORATION
UNAUDITED CONDENSED
STATEMENTS OF INCOME
For the Three Months
Ended June 30,
1997 1996
----------- -----------
(Unaudited) (Unaudited)
REVENUES:
Interest income $ 95,000 $ 1,000
Royalties 6,000 -
Other - -
----------- -----------
Total revenues 101,000 1,000
EXPENSES:
Selling, general and administrative 127,000 105,000
SportPark development costs 75,000 107,000
----------- -----------
Total expenses 212,000 212,000
LOSS BEFORE PROVISION FOR INCOME TAXES (101,000) (211,000)
PROVISION (BENEFIT) FOR INCOME TAXES - -
----------- -----------
LOSS BEFORE INCOME (LOSS) FROM
DISCONTINUED OPERATIONS (101,000) (211,000)
DISCONTINUED OPERATIONS
Income (loss) from operations of dis-
continued franchise operations - 19,000
Additional gain on disposal of
franchise operations (less applicable
income taxes of $450,000) 113,000 -
----------- -----------
NET INCOME (LOSS) $ 12,000 $ (192,000)
INCOME (LOSS) PER SHARE:
Income (loss) from operations $ (.03) $ (.07)
Income (loss) from discontinued
operations .03 .01
----------- -----------
NET INCOME (LOSS) PER SHARE $ - $ (.06)
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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<PAGE>
SAINT ANDREWS GOLF CORPORATION
UNAUDITED CONDENSED
STATEMENTS OF INCOME
For the Six Months
Ended June 30,
1997 1996
----------- -----------
(Unaudited) (Unaudited)
REVENUES:
Interest income $ 163,000 $ 5,000
Royalties 12,000 -
Other 4,000 -
----------- -----------
Total revenues 179,000 5,000
EXPENSES:
Selling, general and administrative 250,000 203,000
SportPark development costs 152,000 201,000
----------- -----------
Total expenses 402,000 404,000
LOSS BEFORE PROVISION FOR INCOME TAXES (223,000) (399,000)
PROVISION (BENEFIT) FOR INCOME TAXES - -
----------- -----------
LOSS BEFORE INCOME (LOSS) FROM
DISCONTINUED OPERATIONS (223,000) (399,000)
DISCONTINUED OPERATIONS
Loss from operations of discontinued
franchise operations (41,000) (20,000)
Gain on disposal of franchise operations
(less applicable income taxes of
$450,000) 2,162,000 -
----------- -----------
NET INCOME (LOSS) $ 1,898,000 $ (419,000)
INCOME (LOSS) PER SHARE:
Income (loss) from operations $ (.07) $ (.13)
Income (loss) from discontinued
operations .70 (.01)
----------- -----------
NET INCOME (LOSS) PER SHARE $ .63 $ (.14)
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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<PAGE>
SAINT ANDREWS GOLF CORPORATION
UNAUDITED CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS
For the Six Months
Ended June 30,
1997 1996
----------- -----------
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 1,898,000 $ (419,000)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 4,000 10,000
Gain on sale of franchise
operations (2,499,000) -
Changes in assets and liabilities:
Decrease in other receivables 436,000 6,000
Increase in inventory - (5,000)
(Increase) decrease in prepaid
expenses and other (7,000) 410,000
Increase (decrease) in accounts payable 1,252,000 (59,000)
Increase (decrease) in deferred income (75,000) 23,000
Increase in other payables 218,000 274,000
Increase in income tax payable 225,000 -
----------- -----------
Net cash provided by operating
activities 1,452,000 240,000
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Project development costs (5,747,000) (324,000)
Development cost refund - 85,000
Purchases of equipment (14,000) -
Proceeds from sale of franchise
operations 2,688,000 -
----------- -----------
Net cash provided (used) by investing
activities (3,073,000) (239,000)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from note payable 1,315,000 -
Proceeds from minority interest in
Callaway Golf Center 750,000 -
----------- -----------
Net cash provided by financing activities 2,065,000 -
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 444,000 1,000
CASH AND CASH EQUIVALENTS-
Beginning of period 5,818,000 125,000
----------- -----------
CASH AND CASH EQUIVALENTS - End of period $ 6,262,000 $ 126,000
----------- -----------
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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<PAGE>
SAINT ANDREWS GOLF CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 1. CONDENSED FINANCIAL STATEMENTS
The accompanying condensed consolidated financial statements include the
accounts of Saint Andrews Golf Corporation and its wholly-owned subsidiary
All-American SportPark, Inc. (collective, the "Company"). All significant
intercompany transactions have been eliminated.
The accompanying financial statements have been prepared by the Company
without audit pursuant to the rules and regulations of the Securities and
Exchange Commission. In the opinion of management, all adjustments necessary
to present fairly the financial position, results of operations and cash flows
at June 30, 1997 and for all periods presented have been made.
On February 26, 1997, Las Vegas Discount Golf & Tennis, Inc. and the Company
completed the sale of certain of their assets and transferred certain
liabilities to an unrelated buyer who has incorporated under the name Las
Vegas Golf & Tennis, Inc. The total purchase consideration received was $5.3
million of which $4.6 million was paid in cash, $264,000 was received in the
form of a short-term unsecured receivable, $200,000 was placed in escrow
pending the accounting for inventory and trade payables, and $200,000 was
placed in escrow for two years to cover potential indemnification obligations.
Of the total consideration received, approximately $2,688,000 was allocated to
the Company.
The Company's operations, subsequent to the sale, consist solely of the
SportPark facility which is currently under development on the Las Vegas strip
in Las Vegas, Nevada. The assets, liabilities and operations related to the
franchise business have been presented as "Net Assets of Discontinued
Operations" and "Discontinued Operations," respectively, in the accompanying
balance sheet at December 31, 1996 and statement of operations as of and for
the three and six months ended June 30, 1997 and 1996.
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 consolidated financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's December 31,
1996 audited financial statements. The results of operations for the periods
ended June 30, 1997 and 1996 are not necessarily indicative of the operating
results for the full year.
NOTE 2. EARNINGS PER SHARE
In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 ("SFAS 128"), "Earnings Per Share,"
effective for fiscal years ending after December 15, 1997. The Company will
adopt SFAS 128 for the year ending December 31, 1997. SFAS 128 requires the
computation and presentation of basic and diluted earnings per share for all
periods an income statement is presented. For the three and six months ended
June 30, 1997 and 1996 the proforma calculations were as follows:
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<PAGE>
June 30, 1997 June 30, 1996
Three Months Basic Diluted Basic Diluted
----- ------- ----- -------
Income (loss) from operations $(.03) $(.04) $(.07) $(.07)
Loss from discontinued operations .03 .03 .01 .01
----- ----- ----- -----
Net income (loss) per share $ - $(.01) $(.06) $(.06)
June 30, 1997 June 30, 1996
Six Months Basic Diluted Basic Diluted
----- ------- ----- -------
Income (loss) from operations $(.07) $(.08) $(.13) $(.13)
Loss from discontinued operations .70 .70 (.01) (.01)
----- ----- ----- -----
Net income (loss) per share $ .63 $(.62) $(.14) $(.14)
Options to purchase 1,517,000 and 360,000 shares of common stock were
outstanding at June 30, 1997 and 1996, respectively, at exercise prices of
$4.625 to $5.40 at June 30, 1997 and of $5.00 to $5.40 at June 30, 1996,
respectively.
NOTE 3. NOTE PAYABLE AND AGREEMENT WITH CALLAWAY
On June 13, 1997 the Company and Callaway Golf Company ("Callaway") announced
the formation of the All American Golf, LLC, a limited liability California
corporation, to construct, manage and operate "Callaway Golf Center", a
premier golf facility at the site of the All-American Sportpark. The total
budgeted costs for the Callaway Golf Center are approximately $9.0 million.
Callaway will provide $5,750,000 in debt financing which bears interest at 10
percent with interest only payments commencing 60 days after the opening of
the golf center through a date ten years after the opening at which point the
remaining accrued interest and principal will be due in full. As of June 30,
1997, $1,312,000 had been drawn under this agreement. The Company will own 80
percent of the members' units of the LLC. The Company will manage the driving
range, golf course and tenant facilities in the clubhouse.
NOTE 4. STATEMENT OF CASH FLOWS
For purposes of the statements of cash flows, the Company considers all highly
liquid debt investments purchased with a maturity of three months or less to
be cash equivalents.
Cash paid during the six months ended on: June 30,
1997 1996
-------- --------
Interest - $ 31,000
Income taxes $225,000 -
NOTE 5. COMMITMENTS AND CONTINGENCIES
In December 1994, the Company entered into an agreement with Major League
Baseball ("MLB") concerning a license for the use of MLB logos, trade marks
and mascots in the decor, advertising and promotions of the Company's Slugger
Stadium concept. The Company obtained an exclusive license for indoor and
outdoor baseball batting stadiums in the United States through December 31,
1997, and in return the Company will pay a royalty of the gross revenues from
the batting cages with a minimum annual royalty for each stadium. The
Company's right to exclusively use MLB logos and other trade marks at its
baseball batting stadiums
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<PAGE>
is dependent upon certain conditions set forth in the agreement. The Company
and MLB are currently in negotiations to extend this agreement.
In May 1996, Saint Andrews entered into an agreement with Jeff Gordon, the
1995 NASCAR Winston Cup Champion and the 1997 Daytona 500 Champion, to serve
as spokesperson of the NASCAR SpeedPark through April 30, 2000. Mr. Gordon
will be paid $25,000 for his services during 1996, $25,000 per SpeedPark per
year thereafter ($325,000 guaranteed over the life of the agreement).
The Company has an exclusive license agreement with The National Association
of Stock Car Auto Racing, Inc. ("NASCAR") for the operations of SpeedParks as
a part of the All-American SportPark or as a stand-alone NASCAR SpeedPark.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
SALE OF FRANCHISE OPERATIONS.
On December 16, 1996, the Company entered into an agreement to sell its
franchise operations including all rights under existing franchise agreements;
all trade names and trademarks; specific depreciable assets and a modified
covenant not to compete. The sale was consummated on February 26, 1997 with
the Company receiving proceeds of $2,688,000.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1997, COMPARED TO THREE MONTHS ENDED JUNE 30, 1996
Total revenues increased $100,000 compared to 1996. The increase in revenues
was attributable primarily to an increase in interest income resulting from
the increase in cash on interest bearing accounts.
Selling, general and administrative expenses and Sportpark development costs
remained constant between periods on a combined basis.
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997
Total revenues increased to $179,000 from $5,000 for the same period in 1996.
The increase in revenues was primarily attributable to increased interest
income resulting from the increase in cash on interest bearing accounts.
Selling, general and administrative expenses and Sportpark development costs
on a cumulative basis were relatively unchanged between years.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1997, the Company had working capital of approximately $3,740,000
as compared to working capital of approximately $5,419,000 at December 31,
1996. Cash increased from $5,818,000 at December 31, 1996, to $6,262,000 at
June 30, 1997. This increase in cash was primarily attributable to $2,688,000
in proceeds from the sale of franchise operations; $2,065,000 in debt and
minority interest proeeds from Callaway for the golf facility and $1,326,000
increase in accounts payable. The increase in cash was partially offset by
Sportpack expenditures of $5,747,000.
The Company does not expect to have any significant capital expenditures other
than the development of the SportPark.
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<PAGE>
The Company's sources of working capital are its current cash balance and cash
flows from operations. The Company has, in the past, funded a portion of its
cash needs through loans from its parent corporation (Las Vegas Discount Golf
& Tennis, Inc.), however, any loans from the parent in the future are likely
to be limited.
On June 13, 1997 the Company and Callaway Golf Company ("Callaway") announced
the formation of the All American Golf, LLC, a limited liability California
corporation, to construct, manage and operate "Callaway Golf Center", a
premier golf facility at the site of the All-American Sportpark. The total
budgeted costs for the Callaway Golf Center are approximately $9.0 million.
Callaway will provide $5,750,000 in debt financing which bears interest at 10
percent with interest only payments commencing 60 days after the opening of
the golf center through a date ten years after the opening at which point the
remaining accrued interest and principal will be due in full. As of June 30,
1997, $1,312,000 had been drawn under this agreement. The Company will own 80
percent of the members' units of the LLC. The Company will manage the driving
range, golf course and tenant facilities in the clubhouse.
While the Company has entered into the Callaway arrangement as previouisly
described, the Company currently has not secured financing for the
construction of the sports entertainment complex portion of the SportPark.
The Company has been holding discussions with a number of potential corporate
sponsors who have expressed an interest in participating in the SportPark, and
management expects that corporate sponsors will contribute a portion of the
financing needed. The Company expects to receive the balance of the financing
from a combination of sources including outside equity and/or debt investors,
bank financing, and the Company's own cash. There is no assurance that
financing will be obtained from any of these sources.
FACTORS AFFECTING FORWARD-LOOKING INFORMATION
This Report contains forward-looking statements within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended. Among others, such
forward-looking statements include statements with respect to (i) the
availability to the Company of additional equity and/or debt proceeds on terms
acceptable to the Company and at the times necessary to satisfy capital
expenditure, debt repayment and other requirements, (ii) the availability of
operating cash flow in amounts and at the times anticipated by management,
(iii) the adequacy of budgeted amounts for capital expenditure projects and
the adequacy of the Company's liquidity and capital resources generally, and
(iv) the anticipated time of completion of capital projects.
These forward-looking statements involve important risks and uncertainties,
many of which will be beyond the control of the Company, and which could
significantly affect anticipated future results, both short-term and
long-term. As a result, actual results may differ, in some cases materially,
from those anticipated or contemplated by forward-looking statements in this
Report. In addition to the cautionary statements included in this section and
elsewhere throughout this Report, attention is directed to the cautionary
statements included in the Company's other publicly available reports filed
with the Securities and Exchange Commission under the Securities Exchange Act
of 1934, including without limitation the cautionary statements set forth or
referenced in the Company's Form 10-KSB for the year ended December 31, 1996,
under the caption "Part II, Item 6., Management's Discussion and Analysis or
Plan of Operations - Safe Harbor Provision."
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<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. None.
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
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.
SAINT ANDREWS GOLF CORPORATION
Date: August 25, 1997 By:/s/ Ronald Boreta
Ronald Boreta, President and Chief
Financial Officer
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<PAGE>
EXHIBIT INDEX
EXHIBIT METHOD OF FILING
- ------- ------------------------------
27. Financial Data Schedule Filed herewith electronically
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
unaudited condensed balance sheets and unaudited condensed statements of
income 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1997
<CASH> 6,262,000
<SECURITIES> 0
<RECEIVABLES> 44,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,330,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 14,276,000
<CURRENT-LIABILITIES> 2,590,000
<BONDS> 0
<COMMON> 3,000
0
4,740,000
<OTHER-SE> 4,881,000
<TOTAL-LIABILITY-AND-EQUITY> 14,276,000
<SALES> 0
<TOTAL-REVENUES> 179,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 402,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (223,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 1,857,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,898,000
<EPS-PRIMARY> .63
<EPS-DILUTED> 0
</TABLE>
