<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 March 31, 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
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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 27, 1997, 3,000,000 shares of common stock were outstanding.
Transitional Small Business Disclosure Format (check one): Yes___ No X
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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 5
Notes to Unaudited Condensed Consolidated
Financial Statements 6
Item 2. Management's Discussion and Analysis or Plans
of Operations 8
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
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<PAGE>
SAINT ANDREWS GOLF CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, December 31,
1997 1996
----------- -----------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 8,062,000 $ 5,818,000
Other receivables 51,000 480,000
Prepaid expenses and other 25,000 17,000
----------- -----------
Total current assets 8,138,000 6,315,000
FURNITURE, EQUIPMENT AND
LEASEHOLD IMPROVEMENTS, NET 85,000 84,000
PROJECT DEVELOPMENT COSTS 3,338,000 2,103,000
NET ASSETS OF DISCONTINUED OPERATIONS - 120,000
----------- -----------
$11,561,000 $ 8,622,000
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 1,068,000 $ 742,000
Deferred income 86,000 154,000
Other payables 345,000 -
Income taxes payable 450,000 -
----------- -----------
Total current liabilities 1,949,000 896,000
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) 1,089,000 (797,000)
----------- -----------
Total stockholders' equity 9,612,000 7,726,000
----------- -----------
$11,561,000 $ 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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SAINT ANDREWS GOLF CORPORATION
UNAUDITED CONDENSED
STATEMENTS OF INCOME
For the Three Months
Ended March 31,
1997 1996
----------- -----------
(Unaudited) (Unaudited)
REVENUES:
Interest income $ 68,000 $ 4,000
Royalties 6,000 -
Other 4,000 -
----------- -----------
Total revenues 78,000 4,000
EXPENSES:
Selling, general and administrative 123,000 98,000
SportPark development costs 77,000 94,000
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Total expenses 200,000 192,000
----------- -----------
(122,000) (188,000)
GAIN ON SALE OF FRANCHISE OPERATIONS 2,499,000 (188,000)
----------- -----------
INCOME (LOSS) BEFORE PROVISION
FOR INCOME TAXES 2,377,000 (188,000)
PROVISION FOR INCOME TAXES 450,000 -
----------- -----------
INCOME (LOSS) BEFORE LOSS FROM
DISCONTINUED OPERATIONS 1,927,000 (188,000)
LOSS FROM DISCONTINUED OPERATIONS (41,000) (39,000)
----------- -----------
NET INCOME (LOSS) $ 1,886,000 $ (227,000)
INCOME (LOSS) PER SHARE:
Income(loss) from operations $ .64 $ (.06)
Loss from discontinued operations (.01) (.02)
----------- -----------
NET INCOME (LOSS) PER SHARE $ .63 $ (.08)
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 Three Months
Ended March 31,
1997 1996
----------- -----------
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 1,886,000 $ (227,000)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 2,000 5,000
Gain on sale of franchise
operations (2,499,000) -
Changes in assets and liabilities:
Decrease in other receivables 274,000 45,000
Increase in inventory - (4,000)
(Increase) decrease in prepaid
expenses and other (13,000) 416,000
Increase (decrease) in accounts payable 417,000 (55,000)
Increase (decrease) in deferred income (68,000) 21,000
Increase in other payables 345,000 51,000
Increase in income tax payable 450,000 -
----------- -----------
Net cash provided by operating
activities 794,000 252,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Project development costs (1,238,000) (152,000)
Development cost refund - 85,000
Proceeds from sale of franchise
operations 2,688,000 -
----------- -----------
Net cash provided (used) by investing
activities 1,450,000 (67,000)
----------- -----------
NET INCREASE IN CASH AND CASH
EQUIVALENTS 2,244,000 185,000
CASH AND CASH EQUIVALENTS-
Beginning of period 5,818,000 125,000
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CASH AND CASH EQUIVALENTS -
End of period $ 8,062,000 $ 310,000
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 March 31, 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 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 sheets and statement of
operations as of and for the three months March 31, 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 March 31, 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 months ended March
31, 1997 and 1996 the proforma calculations were as follows:
March 31, 1997 March 31, 1996
Basic Diluted Basic Diluted
----- ------- ----- -------
Income (loss) from operations $.64 $.43 $(.06) $(.06)
Loss from discontinued operations (.01) (.01) (.02) (.01)
---- ---- ----- -----
Net income (loss) per share $.63 $.42 $(.08) $(.07)
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Options to purchase 1,517,000 and 360,000 shares of common stock were
outstanding at March 31, 1997 and 1996, respectively, at exercise prices of
$4.625 to $5.40 at March 31, 1997 and of $5.00 to $5.40 at March 31, 1996,
respectively.
NOTE 3. 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.
The Company made no cash payments for interest or income taxes during the
three months ended March 31, 1997 or 1996.
NOTE 4. 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 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.
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<PAGE>
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 MARCH 31, 1997, COMPARED TO THREE MONTHS ENDED MARCH 31,
1996
Total revenues increased $74,000 compared to 1996. The increase in revenues
was attributable primarily to an increase in interest income resulting from
the increase in cash or interest bearing accounts.
Selling, general and administrative expenses increased by $25,000 (26%) in
1997 as compared to 1996, primarily as a result of the activity in All-American
SportPark, Inc.
Net loss from discontinued operations increased $2,000 compared to 1996.
Revenue from discontinued oeprations decreased 48% from $359,000 in 1996 to
$186,000 in 1997. Selling, general and administrative expenses for
discontinued operations decreased 42% from $392,000 in 1996 to $227,000 in
1997. All changes in discontinued operations are attributed to the sale of
franchise operations on February 26, 1997, resulting in less than two months
activity in the period ended March 31, 1997, versus three months in the period
ended March 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1997, the Company had working capital of approximately $6,189,000
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 $8,062,000 at
March 31, 1997. This increase in cash was primarily attributable to
$2,688,000 in proceeds from the sale of franchise operations; a $417,000
increase in accounts payable; and a $345,000 increase in other payables. The
increase was partially offset by expenditures of $1,238,000.
The Company incurred $1,236,000 of project development expenditures during the
quarter which were related to the continued development of its first SportPark
in Las Vegas, Nevada.
The Company does not expect to have any significant capital expenditures other
than the development of the SportPark.
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, it is likely that the parent will be able to make
any loans in the future.
The Company currently has not secured financing for the construction of the
first 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
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<PAGE>
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 1996, under the caption "Part II, Item 6., Management's
Discussion and Analysis or Plan of Operations - Safe Harbor Provision."
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.
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<PAGE>
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: June 6, 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1997
<CASH> 8,062,000
<SECURITIES> 0
<RECEIVABLES> 51,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,138,000
<PP&E> 3,338,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 11,561,000
<CURRENT-LIABILITIES> 1,949,000
<BONDS> 0
<COMMON> 3,000
0
4,740,000
<OTHER-SE> 4,869,000
<TOTAL-LIABILITY-AND-EQUITY> 11,561,000
<SALES> 0
<TOTAL-REVENUES> 78,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 200,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,377,000
<INCOME-TAX> 450,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,886,000
<EPS-PRIMARY> .63
<EPS-DILUTED> .63
</TABLE>
