U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
Post-Effective Amendment #1
General Form For Registration of Securities
Of Small Business Issuers under
Section 12(b) or (g) of The Securities Exchange Act of 1934
LCS, Golf, Inc.
(Name of Small Business Issuer in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
11-3200338
(I.R.S. Employer Identification No.)
809 North Dixie Highway, Suite 200, West Palm Beach, Florida 33401
(Address of principal executive offices) (Zip Code)
(561) 835-8484
(Issuer's telephone number)
Securities to be registered under Section 12(b) of the Act:
None
Securities to be registered under Section 12(g) of the Act:
Common Stock, par value $.001
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TABLE OF CONTENTS
Part I
Item 1. Description of Business..............................................3
Item 2. Management's Discussion and Analysis
or Plan of Operation.......................................10
Item 3. Description of Property.............................................13
Item 4. Security Ownership of Certain Beneficial
Owners and Management......................................13
Item 5. Directors, Executive Officers, Promoters
and Control Persons........................................14
Item 6. Executive Compensation..............................................17
Item 7. Certain Relationships and Related Transactions......................18
Item 8. Description of Securities...........................................18
Part II
Item 1. Market Price of and Dividends on the Registrant's
Common Equity and Other Shareholder Matters................19
Item 2. Legal Proceedings...................................................20
Item 3. Changes in and Disagreements with Accountants.......................20
Item 4. Recent Sales of Unregistered Securities.............................20
Item 5. Indemnification of Directors and Officers...........................26
Part F/S
Financial Statements.........................................................27
Part III
Item 1. Index to Exhibits...................................................48
Signatures...................................................................50
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
To simplify the language in this registration statement, references to "We,"
"Us" or "LCS Golf" refer to LCS Golf, Inc. and its subsidiaries.
Business Development.
We were incorporated in the State of Delaware on October 8, 1997 as Linkun
Enterprise, Inc. to design and distribute golf clubs and golf related products.
On October 27, 1997, we changed our name to LCS Golf, Inc.
On October 28, 1997, LCS Golf, Inc. a New York Corporation (hereinafter "LCS New
York") was merged into our Company and we were the surviving company. Pursuant
to the merger, we exchanged nine hundred eighty thousand nine hundred and four
(980,904) shares of our common stock for all of the issued and outstanding
shares of LCS New York on a one-share for one-share basis.
We entered into this transaction to obtain the name LCS Golf, Inc. Prior to this
transaction, our officers and directors had no affiliation with LCS Golf, Inc.
New York.
On May 1, 1998, we acquired Golf Universe, Inc., which became our wholly owned
subsidiary. Golf Universe, Inc. was incorporated in the state of Florida on
October 23, 1996. We acquired all of the outstanding stock in Golf Universe in
exchange for the following consideration:
o 400,000 shares of our common stock issued to Golf Universe's
shareholders,
o A promissory note for $100,000, which we paid prior to February 28,
1999, and
o Expenses of $16,750 associated with the transaction
We entered into this transaction to acquire Golf Universe's plans for
development of a golf related website. Prior to this transaction, our officers
or directors had no affiliation with Golf Universe.
On November 17, 1998, we entered into a stock purchase agreement with Milton
Besen who controlled all of the issued and outstanding common stock of Mr. B
III, Inc. ("B III"). B III was incorporated in the state of Florida on
September 3, 1996. In this transaction, we exchanged 150,000 shares of our
common stock and $250,000 for all of the issued and outstanding shares of B III.
B III became our wholly owned subsidiary. We entered into this transaction to
acquire B III's manufacturing operations. Prior to this transaction, our
officers and directors had no affiliation with B III.
On January 26, 1999, we entered into a common stock purchase agreement with Alex
Bruni, the holder of 100% of the issued and outstanding shares of Play Golf Now,
Inc. Play Golf was incorporated on
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November 27, 1998 in the state of New York. We acquired all of the issued and
outstanding shares of Play Golf in exchange for:
o 350,000 shares of our common stock issued to Mr. Bruni,
o 250,000 shares of our common stock issued to consultants, and
o an unconditional option issued to Mr. Bruni to purchase an
additional 200,000 shares of our common stock at a purchase price of
$0.50 per share that may be exercised in whole or in part on or
before January 25, 2001.
Play Golf Now then became our wholly owned subsidiary. We entered into this
transaction to acquire Play Golf's golf membership discount program, consisting
of a network of golf courses, driving ranges, and pro shops offering discounted
rates to Play Golf's members. Prior to this transaction, our officers and
directors had no affiliation with Play Golf.
On February 15, 1999, we entered into a common stock purchase agreement with
Leigh Ann Colguhoun, the holder of 100% of the issued and outstanding shares of
Golfpromo, Inc. Golfpromo was incorporated in the state of Florida on February
10, 1999. We acquired all of the issued and outstanding shares of Golfpromo in
exchange for 350,000 shares of our common stock. Golfpromo then became our
wholly owned subsidiary. We entered into this transaction to acquire Golfpromo's
mailing database list of golfers. Prior to this transaction, our officers and
directors had no affiliation with Golfpromo.
On August 27, 1999, we incorporated I Fusion Corp. as our wholly owned
subsidiary, to provide both Internet and traditional and marketing services.
Business of Issuer.
We sell products and offer information over the Internet through our five wholly
owned subsidiaries:
o Golf Universe
o B III
o Play Golf
o Golf Promo
o iFusion
Internet Operations.
Golf Universe.com
o Golfuniverse.com has been operational since March of 1999 and currently
averages approximately 150,000 hits per day. Golfuniverse.com delivers
information and details on over 24,000 golf courses located world wide and
over 10,000 golf related businesses as well as other golf related data and
information.
o The Golf Universe site offers an online pro shop, where golf-related
products and services are sold through third party vendors. The website
offers products and services from major golf equipment manufacturers,
apparel designers, and other golf related manufacturers. Consumers can
purchase items from exclusive resorts such as Doral, PGA National and
Pebble Beach. We obtain commissions when site visitors purchase products,
reserve tee times, and make travel plans online.
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Our commissions on these transactions range from 12% to 20% depending on
the vendor, type and amount of reservation or sale.
o The Golf Universe site offers a Golf Universe Preferred Members Club that
provides members discounts on golf services and products. Through
alliances with Choice Hotels International, Avis(R), Alamo(R), Budget(R),
National(R) and Nike Golf Schools, the Club offers members discounts at
over 2000 golf courses, resorts, practice facilities, as well as equipment
and apparel through the Online Pro Shop. We plan to develop benefits for
Club members such as a monthly online newsletter, a bi-monthly magazine, a
Recreation Directory, savings on condo rentals, short notice airfare
savings, vacation package savings, discounts on cruises, motor home
savings and skiing discounts.
ifusionco.com
iFusionco.com is a full-service Internet marketing company that provides the
following services:
o creative and concept development;
o national marketing program implementation and management;
o corporate and package development;
o sweepstaking, and couponing;
iFusion generates revenues from monthly retainers, subcontract work, and per
project work.
Targetmails.com is a website operated by iFusion, which utilizes our databases.
Our database of golfers includes:
o in excess of 4.2 million email addresses:
o 1.8 permission email addresses,
o 2 million physical mail addresses,
o 24,000 golf course names and addresses; and
o over 15,000 golf retailers and pro shops.
Additionally, we have databases of individuals associated with the travel,
healthcare, and investment industries.
With our diverse databases:
o we are able to direct market specific GolfUniverse and Preferred Club
products and services
o rent the database to advertisers, researchers, and golf industry
consumers; and
o and increase traffic to the GolfUniverse.com and Wall StreetGolf.com web
sites through the targetmail.com website.
Golfpromo.net and playgolfnow.com are used principally as links to our other
web-sites.
B III
We formerly designed and manufactured consumer products through B III, but we
ceased our manufacturing operations in November of 1999. We are planning to sell
B III therapeutic magnet products and specialty pillows on our websites. The
manufacturing of our products is done by Allied Packaging and Manufacturing.
Allied will be using B III's manufacturing equipment to produce these
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product lines. We are in the process of negotiating a formal agreement for the
manufacturing of these products. Until a manufacturing agreement is executed, we
compensate Allied on a per project basis.
Namath Agreement.
In December 1998, we entered into a ten-year agreement with Mr. Joe Namath
providing that for six days a year Mr. Namath will produce infomercials
containing his endorsement of B III's therapeutic magnet products. This
agreement expires on December 1, 2008. Mr. Namath was paid consideration of
600,000 shares of our common stock with a market value of approximately $587,000
and $25,000 upon the signing of the agreement. Additionally, Mr. Namath is to
receive royalties of 5% of the gross sales price of all endorsed products sold.
To date, Mr. Namath has received no royalty payments. We also paid 600,000
shares of our common stock to Mr. Namath's licenser, Planned Licensing, Inc.,
valued at approximately $587,000 as consideration for the use of Mr. Namath's
services.
Suppliers and Consumer Base.
We are not dependent upon suppliers of raw materials or upon any single
customer. We maintain no inventory. We do not sell any of or own products on our
Golf Universe website and we maintain no inventory. We provide links to the
websites of vendors who sell their own products on their websites. All shipping
and credit card transactions are processed by the vendors whose products are
displayed.
Competition for our Internet Operations.
We compete with consumer products and specialty retail businesses with physical
locations as well as with other websites selling products similar to ours. Our
leading competitors include retail stores such as Target stores, Wal-Mart
Stores, Inc., and other physical store locations that sell golf related
products. We attempt to compete on the basis of content, quality, uniqueness,
pricing, assortment of our merchandise, brand name, service to customers, and
proprietary customer lists.
Government Approval and Compliance with Governmental Regulation.
We will not collect sales or other similar taxes from goods sold on our website
except where required by law. Some states or the federal government may seek to
impose sales tax collection obligations on out-of-state companies that engage in
or facilitate online commerce. Proposals have been made at the state and local
level that would impose additional taxes on the sale of goods and services
through the Internet. Such proposals, if adopted, could substantially impair the
growth of electronic commerce, and could adversely affect our opportunity to
derive financial benefit from such activities.
Due to the increasing popularity and use of the Internet, a number of laws and
regulations may be adopted, covering privacy, pricing, and quality of products
and services regarding the Internet. The growth of Internet commerce may prompt
calls for more stringent consumer protection laws that may impose additional
burdens on our business. The adoption of any additional laws or regulations may
decrease the growth of the Internet, which, in turn, could decrease the demand
for our Internet products or increase our cost of doing business, results of
operations and financial condition.
We sell our products and services to numerous consumers residing in such states
and jurisdictions that may claim that we are required to qualify to do business
as a foreign corporation in each such state or foreign country. Our failure to
qualify as a foreign corporation in a jurisdiction where it is required to do
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so could subject us to taxes and penalties for failure to qualify. Any such
existing or new legislation or regulation, including state sales tax, or the
application of laws or regulations from jurisdictions whose laws do not
currently apply to our business, could have a material adverse effect on our
business, results of operations and financial condition.
Agreements.
On February 16, 2000, we entered into a series of related agreements with
Quintel Communications, Inc. ("Quintel"), including a loan agreement to borrow
$500,000 from Quintel in the form of a convertible promissory note. The
promissory note is secured by our database of information. The note bears
interest at a variable rate not to exceed 14%. The note was due on demand any
time after August 16, 2000. Quintel may have converted the remaining principal
into shares of our common stock and such shares would have had registration
rights as set forth in a registration rights agreement. Further, any additional
shares issued upon conversion of the debt are protected by anti-dilution
provisions, subject to our right to repurchase any shares issued under such
anti-dilution provisions at $1.00 per share, which repurchase right may be used
once in twelve months from the date of the agreement.
On the same date, we entered into a marketing agreement and licensing
agreement with Quintel. As consideration for providing marketing services for a
period of two years, we issued options (valued at approximately $139,000 using
the Black-Scholes Model) to purchase 200,000 shares of our common stock. Options
to purchase 100,000 shares are exercisable for a period of two years from
issuance at $1.00 per share and options to purchase 100,000 shares are
exercisable for a period of two years from issuance at $2.00 per share. The
shares underlying these options have registration rights as described in the
registration rights agreement discussed above.
Under the licensing agreement, Quintel acquired a license to use our
database of information in exchange for payment of $5,000 per month. If we
default under the loan agreement, Quintel may credit this monthly amount towards
any amounts in arrears under the terms of the loan agreement. The licensing
agreement is for a term of ten years with an option to renew for an additional
five years.
On August 7, 2000 following certain disagreements concerning
Quintel's use of our database, we entered into a forbearance agreement and
amendment of our security agreement with Quintel. Quintel acknowledged receipt
of a $50,000.00 payment against the principal balance of $500,000 due on the
convertible note, funded personally by Dr. Mitchell. The related note was
amended to provide for payment upon written demand. If there is a default under
the terms of the forbearance agreement or the note, the interest rate will equal
the prime rate as defined in the note plus 4% not to exceed
fourteen(14%)percent. Until payment of all amounts due under the note are made,
amendment #1 to the security agreement requires us to pay fifty percent (50%) of
the collections received for accounts receivable outstanding as of August 10,
2000, and twenty-five percent (25%) of collections for all new accounts
receivable, within five days. Payment is to be credited against amounts due
under the note, first to interest, then to principal. Quintel also receives 50%
of all other cash receipts including additional loans, cash equivalents and
marketable securities generated by us from any source whatsoever until payment
in full of the amounts due under the note. The security agreement filed February
22, 2000 was amended to include all accounts of LCS Golf and all securities or
guarantees held by us in respect of the accounts and all account proceeds. In
addition, Dr. Mitchell, President and CEO of LCS Golf, executed and delivered a
guarantee on August 7, 2000 of up to $250,000.00 on the note.
Quintel agreed to forbear from demanding payment of the note or commencing
any action against us as long as Quintel receives at least $10,000.00 per month
in payment of principal and interest on the Note, or collections of the accounts
or from the guarantor, and we generate gross revenues of at least $75,000.00 per
calendar month from the normal conduct of business.
On August 8, 2000 American Warrant Partners, LLC ("American
Warrant")invested $300,000.00 in our Company. We issued an 8% convertible
subordinated promissory note to American Warrant with a maturity date for the
principal of August 8, 2002. The note is convertible into our common stock at
$0.25 per share subject to adjustment. Interest is payable on a quarterly basis
commencing September 30, 2000. We also issued to American Warrant a warrant
expiring on August 8, 2005 to purchase up to 600,000 shares of our common stock,
at the exercise price of $0.40 per share, to be exercised in whole or in part.
In order to elect to exercise the warrant at the share price computed using the
formula in the warrant agreement, American Warrant must deliver the warrant and
a written notice of election to exercise the warrant to us. In addition, we
entered into a registration rights agreement in which we promise to register the
shares with the Commission as soon as reasonably practicable, but in no event
later than September 15, 2000. To date, no such Registration Statement has been
filed. Certain officers and directors of the Company agreed to a lock-up
provision restricting their right to sell, transfer, pledge or hypothecate or
otherwise encumber their shares until the earlier of the one year anniversary of
the agreement, the effective date of the Registration Statement, or until we
raise $1,000,000 in equity or debt financing. We also agreed that without prior
written consent, until the earlier of 85% of the principal balance and interest
is paid or converted to common stock, or 180 days from the date of the warrant
agreement, we will not offer to sell or sell any of our common stock at a price
per share (or conversion or exercise price per share) less than the average
closing price per share of our common stock as quoted by the OTC Electronic
Bulletin Board on the five days immediately prior to the close of the
transaction. We also agreed to recommend and use our best efforts to elect a
designee and representative of American Warrant as a member of the Board of
Directors until the later of one year from the date of the agreement or until
such time we receive $1,000,000 in equity or debt financing.
Debt in Default
The American Warrant investment of $300,000 placed us in default of the
forbearance agreement that we signed with Quintel because we did not in turn
remit fifty percent of the cash proceeds as required under the agreement. On
August 30, 2000, Dr. Mitchell agreed to fund personally two payments of $50,000
each towards principal and interest on the Quintel loan. We also changed to 50%
instead of 25% of receipts from new accounts receivable that are payable to
Quintel under the amended security agreement.
Intellectual Property.
Through our acquisition of B III, we own patent serial number 29/073.138 to a
product sold under the label "Adorables," that is an animal pillow with a pouch.
We have not sought trademark registration of the "Adorables" name with the U.S.
Patent & Trademark Office. Golf Universe has registered the following domain
names:
o golfuniverse.com o skiuniverse.com
o golfpromo.net o universe-online.com
o ifusionco.com o ifusionco.net
o playgolfnow.com o junior-golf.com
o targetmail.com o mygolfuniverse.com
o wallstreetgolf.com o freeis4me.com
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o lcsgolf.com o golfuniverse-online.com
Research and Development.
We have conducted no research and development in the past two (2) fiscal years.
Status of Publicly Announced New Products or Services.
We have no publicly announced new products or services.
Employees.
LCS Golf and its subsidiaries have 15 full-time employees, and a total of 15
employees.
Risk Factors.
We Are In Default of a Senior Secured Loan Which May Cause Us to Curtail or
Cease Operations.
Our failure to remit 50% of the cash proceeds from the American Warrant
transaction to Quintel resulted in a default under the forbearance agreement
with Quintel. If Quintel elects to pursue its remedies under the forbearance
agreement and we are unable to reach an amicable resolution with Quintel, we may
have to curtail or cease operations unless we are able to obtain additional
financing. Even if we do reach an amicable resolution with Quintel which we have
no reason to believe such resolution is possible, and continue operations, our
efforts to satisfy continuing obligations under the Quintel agreements will
significantly impact our cash flow. Pursuant to arrangements with Quintel, we
increased the percentage of receipts which we must remit from new accounts
receivable from 25% to 50% which will significantly impact on our cash flow
until such time as we are able to make payment in full under the Quintel
agreement.
Our Financial Condition is Poor and We May Be Unable to Continue as a Going
Concern.
Our operations have been dependent upon short-term borrowing and other funding
resources. From March 1, 1999 through November 30, 1999, our president has made
additional net advances of approximately $261,000. Our independent auditors
report on our consolidated financial statements for the year ended February 28,
1999, raises substantial doubt as to our ability to continue as a going concern.
Our financial statements show an accumulated deficit of $6,170,817. We expect to
continue to incur net losses for the foreseeable future and negative cash flow
from operations through at least the year 2000. We expect to significantly
increase our operating expenses as a result of expanding our sales and
marketing, product development and administrative operations and developing new
strategic relationships to promote our future growth. As a result, we will need
to generate increased sales to meet these expenses and to achieve profitability.
In addition, due to our default under the agreement with Quintel, we must now
remit 50% of all accounts receivable to Quintel which will further significantly
reduce our cash flow. Therefore, an investment should not be made in our
securities unless an investor is prepared to lose his or her entire investment.
We Recently Redirected Our Strategic Focus; Therefore Our Recent Operating
Results Are Not Comparable to Our Results for Prior Periods
We were founded in 1997 to design and distribute golf clubs and related
products. In early 1999, we began to provide permission email and Internet
services. For the nine months ended November 30, 1999, permission email
marketing services represented 40% of our revenue, compared to 0% in the nine
months ended November 30, 1998. Accordingly, our operating results since the
year ended February 28, 1999 are not comparable to our results for prior
periods. We cannot be certain that our business strategy will be successful, or
that we will adequately address these risks.
We Have Only Been In Existence For a Short Time Period; Therefore, You May Not
Be Able to Assess Our Business for Investment Purposes.
Because our business has been in existence only since October 1997, you may not
be able to assess our future performance.
We May Not Be Able to Obtain Funds From Other Funding Sources to Stay In
Business.
If our revenues are not sufficient to continue our business, we may have to seek
other funding. If we are unable to obtain any such funding, our ability to
continue in business will be negatively impacted.
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Our Management May Not Have the Requisite Experience or be Unable to Devote the
Time Necessary to Develop Our Business.
Our management has little experience in managing Internet based companies. Such
inexperience could hinder our ability to fully develop our business. Although
our Chief Executive Officer works full-time for us, his employment agreement
with LCS Golf requires him to devote a minimum of only twenty hours per week to
our operations. Our management's inability to devote their full attention to our
business, could effect our growth and sales.
The Golf Industry is Highly Seasonal and Subject to Fluctuations.
The majority of golf sales occur during warmer weather. Therefore, our revenues
may be higher during the golf season. If we are unable to effectively develop
marketing strategies that account for decreased sales during these months, we
may not generate sufficient sales during certain financial quarters to be
profitable. In addition, due to such seasonal fluctuations, our quarterly
results may not be indicative of our future earnings.
Our Revenues May be Negatively Affected by Internet Security Risks.
We are dependent upon encryption and authentication technology to provide
security to effect secure transmission of confidential data and information.
There is no assurance that new technological discoveries will not result in
compromises to our security. If our security is compromised, we could be subject
to litigation and our business reputation could be negatively impacted.
Our Success is Dependent Upon Broad Market Acceptance of Permission Email
Marketing Services.
We do not know if our products and services will be successful. The market for
permission email marketing services is in its infancy, and we are not certain
whether our target customers will widely adopt and deploy this technology. Even
if they do so, they may not choose our products for technical, cost, support or
other reasons. Adoption of permission email marketing services, particularly by
those entities that have historically relied upon traditional means of direct
marketing, such as telemarketing and direct mail, requires the broad acceptance
of a new and substantially different approach to direct marketing.
If We Fail to Develop and Maintain Our Sales, Marketing, and Support
Organization and Relationships With Our Network Partners and Third Party List
Managers, Our Growth Will Be Limited.
We must continue to maintain and expand our relationships with network partners
who provide us with access to permission email lists. We began to enter into
agreements with our network partners in the first quarter of 1999. These
contracts are generally short-term, ranging from a one-time project to an
initial term of six months. In accordance with these contracts, we provide our
network partners with tracking services and generate revenues by reselling the
permission email lists to direct marketers. Our network partners receive a
percentage of our revenues from such resale. We cannot assure that the growth of
our business as a result of our entering into these agreements will be
sufficient to meet our expectations for sales growth and profitability.
We also have our proprietary lists, which include the majority of the email
addresses used in our operations. We complement our lists through reseller
arrangements with network partners, under which we pay a fixed fee for
nonexclusive use of their list for a specific campaign. These network partners
are
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not contractually obligated to provide us with access to their lists. If we fail
to maintain or grow our relationships with our network partners, our business
could be negatively impacted.
The Loss of Any of Our Executive Officers or Key Personnel Would Likely Have an
Adverse Effect on Our Business.
We need to hire a significant number of additional sales, support, marketing and
product development personnel to expand our business. If we fail to attract
qualified personnel or retain current employees, our sales may not increase and
could decline. Competition for these individuals is intense, and we may not be
able to attract, assimilate or retain additional highly qualified personnel in
the future. Our future success also depends upon the continued service of our
executive officers and other key sales, marketing and support personnel. We do
not have "key person" life insurance policies covering any of our employees.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Except for historical information, the discussion in this report contains
forward-looking statements that involve risks and uncertainties. These
forward-looking statements include, among others, those statements including the
words "expects," "anticipates," "intends," "believes" and other similar
language. Our actual results could differ materially from those discussed
herein. You should not place undue reliance on these forward-looking statements,
which apply only as of the date of this report. Factors that could cause or
contribute to such differences include, but are not limited to, the risks
discussed in "Certain Factors That May Affect Future Results of Operations."
Overview
LCS Golf Inc. is a holding company that provides:
o permission email direct marketing services through Golfpromo.net and
Targetmails.com;
o Internet and direct marketing services through Ifusionco.com.
o Golf ecommerce, news and information through GolfUniverse.com ; and
o discounts on golf services through Playgolfnow.com.
We began to refocus our business on permission email direct marketing,
newsletter marketing and Internet & direct marketing in early 1999. To implement
our permission based email business strategy, we acquired Golf Promo and created
TargetMails.com and Ifusionco.com. As a result of our new focus, we have built a
network and developed reseller relationships, which collectively provide us with
access to over 3 million approved golfers. Our current strategy is to focus our
resources on our permission email business by continuing to build our network of
subscribers and customer base.
We derive sales by charging fees for sending permission email messages to our
golf database. Sales are recognized when emails are sent to subscribers. Our
customers are primarily e-commerce companies, interactive advertising agencies
and golf related companies.
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We deliver email messages to members of our golf related division that consists
of our own permission email list and lists from network partners. We pay our
network partners either a percentage of sales derived from the delivery of email
messages to members on the lists they provide or a fixed fee. Substantially all
of our customers purchase our permission email services under agreements that
are short-term or less than one year. We expect to continue to derive a
substantial majority of our sales from short-term contracts and one-time users.
We expect to increase spending on sales and marketing as we expand our sales
force, increase our subscriber base and promote awareness of our business. We
also expect substantially higher general and administrative expenses as we
expand our infrastructure to support our expected growth and as we continue to
develop new product lines and make enhancements to our existing products. As a
result of these increases, we expect to incur significant losses for the
foreseeable future.
Our manufacturing operations for the B III have been outsourced to Allied
Packaging and Manufacturing, Inc., who utilize our machinery and equipment, to
produce our line of B III products.
In view of the rapidly evolving nature of our business, our limited operating
history, and our recent focus on permission email and Internet marketing
services, we believe that period-to-period comparisons of our sales and
operating results, including our gross profit or losses and operating expenses
as a percentage of total sales, are not meaningful and should not be relied upon
as an indication of future performance. We do not believe that our historical
growth rates are indicative of future results.
Results of Operations
Nine Months Ended November 30, 1999
Sales. Our sales revenue consisted of fees from providing Internet marketing
services that include:
o delivery of permission email
o direct marketing messages to members in our network
o newsletter-marketing
o e-commerce
o banner advertising
o sales of our products
Total sales revenues were approximately $1,665,000 for the nine months ended
November 30, 1999, compared with approximately $108,000 for the year ending
February 28, 1999. Our sales revenues for the nine months ended November 30,
1999, consisted of approximately $1,003,000 from our manufacturing and $662,000
from other golf related segments.
Cost of Sales. Cost of sales was approximately $1,063,000 for the nine months
ended November 30, 1999, consisting of about $985,000 manufacturing costs and
$78,000 of online and reproduction services and labor.
Selling, General, and Administrative Expenses. Total selling, general, and
administrative expenses for the 9 months ended November 30, 1999, were
approximately $3,701,000.
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General and administrative expenses were approximately $3,187,000 for the 9
months ended November 1999, pertaining to the following expense areas:
o personnel
o finance
o accounting
o legal
o shares issued for financial consulting services and settlement of
claims
Sales and marketing expenses were approximately $514,000 for the nine months
ended November 30, 1999, pertaining to the following expense areas:
o direct sales force
o marketing staff
o marketing programs
o trade shows
o advertising
o public relations.
Because we created a direct sales force, increased our marketing expenditures to
build our permission email and Internet marketing strategy, and over the next
year we will hire additional sales and marketing personnel over the next year,
we expect increased sales and marketing expenses.
Interest Expense. Interest expense was approximately $40,000 for the nine months
ending November 30, 1999, and consists of interest on debt obligations.
Income Taxes. Because we had no losses since our inception through November 30,
1999, we were not required to record federal or state income taxes. The deferred
tax benefit of these net operating losses has been reduced by a 100 % valuation
allowance.
Liquidity and Capital Resources
From inception to November 30, 1999, we have funded our growth through
short-term borrowings and private placement proceeds. In February of 2000, we
entered into a 6 month, $500,000 loan agreement with Quintel Communications with
an interest rate equal to prime plus 4%, not to exceed 14%. The loan is
convertible, at Quintel's election, into shares of our common stock at a rate of
one (1) share for each $1 of the loan.
Golf related sales continue to increase. We expect that sales for the year
ending February 29, 2000 will exceed $900,000, compared to $0 for the fiscal
year ended February 28, 1999. We have agreements with several companies to
manage and represent their company's database and broker their client's list.
These agreements may result in increased sales and brand awareness.
We will continue our search for strategic partners and/or acquisition candidates
for our Golf Network Services.
12
<PAGE>
We are currently seeking to raise additional capital through investment banking
firms to achieve our growth objectives. If adequate funds are not available, we
believe that our planned growth could be significantly affected. Operations
could continue to be reliant upon the cash flow from additional short-term
borrowings from Dr. Mitchell or from other sources.
Year 2000 Readiness Disclosure
We have not experienced any problem with any of our systems and software and do
not expect to spend any additional funds on Year 2000 issues.
ITEM 3. DESCRIPTION OF PROPERTY
We do not own any real property. We lease office space at 809 North Dixie
Highway, Suite 200, West Palm Beach, Florida for our internet operations. This
space is approximately 5000 square feet. The monthly rental for this premise is
$5,000.00 and the term of the lease is three years. This lease expires on August
11, 2002, but provides an option to renew for an additional two years if we are
not in default on the terms of the lease.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following tables set forth certain information with respect to the
beneficial ownership of our common stock by (a) each person known to us to be
the beneficial owner of more than five percent of our common stock, (b)
directors and executive officers both individually and as a group, as of March
31, 2000. Unless otherwise indicated, we believe that the beneficial owner had
sole voting and investment power over such shares.
Security Ownership of Certain Beneficial Owners
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
Number of Beneficially Percentage Ownership of
Title Name and Address of Beneficial Owner Owned Shares Class
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Dr. Michael Mitchell
President 24 East 12th Street 4,118,309(1) 20.30%
and CEO New York, NY 10003
--------------------------------------------------------------------------------------------------------------------
</TABLE>
Security Ownership of Management
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
Number of Beneficially Percentage Ownership of
Title Name and Address of Beneficial Owner Owned Shares Class
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
President Dr. Michael Mitchell 4,118,309(1) 20.30%
--------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
and CEO 24 East 12th Street
New York, NY 10003
--------------------------------------------------------------------------------------------------------------------
Mr. John H. Flood, III
Director 24 East 12th Street 50,000 0.25%
New York, NY 10003
--------------------------------------------------------------------------------------------------------------------
Mr. Don Klosterman
Director 809 N Dixie Hgwy, Suite 200 50,000 0.25%
West Palm Beach, FL 33401
--------------------------------------------------------------------------------------------------------------------
Mr. Charles Gargano
Director 633 3rd Ave., 37th Fl. 250,000 1.23%
New York, NY 10017
--------------------------------------------------------------------------------------------------------------------
Mr. Kenneth Greenblatt
Director 809 N Dixie Hgwy, Suite 200 100,000 0.49%
West Palm Beach, FL 33401
--------------------------------------------------------------------------------------------------------------------
Mr. Lawrence Slavin
Director 87 St. Jon's Road 205,000(3) 1.01%
Wilton, CT 06897
--------------------------------------------------------------------------------------------------------------------
Chief Alex Bruni
Operating 809 N Dixie Hgwy, Suite 200 550,000(2) 2.70%
Officer West Palm Beach, FL 33401
--------------------------------------------------------------------------------------------------------------------
Mr. James Walsh
Director 5874 Deerfield Place 600,000 2.96%
Lake Worth, FL 33463
--------------------------------------------------------------------------------------------------------------------
All Executive Officers and Directors as 5,923,309 28.92%
a group (8 people)
--------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) This amount includes 200,000 shares earned by Lynn Mitchell, Dr.
Mitchell's wife, for services to us.
(2) This amount includes 200,000 shares that may be obtained through January
2001 by Mr. Bruni upon exercise of his outstanding options.
(3) This amount includes 5,000 shares issued to Mr. Slavin's wife for services
rendered to us.
Changes in Control.
We are unaware of any arrangements, which may cause a change in control.
14
<PAGE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
Directors and Executive Officers.
The following sets forth the names, ages, positions and terms of office of our
officers and directors. Our directors are elected annually by the shareholders,
and the officers are elected by the board at the first meeting of the board
following the annual meeting.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
Name Age Position Term of Office
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Dr. Michael Mitchell 44 President and CEO Annual
--------------------------------------------------------------------------------------------------------------------
Mr. Charles A. Gargano 64 Director Annual
--------------------------------------------------------------------------------------------------------------------
Mr. Lawrence J. Slavin 46 Director Annual
--------------------------------------------------------------------------------------------------------------------
Mr. Alex Bruni 41 Chief Operating Officer Annual
--------------------------------------------------------------------------------------------------------------------
Mr. James C. Walsh 58 Director Annual
--------------------------------------------------------------------------------------------------------------------
Mr. Don Klosterman 69 Director Annual
--------------------------------------------------------------------------------------------------------------------
Mr. John H. Flood, III 49 Director Annual
--------------------------------------------------------------------------------------------------------------------
Mr. Kenneth Greenblatt 52 Director Annual
--------------------------------------------------------------------------------------------------------------------
</TABLE>
Dr. Michael Mitchell
Dr. Mitchell obtained a degree in biology from Jacksonville University in 1976.
In 1980, he obtained his M.D. degree from the University of Dominica. From 1985
through the end of 1999, he has been a physician at Greenwich Village
Pediatrics. He is board certified in pediatrics and has memberships in the
Academy of Pediatrics and the New York County Medical Society. He has now left
the practice of pediatrics to devote his full attention to LCS Golf.
Mr. Charles A. Gargano
Mr. Gargano earned his B.S. and M.B.A. degrees from Fairleigh Dickinson
University and an M.S. in civil engineering from Manhattan College. He served
under Presidents Reagan and Bush as the Ambassador to the Republic of Trinidad
and Tobago. Since 1995, Mr. Gargano has served as the Commissioner for the New
York State Department of Economic Development, while simultaneously serving his
appointment as Chairman of Empire State Development, Inc. Mr. Gargano is a
licensed Professional Engineer and a Civil Engineer.
Mr. Lawrence J. Slavin
In 1974, Mr. Slavin received his history degree at Hofstra University. He then
received his M.A. in Healthcare Administration at C.W. Post College in 1977.
From 1991 through 1996, he worked as
15
<PAGE>
Executive Director and Managing Partner of Hartsdale Diagnostic & Women's
Imaging Service in Hartsdale, New York. In 1996, Mr. Slavin became Vice
President of Business Development and Marketing at U.S. Management Systems,
Inc., a healthcare management service company, where he developed and managed
sales and marketing plans for entities in the healthcare industry. In 1998, Mr.
Slavin began service as the President of Slavin Consulting, LLC, a healthcare
consulting firm in Wilton, Connecticut, where he focuses on the development of
strategic growth plans for healthcare related facilities.
Mr. Alex Bruni
Mr. Bruni serves as our Chief Operating Officer. He obtained a BBA in Accounting
and a MS in Taxation from Hofstra University. From 1988 through 1998, Mr. Bruni
worked at American Express as the Director of International Taxes, managing a
staff of five tax accountants while also managing and planning American Express
international operations. In addition, Mr. Bruni worked as a tax manager for
Nomura Securities from 1986 through 1988 and as a tax specialist for Wertheim
Schroder from 1984 through 1986.
Mr. James C. Walsh
Mr. Walsh received his B.S. and J.D. degrees from the University of Alabama. He
is admitted to practice law in Louisiana and New York, where he has been
practicing since 1966. Mr. Walsh practices in his own firm, specializing in the
representation of entertainers and professional athletes. He is also the
President of Namanco Productions, Inc. specializing in the marketing and
management of athletes. Mr. Walsh is a Director of Sportsline, USA, Inc., a
NASDAQ publicly traded company under the symbol "SPLN." This company is an
Internet based sports media company.
Mr. Don Klosterman
Mr. Klosterman graduated from Loyola University of Los Angeles in 1952. He is a
former Chairman of the Board and currently Director for the public television
company NTN (an AMEX company). He also serves as Director for Aldila, a golf
shaft manufacturing company traded on NASDAQ, Director for the National
Registry, Inc., a software development company traded on NASDAQ, and as a
Director of the Bel-Air Country Club.
Mr. John H. Flood, III
Mr. Flood received his A.B in Psychology from Harvard College in 1975. He
obtained his J.D. from the University of Virginia School of Law in 1978. Mr.
Flood is currently the President of Oldron Sports & Entertainment Company, which
does professional sports team marketing and consulting. Prior to his current
position, Mr. Flood directed and managed the National Football League
Properties, Inc. for eleven years where he held the positions of Director of
Legal and Business Affairs, Executive Vice President, General Counsel, and
President.
Mr. Kenneth Greenblatt
Mr. Greenblatt has a BBA degree in Finance from the University of Miami. He
currently serves as a member of the President's Council of the University of
Miami and as a member of the Board of Directors of the Helen Hayes Theatre, in
addition to his position with our company. In 1987, Mr. Greenblatt founded
Waverly Converting, Inc., a textile company, and served as its President until
the
16
<PAGE>
company was sold to Missbrenner, Inc. in 1997. Prior to founding Waverly
Converting, Inc., Mr. Greenblatt served as Chairman for Guilford Mills
Incorporated.
Significant Employees.
Eric Reinertsen was a significant employee of Golf Promo prior to their
acquisition and continued his employment with LCS Golf after the acquisition to
facilitate a smooth transition with the transfer of control. Mr. Reinertsen's
duties with LCS Golf include customer relations and email distribution, which
comprise two essential areas of our business. Prior to joining Golf Promo in
October of 1997, Mr. Reinertsen served as General Manager for Eric's Outboard,
Inc., a company involved in boat sales. Concurrent with his employment with
Golfpromo, Inc., Mr. Reinertsen has worked as a national accounts sales manager
for Vitarich, Inc., a company involved in production and sales of vitamins.
Other than those mentioned above, we currently have no significant employees.
Family Relationships.
There are no family relationships among our directors, executive officers or
persons nominated for such positions.
Involvement in Certain Legal Proceedings.
As of the date of this registration statement, no events have occurred during
the past five years, which would be material to an evaluation of the ability or
integrity of any director, officer or persons nominated for such positions.
ITEM 6. EXECUTIVE COMPENSATION
Summary Compensation Table
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Long Term Compensation
------------------------------------------------------------------------------------------------------------------------------------
Annual Compensation(1) Awards Payouts
------------------------------------------------------------------------------------------------------------------------------------
(a) (b) (C) (d) (e) (f) (g) (h) (i)
------------------------------------------------------------------------------------------------------------------------------------
Name and Restricted Securities LTIP All Other
Principle Fiscal Salary Bonus Other Annual Stock Award(s) Underlying Payouts Compensation
Position Year ($) ($) Compensation ($) ($) Options/SARs (#) ($) ($)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael 1997 0 0 0 0 0 0 0
Mitchell, 1998 0 0 0 0 0 0 0
President 1999 0 0 0 $1,925,000 0 0 0
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1999 Dr. Michael Mitchell did not receive compensation pursuant to the terms of
his employment agreement in fiscal year ended 2/29/00 because the Company
operated at a loss. Such compensation has been accrued on our financial
statements.
Michael Mitchell, M.D.
17
<PAGE>
On June 1, 1998, we entered into an employment agreement with Dr. Michael
Mitchell for his services as our President and Chief Executive Officer. The
agreement is for a term of five (5) years. There may be termination for cause
ninety (90) days after a written demand for services by our board of directors
has been provided. Termination without cause requires at least three (3) months
notice to Dr. Mitchell. Dr. Mitchell's duties include all those customary for
such positions, as well as any duties reasonably imposed or removed from such
customary duties under our discretion. Dr. Mitchell is to perform such services
at least twenty (20) hours per week. As consideration for these services, we
have agreed to pay Dr. Mitchell an annual salary of two hundred, sixty thousand
dollars ($260,000.00) payable in weekly installments of five thousand dollars
($5,000.00). This salary is to be increased each year by at least four percent
(4%) during the term of the agreement.
Since we were unable to pay Dr. Mitchell pursuant to the terms of his agreement
with us, we issued 2,000,000 restricted shares of our common stock to Dr.
Mitchell in January of 1999. Such shares had a market value of $1,925,000 at the
time of issuance, based on the trading price of free-trading shares of the same
class. Dr. Mitchell's shares were unable and unavailable to be sold at the then
prevailing market price per share. Given that the shares were restricted and
illiquid, management decided that the shares were equivalent in value to the
amounts owed to Dr. Mitchell under the terms of his employment agreement through
the end of 1998.
Alex Bruni.
In accordance with the agreement in which we purchased all of the outstanding
shares of Play Golf, we agreed to employ Alex Bruni for a period of two-years
from May 26, 1999 as Chief Operating Officer of Play Golf and Golf Universe at
an annual salary of $104,000 payable in bi-weekly installments.
Eric Reinertsen.
In accordance with the agreement in which we purchased all of the outstanding
shares of Golf Promo, we agreed to employ Eric Reinertsen for a period of
one-year from the date of the agreement at an annual salary of $60,000 payable
in bi-weekly installments. This agreement is renewable at the mutual option of
the parties.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
In January 1999, as compensation for services rendered under his employment
contract for the period from June 1, 1998 through December 31, 1998, we issued
Dr. Michael Mitchell, our President and Director, 2,000,000 shares of our common
stock valued at $1,925,000. In September of 1998, we issued 200,000 shares of
our common stock valued at $75,000 to Lynn Mitchell, wife of Dr. Michael
Mitchell, for services rendered to the Company. In addition, Dr. Mitchell
periodically makes short-term loans to the Company for operations without
specific repayment terms.
Other than those described above, we have no transactions which involved or are
planned to involve a direct or indirect interest of a director, nominee,
executive officer, 5% shareholder or any family of such parties. We are not a
subsidiary of any other company.
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<PAGE>
ITEM 8. DESCRIPTION OF SECURITIES.
Common Stock.
In General. We are authorized to issue 50,000,000 shares of common stock, par
value $0.001 per share, of which 20,282,225 shares were issued and outstanding
as of March 31, 2000. All of the issued and outstanding common stock is fully
paid and nonassessable.
Voting. Each share of our common stock entitles the holder thereof to one vote
per share in the election of directors and in all other matters upon which
stockholders are entitled to vote.
The holders of shares of common stock do not have cumulative voting rights,
which means that the holders of more than 50% of such outstanding shares voting
for the election of directors can elect all of the directors to be elected, if
they so choose. In such event the holders of the remaining shares will not be
able to elect any of our directors.
Dividends. Each share of common stock entitles the holder thereof to receive
cash dividends, as the Board of Directors may declare from funds legally
available therefore. However, we do not intend to declare any dividend on our
common stock in the foreseeable future.
Preemptive Rights. There are no preemptive rights with respect to the common
stock. Upon liquidation, dissolution or winding up of our affairs, and after
payment of creditors, the assets legally available for distribution will be
divided ratably on a share-for-share basis among the holders of the outstanding
shares of common stock.
Debt Securities.
As of the date of this registration statement, we have no debt securities
outstanding.
Other Securities.
As of the date of this registration statement, we have 200,000 options
outstanding to Alex Bruni, which are exercisable through January of 2001. In
addition, we issued 200,000 options to Quintel Communications, Inc. for their
services under a marketing agreement. 100,000 of these options are exercisable
at $1.00 per share until February 16, 2002. The remaining 100,000 options are
exercisable at $2.00 per share until February 16, 2002. These options have
registration rights. We are not authorized to issue preferred stock. We have 50
warrants outstanding, which are each eligible to be exercised for 7 shares at
$0.35 per share.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS
Market Information.
19
<PAGE>
From mid-1998 through January 19, 2000, our common stock was traded on the
NASDAQ Over-The-Counter Bulletin Board under the symbol "LCSG." The following
chart sets forth the high and low sales prices for each quarter since listing of
the Company's common stock.
1998 Quarter High Low
------------ -----------------------
July 1 - September 30 $0.50 $0.20
October 1 - December 31 $1.49 $0.25
1999 Quarter
------------
January 1 - March 31 $2.75 $0.75
April 1 - June 30 $3.62 $2.25
July 1 - September 30 $2.625 $1.218
October 1 - December 31 $1.625 $0.687
On January 19, 2000, we were de-listed from the Over the Counter Bulletin Board
for failure to comply with the new listing standards set forth by the NASD
before our phase-in date. Since January 20, 2000, our stock has been quoted in
the National Quotation Bureau pink sheets. If we obtain compliance with the NASD
listing requirements, we intend to reapply for listing on the Over the Counter
Bulletin Board. There is no guarantee that we will ever re-obtain such listing.
No prediction can be made as to the effect, if any, that future sales of shares
of common stock or the availability of common stock for future sale will have on
the market price of the common stock prevailing from time-to-time. Sales of
substantial amounts of common stock on the public market could adversely affect
the prevailing market price of the common stock.
Holders.
As of March 31, 2000, there were approximately 425 holders of common stock.
Dividends.
We have not paid a cash dividend on the common stock since the arrival of our
current management, and we do not plan at this time to declare dividends.
Management anticipates that any funds available will be reinvested in our
business. The payment of dividends may be made at the discretion of our Board of
Directors and will depend upon, among other things, our operations, capital
requirements, and overall financial condition.
ITEM 2. LEGAL PROCEEDINGS
Currently, there are no legal proceedings pending against us. However, from time
to time we could be subject to suits arising in the ordinary course of business.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
We have not had any changes in or disagreements with our accountants on any
accounting and financial disclosure issue. In early 1999, we hired Cornick,
Garber & Sandler, LLP located in New York.
20
<PAGE>
Prior to such hiring, J.T. Shulman and Company, P.C. was our primary auditor.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
On October 14, 1997, we issued 10,279,216 shares of common stock to Linkun
Holding Company in exchange for certain assets of Linkun Holding Company.
On October 17, 1997, we transferred these assets to WMF Holding Company in
exchange for services valued at $1,500.00.
On October 28, 1997, we issued 850,000 shares of our common stock in our merger
with LCS New York.
On May 1, 1998, we issued 400,000 shares of our common stock in our acquisition
of Golf Universe.
On November 17, 1998, we issued 150,000 shares of our restricted common stock in
our acquisition of B III.
On January 26, 1999, we issued 200,000 shares of our common stock and an option
to purchase an additional 200,000 shares of our common stock in our acquisition
of Play Golf.
On March 8, 1999, we issued 350,000 shares of our common stock in connection
with our acquisition of Golf Promo on February 15, 1999.
The aforementioned share issuances were all made in reliance upon the exemption
from registration provided in Section 4(2) of the Securities Act of 1933, as
amended. We believe the exemption from registration in Section 4(2) of the
Securities Act was available because the transactions did not involve a public
offering. No commissions were paid in any of these transactions.
We issued the following securities in reliance up on the exemption provided in
Rule 504 of Regulation D, of the Securities Act. Our basis for claiming this
exemption is i) we were not a reporting company at the time of the transactions;
ii) we were not an investment company; iii) we were not a development stage
company without a specific plan of business or purpose; and iv) we did not
receive aggregate proceeds of more than $1,000,000 in a twelve-month period. No
commissions were paid in these transactions.
On September 21, 1998, we issued 905,000 shares of our common stock for
Consulting and Business Services rendered to us.
On October 6, 1998, we issued 42,000 shares of our common stock for Legal and
Administrative Services rendered to us.
On October 15, 1998, we issued 18,000 shares of our common stock for Legal
Services rendered to us.
21
<PAGE>
On October 22, 1998, we issued 137,000 shares of our common stock for Legal and
Management Services rendered to us.
On November 3, 1998, we issued 34,200 shares of our common stock for Legal
Services rendered to us.
On November 12, 1998, we issued 35,000 shares of our common stock for Consulting
Services rendered to us.
On November 15, 1998, we issued 16,500 shares of our common stock for Legal
Services rendered to us.
On November 19, 1998, we issued 50,000 shares of our common stock for Consulting
Services rendered to us.
On November 23, 1998, we issued 20,000 shares of our common stock for Consulting
Services rendered to us.
On November 30, 1998, we issued 11,800 shares of our common stock for Legal
Services rendered to us.
On December 1, 1998, we completed the sale of 200,000 units, each comprised of 1
share of common stock and 2 warrants for the purchase 7 shares of common stock
at an exercise price of $0.35, at $0.10 per unit pursuant to an offering under
Rule 504 of Regulation D of the Securities Act. Our basis for claiming this
exemption is i) we were not a reporting company at the time of the transactions;
ii) we were not an investment company; iii) we were not a development stage
company without a specific plan of business or purpose; and iv) we did not
receive aggregate proceeds of more than $1,000,000 in a twelve-month period. No
commissions were paid in these transactions. No commission was paid with respect
to the offering, as the shares were sold by our officers and directors. We
raised $993,752.50 in cash proceeds from the offering.
On December 7, 1998, we issued 125,000 shares of our common stock for Consulting
Services rendered to us.
On December 9, 1998, we issued 350,000 shares of our common stock for Consulting
Services rendered to us.
On December 10, 1998, we issued 11,100 shares of our common stock for Legal
Services rendered to us.
On December 11, 1998, we issued 55,000 shares of our common stock for Consulting
Services rendered to us.
On December 15, 1998, we issued 400,000 shares of our common stock for payment
of a Licensing Fee due from us.
On December 16, 1998, we issued 7,000 shares of our common stock for Legal
Services rendered to us.
22
<PAGE>
On December 21, 1998, we issued 7,200 shares of our common stock for Legal
Services rendered to us
On December 22, 1998, we issued 35,000 shares of our common stock for Management
Services rendered to us.
The aforementioned securities were issued in reliance on Rule 504 of Regulation
D promulgated under the Securities Act, as amended. Our basis for claiming this
exemption is i) we were not a reporting company at the time of the transactions;
ii) we were not an investment company; iii) we were not a development stage
company without a specific plan of business or purpose; and iv) we did not
receive aggregate proceeds of more than $1,000,000 in a twelve month period. No
commissions were paid in these transactions.
On January 26, 1999, we issued 25,000 shares of our common stock for Legal
Services rendered to us.
On March 1, 1999, we issued 20,000 shares of our common stock for Legal Services
rendered to us.
On March 1, 1999, we issued 175,000 shares of our common stock for Public
Relations and Consulting Services rendered to us.
On March 3, 1999, we issued 20,000 shares of our common stock for Consulting
Services rendered to us.
On March 4, 1999, we issued 7,500 shares of our common stock for Legal Services
rendered to us.
On April 9, 1999, we issued 115,000 shares of our common stock for Legal
Services rendered for the Company.
On April 21, 1999, we issued 50,000 shares of our common stock for Legal
Services rendered for the Company.
The aforementioned securities were issued in reliance on Rule 504 of Regulation
D promulgated under the Securities Act, as amended. Our basis for claiming this
exemption is i) we were not a reporting company at the time of the transactions;
ii) we were not an investment company; iii) we were not a development stage
company without a specific plan of business or purpose; and iv) we did not
receive aggregate proceeds of more than $1,000,000 in a twelve-month period. No
commissions were paid in these transactions.
We issued the following securities in reliance up on the exemption provided in
Section 4(2) of the Securities Act. We believed that this exemption was
available in each of the above transactions, as they did not involve a public
offering. No commissions were paid in these transactions.
On September 21, 1998, we issued 120,000 restricted shares of our common stock
for Business Consulting Services rendered to us.
23
<PAGE>
On October 23, 1998, we issued 15,000 restricted shares of our common stock for
Business Consulting Services rendered to us.
On November 6, 1998, we issued 35,000 restricted shares of our common stock for
Business Consulting Services rendered to us.
On December 7, 1998, we issued 75,000 restricted shares of our common stock for
the repayment of debt owed by us.
On December 11, 1998, we issued 115,000 restricted shares of our common stock
for Business Consulting Services rendered to us.
On December 15, 1998, we issued 200,000 restricted shares of our common stock as
payment of a Licensing Fee due by us.
On December 21, 1998, we issued 110,000 restricted shares of our common stock
for Consulting Services rendered to us.
On January 4, 1999, we issued 15,000 restricted shares of our common stock for
Public Relations Services rendered to us.
On January 5, 1999, we issued 2,000,000 restricted shares of our common stock to
our President, Dr. Michael Mitchell, in lieu of compensation for services
rendered to us.
On January 7, 1999, we issued 1,200,000 restricted shares of our common stock as
payment of a Licensing Fee due by us.
On January 26, 1999, we issued 1,015,000 restricted shares of our common stock
for various Consulting Services rendered to us.
On February 17, 1999, we issued 265,000 restricted shares of our common stock
for Consulting Services rendered to us.
On March 1, 1999, we issued 80,000 restricted shares of our common stock for
Consulting Services rendered to us.
On March 4, 1999, we issued 20,000 restricted shares of our common stock for
Consulting Services rendered to us.
On March 8, 1999, we issued 30,000 restricted shares of our common stock for
Consulting Services rendered to us.
On March 25, 1999, we issued 80,000 restricted shares of our common stock for
Consulting Services rendered to us.
24
<PAGE>
On April 9, 1999, we issued 15,000 restricted shares of our common stock for
Administrative Services rendered to us.
On May 21, 1999, we issued 30,000 restricted shares of our common stock for
Consulting Services rendered to us.
On June 1, 1999, we issued 50,000 restricted shares of our common stock for
Consulting Services rendered to us.
On June 24, 1999, we issued 125,000 restricted shares of our common stock for
Executive Services rendered to us.
On June 28, 1999, we issued 200,000 restricted shares of our common stock for
Consulting Services rendered to us.
On July 27, 1999, we issued 200,000 restricted shares of our common stock for
Consulting Services rendered to us.
On August 23, 1999, we issued 275,000 restricted shares of our common stock for
Consulting Services rendered to us.
On September 23, 1999, we issued 3,000 restricted shares of our common stock for
Consulting Services rendered to us.
On October 28, 1999, we issued 200,000 restricted shares of our common stock for
settlement of an employment dispute.
On November 30, 1999, we issued 50,000 restricted shares of our common stock for
management services rendered to us.
On December 1, 1999, we issued 55,000 restricted shares of our common stock for
management services rendered to us.
On December 6, 1999, we issued 25,000 restricted shares of our common stock for
management services rendered to us.
On December 17, 1999, we issued 82,500 restricted shares of our common stock for
employee services rendered to us.
On January 13, 2000, we issued 170,000 restricted shares of our common stock for
settlement of an employment dispute.
On February 6, 2000, we issued 200,000 restricted shares of our common stock for
financial consulting services rendered to us.
25
<PAGE>
On February 11, 2000, we issued 75,000 restricted shares of our common stock for
management services rendered to us.
On March 21, 2000, we issued 150,000 restricted shares of our common stock for
management services rendered to us.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our bylaws provide that we shall indemnify each of our directors and officers
against all costs and expenses actually and necessarily incurred by him or her
in connection with the defense of any action, suit or proceeding in which he or
she may be involved or to which he or she may be made a party by reason of his
or her being or having been such director or officer, except in relation to
matters as to which he or she shall be finally adjudged in such action, suit or
proceeding to be liable for negligence or misconduct in the performance of duty.
26
<PAGE>
PART F/S
GOLF PROMO, INC.
(a development stage company)
FINANCIAL STATEMENTS
DECEMBER 31, 1998
27
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Proprietor
Golf Promo
We have audited the accompanying balance sheet of Golf Promo (a proprietorship)
(a development stage company) as of December 31, 1998 and the related statements
of operations and proprietor's capital and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Golf Promo as of December 31,
1998 and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
/s/ Richard A. Eisner and Company, LLP
--------------------------------------
Certified Public Accountants
New York, New York
June 8, 2000
28
<PAGE>
Golf Promo
(a development stage company)
Balance Sheet
December 31, 1998
ASSETS $ 0
========
LIABILITIES AND PROPRIETOR'S CAPITAL
Liabilities $ 0
--------
Proprietor's capital:
Net capital contributions 11,906
Net loss (11,906)
--------
Total proprietor's capital 0
--------
$ 0
========
See notes to financial statements.
29
<PAGE>
Golf Promo
(a development stage company)
Statement of Operations and Proprietor's Capital
Year Ended December 31, 1998
Revenue $ 22,133
Operating expenses 34,039
--------
Net loss (11,906)
Proprietor's capital - beginning of year 0
Net contributions by proprietor 11,906
--------
Proprietor's capital - end of year $ 0
========
See notes to financial statements.
30
<PAGE>
Golf Promo
(a development stage company)
Statement of Cash Flows
Year Ended December 31, 1998
Cash flows from operating activities:
Net loss $(11,906)
Cash flows from financing activities:
Net contributions by proprietor 11,906
--------
Net change in cash and ending balance $ 0
========
See notes to financial statements.
31
<PAGE>
Golf Promo
Notes to Financial Statements
December 31, 1998
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
[1] Nature of operations and basis of accounting:
Golf Promo (the "Company") a proprietorship, is in the development stage.
The Company provides direct marketing services to clients via permission
email. Revenue is derived by charging fees for sending email messages to
subscribers. The proprietorship began operations on January 1, 1998.
The Company's financial statements do not include the assets or
liabilities of the owner unrelated to the business.
[2] Income taxes:
The Company is not a taxpaying entity for purposes of federal and state
income taxes. The income or loss of the Company are included in the
federal and state personal income tax returns of the proprietor.
Accordingly, no provision for income taxes is made in the financial
statements.
[3] Use of estimates:
The preparation of the financial statements in conformity with generally
accepted accounting principles requires the proprietor to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
[4] Revenue recognition:
Email distribution revenue is derived from delivering permission email for
third parties to the Company's mailing list of golfers. Email distribution
revenue is recognized when the mail is delivered.
NOTE B - SUBSEQUENT EVENT
In 1999 the assets of Golf Promo, consisting principally of the email subscriber
list, were contributed to Golf Promo Inc. a newly formed corporation. On
February 15, 1999, one hundred percent of the outstanding stock of Golf Promo,
Inc. was acquired by LCS Golf, Inc. in a transaction accounted for as a
purchase. LCS Golf, Inc. issued 350,000 shares of its common stock, with a
market value of approximately $316,000, in exchange for all the outstanding
stock of Golf Promo, Inc.
32
<PAGE>
GOLF UNIVERSE, INC.
(a development stage company)
FINANCIAL STATEMENTS
DECEMBER 31, 1997
33
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholder
Golf Universe, Inc.
Palm Beach Gardens, Florida
We have audited the accompanying balance sheet of Golf Universe, Inc. (a
development stage company) as of December 31, 1997 and the related statements of
operations and cash flows for the year then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Golf Universe, Inc. as of
December 31, 1997 and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
Richard A. Eisner & Company, LLP
--------------------------------
Certified Public Accountants
New York, New York
June 8, 2000
34
<PAGE>
Golf Universe, Inc.
(a development stage company)
Balance Sheet
December 31, 1997
ASSETS
Current asset:
Cash $ 325
========
LIABILITY AND STOCKHOLDER'S EQUITY (CAPITAL DEFICIENCY)
Current liability:
Loan from stockholder $ 46,018
--------
Stockholders' equity (capital deficiency):
Capital stock - $.001 par value; 100,000 shares authorized;
100,000 issued and outstanding 100
Deficit accumulated during development stage (45,793)
--------
(45,693)
--------
$ 325
========
See notes to financial statements.
35
<PAGE>
Golf Universe, Inc.
(a development stage company)
Statement of Operations
Year Ended December 31, 1997
Revenue $ --
Operating expenses 45,793
--------
Net loss and deficit accumulated during development stage $(45,793)
========
See notes to financial statements.
36
<PAGE>
Golf Universe, Inc.
(a development stage company)
Statement of Cash Flows
Year Ended December 31, 1997
Cash flows from operating activities:
Net loss $(45,793)
--------
Cash flows from financing activities:
Proceeds from issuance of capital stock 100
Proceeds from stockholder loans 46,018
--------
Net cash provided by financing activities 46,118
--------
Net increase in cash 325
Cash - beginning of year 0
--------
Cash - end of year $ 325
========
See notes to financial statements.
37
<PAGE>
Golf Universe, Inc.
Notes to Financial Statements
December 31, 1997
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
[1] Principal business activities:
Golf Universe, Inc. (the "Company"), a corporation formed under the laws
of the state of Florida on October 23, 1996, remained inactive until
January 15, 1997. The Company is in the development stage and operates a
golf website that provides hyperlinks to other golf related websites.
[2] Income taxes:
The Company accounts for income taxes based upon the provisions of
Statements of Financial Accounting Standards No. 109 ("SFAS No. 109"),
Accounting for Income Taxes. Under SFAS No. 109, the liability method is
used for accounting for income taxes, and deferred tax assets and
liabilities are determined based on differences between financial
reporting and tax bases of assets and liabilities.
[3] Use of estimates:
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those
estimates.
NOTE B - LOAN FROM STOCKHOLDER AND OTHER MATTERS
The stockholder makes advances to the Company when necessary. These advances are
non-interest bearing and have no repayment terms.
The stockholder of the Company developed the website for which he was not paid a
salary. In addition, the Company incurred other development costs which were not
considered material and were not capitalized.
NOTE C - CAPITAL STOCK
Capital stock consists of 100,000 shares of authorized, $.001 par value common
stock, all of which are issued and outstanding.
NOTE D - INCOME TAXES
The Company has a deferred tax asset in the amount of approximately $6,900,
representing the future tax benefit of a net operating loss carryforward in the
amount of approximately $45,800. Utilization of the deferred tax asset is
dependent on future taxable income. As a result of the losses to date, the
Company has recorded a valuation allowance equal to the deferred tax asset. As a
result of the acquisition of the Company (see Note E), the utilization of the
net operating loss carryforward will be subject to annual limitations.
38
<PAGE>
Golf Universe, Inc.
Notes to Financial Statements
December 31, 1997
NOTE E - SUBSEQUENT EVENT
On May 1, 1998, one hundred percent of the outstanding common stock of the
Company was acquired by LCS Golf, Inc. in a transaction accounted for as a
purchase. LCS Golf, Inc. issued 400,000 shares of its common stock, with a
market value of $128,500 and a note for $100,000 in exchange for all the
outstanding stock of the Company.
39
<PAGE>
PLAY GOLF NOW, INC.
(a development stage company)
FINANCIAL STATEMENTS
DECEMBER 31, 1998
40
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholder
Play Golf Now, Inc.
New York, New York
We have audited the accompanying balance sheet of Play Golf Now, Inc. (a
development stage company) as of December 31, 1998 and the related statements of
operations and cash flows for the period November 25, 1998 (inception) through
December 31, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Play Golf Now, Inc. as of
December 31, 1998 and the results of its operations and its cash flows for the
period November 25, 1998 (inception) through December 31, 1998 in conformity
with generally accepted accounting principles.
Richard A. Eisner & Company, LLP
--------------------------------
Certified Public Accountants
New York, New York
June 8, 2000
41
<PAGE>
Play Golf Now, Inc.
(a development stage company)
Balance Sheet
December 31, 1998
ASSETS
Current asset:
Cash $ 484
=====
LIABILITY AND STOCKHOLDERS' EQUITY
Liabilities $ 0
-----
Stockholders' equity:
Capital stock - no par value; 200 shares authorized,
issued and outstanding 500
Deficit accumulated during development stage (16)
-----
484
-----
$ 484
=====
See notes to financial statements.
42
<PAGE>
Play Golf Now, Inc.
(a development stage company)
Statement of Operations
For the Period From November 25, 1998 (Inception) Through December 31, 1998
Revenue $ --
Operating expenses 16
----
Net loss and accumulated deficit $(16)
====
See notes to financial statements.
43
<PAGE>
Play Golf Now, Inc.
(a development stage company)
Statement of Cash Flows
For the Period From November 25, 1998 (Inception) Through December 31, 1998
Cash flows from operating activities:
Net loss $ (16)
Cash flows from financing activities:
Proceeds from issuance of common stock 500
-----
Net increase in cash 484
Cash - beginning of period 0
-----
Cash - end of period $ 484
=====
See notes to financial statements.
44
<PAGE>
Play Golf Now, Inc.
Notes to Financial Statements
December 31, 1998
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
[1] Principal business activities:
Play Golf Now, Inc., (the "Company"), a corporation formed under the laws
of the state of New York on November 25, 1998, is a development stage
company that intends to sell memberships through its website that will
enable the member to play at specified golf courses across the country at
reduced green fees and entitles the member to receive various other
discounts from participating vendors on golf related items. The Company
was originally organized as a sole proprietorship which commenced
operations in early 1998. The predecessor proprietorship's only activity
was the setup and design of the website. The costs associated with the
website setup and design, in the amount of $7,000, were incurred and
expensed by the predecessor proprietorship and, accordingly, are not
reflected in these financial statements. On November 25, 1998, the
proprietorship contributed its assets to the Company.
[2] Income taxes:
The Company accounts for income taxes based upon the provisions of
Statement of Financial Accounting Standards No. 109 ("SFAS No. 109"),
Accounting for Income Taxes. Under SFAS No. 109, the liability method is
used for accounting for income taxes, and deferred tax assets and
liabilities are determined based on differences between financial
reporting and tax bases of assets and liabilities. At December 31, 1998,
there were no deferred taxes.
[3] Use of estimates:
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those
estimates.
NOTE B - CAPITAL STOCK
Capital stock consists of 200 shares of authorized, no par value, common stock,
all of which are issued and outstanding.
NOTE C - SUBSEQUENT EVENT
On January 26, 1999, one hundred percent of the outstanding common stock of the
Company was acquired by LCS Golf, Inc. in a transaction accounted for as a
purchase. LCS Golf, Inc. issued 350,000 shares of its common stock, with a
market value of approximately $336,000, in exchange for all the outstanding
stock of Play Golf Now, Inc. In addition, LCS Golf Inc. issued options to
purchase 200,000 shares of its common stock at $.50 per share expiring January
25, 2001.
45
<PAGE>
The Pro Forma Condensed Consolidated Statement of Operations for the fiscal year
ended February 28, 1999 adjusts the historical financial information of the
Company to show the effect of the four acquisitions as if they occurred at March
1, 1998 or the date of inception of the acquired company, whichever is later.
All of these acquisitions were recorded utilizing the purchase method of
accounting. For the Golf Universe ("GU") acquisition on May 1, 1998, the
adjustment is to include the operations of GU for the period March 1, 1998 to
April 30, 1998. For the Mr. B III ("B III") acquisition on November 17, 1998,
the adjustment is to include the operations of B III for the period March 1,
1998 through November 16, 1998. For the Play Golf Now ("PGN") acquisition on
January 26, 1999, the adjustment is to include the operations of PGN from
November 25, 1998 (inception) through January 25, 1999. For the Golf Promo
("GP") acquisition on February 15, 1999, the adjustment is to remove the
operations of GP for the period February 15, 1999 through February 28, 1999
included in the historical financial information and include the operations of
GP for the year ended December 31, 1998. The "Pro Forma adjustments" column
reflects the amortization of intangible assets generated from the above
acquisitions for the pro forma period presented and the interest expense on a
$100,000 note issued in connection with the GU acquisition. The pro forma loss
per share reflects the issuance of common stock for the four acquisitions as if
they occurred at the beginning of the year or the date of inception of the
acquired company, whichever is later.
The unaudited pro forma condensed consolidated financial statement has been
prepared by the Company based upon assumptions deemed proper by it. This
unaudited pro forma condensed consolidated financial statement presented herein
is shown for illustrative purposes only and is not necessarily indicative of the
future results of operations of the Company, or the results of operations of the
Company that would have actually occurred had the transactions been in effect
for the period presented. The unaudited pro forma condensed consolidated
financial statement should be read in conjunction with the historical financial
statements and related notes of the Company.
Pro Forma Condensed Consolidated Statement of Operations
Year Ended February 28, 1999 (Unaudited)
<TABLE>
<CAPTION>
Play Pro
Historical Golf Golf Golf Forma
The Company Universe Mr. B III Now Promo Adjustments Pro Forma
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue $ 108,000 $ 1,027,000 $ 22,000 $ 1,157,000
Cost of revenue 192,000 555,000 747,000
----------- ----------- ----------- -----------
Gross profit (loss) (84,000) 472,000 22,000 410,000
Selling, general and
administrative
expenses 5,552,000 $ 8,000 332,000 $ 6,000 33,000 $ 79,000(A) 6,010,000
----------- ----------- ----------- ----------- ----------- ----------- -----------
(Loss) income from
operations (5,636,000) (8,000) 140,000 (6,000) (11,000) (79,000) (5,600,000)
Other income, net 17,000 1,000 (3,000)(B) 15,000
----------- ----------- ----------- ----------- ----------- ----------- -----------
(Loss) income before
provision for income tax (5,619,000) (8,000) 141,000 (6,000) (11,000) (82,000) (5,585,000)
Provision for income tax 3,000 3,000
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net (loss) income $(5,619,000) $ (8,000) $ 138,000 $ (6,000) $ (11,000) $ (82,000) $(5,588,000)
=========== =========== =========== =========== =========== =========== ===========
Basic and diluted net
loss per share $ (0.63) $ (0.55)
=========== ===========
Weighted average
number of shares
outstanding 8,961,285 10,132,054(C)
=========== ===========
</TABLE>
46
<PAGE>
(A) To reflect the amortization of intangible assets generated from the four
acquisitions for the period presented.
(B) To reflect interest expense for six months on the $100,000 note issued in
connection with the Golf Universe acquisition.
(C) The pro forma weighted average number of shares that would have been
outstanding for the period commencing on March 1, 1998 or the date of
inception of the acquired company, whichever is later, up to the issuance
date of the common stock.
The calculation is as follows:
Weighted average number of shares outstanding - historical 8,961,285
Golf Universe 215,385
Mr. B III 240,000
Play Golf Now 380,769
Golf Promo 334,615
----------
Pro forma weighted average of shares outstanding 10,132,054
==========
47
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
Exhibit Number Description
----------------------------------------------------------------------------------------------------
<S> <C>
2.1 Linkun Holding Company (as filed in the Form 10-SB filing on 12/9/99)
----------------------------------------------------------------------------------------------------
2.2 LCS Golf, Inc. Merger (as filed in the Form 10-SB filing on 12/9/99)
----------------------------------------------------------------------------------------------------
2.3 Golf Universe, Inc. (as filed in the Form 10-SB filing on 12/9/99)
----------------------------------------------------------------------------------------------------
2.4 Mr. "B" III, Inc. (as filed in the Form 10-SB filing on 12/9/99)
----------------------------------------------------------------------------------------------------
2.5 GolfPromo, Inc. (as filed in the Form 10-SB filing on 12/9/99)
----------------------------------------------------------------------------------------------------
2.6 Play Golf Now, Inc. (as filed in the Form 10-SB filing on 12/9/99)
----------------------------------------------------------------------------------------------------
3.1 Articles of Incorporation (as filed in the Form 10-SB filing on 12/9/99)
----------------------------------------------------------------------------------------------------
3.2 By-laws (as filed in the Form 10-SB filing on 12/9/99)
----------------------------------------------------------------------------------------------------
4.1 Form of Common Stock Certificate (as filed in the Form 10-SB filing on 12/9/99)
----------------------------------------------------------------------------------------------------
10.1 Namath Agreement
----------------------------------------------------------------------------------------------------
10.2A Quintel Loan Agreement
----------------------------------------------------------------------------------------------------
10.2B Quintel Convertible Promissory Note
----------------------------------------------------------------------------------------------------
10.2C Quintel Security Agreement
----------------------------------------------------------------------------------------------------
10.2D Quintel License Agreement
----------------------------------------------------------------------------------------------------
10.2E Quintel Marketing Agreement
----------------------------------------------------------------------------------------------------
10.2F Quintel Registration Rights Agreement
----------------------------------------------------------------------------------------------------
10.2G* Quintel Forbearance Agreement, dated as of August 8, 2000.
----------------------------------------------------------------------------------------------------
10.2H* Quintel Amendment #1 to the Security Agreement, dated as of August
8, 2000.
----------------------------------------------------------------------------------------------------
10.2I* Guaranty dated as of August 7, 2000 by Michael Mitchell for the
timely repayment of the obligations of LCS Golf under the Promissory
Note dated as of February 16, 2000 between Quintel and LCS Golf.
----------------------------------------------------------------------------------------------------
10.3A* Agreement dated as of August 10, 2000 between American Warrant
Partners LLC and LCS Golf.
----------------------------------------------------------------------------------------------------
10.3B* Registration Rights Agreement between American Warrant Partners LLC
and LCS Golf.
----------------------------------------------------------------------------------------------------
10.3C* American Warrant Partners LLC warrant for up to 600,000 shares of
common stock expiring August 8, 2005.
----------------------------------------------------------------------------------------------------
10.3D* American Warrant Partners LLC 8% Subordinated Convertible Promissory
note.
----------------------------------------------------------------------------------------------------
21 Subsidiaries of the Registrant
----------------------------------------------------------------------------------------------------
27 Financial Data Schedule
----------------------------------------------------------------------------------------------------
</TABLE>
48
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
/s/ Dr. Michael Mitchell
-----------------------------------
By: Dr. Michael Mitchell, President
Dated: September 8, 2000
