UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from to
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Commission File Number: 000-50283
Golf Two, Inc.
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(Exact name of small business issuer as specified in its charter)
Delaware 04-3625550
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1537 West Orangewood Avenue, Orange, California 92868
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(Address of principal executive offices)
(714) 633-1400
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(Issuer's Telephone Number)
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practical date. As of May 15, 2003, there were
7,418,336 shares of the issuer's $.001 par value common stock issued and
outstanding.
1
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
GOLF TWO, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
March 31, December 31,
2003 2002
------------------------- -------------------------
(Unaudited)
ASSETS
Current assets -
cash and cash equivalents $ 20,715 $ 27,150
========================= =========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities -
accounts payable $ 2,590 $ 7,000
------------------------- -------------------------
Stockholders' equity:
Preferred stock, $0.001 par value, 5,000,000 shares authorized;
no shares issued or outstanding - -
Common stock, $0.001 par value, 50,000,000 shares authorized;
7,418,336 issued and outstanding 7,418 7,418
Additional paid-in capital 150,907 150,607
Deficit accumulated during development stage (140,200) (137,875)
------------------------- -------------------------
Total stockholders' equity 18,125 20,150
------------------------- -------------------------
$ 20,715 $ 27,150
========================= =========================
See accompanying notes from an integral part of these financial statements.
2
GOLF TWO, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS (UNAUDITED)
For the
period from
For the For the March 15, 2001
three months ended three months ended (inception) to
March 31, 2003 March 31, 2002 March 31, 2003
------------------------- ------------------------- -------------------------
Net revenue $ - $ - $ -
General and administrative expenses 2,360 95,300 139,677
------------------------- ------------------------- -------------------------
Loss from operations (2,360) (95,300) (139,677)
Other income (expense):
Interest income (35) - (277)
Interest expense - - 800
------------------------- ------------------------- -------------------------
Loss before income taxes (2,325) (95,300) (140,200)
Provision for income taxes - - -
------------------------- ------------------------- -------------------------
Net loss $ (2,325) $ (95,300) $ (140,200)
========================= ========================= =========================
Net loss available to common stockholders per
common share - basic and dilutive:
Loss per common share $ (0.00) $ (0.03) $ (0.03)
========================= ========================= =========================
Weighted average common shares
outstanding - basic and dilutive 7,418,336 3,577,747 4,936,570
========================= ========================= =========================
See accompanying notes from an integral part of these financial statements.
3
GOLF TWO, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
Deficit
accumulated
Common stock Additional during Total
---------------------------------- paid-in development stockholders'
Shares Amount capital stage equity (deficiency)
----------------- --------------- -------------- ----------------- --------------------
Balance at March 15, 2001, $ - $ - $ - $ - $ -
date of incorporation
Issuance of Founders Shares for
services at $0.01 per share
(March 2001) 2,325,000 2,325 - - 2,325
Additional paid-in capital - - 1,500 - 1,500
Net loss - - - (14,303) (14,303)
----------------- --------------- -------------- ----------------- --------------------
Balance at December 31, 2001 2,325,000 2,325 1,500 (14,303) (10,478)
Issuance of common stock for
services at $0.03 per share
(February 2002) 3,000,000 3,000 87,000 - 90,000
Issuance of common stock for cash
at $0.03 per share (April 2002) 2,093,336 2,093 60,707 - 62,800
Additional paid-in capital - - 1,400 - 1,400
Net loss - - - (123,572) (123,572)
----------------- --------------- -------------- ----------------- --------------------
Balance at December 31, 2002 7,418,336 7,418 150,607 (137,875) 20,150
Additional paid-in capital (unaudited) - - 300 - 300
Net loss (unaudited) - - - (2,325) (2,325)
----------------- --------------- -------------- ----------------- --------------------
Balance at March 31, 2003 7,418,336 $ 7,418 $ 150,907 $ (140,200) $ 18,125
================= =============== ============== ================= ====================
See accompanying notes from an integral part of these financial statements.
4
GOLF TWO,
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS (UNAUDITED)
For the
period from
For the For the March 15, 2001
three months ended three months ended (inception) to
March 31, 2003 March 31, 2002 March 31, 2003
------------------------ ---------------------- -----------------------
Cash flows provided by (used for) operating activities:
Net loss $ (2,325) $ (95,300) $ (140,200)
------------------------ ---------------------- -----------------------
Adjustments to reconcile net loss to net cash
used for operating activities:
Non-cash issuance of common stock for services - 90,000 92,625
Non-cash additional paid-in-capital contributed 300 300 2,900
Increase (decrease) in liabilities:
Accounts payable (4,410) - 2,590
Accounts payable-related party - 5,000 -
------------------------ ---------------------- -----------------------
Total adjustments (4,110) 95,300 98,115
------------------------ ---------------------- -----------------------
Net cash used for operating activities (6,435) - (42,085)
------------------------ ---------------------- -----------------------
Cash flows provided by financing activities:
Proceeds from note payable-related party - - 10,000
Repayment of note payable-related party - - (10,000)
Proceeds from issuance of common stock - - 62,800
------------------------ ---------------------- -----------------------
Net cash provided by financing activities - - 62,800
------------------------ ---------------------- -----------------------
Net increase (decrease) in cash (6,435) - 20,715
Cash, beginning of period 27,150 - -
------------------------ ---------------------- -----------------------
Cash, end of period $ 20,715 $ - $ 20,715
======================== ====================== =======================
Supplemental disclosure of cash flow information:
Income taxes paid $ - $ - $ -
======================== ====================== =======================
Interest paid $ - $ - $ -
======================== ====================== =======================
See accompanying notes from an integral part of these financial statements.
5
GOLF TWO, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM MARCH 15, 2001
(INCEPTION) TO MARCH 31, 2003 AND THE THREE AND SIX MONTHS
ENDED MARCH 31, 2003 AND 2002
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
NATURE OF BUSINESS:
Golf Two, Inc. (the "Company") is currently a development
stage company under the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 7 and was incorporated under
the laws of the State of Delaware on March 15, 2001. The
Company plans to operate retail golf stores that will feature
indoor golf instruction and sell custom golf clubs throughout
California.
INTERIM FINANCIAL STATEMENTS:
The accompanying unaudited financial statements for the three
months ended March 31, 2003 and 2002 include all adjustments
(consisting of only normal recurring accruals) which, in the
opinion of management, are necessary for a fair presentation
of the results of operations for the periods presented.
Interim results are not necessarily indicative of the results
to be expected for a full year. The unaudited financial
statements should be read in conjunction with the audited
financial statements included in Form SB-2/A, filed with the
Securities and Exchange Commission on April 24, 2003 for the
period from March 15, 2001 (inception) to December 31, 2002.
GOING CONCERN:
The accompanying financial statements have been prepared in
conformity with accounting principles generally accepted in
the United States of America, which contemplate continuation
of the Company as a going concern. However, the Company has no
established source of revenue. This matter raises substantial
doubt about the Company's ability to continue as a going
concern. These financial statements do not include any
adjustments relating to the recoverability and classification
of recorded asset amounts, or amounts and classification of
liabilities that might be necessary should the Company be
unable to continue as a going concern.
Management intends to continue to raise additional financing
through joint venturing of projects, exchange of asset, debt
financing, equity financing or other means and interests which
it deems necessary with a view to moving forward and sustain a
prolonged growth in its strategy phases.
Management believes these steps will be sufficient to provide
the Company with the ability to continue in existence.
USE OF ESTIMATES:
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States
of America 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 revenues and expenses during the reported
periods.
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(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
COMPREHENSIVE INCOME:
For the three months ended March 31, 2003 and 2002, the Company
had no items that represent other comprehensive income and,
therefore, has not included a Statement of Comprehensive Income
in the financial statements (unaudited).
BASIC AND DILUTED LOSS PER SHARE:
In accordance with SFAS No. 128, "Earnings Per Share," the basic
income (loss) per common share is computed by dividing net
income (loss) available to common stockholders by the weighted
average number of common shares outstanding. Diluted income
(loss) per common share is computed similar to basic income per
common share except that the denominator is increased to include
the number of additional common shares that would have been
outstanding if the potential common shares had been issued and
if the additional common shares were dilutive. As of March 31,
2003 and 2002, the Company did not have any equity or debt
instruments outstanding that can be converted into common stock
(unaudited).
(2) RELATED PARTY TRANSACTIONS:
NOTE PAYABLE - RELATED PARTY
In April 2001, the Company entered into a $10,000 non interest-bearing
note with a stockholder. The note was due upon demand and repaid in
April 2002. The Company recorded interest expense on this note at 8%
per annum as a contribution to capital.
OFFICE EXPENSE
An officer of the Company provided office space to the Company at $100
per month on a month-to-month basis, which was recorded as a
contribution to capital. Total office expense for the three months
ended March 31, 2003 and 2002 amounted to $300 and $300, respectively
(unaudited).
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ITEM 2. PLAN OF OPERATION
This following information specifies certain forward-looking statements of
management of the company. Forward-looking statements are statements that
estimate the happening of future events and are not based on historical fact.
Forward-looking statements may be identified by the use of forward-looking
terminology, such as "may", "shall", "could", "expect", "estimate",
"anticipate", "predict", "probable", "possible", "should", "continue", or
similar terms, variations of those terms or the negative of those terms. The
forward-looking statements specified in the following information have been
compiled by our management on the basis of assumptions made by management and
considered by management to be reasonable. Our future operating results,
however, are impossible to predict and no representation, guaranty, or warranty
is to be inferred from those forward-looking statements.
The assumptions used for purposes of the forward-looking statements specified in
the following information represent estimates of future events and are subject
to uncertainty as to possible changes in economic, legislative, industry, and
other circumstances. As a result, the identification and interpretation of data
and other information and their use in developing and selecting assumptions from
and among reasonable alternatives require the exercise of judgment. To the
extent that the assumed events do not occur, the outcome may vary substantially
from anticipated or projected results, and, accordingly, no opinion is expressed
on the achievability of those forward-looking statements. We cannot guaranty
that any of the assumptions relating to the forward-looking statements specified
in the following information are accurate, and we assume no obligation to update
any such forward-looking statements.
Critical Accounting Policy and Estimates. Our Management's Discussion and
Analysis of Financial Condition and Results of Operations section discusses our
financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States of America. The preparation
of these financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of expenses during the
reporting period. On an on-going basis, management evaluates its estimates and
judgments, including those related to accrued expenses, financing operations,
and contingencies and litigation. Management bases its estimates and judgments
on historical experience and on various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying value of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. The most significant
accounting estimates inherent in the preparation of our financial statements
include estimates as to the appropriate carrying value of certain assets and
liabilities which are not readily apparent from other sources. These accounting
policies are described at relevant sections in this discussion and analysis and
in the notes to them consolidated financial statements included in our Quarterly
Report on Form 10-QSB for the three months ended March 31, 2003.
We incorporated in Delaware on March 15, 2001. We are a development stage
company and we plan to initiate, establish and operate retail golf stores which
will feature indoor golf instruction and custom golf clubs. Each retail location
will offer custom-fitted golf clubs, individualized to our customers' needs and
marketed under the Golf Two brand name. Golf instruction and training will be
conducted on-site by in-store staff under the direction of a professional at
each store.
8
We anticipate that our retail stores will be approximately 5,000 square feet and
will include two virtual reality golf simulators, two computer swing analysis
systems and a club fitting analysis system. Private label and brand name golf
merchandise and related products will also be available for sale at each retail
store. We seek to promote the enjoyment of the game of golf by helping golfing
enthusiasts of all levels play better. Accordingly, we intend to offer indoor
golf training available and individualized, quality golf clubs and related
products to our clientele.
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002.
Liquidity and Capital Resources. We have total assets (consisting of cash only)
of $20,715 as of March 31, 2003. Our total liabilities were $2,590 as of March
31, 2003. In April 2002, we sold 2,093,336 shares of our common stock for $0.03
per share. The net proceeds from the sale of those shares were $62,800. Those
proceeds were used to provide us with additional working capital.
RESULTS OF OPERATIONS.
Revenues. We have realized no revenues from our inception on March 15, 2001
through the three months ended March 31, 2003. We anticipate that we will
generate revenues as we commence operations and build our customer base.
Operating Expenses. For the three months ended March 31, 2003, our total
expenses were $2,360, which were represented by general and administrative
expenses. We also had $35 in interest income. Therefore, for the three months
ended March 31, 2003, we experienced a net loss of $2,325. This is in comparison
to the period from our inception on March 15, 2001 through March 31, 2003, where
we had accumulated expenses and loss from of operations totaling $139,677. Of
that amount, $90,000 was represented by stock issued in exchange for services.
For the period from our inception on March 15, 2001 to March 31, 2003, we had
$277 in interest income and $800 in interest expense, so that our net loss
totaled $140,200.
Our Plan of Operation for the Next Twelve Months. To effectuate our business
plan during the next twelve months, we plan to begin marketing our products and
services by means of our website and develop our brand image. Our operations to
date have been focused on developing our brand name and attempting to establish
strategic relationships with providers of golf products. In the next twelve
months, we hope to accomplish the steps listed below to implement our business
plan.
---------------------------------------- ------------------------------------------- --------------------- -----------------------
Milestones Steps Needed Estimated Timeframe Estimated Cost
---------------------------------------- ------------------------------------------- --------------------- -----------------------
Complete development website to 1. Engage webmaster within next six $7,500
promote our brand name and services 2. Design webpage contents months
and take product orders 3. Deploy developed website
---------------------------------------- ------------------------------------------- --------------------- -----------------------
Advertising by means of direct mail, 1. Identify local areas to target to coincide with $5,000
flyers and magazine inserts media deployment of
to help develop brand name recognition 2. Design advertising content website
3. Arrange for distribution of
materials
---------------------------------------- ------------------------------------------- --------------------- -----------------------
Engage golf pro / instructor staff 1. Identify additional candidates within one month (no up-front costs:
if needed after website fee-split or pay
2. Negotiate terms of service deployment commissions from goods
3. Engage candidates sold)
---------------------------------------- ------------------------------------------- --------------------- -----------------------
Explore possible suitable retail 1. Identify suitable property by fourth quarter $2,000
locations for our initial store 2. Estimate purchase price or lease 2003
terms
---------------------------------------- ------------------------------------------- --------------------- -----------------------
Explore debt financing options 1. Identify potential lenders by fourth quarter $2,000
2. Prepare proposal and loan 2003
application
3. Submit completed application
---------------------------------------- ------------------------------------------- --------------------- -----------------------
We have cash of $18,413 as of May 1, 2003. In the opinion of management,
available funds will satisfy our working capital requirements through the next
twelve months. For the next twelve months, we anticipate that our day-to-day
expenses will be approximately $1,000 per month until and unless we secure our
first location. We believe that our expenses will significantly increase once we
begin renovating and developing our first location. Our forecast for the period
for which our financial resources will be adequate to support our operations
involves risks and uncertainties and actual results could fail as a result of a
number of factors.
9
We are not currently conducting any research and development activities and do
not anticipate conducting such activities in the near future. Unless we raise
funds to accommodate additional expenditures, we do not anticipate that we will
purchase any significant equipment. In the event that we generate significant
revenues and expand our operations, then we may need to hire additional
employees or independent contractors as well as purchase or lease additional
equipment. We do not anticipate incurring expenses to hire a golf pro or
instructor staff, at least initially, in that we hope to engage such individuals
on a fee-splitting or commission basis.
ITEM 3. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures. We maintain controls and
procedures designed to ensure that information required to be disclosed in the
reports that we file or submit under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified
in the rules and forms of the Securities and Exchange Commission. Based upon
their evaluation of those controls and procedures performed within 90 days of
the filing date of this report, our chief executive officer and the principal
financial officer concluded that our disclosure controls and procedures were
adequate.
(b) Changes in internal controls. There were no significant changes in our
internal controls or in other factors that could significantly affect these
controls subsequent to the date of the evaluation of those controls by the chief
executive officer and principal financial officer.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
--------------------------
None.
ITEM 2. CHANGES IN SECURITIES.
------------------------------
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
----------------------------------------
None.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
----------------------------------------------------------
None.
ITEM 5. OTHER INFORMATION
--------------------------
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
-----------------------------------------
None.
10
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Golf Two, Inc.,
a Delaware corporation
May 15, 2003 By: /s/ David Bennett
-----------------------------------
David Bennett
principal executive, accounting and
financial officer, president, treasurer,
and a director
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CERTIFICATIONS
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I, David Bennett, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Golf Two, Inc.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 15, 2003
/s/ David Bennett
----------------------
David Bennett
Chief Executive Officer and
Chief Financial Officer
12