U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(MARK ONE)
|X| Quarterly Report Pursuant to Section 13 or 15(d) of Securities Exchange Act of 1934
For the quarterly period ended JUNE 30, 2001
|_| Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from _______ to _______.
Commission File No. 000-28321
AVID SPORTSWEAR & GOLF CORP.
---------------------------
(Name of Small Business Issuer in Its Charter)
Nevada 88-0374969
------ ----------
(State or Other Jurisdiction of Incorporation (I.R.S. Employer Identification No.)
or Organization)
19143 South Hamilton Avenue, Gardena, California 90248
------------------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
(310) 436-1500
--------------
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d)
of the Exchange Act during the past 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|
There were 149,183,309 shares of Common Stock outstanding as of September 20, 2001. This
number does not include outstanding options to purchase shares of Common Stock of the issuer.
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
2
AVID SPORTSWEAR & GOLF CORP.
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2001 AND DECEMBER 31, 2000
3
AVID SPORTSWEAR & GOLF CORP.
Consolidated Balance Sheets
ASSETS
------ June 30, December 31,
2001 2000
-------------- ----------------
(Unaudited)
CURRENT ASSETS
Cash 506,555 $ 25,452
Accounts receivable, net 2,782,789 75,719
Inventory 1,070,799 1,961,464
Due from factor, net 694,027 816,663
Prepaid expenses 149,831 134,900
Other current assets 66,656 71,540
-------------- ------------
Total Current Assets 5,270,657 3,085,738
-------------- ------------
EQUIPMENT
Machinery and equipment 491,790 484,495
Furniture and fixtures 85,741 90,263
Computers and software 415,847 408,046
Office equipment 49,770 49,770
Show booths 460,927 460,927
Leasehold improvements 31,470 31,470
Less: accumulated depreciation (609,362) (468,861)
-------------- ------------
Total Equipment 926,183 1,056,110
-------------- ------------
OTHER ASSETS
Goodwill, net - 2,090,171
Debt offering costs - 66,405
Deposits 30,790 15,789
Trademarks 2,902 2,902
-------------- ------------
Total Other Assets 33,692 2,175,267
-------------- ------------
TOTAL ASSETS $ 6,230,532 $ 6,317,115
============== ============
4
AVID SPORTSWEAR & GOLF CORP.
Consolidated Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
June 30, December 31,
2001 2000
-------------- ---------------
(Unaudited)
CURRENT LIABILITIES
Cash overdraft $ 17,950 $ 87,534
Accounts payable 4,636,661 5,086,000
Accrued expenses 2,070,606 479,688
Notes payable - related parties 203,564 166,557
Notes payable - 100,000
Capital leases - current portion 46,074 44,279
Customer deposits - 86,677
-------------- ---------------
Total Current Liabilities 6,974,855 6,050,735
-------------- ---------------
SUBORDINATED DEBT
Notes payable - related parties - 547,126
Note payable 561,525 561,525
-------------- ---------------
Total Subordinated Debt 561,525 1,108,651
-------------- ---------------
LONG-TERM DEBT
Convertible debentures - 300,000
Capital leases - long term portion 102,022 122,954
-------------- ---------------
Total Long-Term Debt 102,022 422,954
-------------- ---------------
Total Liabilities 7,638,402 7,582,340
-------------- ---------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock; 10,000,000 shares authorized of
$0.001 par value, zero issued and outstanding - -
Common stock; 150,000,000 shares authorized
of $0.001 par value, 142,933,309 and 46,429,406
shares issued and outstanding, respectively 142,933 46,429
Additional paid-in capital 16,773,352 13,855,035
Common stock subscription receivable (1,434,900) (942,000)
Accumulated deficit (16,889,255) (14,224,689)
-------------- ---------------
Total Stockholders' Equity (Deficit) (1,407,870) (1,265,225)
-------------- ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 6,230,532 $ 6,317,115
============== ===============
5
AVID SPORTSWEAR & GOLF CORP.
Consolidated Statements of Operations
(Unaudited)
For the Six Months Ended For the Three Months Ended
June 30, June 30,
------------------------------ --------------------------------
2001 2000 2001 2000
------------- -------------- --------------- ------------
SALES, NET $17,987,963 $3,667,924 $11,366,568 $2,638,616
COST OF GOODS SOLD 12,853,189 3,370,557 8,132,326 2,596,264
------------- -------------- --------------- ------------
Gross Margin 5,134,774 297,367 3,234,242 42,352
------------- -------------- --------------- ------------
OPERATING EXPENSES
Shipping expenses 201,148 - 100,518 -
Design expense 150,800 - 77,376 -
Selling expenses 1,261,302 1,286,761 343,774 675,277
Depreciation and amortization expense 268,467 205,417 128,657 109,821
General and administrative expenses 3,579,479 2,652,306 2,664,027 828,467
Loss on impairment of goodwill 1,962,205 - 1,962,205 -
------------- -------------- --------------- ------------
Total Operating Expenses 7,423,401 4,144,484 5,276,557 1,613,565
------------- -------------- --------------- ------------
(Loss) from Operations (2,288,627) (3,847,117) (2,042,315) (1,571,213)
------------- -------------- --------------- ------------
OTHER INCOME (EXPENSE)
Interest income 39,494 188 39,494 -
Interest expense (415,433) (300,790) (259,772) (49,820)
Gain on sale of assets - 5,419 - -
------------- -------------- --------------- ------------
Total Other Income (Expense) (375,939) (295,183) (220,278) (49,820)
INCOME TAX BENEFIT - - - -
------------- -------------- --------------- ------------
NET LOSS $(2,664,566) $(4,142,300) $(2,262,593) $(1,621,033)
============= ============== =============== ============
BASIC LOSS PER SHARE $(0.05) $(0.13) $(0.03) $(0.09)
============= ============== =============== ============
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 54,222,825 31,863,846 77,853,677 18,011,478
============= ============== =============== ============
6
AVID SPORTSWEAR & GOLF CORP.
Consolidated Statements of Stockholders' Equity (Deficit)
Common Stock
------------ Additional Subscriptions Accumulated
Shares Amount Paid-in Capital Receivable Deficit
---------------- ------------- ---------------- --------------- ---------------
Balance, December 31, 1999 26,374,022 $ 26,374 $ 7,092,848 $ (30,000) $ (5,563,135)
January 17, 2000, common stock issued for
services, valued at $0.30 per share 1,200,000 1,200 358,800 - -
January 25, 2000, common stock issued to a
related party for conversion of debt,
valued at $0.38 per share 1,241,874 1,241 464,461 - -
February 1, 2000, common stock issued to a
related party for conversion of debt,
valued at $0.44 per share 695,583 696 303,274 - -
March 6, 2000, cancellation of common
stock subscription receivable (100,000) (100) (14,900) 15,000 -
May 17, 2000 through July 11, 2000,
common stock issued pursuant to SB-2
valued at $0.35 per share 14,702,927 14,703 5,131,322 (527,000) -
Stock offering costs - - (268,815) - -
June 30, 2000, common stock issued for
services valued at $0.35 per share 15,000 15 5,235 - -
November 15, 2000, common stock issued for
services valued at $0.16 per share 300,000 300 46,575 - -
December 15, 2000, common stock issued for
subscription at $0.20 per share 2,000,000 2,000 398,000 (400,000) -
Warrants and options issued below market
value per FAS 123 valuations - - 338,235 - -
Net loss for the year ended December 31,
2000 - - - - (8,661,554)
--------------- ------------- ---------------- --------------- ---------------
Balance, December 31, 2000 46,429,406 $ 46,429 $ 13,855,035 $ (942,000) $ (14,224,689)
=============== ============= ================ =============== ===============
7
AVID SPORTSWEAR & GOLF CORP.
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
Common Stock
------------ Additional Subscriptions Accumulated
Shares Amount Paid-in Capital Receivable Deficit
---------------- ------------- ---------------- --------------- ---------------
Balance, December 31, 2000 46,429,406 $ 46,429 $ 13,855,035 $ (942,000) $ (14,224,689)
January 10, 2001, common stock issued for
conversion of debt, non-related,
valued at $0.065 per share (unaudited) 374,509 375 24,025 - -
January 19, 2001, common stock issued for
conversion of debt, non-related,
valued at $0.05 per share (unaudited) 360,000 360 17,640 - -
January 23, 2001, common stock issued for
conversion of debt, non-related,
valued at $0.05 per share (unaudited) 1,332,000 1,332 65,268 - -
January 25, 2001, common stock issued for
conversion of debt, non-related,
valued at $0.05 per share (unaudited) 190,000 190 9,310 - -
January 30, 2001, common stock issued for
conversion of debt, non-related,
valued at $0.05 per share (unaudited) 280,000 280 13,720 - -
January 30, 2001, common stock issued for
conversion of debt to related party,
valued at $0.085 per share (unaudited) 11,500,000 11,500 966,000 - -
January 31, 2001, cancellation of common
stock (unaudited) (1,200,000) (1,200) (358,800) - -
February 5, 2001, common stock issued for
conversion of debt, non-related,
valued at $0.05 per share (unaudited) 82,000 82 4,018 - -
February 13, 2001, common stock issued
for conversion of debt, non-related,
valued at $0.05 per share (unaudited) 812,000 812 39,788 - -
February 14, 2001, common stock issued
for conversion of debt, non-related,
valued at $0.05 per share (unaudited) 11,078 11 554 - -
-------------- ------------ ------------ -------------- ---------------
Balance Forward 60,170,993 $ 60,171 $ 14,636,558 $ (942,000) $ (14,224,689)
============== ============ ============ ============== ===============
8
AVID SPORTSWEAR & GOLF CORP.
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
Common Stock
------------ Additional Subscriptions Accumulated
Shares Amount Paid-in Capital Receivable Deficit
---------------- ------------- ---------------- --------------- ---------------
Balance Forward 60,170,993 $ 60,171 $ 14,636,558 $ (942,000) $ (14,224,689)
February 19, 2001, common stock issued for
conversion of debt, non-related,
valued at $0.08 per share (unaudited) 2,310,547 2,311 182,533 - -
February 19, 2001, common stock issued for
conversion of debt interest,
non-related, valued at $0.09 per share
(unaudited) 425,939 426 37,909 - -
February 27, 2001, common stock issued for
conversion of debt, non-related,
valued at $0.568 per share (unaudited) 245,775 246 13,714 - -
February 28, 2001, common stock issued for
conversion of debt, non-related, valued
at $0.05 per share (unaudited) 80,769 81 4,119 - -
February 28, 2001, common stock issued for
conversion of debt, non-related,
valued at $0.05 per share (unaudited) 80,000 80 3,920 - -
March 13, 2001, common stock issued for
conversion of debt, non-related,
valued at $0.048 per share (unaudited) 595,679 596 28,397 - -
March 13, 2001, common stock issued for
cash, non-related, valued at $0.05 per
share (unaudited) 4,000,000 4,000 196,000 (200,000) -
March 21, 2001, common stock issued for
conversion of debt, non-related,
valued at $0.0312 per share (unaudited) 176,300 176 5,324 - -
March 30, 2001, common stock issued for
cash, valued at $0.05 per share
(unaudited) 2,000,000 2,000 98,000 (100,000) -
Receipt of stock subscription receivable
(unaudited) - - - 29,100 -
--------------- ------------- ------------- -------------- ---------------
Balance Forward 70,086,002 $ 70,087 $ 15,206,474 $ (1,212,900) $ (14,224,689)
=============== ============= ============= ============== ===============
9
AVID SPORTSWEAR & GOLF CORP.
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
Common Stock
------------ Additional Subscriptions Accumulated
Shares Amount Paid-in Capital Receivable Deficit
---------------- ------------- ---------------- --------------- ---------------
Balance Forward 70,086,002 $ 70,087 $ 15,206,474 $ (1,212,900) $ (14,224,689)
Discount on debentures issued at less than
market value - - 46,371 - -
April 1, 2001, common stock issued for
conversion of debt, non-related,
valued at $0.028 per share (unaudited) 857,142 857 23,143 - -
April 2, 2001, common stock issued for
conversion of debt, non-related,
valued at $0.028 per share (unaudited) 714,285 714 19,286 - -
April 4, 2001, common stock issued for
conversion of debt, non-related,
valued at $0.028 per share (unaudited) 1,546,428 1,547 41,754 - -
April 9, 2001, common stock issued for
conversion of debt, non-related,
valued at $0.028 per share (unaudited) 1,607,141 1,607 43,393 - -
April 10, 2001, common stock issued for
conversion of debt, non-related,
valued at $0.028 per share (unaudited) 571,426 572 15,429 - -
April 17, 2001, common stock issued for
consulting services valued at $0.06
per share (unaudited) 125,000 125 7,375 - -
April 18, 2001, common stock issued for
conversion of debt, non-related,
valued at $0.028 per share (unaudited) 2,000,000 2,000 54,000 - -
April 30, 2001, common stock issued for
conversion of debt, non-related,
valued at $0.032 per share (unaudited) 1,406,250 1,406 43,594 - -
April 30, 2001, common stock issued for
conversion of interest on debt,
non-related, valued at $0.028 per
share (unaudited) 129,922 130 3,508 - -
-------------- ------------- -------------- --------------- ---------------
Balance Forward 79,043,596 $ 79,045 $ 15,504,327 $ (1,212,900) $ (14,224,689)
============== ============= ============== =============== ===============
10
AVID SPORTSWEAR & GOLF CORP.
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
Common Stock
------------ Additional Subscriptions Accumulated
Shares Amount Paid-in Capital Receivable Deficit
---------------- ------------- ---------------- --------------- ---------------
Balance Forward 79,043,596 $ 79,045 $ 15,504,327 $ (1,212,900) $ (14,224,689)
April 30, 2001, common stock issued for
conversion of debt, non-related,
valued at $0.0304 per share
(unaudited) 164,474 164 4,836 - -
May 8, 2001, common stock issued for
conversion of debt, non-related,
valued at $0.0304 per share
(unaudited) 2,434,207 2,434 71,566 - -
May 10, 2001, common stock issued for
cash, non-related, valued at $0.037
per share (unaudited) 3,000,000 3,000 147,000 (150,000) -
May 10, 2001, common stock issued for
cash, non-related, valued at $0.032
per share (unaudited) 7,500,000 7,500 232,500 (240,000) -
May 10, 2001, common stock issued for
cash, non-related, valued at $0.0312
per share (unaudited) 1,000,000 1,000 30,200 (31,200) -
May 10, 2001, common stock issued for
consulting services, valued at
$0.0335 per share (unaudited) 5,000,000 5,000 162,500 - -
May 17, 2001, common stock issued for
conversion of debt, non-related,
valued at $0.0304 per share
(unaudited) 2,467,102 2,467 72,533 - -
May 21, 2001, common stock issued for
conversion of debt, non-related,
valued at $0.028 per share (unaudited) 3,178,568 3,179 85,821 - -
June 4, 2001, common stock issued for
conversion of debt, non-related,
valued at $0.0096 per share
(unaudited) 2,979,165 2,979 25,621 - -
June 4, 2001, common stock issued for
conversion of debt, non-related,
valued at $0.014 per share (unaudited) 749,999 750 9,750 - -
June 4, 2001, common stock issued for
conversion of debt, non-related,
valued at $0.014 per share (unaudited) 8,214,278 8,214 106,786 - -
-------------- ------------- ------------- --------------- ---------------
Balance Forward 115,731,389 $ 115,732 $ 16,453,440 $ (1,634,100) $ (14,224,689)
============== ============= ============= =============== ===============
11
AVID SPORTSWEAR & GOLF CORP.
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
Common Stock
------------ Additional Subscriptions Accumulated
Shares Amount Paid-in Capital Receivable Deficit
---------------- ------------- ---------------- --------------- ---------------
Balance Forward 115,731,389 $ 115,732 $ 16,453,440 $ (1,634,100) $ (14,224,689)
June 4, 2001, common stock issued for
conversion of interest on debt,
non-related, valued at $0.0304 per
share (unaudited) 34,589 35 1,017 - -
June 4, 2001, common stock issued for
conversion of interest on debt,
non-related, valued at $0.028 per
share (unaudited) 119,336 119 3,222 - -
June 4, 2001, common stock issued for
conversion of debt, non-related,
valued at $0.0096 per share
(unaudited) 11,020,828 11,021 94,779 - -
June 12, 2001, common stock issued for
conversion of debt, non-related,
valued at $0.0096 per share
(unaudited) 18,892,212 18,892 162,473 - -
June 12, 2001, common stock issued for
conversion of interest on debt,
non-related, valued at $0.014 per
share (unaudited) 200,955 201 2,612 - -
June 12, 2001, common stock issued for
conversion of interest on debt,
non-related, valued at $0.0096 per
share (unaudited) 179,330 179 1,542 - -
June 19, 2001, common stock issued for
conversion of debt, non-related,
valued at $0.0088 per share
(unaudited) 1,136,363 1,136 8,864 - -
June 19, 2001, common stock issued for
conversion of debt, non-related,
valued at $0.0088 per share
(unaudited) 18,307 18 143 - -
June 20, 2001, common stock issued for
conversion of debt, non-related,
valued at $0.0335 per share
(unaudited) (4,400,000) (4,400) (143,000) - -
Receipt of stock subscription receivable
(unaudited) - - - 199,200 -
-------------- -------------- ------------- --------------- ---------------
Balance Forward 142,933,309 $ 142,933 $ 16,585,092 $ (1,434,900) $ (14,224,689)
============== ============== ============= =============== ===============
12
AVID SPORTSWEAR & GOLF CORP.
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
Common Stock
------------ Additional Subscriptions Accumulated
Shares Amount Paid-in Capital Receivable Deficit
---------------- ------------- ---------------- --------------- ---------------
Balance Forward 142,933,309 $ 142,933 $ 16,585,092 $ (1,434,900) $ (14,224,689)
Discount on debenture issued at less than
market value (unaudited) - - 188,260 - -
Net loss for the six months ended June
30, 2001 (unaudited) - - - - (2,664,566)
----------- -------------- -------------- -------------- ---------------
Balance, June 30, 2001 (unaudited) 142,933,309 $ 142,933 $ 16,773,352 $ (1,434,900) $ (16,889,255)
=========== ============== ============== ============== ===============
13
AVID SPORTSWEAR & GOLF CORP.
Consolidated Statements of Cash Flows
(Unaudited)
For the Six Months Ended
June 30,
----------------------------------------
2001 2000
------------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (2,664,566) $ (4,142,300)
Adjustments to reconcile net (loss) to net cash
used in operating activities:
Depreciation and amortization 2,228,681 205,417
Common stock issued for services 27,600 611,935
Conversion of debt below market value 234,631 -
Change in allowance for bad debt (58,749) -
Changes in operating assets and liabilities:
Increase (decrease) in due from factor 216,266 -
(Increase) decrease in accounts receivable (2,741,951) (1,429,873)
(Increase) decrease in inventory 890,665 888,045
(Increase) decrease in other assets (25,048) (9,520)
Increase (decrease) in accounts payable (449,657) 368,124
Increase (decrease) in other current liabilities 995,683 621,214
------------------- ----------------
Net Cash Used in Operating Activities (1,346,445) (2,886,958)
------------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (10,575) (584,351)
------------------- ----------------
Net Cash Used in Investing Activities (10,575) (584,351)
------------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash overdraft (69,584) -
Debt offering costs 68,695 -
Payments on notes payable (100,000) (549,521)
Proceeds from related party notes payable 364,981 1,244,283
Payments on related party notes payable (230,332) -
Proceeds from convertible debentures 874,000 -
Issuance of common stock for cash 721,200 1,698,718
Proceeds from subscribed stock 228,300 1,782,600
Payments on capital leases (19,137) -
Increase in related party receivable - (417,003)
------------------- ----------------
Net Cash Provided by Financing Activities 1,838,123 3,759,077
------------------- ----------------
NET INCREASE (DECREASE) IN CASH 481,103 287,768
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 25,452 237,407
------------------- ----------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 506,555 $ 525,175
=================== ================
14
AVID SPORTSWEAR & GOLF CORP.
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
For the Six Months Ended
June 30,
----------------------------------------
2001 2000
------------------- ----------------
CASH PAID FOR:
Interest $ - $ 36,592
Income tax $ - $ -
SCHEDULE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES
Issuance of common stock for debt and interest $ 1,818,768 $ -
Issuance of common stock for subscription $ 721,200 $ -
Conversion of debt below market value $ 234,631 $ -
Issuance of common stock for services $ 27,600 $ -
15
AVID SPORTSWEAR & GOLF CORP.
Notes to the Consolidated Financial Statements
June 30, 2001 and December 31, 2000
NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared
by the Company without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary
to present fairly the consolidated financial position, results of
operations and cash flows at June 30, 2001 and 2000 and for all periods
presented have been made.
Certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. It is
suggested that these condensed consolidated financial statements be
read in conjunction with the financial statements and notes thereto
included in the Company's December 31, 2000 audited consolidated
financial statements. The results of operations for the period ended
June 30, 2001 and 2000 are not necessarily indicative of the operating
results for the full years.
NOTE 2 - GOING CONCERN
The Company's consolidated financial statements are prepared using
generally accepted accounting principles applicable to a going concern,
which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. The Company has generated
significant losses from operations for the six months ended June 30,
2001 and 2000 and has current liabilities in excess of current assets
at June 30, 2001.
It will be necessary to raise additional working capital to execute a
new business strategy. Management also recognizes that obtaining
favorable forbearance agreements with its vendors and creditors will be
essential for the Company to execute a new business strategy. There are
no assurances that the Company will be able to fund its working capital
needs as outlined.
NOTE 3 - MATERIAL EVENTS
On May 9, 2001, Levi Strauss & Co. terminated the "Dockers Golf"
Trademark License Agreement that gave the Company's wholly-owned
subsidiary the exclusive non-assignable right to use the trademark in
connection with the manufacturing, advertising, distribution and sale
of products to approved retailers. The Dockers Golf license was
terminated as a result of Avid Sportswear, Inc.'s second quality and
closeout or end-of-season sales being greater than 25% of the company's
total product sales during Year 2000. Because of the termination of the
trademark license, the goodwill associated with the purchase of the
wholly-owned subsidiary is considered impaired. An impairment loss has
been recorded in the amount of $1,962,205 for the quarter ended June
30, 2001.
On May 22, 2001, the Company's factor provided notice that the
Company's wholly-owned subsidiary was in default of the factoring
agreement on account of, among other things, the termination of the
Trademark License Agreement with Levi Strauss & Co. Subsequently, on
July 20, 2001, the Company's wholly-owned subsidiary received notice
from the factor that the obligations under the factoring agreement had
been paid in full. Also on July 20, 2001, the Company's wholly-owned
subsidiary received notice from the factor that the Company's chairman
has no further obligations as the guarantor of the factoring agreement.
16
AVID SPORTSWEAR & GOLF CORP.
Notes to the Consolidated Financial Statements
June 30, 2001 and December 31, 2000
NOTE 3 - MATERIAL EVENTS (CONTINUED)
On June 25, 2001, the Company entered into a three-year employment
agreement with Frank J. Jakovac, to act as President and Chief
Executive Officer. The base salary for services is $127,500 per year,
payable in semi-monthly installments through September 25, 2001. After
September 25, 2001, base salary is $255,000 per year, payable in
semi-monthly installments. An initial bonus of 1,250,000 shares of
common stock at $0.01 per share vested immediately, and $25,000 to be
paid upon signing new business equaling or greater than $1,000,000 of
new revenue. The CEO is eligible for additional bonuses based on the
bonus plan for senior management established by the CEO and Board of
Directors for each fiscal year. The CEO was granted and fully vested in
5% of the Company's total shares of issued stock. The 5% ownership
percentage applies to all current and future issuance of stock.
On June 25, 2001, the Company entered into a three-year employment
agreement with James W. Handlon to act as Executive Vice President and
Chief Operating Officer. The base salary for services is $125,000 per
year, payable in semi-monthly installments through September 25, 2001.
After September 25, 2001, base salary is $245,000 per year, payable in
semi-monthly installments. An initial bonus of 1,250,000 shares of
common stock at $0.01 per share vested immediately, and $25,000 to be
paid upon signing new business equaling or greater than $1,000,000 of
new revenue. The COO is eligible for additional bonuses based on the
bonus plan for senior management established at the CEO and Board of
Directors for each fiscal year. The COO was granted and fully vested in
5% of the Company's total shares of issued stock. The 5% ownership
percentage applies to all current and future issuances of stock.
On June 25, 2001, the Company entered into a three-year employment
agreement with Michelle Mathis to act as the Director of Corporate and
Legal Affairs. The base salary for services is $50,000 per year,
payable in semi-monthly installments through September 25, 2001. After
September 25, 2001, base salary is $100,000 per year, payable in
semi-monthly installments. An initial bonus of 800,000 shares of common
stock at $0.01 per share vested immediately, and $10,000 to be paid
upon signing new business equaling or greater than $1,000,000 of new
revenue. The Director of Corporate and Legal Affairs is eligible for
additional bonuses based on the bonus plan for senior management
established at the CEO and Board of Directors for each fiscal year. The
Director of Corporate and Legal Affairs was granted and fully vested in
1% of the Company's total shares of issued stock. The 1% ownership
percentage applies to all current and future issuances of stock.
NOTE 4 - SUBSEQUENT EVENTS
On July 26, 2001, the Company and our wholly-owned subsidiary were
named in litigation with Barnum Mow, former Chief Executive Officer of
the wholly-owned subsidiary. Mr. Mow filed a complaint against our
company and our wholly-owned subsidiary alleging breach of contract,
breach of implied covenant of good faith and fair dealing, and
violation of Labor Code ss. 227.3. Mr. Mow seeks damages in the amount
of $444,307.00, prejudgment interest thereon, costs of suit incurred,
and attorney's fees and costs according to statute. Due to the
preliminary status of the lawsuit, it is not possible to evaluate the
likelihood of an unfavorable outcome or estimate of potential loss.
On August 1, 2001, the Company and its wholly-owned subsidiary were
named in litigation with Stephen A. Korn, former Chief Financial
Officer of the wholly-owned subsidiary. Mr. Korn filed a complaint
against the Company and its wholly-owned subsidiary alleging
termination in violation of public policy, breach of written and
implied contract, breach of implied covenant of good faith and fair
dealing, intentional interference with contractual relations, negligent
interference with contractual relations, and violation of Labor Code
ss.ss. 201 & 227.3. Mr. Korn seeks damages in an amount proven at
trial, prejudgment interest thereon, a penalty in accordance with Labor
Code ss.203, costs of suit incurred, and attorney's fees and costs
according to statute. Due to the preliminary status of the lawsuit, it
is not possible to evaluate the likelihood of an unfavorable outcome or
estimate the extent of potential loss.
17
CONTINGENT LIABILITIES
The company's new management believes that the company issued shares of
common stock without legends restricting the resale of such shares. The
company's new management believes that at least 19,225,000 shares of
common stock have been resold in the public market in violation of
Section 5 of the Securities Act of 1933, as amended. The company may be
liable for rescission and other damages with respect to these sales.
18
ITEM 2. MANAGEMENT'S PLAN OF OPERATION AND DISCUSSION AND ANALYSIS.
INTRODUCTORY STATEMENTS
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS. THIS FILING CONTAINS
FORWARD-LOOKING STATEMENTS, INCLUDING STATEMENTS REGARDING, AMONG OTHER THINGS,
(A) OUR COMPANY'S PROJECTED SALES AND PROFITABILITY, (B) OUR COMPANY'S GROWTH
STRATEGIES, (C) ANTICIPATED TRENDS IN OUR COMPANY'S INDUSTRY, (D) OUR COMPANY'S
FUTURE FINANCING PLANS AND (E) OUR COMPANY'S ANTICIPATED NEEDS FOR WORKING
CAPITAL. IN ADDITION, WHEN USED IN THIS FILING, THE WORDS "BELIEVES,"
"ANTICIPATES," "INTENDS," "IN ANTICIPATION OF," "EXPECTS," AND SIMILAR WORDS ARE
INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE FORWARD-LOOKING
STATEMENTS ARE BASED LARGELY ON OUR COMPANY'S EXPECTATIONS AND ARE SUBJECT TO A
NUMBER OF RISKS AND UNCERTAINTIES, MANY OF WHICH ARE BEYOND OUR COMPANY'S
CONTROL. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THESE FORWARD-LOOKING
STATEMENTS AS A RESULT OF CHANGES IN TRENDS IN THE ECONOMY AND OUR COMPANY'S
INDUSTRY, DEMAND FOR OUR COMPANY'S PRODUCTS, UNEXPECTED CHANGES IN FASHION
TRENDS, PRIOR SEASON INVENTORIES, COMPETITION, REDUCTIONS IN THE AVAILABILITY OF
FINANCING AND AVAILABILITY OF RAW MATERIALS, THE SEASONAL NATURE OF OUR
COMPANY'S BUSINESS, THE EXTREMELY COMPETITIVE NATURE OF THE GOLF APPAREL AND
SPORTSWEAR INDUSTRIES AND OTHER FACTORS. IN LIGHT OF THESE RISKS AND
UNCERTAINTIES, THERE CAN BE NO ASSURANCE THAT THE FORWARD-LOOKING STATEMENTS
CONTAINED IN THIS FILING WILL IN FACT OCCUR.
OVERVIEW
Through our wholly-owned subsidiary, we design, manufacture and market
distinctive premium and moderately-priced sportswear. We sell our products
primarily through golf pro shops and resorts, corporate sales accounts and
better specialty stores. Until May, 2001, our sportswear was marketed under
three distinct labels: Avid Sportswear, British Open collection and Dockers
Golf. On May 9, 2001, the Dockers Golf label was terminated by the licensor.
From our incorporation on September 19, 1997 until March 1, 1999, we had no
operations. On March 1, 1999, we acquired Avid Sportswear, Inc., which has been
in the business of designing, manufacturing and marketing golf apparel since
October 6, 1988. For accounting purposes, the acquisition was treated as a
purchase of Avid Sportswear, Inc. All of our business operations are conducted
through Avid Sportswear, Inc.
On May 9, 2001, we received a letter from Levi Strauss & Co. that,
effective May 9, 2001, it was terminating the Dockers Trademark License
Agreement between our company's wholly-owned subsidiary, Avid Sportswear, Inc.
and Levi Strauss & Co. as a result of Avid Sportswear, Inc.'s second quality and
closeout or end-of-season sales being greater than 25% of the company's total
product sales during the Year 2000. Due to the loss of this license, our
operating results for the quarter ended June 30, 2001 will not be indicative of
future results. We believe that the loss of this license will have a material
adverse effect on our results of operations in future periods. The loss of this
license will result in lower sales and a higher net loss in future periods.
On May 17, 2001, Barnum Mow, the President of Avid Sportswear, Inc.
resigned. In addition, on May 14, 2001, Stephen A. Korn, the Chief Financial
Officer of Avid Sportswear, Inc., was terminated by the company and, on May 29,
2001, the Executive Vice-President of Merchandising and Design of Avid
Sportswear, Inc. resigned.
On July 26, 2001, our company and our wholly-owned subsidiary were
named in litigation with Mr. Mow. Mr. Mow filed a complaint against our company
and our wholly-owned subsidiary alleging breach of contract, breach of implied
covenant of good faith and fair dealing and violation of Labor Code ss. 227.3.
Mr. Mow seeks damages in the amount of $444,307.00, prejudgment interest
thereon, costs of suit incurred, and attorney's fees and costs according to
statute. Due to the preliminary status of the lawsuit, it is not possible to
evaluate the likelihood of an unfavorable outcome or estimate of potential loss.
On August 1, 2001, our company and our wholly-owned subsidiary were
named in litigation with Mr. Korn. Mr. Korn filed a complaint against our
company and our wholly-owned subsidiary alleging termination in violation of
public policy, breach of written and implied contract, breach of implied
covenant of good faith and fair dealing, intentional interference with
contractual relations, negligent interference with contractual relations, and
violations of Labor Code ss.ss. 201 and 227.3. Mr. Korn seeks damages in an
amount proven at trial, prejudgment interest thereon, a penalty in accordance
with Labor Code ss. 203, costs of suit incurred, and attorney's fees and costs
according to statute. Due to the preliminary status of the lawsuit, it is not
possible to evaluate the likelihood of an unfavorable outcome or estimate of
potential loss.
On May 22, 2001, we received a letter from GE Capital Commercial
Services, Inc. that, effective May 22, 2001, it was terminating its obligation
to make any further advances to our company pursuant to the Factoring Agreement
between our company and GE Capital Commercial Services, Inc. In addition, GE
19
Capital Commercial Services, Inc. declared all of the advances and other
obligations owing by our company to GE Capital Commercial Services, Inc. to be
immediately due and payable. Subsequently, on July 20, 2001, the company's
wholly-owned subsidiary received notice from the factor that the obligations
under the factoring agreement had been paid in full. Also, on July 20, 2001, the
company's wholly-owned subsidiary received notice from the factor that the
company's chairman has no further obligations as the guarantor of the factoring
agreement.
On July 24, 2001, our company hired Frank Jakovac as our new President
and Chief Executive Officer. Also, on July 24, 2001, our company hired James
Handlon as our new Chief Operating Officer and Michelle Mathis as our new
Director of Corporate and Legal Affairs. Messrs. Jakovac and Handlon and Ms.
Mathis were also elected as members of our company's Board of Directors.
PLAN OF OPERATIONS
ADDITIONAL FUND RAISING ACTIVITIES. As of June 30, 2001, we had
$506,555 cash-on-hand. We currently have little or no cash-on-hand. We have
historically funded our operations through a combination of internally generated
cash, funds loaned to our company by certain of our officers and directors and
through the sale of securities. We will need to raise additional funds to
execute a new business strategy. Our current liabilities exceeded our current
assets as of June 30, 2001.
We registered on behalf of certain shareholders 14,988,640 shares of
common stock issued pursuant to our company's private offerings, which
registration statement became effective on July 28, 2000. In addition, we
registered on behalf of certain shareholders 55,500,000 shares of common stock
issued, or to be issued, pursuant to our company's line of credit, which
registration statement became effective on January 8, 2001. The sale of these
shares is permitted in most states pursuant to registration or exemptions from
registration. These shares of common stock may be offered and sold from time to
time by selling shareholders of our company, and none of the proceeds generated
from such sales will be available to our company. See "Certain Business Risk
Factors - The selling shareholders intend to sell their shares of common stock
in the market, which sales may cause our stock price to decline." In addition,
the company's new management believes that approximately 19,225,000 shares of
common stock were issued without approval of the board of directors and without
appropriate restrictive legends. The company has retained a consultant
experienced in these matters to perform an independent review of these
transactions, as well as all related party transactions.
SUMMARY OF ANTICIPATED PRODUCT DEVELOPMENT. We spent approximately
$280,000 and $417,000 on product development in 1999 and 2000, respectively, and
expect to spend approximately $50,000 on product development in 2001 in
preparation for future seasons and in designing products for the Avid Sportswear
label. Our company is re-evaluating our product development efforts in light of
the termination of the Dockers Golf label and the British Open Collection label.
SIGNIFICANT PLANT AND EQUIPMENT PURCHASES. In 2000, we purchased
computer hardware and software, telephone and embroidery equipment at a cost of
approximately $734,000. In 2001, we do not anticipate purchasing additional
equipment.
CHANGES IN NUMBER OF EMPLOYEES. We currently have 9 employees. As shown
in the following chart, we do not anticipate hiring additional personnel during
2001. We believe that these personnel will be adequate to accomplish the tasks
set forth in the plan.
CURRENT
DEPARTMENT EMPLOYEES
---------- ---------
Marketing and Sales 1
Embroidery and Sewing 1
Warehousing and Delivery 2
Design and Production Control 1
Administrative and Other
Support Positions 4
---------
Total Employees 9
---------
20
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
The following table sets forth, for the periods presented, the
percentage of net sales represented by certain items in our company's
Consolidated Statement of Operations for the three and six months ended June 31,
2001 and 2000:
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, 2001 JUNE 30, 2000 JUNE 30, 2001 JUNE 30, 2000
------------- ------------- ------------- -------------
Sales, net 100.0% 100.0% 100.0% 100.0%
Cost of goods sold (71.5%) (98.4%) (71.5%) (91.9%)
Gross margin 28.5% 1.6% 28.6% 8.1%
Operating expenses (46.4%) (61.2%) (41.3%) (113.0%)
(Loss) from operations (18.0%) (60.0%) (12.7%) (104.9%)
Interest expense (2.3%) (1.9%) (2.3%) (8.2%)
Net loss (19.9%) (61.4%) (14.8%) (113.0%)
THREE-MONTH PERIODS ENDED JUNE 30, 2001 AND 2000
Our results of operations for the three-month periods ended June 30,
2001 and 2000, respectively, included three months of operations of our
wholly-owned subsidiary, Avid Sportswear, Inc. As a result of the termination of
the Dockers Golf license, these results are not indicative of future results.
SALES, NET. Sales, net increased $8.7 million, or 330.8%, from $2.6
million to $11.4 million in the three months ended June 30, 2001 compared to the
same period in the prior year. This increase was primarily attributable to
increased sales efforts in connection with the Dockers Golf product line prior
to its termination on May 9, 2001.
COST OF GOODS SOLD. Cost of goods sold decreased $5.5 million, or
213.2%, from $2.6 million to $8.1 million in the three months ended June 30,
2001 compared to the same period in the prior year. Cost of goods sold as a
percentage of sales, net, decreased from 98.4% in the three months ended June
30, 2000 to 71.5% in the three months ended June 30, 2001. This decrease was
primarily attributable to the reduced need to give concessions to customers
caused by late shipping and the decreased liquidation of inventory from prior
seasons.
GROSS PROFIT. Gross profit increased $3.2 million, or 7,536.6%, from
$42,352 to $3.2 million in the three months ended June 30, 2001 compared to the
same period in the prior year. Gross profit as a percentage of sales, net
increased from 1.6% to 28.5% in the three months ended June 30, 2000 and 2001,
respectively. This increase was primarily attributable to the increase in sales,
net in the current period compared to the same period in the prior year.
SELLING EXPENSES. Selling expenses decreased $0.3 million, or 49.1%,
from $0.7 million to $0.3 million the three months ended June 30, 2001 compared
to the same period in the prior year. This decrease was primarily attributable
to our reduced sales efforts subsequent to the termination of the Dockers Golf
license on May 9, 2001.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses increased $1.8 million, or 221.6%, from $0.8 million to $2.7 million in
the three moths ended June 30, 2001 compared to the same period in the prior
year.
INTEREST EXPENSE. Interest expense increased $0.2 million or 421.4%, in
the three-month period ended June 30, 2001, compared to the same period in the
prior year. This increase consisted primarily of the interest expense associated
with our line of credit with GMF Holdings, Inc.
NET LOSS. Net loss increased $0.6 million, or 39.6%, from $1.6 million
to $2.3 million in the three months ended June 30, 2001 compared to the same
period in the prior year. This increase was primarily attributable to a
reduction in sales subsequent to the termination of the Dockers Golf label on
May 9, 2001, the increase in cost of goods sold and general and administrative
21
expenses. We anticipate that our net loss will increase as a result of the
termination of the Dockers Golf license.
SIX-MONTH PERIODS ENDED JUNE 30, 2001 AND 2000
Our results of operations for the six-month periods ended June 30, 2001
and 2000, included six months of operations of our wholly-owned subsidiary, Avid
Sportswear, Inc. As a result of the termination of the Dockers Golf license,
these results are not indicative of future results.
SALES, NET. Sales, net increased $14.3 million, or 390.4%, from $3.7
million to $18.0 million in the six months ended June 30, 2001 compared to the
same period in the prior year. This increase is primarily attributable to
increased sales efforts in connection with the Dockers Golf product line prior
to termination on May 9, 2001.
COST OF GOODS SOLD. Cost of goods sold increased $9.5 million, or
281.3%, from $3.4 million to $12.9 million in the six months ended June 30, 2001
compared to the same period in the prior year. Cost of goods sold as a
percentage of sales, net, decreased from 91.9% in the six months ended June 30,
2000 to 71.5% in the six months ended June 30, 2001. This decrease was primarily
attributable to the reduced need to give concessions to customers caused by late
shipping and the decreased liquidation of inventory from prior seasons.
GROSS PROFIT. Gross profit increased $4.8 million, or 1,626.8%, from
$0.3 million to $5.1 million in the six months ended June 30, 2001 compared to
the same period in the prior year. Gross profit as a percentage of sales, net
increased from 8.1% to 29.0% in the six months ended June 30, 2001,
respectively. This increase was primarily attributable to the increase in sales,
net in the current period and the decrease of the cost of goods sold as a
percentage of sales, net in the current period compared to the same period in
the prior year.
SELLING EXPENSES. Selling expenses decreased $0.03 million, or 2.0%,
from $1.28 million to $1.26 million in the six months ended June 30, 2001
compared to the same period in the prior year. This decrease was primarily
attributable to our reduced sales efforts subsequent to the termination of the
Dockers Golf license.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses increased $0.9 million, or 35.0%, from $2.7 million to $3.6 million in
the six months ended June 30, 2001 compared to the same period in the prior
year. This increase was partially attributable to the operations of our
wholly-owned subsidiary, Avid Sportswear, Inc.
INTEREST EXPENSE. Interest expense increased $0.1 million, or 38.1%, in
the six-month period ended June 30, 2001, compared to the same period in the
prior year. This increase consisted primarily of $0.2 million of interest
expense to reflect a discount given in connection with the conversion of debt to
equity. In total, during the six-month period ended June 30, 2001, $1.2 million
of debt was converted into 59.3 million shares of common stock at an average
price of $0.01 per share. The company has retained a consultant experienced in
these matters to perform an independent review of these transactions, as well as
all related party transactions.
NET LOSS. Net loss decreased $1.5 million, or 35.7%, from $4.1 million
to $2.7 million in the six months ended June 30, 2001 compared to the same
period in the prior year. This decrease was primarily attributable to the
increase in sales, net, prior to the termination of the Dockers Golf label on
May 9, 2001, and the decrease in cost of goods sold as a percentage of sales,
net in the six-month period ended June 30, 2001.
LIQUIDITY AND CAPITAL RESOURCES. As of June 30, 2001, we had $506,555
cash-on-hand and our current liabilities exceeded our current assets. We
currently have little or no cash-on-hand. A discussion of how we generated and
used cash in the three-month period follows:
OPERATING ACTIVITIES. Our operating activities used $1.3
million in cash during the six-month period ended June 30, 2001, consisting
mainly of a net loss of $2.7 million and an increase in accounts receivable of
$2.7 million. These items were partially offset by depreciation and amortization
expenses of $2.2 million, a decrease in accounts payable of $0.4 million, a
decrease in inventory of $0.9 million and an increase in due to factor of $0.2
million.
INVESTING ACTIVITIES. Our investing activities used $10,575 in
cash during the six-month period ended June 30, 2001, consisting mainly of the
cost of new financing.
22
FINANCING ACTIVITIES. Financing activities provided net cash
of $1.8 million, generated mainly by the issuance of convertible debentures for
cash of $0.9 million, issuance of common stock for cash of $0.7 million,
proceeds from subscribed stock of $0.2 million and proceeds from related party
notes payable of $0.4 million, partially offset by payments of notes payable of
$0.1 million and payments on related party notes payable of $0.2 million.
Due to our significant quarterly losses and the loss of the Dockers
Golf and British Open Collection product lines, we will need to rely on external
financing to fund our operations for the foreseeable future. Expenses increased
in the six months ended June 30, 2001 due to, among other things, the increase
in general and administrative expenses.
In August 2000, we entered into a factoring, letter of credit and
revolving inventory facility. On May 22, 2001, the factor terminated its
obligations to make any further advances to our company under the factoring
agreement and declared all of the advances and obligations owing by our company
to the facto to be immediately due and payable. Subsequently, on July 20, 2001,
the company's wholly-owned subsidiary received notice from the factor that the
obligations under the factoring agreement had been paid in full. Also, on July
20, 2001, the company's wholly-owned subsidiary received notice from the factor
that the company's chairman has no further obligations as the guarantor of the
factoring agreement.
As of August 18 2000, the outstanding balance of the company's loan
with First State Bank, including all collateral security and guarantees
associated therewith, were assigned to Earl T. Ingarfield, Michael LaValliere
and Lido Capital Corporation in consideration of payment in full of all
outstanding indebtedness to First State Bank.
In November 2000, our company raised $300,000 in gross proceeds and
$255,000 in net proceeds from the sale of convertible debentures. See "Item 2.
Changes in Securities and Use of Proceeds."
On November 28, 2000, we entered into a Line of Credit with GMF
Holdings, Inc. Pursuant to the Line of Credit, GMF Holdings, Inc. agreed to
acquire up to $10 million of our debentures. The debentures are convertible into
shares of our common stock at a conversion price equal to 80% of the closing bid
price on the Over-the-Counter Bulletin Board or other principal market on which
our company's common stock is traded for the 10 days immediately following the
notice date of conversion. The timing of each sale and the number of debentures
to be sold is at our discretion, subject to various conditions, including an
effective registration of the conversion shares. The dollar amount that our
company can request under any individual sale is subject to the average trading
volume of our common stock for the preceding 40-day trading period. The maximum
term of the Line of Credit is 30 months from the date of the agreement. The
agreement contains various representations, warranties and covenants by us,
including limitations on our ability to sell common stock or common stock
equivalents, sell assets, merge, or enter into certain other transactions.
Through September 17, 2001, our company has raised $1.2 from the sale of
debentures pursuant to the Line of Credit and 59.3 shares of our company's
common stock have been issued upon conversion of the debentures.
In December 2000, our company raised $400,000 form the sale of
2,000,000 shares of common stock.
On January 19, 2001, we received a letter form IMG that our company is
in default of the license with The Championship Committee Merchandising Limited
for failure to pay timely our royalty payments for the second, third and fourth
quarters of 2000 of approximately $94,000. IMG subsequently terminated this
license.
On May 9, 2001, we received a letter from Levi Strauss & Co. that,
effective May 9, 2001, it was terminating the Dockers Trademark License
Agreement between our company's wholly-owned subsidiary, Avid Sportswear, Inc.
and Levi Strauss & Co. as a result of Avid Sportswear, Inc.'s second quality and
closeout or end of season sales being greater than 25% of the company's total
product sales during the Year 2000.
CONTINGENT LIABILITIES
The company's mew management believes that the company issued shares of
common stock without legends restricting the resale of such shares. The
company's new management believes that at least 19,225,000 shares of common
stock have been resold in the public market in violation of Section 5 of the
Securities Act of 1933, as amended. The company may be liable for rescission and
other damages with respect to these sales.
OUR DOCKERS TRADEMARK LICENSE HAS BEEN TERMINATED BY LEVI STRAUSS & CO.
On May 9, 2001, we received a letter from Levi Strauss & Co. that,
effective May 9, 2001, it was terminating the Dockers Trademark License
Agreement between our company's wholly-owned subsidiary, Avid Sportswear, inc.,
and Levi Strauss & Co. as a result of Avid Sportswear, Inc.'s second quality and
23
closeout or end-of-season sales being greater than 25% of our company's total
product sales during Year 2000. The company believes that the loss of the
license will have a material adverse effect on our results of operations in
future periods. The loss of this license will result in lower sales and a higher
net loss in future periods.
THE PRESIDENT OF OUR WHOLLY-OWNED SUBSIDIARY, AVID SPORTSWEAR, INC.,
RESIGNED ON MAY 17, 2001
On May 17, 2001, Barnum Mow resigned as President of our wholly-owned
subsidiary, Avid Sportswear, Inc. On April 24, 2001, Mr. Mow resigned as a
director of our company and as a director of Avid Sportswear, Inc. The
operations of our company largely depended on the efforts and abilities of Mr.
Mow. Our failure to attract and retain a replacement for Mr. Mow could have a
material adverse effect on our results of operations in future periods. Our
company is evaluating circumstances surrounding Mr. Mow's separation from our
company and Avid Sportswear, Inc. On July 26, 2001, Mr. Mow filed a complaint
against our company and our wholly-owned subsidiary alleging breach of contract,
breach of implied covenant of good faith and fair dealing, and violation of
California Labor Code ss. 227.3. Due to the preliminary status of the lawsuit,
it is not possible to evaluate the likelihood of an unfavorable outcome or
estimate the extent of potential loss.
WE COULD FAIL TO ATTRACT OR RETAIN KEY PERSONNEL
Our success largely depends on the efforts and abilities of key
executives and consultants, including Earl T. Ingarfield, our Chairman, Frank
Jakovac, our President and Chief Executive Officer and a Director, James
Handlon. Our Chief Operational Officer and a Director, and Michelle Mathis, our
Director of Corporate and Legal Affairs and a Director. The loss of the services
of any of these people could materially harm our business because of the cost
and time necessary to replace and train such personnel. Such a loss would also
divert management attention away from operational issues. We have entered into
three-year employment agreements with Mr. Ingarfield, Mr. Jakovac, Mr. Handlon
and Ms. Mathis. We do not maintain key-man life insurance policies on any of
these people. On May 17, 2001, Barnum Mow, the President of Avid Sportswear,
inc., resigned. On August 16, 2001, Jerry Busiere, the Secretary, Treasurer and
a Director of our company resigned.
CERTAIN BUSINESS RISK FACTORS
We are subject to various risks, which may have a material adverse
effect on our company's business, financial condition and results of operations.
Certain risks are discussed below:
WE HAVE HISTORICALLY LOST MONEY AND LOSSES MAY CONTINUE IN THE FUTURE
We have historically lost money. In the three months ended June 30,
2001, we sustained a loss of $2.3 million. In the years ended December 31, 2000
and December 31, 1999, we sustained losses of $8.7 million and $5.0 million,
respectively. Future losses are likely to occur. For the years ended December
31, 2000 and 1999, our independent auditors have noted that our company does not
have significant cash or other material assets to cover its operating costs and
to allow it to continue as a going concern. As of June 30, 2001, our current
liabilities exceeded our current assets. Our ability to obtain additional
funding will determine our ability to continue as a going concern. We currently
have little or no cash-on-hand. Accordingly, we will experience significant
liquidity and cash flow problems if we are not able to raise additional capital
as needed and on acceptable terms. No assurances can be given that we will be
successful in reaching or maintaining profitable operations.
WE MAY NEED TO RAISE ADDITIONAL CAPITAL TO FINANCE OPERATIONS
We have relied on significant external financing to fund our
operations. Such financing has historically come from a combination of
borrowings and sale of common stock from third parties and funds provided by
certain officers and directors. We will need to raise additional capital to
execute a new business strategy. Among other things, external financing will be
required to cover our operating costs. We cannot assure you that financing
whether from external sources or related parties will be available if needed or
on favorable terms. The sale of our common stock to raise capital may cause
dilution to our existing shareholders. Our inability to obtain adequate
financing will result in the need to curtail business operations. Any of these
events would be materially harmful to our business and may result in a lower
stock price.
24
WE HAVE BEEN THE SUBJECT OF A GOING CONCERN OPINION FROM OUR INDEPENDENT AUDITOR
Our independent auditors have added an explanatory paragraph to their
audit opinions issued in connection with the 2000 and 1999 financial statements,
as well as our financial statements as of June 30, 2001, which states that our
company does not have significant cash or other material assets to cover its
operating costs and to allow it to continue as a going concern. Our ability to
obtain additional funding will determine our ability to continue as a going
concern. Our financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
WE HAVE BEEN AND CONTINUE TO BE SUBJECT TO A WORKING CAPITAL DEFICIT AND
ACCUMULATED DEFICIT
We had a working capital deficit of $3.0 million and $1.3 million at
December 31, 2000 and 1999, respectively. At June 30, 2001, we had a working
capital deficit of $1.7 million. We had an accumulated deficit of $14.2 million
and $760,099 at December 31, 2000 and 1999, respectively. At June 30, 2001, we
had an accumulated deficit of $16.9 million.
WE FACE SUBSTANTIAL COMPETITION IN OUR BUSINESS
The sportswear and outerwear segments of the apparel industry are
highly competitive. Competition is based primarily on brand recognition, product
differentiation and quality, style and production flexibility. Our future growth
and financial success depend on our ability to further penetrate and expand our
distribution channels, including golf, corporate, international and retail
sales. We encounter substantial competition in the golf distribution channel
from Polo/Ralph Lauren, Cutter & Buck, Ashworth, Antiqua and Izod. Many of our
competitors are significantly larger and more diversified than we are and have
substantially greater resources available for developing and marketing their
products. Many of our competitors' brands also have greater name recognition
than our brands. In addition, our competitors may be able to enter the emerging
e-commerce marketplace more quickly or more efficiently than us. We cannot
assure you that we will successfully compete in this industry.
WE HAVE BEEN IN BUSINESS FOR A SHORT PERIOD OF TIME
Because we have been in business for a short period of time, there is
limited information upon which investors can evaluate our business. We were
formed on September 19, 1997 but did not begin significant operations until the
purchase of our wholly-owned subsidiary on March 1, 1999. You should consider
the likelihood of our future success to be highly speculative in view of our
limited operating history, as well as the complications frequently encountered
by other companies in the early stages of development, particularly companies in
the highly competitive sports apparel industry.
OUR COMMON STOCK MAY FLUCTUATE SIGNIFICANTLY
Our common stock has experienced, and is likely to experience in the
future, significant price and volume fluctuations, which could adversely affect
the market price of our common stock without regard to our operating
performance. In addition, we believe that factors such as quarterly fluctuations
in our financial results, announcements by other designers and marketers of
sportswear, and changes in the overall economy or the condition of the financial
markets could cause the price of our common stock to fluctuate substantially.
OUR COMMON STOCK IS A "PENNY STOCK"
Our common stock is a "penny stock" as that term is defined in Rule
3a51-1 promulgated under the Securities Exchange Act of 1934. Penny stocks are
stock:
o With a price of less than $5.00 per share;
o That are not traded on a "recognized" national exchange;
o Whose prices are not quoted on the Nasdaq automated quotation system
(Nasdaq listed stock must still have a price of not less than $5.00
per share); or
o In issuers with net tangible assets less than $2.0 million (if the
issuer has been in continuous operation for at least three years) or
$5.0 million (if in continuous operation for less than three years),
or with average revenues of less than $6.0 million for the last
three years.
Broker/dealers dealing in penny stocks are required to provide
potential investors with a document disclosing the risks of penny stocks.
Moreover, broker/dealers are required to determine whether an investment in a
penny stock is a suitable investment for a prospective investor. These
25
requirements may reduce the potential market for our common stock by reducing
the number of potential investors. This may make it more difficult for investors
in our common stock to resell shares to third parties or to otherwise dispose of
them. This could cause our stock price to decline.
OUR STOCK PRICE COULD DECLINE DUE TO SEASONAL FLUCTUATIONS IN THE DEMAND FOR
OUR PRODUCTS AND GENERAL ECONOMIC CONDITIONS
Our business has been, and will continue to be, highly seasonal, and
our quarterly operating results will fluctuate due to the seasonality of our
sales of sportswear, among other things. Our sales tend to be highest during our
first and second calendar quarters (i.e., January through June), and lowest
during our third and fourth calendar quarters (i.e., July through December).
Other factors contributing to the variability of our operating results include:
o Seasonal fluctuation in consumer demand;
o The timing and amount of orders from key customers; and
o The timing and magnitude of sales of seasonal remainder merchandise
and availability of products.
In addition, any downturn, whether real or perceived, in general
economic conditions or prospects could change consumer spending habits and
decrease demand for our products.
As a result of these and other factors, our operating results may fall
below market analysts' expectations in some future quarters, and our stock price
may decline.
OUR COMMON STOCK MAY BE AFFECTED BY LIMITED TRADING VOLUME AND MAY FLUCTUATE
SIGNIFICANTLY
Historically, there has been a limited public market for our common
stock and there can be no assurance that an active trading market for our common
stock will develop. As a result, this could adversely affect our shareholders'
ability to sell our common stock in short time periods, or possibly at all. Our
common stock has experienced, and is likely to experience in the future,
significant price and volume fluctuations which could adversely affect the
market price of our common stock without regard to our operating performance. In
addition, we believe that factors such as quarterly fluctuations in our
financial results, announcements by other designers and marketers of sportswear,
and changes in the overall economy or the condition of the financial markets
could cause the price of our common stock to fluctuate substantially.
OUR OFFICERS AND DIRECTORS EXERCISE CONTROL OF THE COMPANY
According to our transfer agent's records, as of September 20, 2001,
our executive officers and directors beneficially own approximately 11.8% of our
outstanding common stock. As a result, these shareholders acting together would
be able to exert significant influence over most matters requiring shareholder
approval, including the election of directors. They would also be able to delay
or deter a change in control, which may result in shareholders not receiving a
premium on their stock.
WE COULD FAIL TO ANTICIPATE CHANGES IN FASHION TRENDS
Fashion trends can change rapidly, and our business is particularly
sensitive to such changes because we typically design and arrange for the
manufacture of our apparel substantially in advance of sales of our products to
consumers. We cannot assure you that we will accurately anticipate shifts in
fashion trends, or in the popularity of golf, and adjust our merchandise mix to
appeal to changing consumer tastes in apparel in a timely manner. If we misjudge
the market for our products or are unsuccessful in responding to changes in
fashion trends or in market demand, we could experience insufficient or excess
inventory levels, missed market opportunities or higher markdowns, any of which
could substantially harm our business and our brand image.
FUTURE SALES BY OUR SHAREHOLDERS MAY ADVERSELY AFFECT OUR STOCK PRICE AND OUR
ABILITY TO RAISE FUNDS IN NEW STOCK OFFERINGS
Sales of our common stock in the public market following our most
recent private offering of 55,500,000 shares could lower the market price of our
common stock. Sales may also make it more difficult for us to sell equity
securities or equity-related securities in the future at a time and price that
our management deems acceptable or at all. In addition, we have issued options
to purchase a total of 1,939,477 shares of our common stock at exercise prices
ranging from $0.30 to $0.375 per share under our 2000 Stock Incentive Plan.
26
THE INVESTOR UNDER THE LINE OF CREDIT WILL PAY LESS THAN THE THEN-PREVAILING
MARKET PRICE OF OUR COMMON STOCK
The common stock to be issued upon conversion of the debenture
purchased under the Line of Credit will be issued at a 20% discount to the
lowest closing bid price for the 10 days immediately following the notice date
of conversion. These discounted sales could cause the price of our common stock
to decline. There are currently no shares available for conversion under the
Line of Credit.
OUR COMMON STOCK HAS BEEN RELATIVELY THINLY TRADED AND WE CANNOT PREDICT THE
EXTENT TO WHICH A TRADING MARKET WILL DEVELOP
Our common stock is traded on the Over-the-Counter Bulletin Board. Our
common stock is thinly traded compared to larger more widely known companies in
our industry. Thinly traded common stock can be more volatile than common stock
trading in an active public market. We cannot predict the extent to which an
active public market for the common stock will develop or be sustained after
this offering.
27
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
-----------------
On July 26, 2001, our company and our wholly-owned subsidiary were
named in litigation with Mr. Mow. Mr. Mow filed a complaint against our company
and our wholly-owned subsidiary alleging breach of contract, breach of implied
covenant of good faith and fair dealing and violation of Labor Code ss. 227.3.
Mr. Mow seeks damages in the amount of $444,307.00, prejudgment interest
thereon, costs of suit incurred, and attorney's fees and costs according to
statute. Due to the preliminary status of the lawsuit, it is not possible to
evaluate the likelihood of an unfavorable outcome or estimate of potential loss.
On August 1, 2001, the Company and its wholly-owned subsidiary were
named in litigation with Stephen A. Korn, former Chief Financial Officer of the
wholly-owned subsidiary. Mr. Korn filed a complaint against the Company and its
wholly-owned subsidiary alleging termination in violation of public policy,
breach of written and implied contract, breach of implied covenant of good faith
and fair dealing, intentional interference with contractual relations, negligent
interference with contractual relations, and violation of Labor Code ss.ss. 201
& 227.3. Mr. Korn seeks damages in an amount proven at trial, prejudgment
interest thereon, a penalty in accordance with Labor Code ss.203, costs of suit
incurred, and attorney's fees and costs according to statute. Due to the
preliminary status of the lawsuit, it is not possible to evaluate the likelihood
of an unfavorable outcome or estimate the extent of potential loss.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
-----------------------------------------
(a), (b) and (d) None.
(c) SALES OF UNREGISTERED SECURITIES.
On November 28, 2000, we entered into a Line of Credit with GMF
Holdings, Inc. Pursuant to the Line of Credit, GMF Holdings, Inc. agreed to
acquire up to $10 million of our debentures. The debentures are convertible into
shares of our common stock at a conversion price equal to 80% of the closing bid
price on the Over-the-Counter Bulletin Board or other principal market on which
our company's common stock is traded for the 10 days immediately following the
notice date of conversion. The timing of each sale and the number of debentures
to be sold is at our discretion, subject to various conditions, including an
effective registration of the conversion shares. The dollar amount that our
company can request under any individual sale is subject to the average trading
volume of our common stock for the preceding 40-day trading period. The maximum
term of the Line of Credit is 30 months from the date of the agreement. The
agreement contains various representations, warranties and covenants by us,
including limitations on our ability to sell common stock or common stock
equivalents, sell assets, merge, or enter into certain other transactions.
Through September 17, 2001, our company has raised $1.2 million from the sale of
debentures pursuant to the Line of Credit and 59.3 shares of our company's
common stock have been issued upon conversion of the debentures issued in
connection with the Line of Credit. There are currently no shares available for
conversion under the Line of Credit.
In January 2001, we issued 2,536,509 shares of common stock to
unrelated parties upon the conversion of $132,443 of indebtedness. In addition,
we issued 11,500,000 shares of common stock to Lido Capital Corporation, an
entity wholly-owned by Earl Ingarfield, the Chairman of our company, upon the
conversion of $977,500 of indebtedness.
In February 2001, we issued 3,622,169 shares of common stock to
unrelated parties upon the conversion of $377,736 of indebtedness. In addition,
we issued 425,939 shares of common stock to unrelated parties upon the
conversion of $38,335 of interest on indebtedness.
In March 2001, we issued 771,979 shares of common stock to unrelated
parties upon the conversion of $34,093 of indebtedness. In addition, we sold
6,000,000 shares of common stock to unrelated parties that were sold in the form
of subscription notes for $0.05 per share. Total consideration paid for these
shares was $300,000.
In April 2001, we issued 8,867,146 shares of common stock to unrelated
parties upon the conversion of $254,300 of indebtedness. In addition, we issued
129,922 shares of common stock to unrelated parties upon the conversion of
$3,638 of interest on indebtedness. Further, we issued 125,000 shares of common
28
stock to Chicago Investment Group in exchange for consulting services.
In May 2001, we issued 8,079,877 shares of common stock to unrelated
parties upon the conversion of $238,000 of indebtedness. In addition, we issued
5,000,000 shares of common stock to Chicago Investment Group in exchange for
consulting services. Subsequently, on June 18, 2001, 4,400,000 of these shares
of common stock were cancelled. In addition, we sold 11,500,000 shares of common
stock for cash ranging from $0.0312 to $0.37 per share. Total consideration paid
for these shares was $382,200.
In June 2001, we issued 19,718,940 shares of common stock to unrelated
parties upon the conversion of $198,226 of indebtedness. In addition, we issued
534,210 shares of common stock to unrelated parties upon the conversion of
$8,928 of interest on indebtedness.
With respect to the sale of unregistered securities referenced above,
and except for the 19,225,000 shares of common stock that the company's new
management believes were issued without approval of the board of directors and
without appropriate restrictive legends, all transactions were exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933 (the "1933
Act"), and Regulation D promulgated under the 1933 Act. In each instance, the
purchaser had access to sufficient information regarding our company so as to
make an informed investment decision. More specifically, each purchaser signed a
written subscription agreement with respect to their financial status and
investment sophistication in which they represented and warranted, among other
things, that they had:
o the ability to bear the economic risks of an investment in the
shares of common stock of our company;
o a certain net worth sufficient to meet the suitability standards of
our company; and
o been provided with all material information requested by the
purchaser or his or her representatives, and been provided an
opportunity to ask questions of and receive answers from our company
concerning our company and the terms of the offering.
CONTINGENT LIABILITIES
The company's new management believes that the company issued shares of
common stock without legends restricting the resale of such shares. The
company's new management believes that at least 19,225,000 shares of common
stock have been resold in the public market in violation of Section 5 of the
Securities Act of 1933, as amended. The company may be liable for rescission and
other damages with respect to these sales.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
On May 22, 2001, we received a letter from GE Capital Commercial
Services, Inc. that, effective May 22, 2001, it was terminating its obligation
to make any further advances to our company pursuant to the Factoring Agreement
between our company and GE Capital Commercial Services, Inc. In addition, GE
Capital Commercial Services, Inc. declared all of the advances and other
obligations owing by our company to GE Capital Commercial Services, Inc. to be
immediately due and payable. Subsequently, on July 20, 2001, the company's
wholly-owned subsidiary received notice from the factor that the obligations
under the factoring agreement had been paid in full. Also, on July 20, 2001, the
company's wholly-owned subsidiary received notice from the factor that the
company's chairman has no further obligations as the guarantor of the factoring
agreement.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
Not applicable.
29
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(A) EXHIBITS.
EXHIBIT
NO. DESCRIPTION LOCATION
--- ----------- --------
2.01 Stock Purchase and Sale Agreement dated as Incorporated by reference to Exhibit 2.01 to the
of December 18, 1998 among our company, Registration Statement on Form 10-SB (the
Avid Registrant's Sportswear, Inc. and the "Registration Statement")
shareholders of Avid Sportswear, Inc.
3.01 Articles of Incorporation filed on September Incorporated by reference to Exhibit 3.01 to the
19, 1997 with the Nevada Secretary of State Registration Statement
3.02 Amended Articles of Incorporation filed on May Incorporated by reference to Exhibit 3.02 to the
12, 1999 with the Nevada Secretary of State Registration Statement
3.03 Certificate of Amendment to Articles of Incorporated by reference to Exhibit 3.03 to the
Incorporation filed on May 27, 1999 with the Registration Statement
Nevada Secretary of State
3.04 Bylaws Incorporated by reference to Exhibit 3.04 to the
Registration Statement
4.01 2000 Stock Incentive Plan Incorporated by reference to Exhibit 4.01 to
Amendment No. 2 to the Registration Statement.
10.01 Agreement dated as of December 8, 1998 between Incorporated by reference to Exhibit 10.01 to the
the Championship Committee Merchandising Registration Statement
Limited and Avid Sportswear Inc.
10.02 Lease dated as of March 1, 1999 between F & B Incorporated by reference to Exhibit 10.02 to the
Industrial Investments, LLC and Avid Registration Statement
Sportswear, Inc.
10.03 Lease dated as of April 30, 1999 between Links Incorporated by reference to Exhibit 10.03 to the
Associates, Ltd. and our company Registration Statement
10.04 Employment Agreement dated as of September 11, Incorporated by reference to Exhibit 10.04 to the
1999 between Barnum Mow and Avid Sportswear, Registration Statement
Inc.
10.05 Trademark License Agreement dated as of May Incorporated by reference to Exhibit 10.05 to
10, 1999 between Levi Strauss & Co. and Avid Amendment No. 2 to the Registration Statement
Sportswear, Inc.
10.06 Employment Agreement dated as of January 1, Incorporated by reference to Exhibit 10.06 to the
1999 between David E. Roderick and Avid Registration Statement
Sportswear, Inc.
10.07 Promissory Note in the original principal Incorporated by reference to Exhibit 10.07 to the
amount of $180,000 dated as of June 4, 1999 Registration Statement
from our company to First State Bank
10.08 Commercial Security Agreement dated as of Incorporated by reference to Exhibit 10.08 to the
November 17, 1999 between First State Bank and Registration Statement
our company
10.09 Promissory Note dated as of November 17, 1999 Incorporated by reference to Exhibit 10.09 to the
in the original principal amount of $1,000,000 Registration Statement
given by our company to First State Bank
30
EXHIBIT
NO. DESCRIPTION LOCATION
--- ----------- --------
10.10 Business Loan Agreement dated as of November Incorporated by reference to Exhibit 10.10 to the
17, 1999 between First State Bank and our Registration Statement
company
10.11 Convertible Revolving Demand Note dated as of Incorporated by reference to Exhibit 10.11 to
December 1, 1999 in the original principal Amendment No. 2 to the Registration Statement
amount of $550,000 given by our company to
Earl Ingarfield
10.12 Convertible Revolving Demand Note dated as of Incorporated by reference to Exhibit 10.12 to
December 1, 1999 in the original principal Amendment No. 2 to the Registration Statement
amount of $1,000,000 given by our company to
Lido Capital Corporation
10.13 Convertible Revolving Demand Note dated as of Incorporated by reference to Exhibit 10.13 to
December 1, 1999 in the original principal Amendment No. 2 to the Registration Statement
amount of $125,000 given by our company to
Michael E. LaValliere
10.14 Convertible Revolving Demand Note dated as of Incorporated by reference to Exhibit 10.14 to
December 1, 1999 in the original principal Amendment No. 2 to the Registration Statement
amount of $500,000 given by our company to
Thomas Browning
10.15 Revolving Demand Note dated as of December 1, Incorporated by reference to Exhibit 10.15 to
1999 in the original principal amount of Amendment No. 2 to the Registration Statement
$200,000 given by our company to Daniel Paetz
10.16 Executive Employment Agreement effective as of Incorporated by reference to Exhibit 10.16 to
February 1, 2000 between our company and Earl Amendment No. 2 to the Registration Statement
T. Ingarfield
10.17 Consulting Agreement dated as of June 22, 2000 Incorporated by reference to Exhibit 10.17 to the
between Persia Consulting Group, Inc. and our Registrant's Registration Statement on Form SB-2
company
10.18 Form of Factoring Agreement between our Incorporated by reference to Exhibit 10. to
company and GE Capital Commercial Services, Registrant's Form 10-QSB filed on November 17, 2001
Inc.
10.19 Form of Factoring Agreement Guaranty/Letter of Incorporated by reference to Exhibit 10. to
Credit Supplement between our company and GE Registrant's Form 10-QSB filed on November 17, 2001
Capital Commercial Services, Inc.
10.20 Form of Factoring Agreement - Inventory Incorporated by reference to Exhibit 10. to
Supplement (with advances) between our company Registrant's Form 10-QSB filed on November 17, 2001
and GE Capital Commercial Services, Inc.
10.21 Form of Letter of Agreement between our Incorporated by reference to Exhibit 10. to
company and GE Capital Commercial Services, Registrant's Form 10-QSB filed on November 17, 2001
Inc.
10.22 Form of Convertible Debenture Incorporated by reference to Exhibit 10. to
Registrant's Form 10-QSB filed on November 17, 2001
10.23 Form of Registration Rights Agreement between Incorporated by reference to Exhibit 10. to
our company and purchasers of convertible Registrant's Form 10-QSB filed on November 17, 2001
debentures
31
EXHIBIT
NO. DESCRIPTION LOCATION
--- ----------- --------
10.24 Line of Credit Agreement dated as of Incorporated by reference to Appendix "A" to the
November 28, 2000 between our company and GMF Registrant's Proxy Statement (the "Proxy
Holdings, Inc. Statement")
10.25 Form of Debenture dated as of November 28, Incorporated by reference to Appendix "B" to the
2000 given by our company Registrant's Proxy Statement
10.26 Registration Rights Agreement dated as of Incorporated by reference to Appendix "C" to the
November 28, 2000 between our company and GMF Registrant's Proxy Statement
Holdings, Inc.
10.27 Form of Warrant dated as of November 28, 2000 Incorporated by reference to Appendix "D" to the
given by our company Registrant's Proxy Statement
10.28 Registration Rights Agreement dated as of Incorporated by reference to Appendix "E" to the
November 28, 2000 between our company and the Registrant's Proxy Statement
May Davis Group, inc.
10.29 Placement Agent Agreement as of November 28, Incorporated by reference to Appendix "F" to the
2000 between our company and the May Davis Registrant's Proxy Statement
Group, Inc.
10.30 Escrow Agreement dated as of November 28, 2000 Incorporated by reference to Appendix "G" to the
among our company, the May Davis Group, Inc. Registrant's Proxy Statement
and First Union National Bank
10.31 Amendment to Employment Agreement effective Incorporated by reference to Exhibit 10. to
January 31, 20001 between our company and Registrant's Form 10-QSB filed on November 17, 2001
Barnum Mow
10.32 Forbearance Agreement as of February 16, 2001 Incorporated by reference to Exhibit 10. to
between our company and GE Capital Commercial Registrant's Form 10-QSB filed on November 17, 2001
Services, Inc.
10.33 Employment Agreement dated as of June 25, 2001 Provided herewith
between Frank Jakovac and our company
10.34 Employment Agreement dated as of June 25, 2001 Provided herewith
between James Handlon and our company
10.35 Employment Agreement dated as of June 25, 2001 Provided herewith
between Michelle Mathis and our company
11.01 Statement re: Computation of Earnings Not Applicable
15.01 Letter on unaudited interim financial Not Applicable
information
16.01 Letter on Change in Certifying Accountant Not Applicable
20.01 Letter dated May 9, 2001 from Levi Strauss & Incorporated by reference to Exhibit 20.01 to the
Co. Registrant's Form 8-K filed May 18, 2001
21.01 Subsidiaries of our company Incorporated by reference to Exhibit 21.01 to the
Registration Statement
23.01 Consent of Independent Accountants Not Applicable
32
EXHIBIT
NO. DESCRIPTION LOCATION
--- ----------- --------
24.01 Power of Attorney Not Applicable
27.01 Financial Data Schedule Not Applicable
(B) REPORTS ON FORM 8-K.
Our company filed a Form 8-K on May 18, 2001.
33
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Date: September 20, 2001 AVID SPORTSWEAR & GOLF CORP.
By:/s/Frank Jakovac
-------------------------------------
Frank Jakovac
President and Chief Executive Officer
34