As filed with the Securities and Exchange Commission on September 29, 1997
SEC Registration No. 33-84024
- ------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
POST EFFECTIVE AMENDMENT NO. 2 TO
FORM SB-2 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
SAINT ANDREWS GOLF CORPORATION
(Name of Small Business Issuer in its Charter)
Nevada 6794 88-0203976
(State or Other Jurisdic- (Primary Standard (IRS Employer Iden-
tion of Incorporation) Industrial Classi- tification Number)
fication Code
Number)
5325 South Valley View Boulevard, Suite 4
Las Vegas, Nevada 89118
(702) 798-7777
(Address and Telephone Number of Principal
Executive Offices and Principal Place of Business)
Ronald Boreta, President
5325 South Valley View Boulevard, Suite 4
Las Vegas, Nevada 89118
(702) 798-7777
(Name, Address and Telephone Number of Agent for Service)
Copies to:
Jon D. Sawyer, Esq.
Krys Boyle Freedman & Sawyer, P.C.
600 Seventeenth Street, Suite 2700 South Tower
Denver, Colorado 80202
(303) 893-2300
- ------------------------------------------------------------------------------
Approximate date of proposed sale to the public: As soon as practicable after
the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
PROSPECTUS
SAINT ANDREWS GOLF CORPORATION
500,000 Shares of Common Stock Obtainable on
Exercise of Class A Warrants
50,000 Shares of Common Stock Obtainable Upon Exercise of
Representative's Class A Warrants
100,000 Shares of Common Stock Obtainable Upon Exercise of
Representative's Warrants to Purchase Common Stock
100,000 Representative's Class A Warrants
100,000 Representative's Warrants to Purchase Common Stock
The securities offered hereby include 500,000 shares of common stock,
$.001 par value ("Common Stock") of Saint Andrews Golf Corporation (the
"Company") obtainable upon the exercise of outstanding Class A Warrants to
purchase Common Stock (the "Class A Warrants"). Two Class A Warrants entitle
the holder to purchase one share of Common Stock at an exercise price of $6.50
per share at any time until November 14, 1997. The Class A Warrants may be
redeemed by the Company upon certain conditions. (See "DESCRIPTION OF
SECURITIES.")
The securities offered hereby also include 50,000 shares of Common Stock
obtainable upon the exercise of outstanding Representative's Class A Warrants
issued to RAF Financial Corporation, the underwriter of the Company's initial
public offering (the "Representative"), to purchase Common Stock (the
"Representative's Class A Warrants"). Two Representative's Class A Warrants
entitle the holder to purchase one share of Common Stock at an exercise price
of $7.80 per share at any time until November 14, 1997. The Representative's
Class A Warrants may be redeemed by the Company upon certain conditions. (See
"DESCRIPTION OF SECURITIES.")
Also included in the securities offered hereby are 100,000 shares of
Common Stock, obtainable upon the exercise of outstanding Representative's
Warrants to Purchase Common Stock ("Representative's Warrants"). Each
Representative's Warrant entitles the holder to purchase one share of Common
Stock at an exercise price of $5.40 per share until December 12, 1999.
Also included in the securities offered hereby are 100,000
Representative's Class A Warrants, 100,000 Representative's Warrants and
150,000 shares of Common Stock issuable upon the exercise of such Warrants
being offered by certain Selling Security Holders. Any person purchasing
Representative's Class A Warrants and/or Representative's Warrants from the
Selling Security Holders must immediately exercise such warrants or they will
immediately expire. (See "DESCRIPTION OF SECURITIES.")
The Company's Common Stock is traded in the over-the-counter market and
is quoted on the Nasdaq Small Cap Market (Symbol: SAGC). On September 25,
1997, the closing price of the Company's Common Stock was $3.25. (See "PRICE
RANGE OF COMMON STOCK.")
__________________
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. PERSONS INVESTING IN
THESE SECURITIES SHOULD BE ABLE TO SUSTAIN A TOTAL LOSS OF THEIR INVESTMENT.
(SEE "RISK FACTORS.")
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
Underwriting
Price to Discounts and Proceeds to the
Warrantholders Commissions<FN1> Company<FN2>
Per Share on Exercise
of Class A Warrants $ 6.50 -0- $ 6.50
Total $3,250,000 -0- $3,250,000
Per Share on Exercise
of Representative's
Class A Warrants $ 7.80 -0- $ 7.80
Total $ 390,000 -0- $ 390,000
Per Share on Exercise
of Representative's
Warrants $ 5.40 -0- $ 5.40
Total $ 540,000 -0- $ 540,000
<FN>
<FN1> No discounts or commissions will be paid in connection with the exercise
of the Class A Warrants, Representative's Class A Warrants or Representative's
Warrants.
<FN2> Before deducting expenses of this offering estimated at $25,000.
</FN>
The date of this Prospectus is __________, 1997.
ADDITIONAL INFORMATION
A Registration Statement on Form SB-2, including amendments thereto,
relating to the securities offered hereby has been filed by the Company with
the Securities and Exchange Commission, Washington, D.C. This Prospectus does
not contain all of the information set forth in the Registration Statement and
the exhibits thereto. For further information with respect to the Company and
the securities offered hereby, reference is made to such Registration
Statement and exhibits. Statements contained in this Prospectus as to the
contents of any contract or other document referred to are not necessarily
complete, and in each instance reference is made to the copy of such contract
or other document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference. A copy of the
Registration Statement may be inspected without charge at the Commission's
principal offices in Washington, D.C., and copies of all or any part thereof
may be obtained from the Commission upon the payment of certain fees
prescribed by the Commission.
The Company is subject to the reporting requirements of Section 13(a)
and to the proxy requirements of Section 14 of the Securities Exchange Act of
1934, as amended, and in accordance therewith files periodic reports, proxy
statements and other information with the Commission. Such reports, proxy
statements and other information concerning the Company may be inspected or
copied at the public reference facilities at the Commission located at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the Commission's
Regional Offices in New York, 7 World Trade Center, New York, New York 10048,
and in Chicago, Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such documents can be obtained at
the public reference section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Electronic filings made through
the Electronic Data Gathering Analysis and Retrieval system are publicly
available through the Commission's web site (http.//www.sec.gov).
Callaway Golf Center, Callaway Golf Experience, Ely's Place, and Divine
Nine are trademarks of Callaway Golf Company; and All-American SportPark and
Slugger Stadium are trademarks of the Company.
TABLE OF CONTENTS
PAGE
PROSPECTUS SUMMARY ................................................... 5
RISK FACTORS ......................................................... 8
THE COMPANY .......................................................... 12
MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS .............. 15
USE OF PROCEEDS ...................................................... 16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS ......................................... 17
BUSINESS ............................................................. 20
MANAGEMENT ........................................................... 28
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ....... 35
CERTAIN TRANSACTIONS ................................................. 37
DESCRIPTION OF SECURITIES ............................................ 39
SELLING SECURITY HOLDERS ............................................. 44
PLAN OF DISTRIBUTION ................................................. 45
LEGAL MATTERS ........................................................ 47
EXPERTS .............................................................. 47
INDEX TO FINANCIAL STATEMENTS ........................................ 48
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Prospectus.
THE COMPANY
Saint Andrews Golf Corporation (the "Company" or "Saint Andrews") has
developed a concept for family-oriented sports theme parks named "All-American
SportPark," which will include a live action Sports Entertainment Complex that
will feature a Major League Baseball Slugger Stadium; a NASCAR SpeedPark; an
All-American SportPark Pavillion; and an Allsport Arena. The other portion of
the SportPark will be a Callaway Golf Center, which is comprised of a lighted,
nine-hole par 3 golf course, which wraps around a state-of-the-art 110-tee
driving range, and a 20,000 square foot clubhouse and training center.
On July 12, 1996, the Company entered into a lease covering
approximately 65 acres of land in Las Vegas, Nevada, where the Company is
developing its first All-American SportPark. The property is located south of
the Luxor Hotel on "The Strip" and borders the new I-215 Loop around the City
of Las Vegas. The land is adjacent to McCarran International Airport and in
the vicinity of the new Circus Circus multi-billion dollar hotel resort
development referred to as "The Millennium Project". In April 1997, the
Company broke ground on the Sports Entertainment Complex and the golf facility
and in June 1997 entered into an agreement with Callaway Golf Company relating
to the financing and operation of the golf portion of the SportPark, which is
named the Callaway Golf Center. The Company is currently in the process of
seeking financing for construction of the Sports Entertainment Complex.
The Company and its majority shareholder, Las Vegas Discount Golf &
Tennis, Inc. ("LVDG"), have verbally agreed that they would merge the Company
into LVDG with LVDG being the surviving corporation. It is the intention of
LVDG and the Company to structure the merger as a tax-free transaction. The
two corporations have hired an independent appraiser to estimate the fair
market values of the Company and LVDG and to recommend an exchange ratio for
the number of LVDG shares to be issued for the shares of the Company's common
stock which are not owned by LVDG. Based on this report it is expected that
the final merger agreement will provide that LVDG will issue 2.4 shares of its
common stock for each share of the Company's common stock which is outstanding
and which is not already owned by LVDG. The current officers of LVDG are
expected to resign and be replaced with the Company's officers. The merger
agreement is currently being drafted and all of the terms have not been
finalized.
The proposed merger would be subject to a number of contingencies
including, among other things, the effectiveness of a registration statement
which would be filed with the SEC, and the approval of the respective
shareholders of each corporation. The shareholders will also be asked to
approve a name change to All American SportPark, Inc. and a reverse split in
the range of 1 for 3 to 1 for 5 with the objective of making the shares of the
survivor eligible for listing on the NASDAQ National Market System and
inclusion on the Federal Reserve "List of Marginable Securities."
THE OFFERING
Securities Offered Upon 500,000 Shares of Common Stock
Exercise of Class A Warrants
-5-
Securities Offered Upon 50,000 Shares of Common Stock
Exercise of Representative's
Class A Warrants
Securities Offered Upon 100,000 Shares of Common Stock
Exercise of Representative's
Warrants
Securities Offered by Selling 100,000 Representative's Class A
Security Holders Warrants and 100,000 Representa-
tive's Warrants
Common Stock Outstanding 3,000,000 Shares <FN1>
Preferred Stock Outstanding 500,000 Shares
Nasdaq Small-Cap Symbol SAGC
<FN>
<FN1>
As of September 25, 1997. Does not include 657,000 shares of Common Stock
which may be issued in the future upon the exercise of outstanding options or
500,000 shares which may be issued upon conversion of Preferred Stock. (See
"MANAGEMENT" and "DESCRIPTION OF SECURITIES.")
</FN>
RISK FACTORS
The purchase of these securities involves a high degree of risk.
Prospective investors should review carefully and consider the factors
described under "RISK FACTORS."
USE OF PROCEEDS
In the event any of such warrants are exercised, the Company would use
the proceeds from the exercise of the Class A Warrants, Class A
Representative's Warrants and Representative's Warrants in connection with the
development and/or operation of the Company's Las Vegas Sport Park.
SUMMARY FINANCIAL DATA
The following table sets forth certain selected financial data with
respect to the Company, which has been extracted from financial statements and
is qualified in its entirety by reference to the financial statements and
notes thereto included in this Prospectus.
At June 30, At December 31,
Balance Sheet Data: 1997 1996 1995
- ------------------- ------------ ---------- ----------
Current Assets $ 6,330,000 $6,315,000 $3,558,000
Total Assets $14,276,000 $8,622,000 $4,903,000
Current Liabilities $ 2,611,000 $ 805,000 $1,148,000
Working Capital $ 3,719,000 $5,510,000 $2,410,000
Long-Term Debt $ 1,312,000 $ 0 $ 0
Shareholders' Equity $ 9,524,000 $7,726,000 $3,639,000
Cash Dividends Per Share $ 0 $ 0 $ 0
-6-
For the Six Months For the Year Ended
Statement of Operations Ended June 30, December 31,
Data: 1997 1996 1996 1995
- ----------------------- ---------- --------- --------- ---------
Total income $ 179,000 $ 5,000 $ 95,500 $ 94,500
Loss from continuing
operations (323,000) (399,000) (421,100) (292,600)
Discontinued operations:
Loss from operations of
discontinued franchise
operations (41,000) (20,000) (329,100) (24,400)
Gain on disposal of
franchise operations
(less applicable income
taxes of $450,000) 2,162,000 - - -
<FN1>
---------- --------- --------- ---------
Net income (loss) $1,798,000 $(419,000) $(750,200) $(317,000)
Income (loss) per share:
Income (loss) from
operations $ (.11) $ (.13) $ (.14) $ (.10)
Income (loss) from
discontinued operations .70 (.01) (.11) (.01)
---------- --------- --------- ---------
Net income (loss) per
share $ .59 $ (.14) $ (.25) $ (.11)
_______________
<FN>
<FN1>
Represents the Company's gain on the sale of the franchise operations which
was closed on February 26, 1997.
</FN>
-7-
RISK FACTORS
The securities offered hereby represent a speculative investment and
involve a high degree of risk of a loss of part or all of the investment.
Therefore, prospective investors should read this entire Prospectus and
carefully consider the following risk factors in addition to the other
information set forth elsewhere in this Prospectus prior to making an
investment.
1. OPERATING LOSSES. The Company reported net losses for the years
ended December 31, 1996 and 1995. The Company's profitability in the future
will be affected by anticipated start-up expenses prior to the opening of any
proposed sportparks. See "FINANCIAL STATEMENTS" and "BUSINESS." Further,
there are no assurances that any sports theme park will be profitable once it
is open.
2. DEPENDENCE UPON MANAGEMENT. The Company is materially dependent
on the continued active participation in the Company's business of Ronald S.
Boreta, its President. The Company does not have any "key-man" life insurance
on Mr. Boreta. The loss of Mr. Boreta's services would materially adversely
affect the Company's business. See "MANAGEMENT."
3. POSSIBLE CONSTRUCTION COSTS OVERRUNS. The Company's estimated
construction costs related to any sportpark will be based on cost estimates of
the Company's engineering firm, bids from various contractors, and discussions
with contractors and others. Since none of these estimates are based on
binding contracts, it is possible that at least some of the costs will be
higher than the estimated amounts. Although the Company will allow a
contingency for cost overruns, there is no assurance that actual costs will
not be significantly higher. If total costs exceed estimated costs, the
Company may be required to seek additional financing, and there can be no
assurance that such financing could be obtained on favorable terms.
4. GOVERNMENT REGULATIONS AFFECTING SPORTPARKS. The construction and
operation of a sportpark will be subject to governmental regulation and
approval with respect to zoning requirements, traffic impact issues and other
matters. Management believes that it has received all of the permits and
approvals that are necessary to construct the SportPark in Las Vegas. Upon
the opening of a sportpark, the Company will also be required to comply with
government regulations concerning sanitation, health and safety. Compliance
with governmental regulations could have an adverse effect on the Company's
ability to build and operate a sportpark.
5. SPORTPARK PROFITABILITY IS UNCERTAIN. Although the Company has
developed a business plan which shows that the SportPark would be profitable
based on Management's projections of the demand and costs to build and operate
the SportPark, the Company is unable to gauge with any degree of certainty the
amount of patronage and/or the revenues of any proposed park. Even if a first
rate park is constructed, maintained and operated as contemplated herein,
there is no assurance that attendance will be sufficient to pay operational
costs and provide a return on the capital investment. See "BUSINESS -- All
American SportPark."
6. COMPETITION IN SPORTPARK BUSINESS. The Company's proposed
sportpark will face substantial competition from other attractions in Las
Vegas including gambling, free entertainment, for-free activities and
inexpensive food outlets. See "BUSINESS -- Competition."
-8-
7. SEASONAL EFFECTS ON OPERATION OF SPORTPARK. Patronage at the
proposed sports sportpark in Las Vegas, Nevada, is expected to be affected by
the desert climate of Las Vegas. During the hot summer months daytime use of
the facilities could be limited; however, the park is expected to remain open
in the evening. The Company's revenues could be cyclical both with respect to
the time of year and daytime versus nighttime attendance.
8. EXPOSURE TO LIABILITY FROM OPERATION OF SPORTPARK; INSURANCE.
Risk of serious injury by patron participation in activities available at the
proposed park is substantial notwithstanding efforts to be employed by the
Company to reduce such risk by event design features. In view of this, the
Company intends to maintain liability insurance in the amount of at least $5
million per occurrence on each proposed facility. Regardless of the
foregoing, it is possible the Company's assets will become subject to claims
of patrons for injuries and losses and damages resulting therefrom arising out
of accidents or incidents at a proposed sportpark. The Company probably would
not build a sportpark anywhere else unless it could obtain such insurance or
use a self-insurance program. See "BUSINESS -- All American SportPark."
9. LACK OF THEMEPARK EXPERIENCE OF MANAGEMENT. While the officers
and directors of the Company are experienced businessmen, only one of the
members of the Company's management has direct experience in the themepark
business. See "MANAGEMENT."
10. DIVIDEND POLICY. The Company has not paid dividends on its shares
of Common Stock since its inception and does not contemplate paying cash
dividends in the foreseeable future. See "DIVIDEND POLICY."
11. NASDAQ MAINTENANCE REQUIREMENTS AND EFFECTS OF POSSIBLE DELISTING.
Although the Company's Common Stock is currently listed on the Nasdaq
Small-Cap Market, the Company must continue to meet certain maintenance
requirements in order for such securities to continue to be listed on Nasdaq.
Under the recently adopted new maintenance requirements of Nasdaq, the minimum
bid price of the Company's Common Stock must remain at or above $1.00 and the
Company's shareholders' equity must remain at or above $2 million. Currently,
the Company's stock trades above $3.00 and its shareholders' equity on June
30, 1997, was over $9.6 million. If the Company's securities are delisted
from Nasdaq, this could restrict investors' interest in the Company's
securities and could materially and adversely affect the trading market and
prices for such securities. In addition, if the Company's securities were to
be delisted from Nasdaq, and if the Company's net tangible assets do not
exceed $2 million, and if the Company's Common Stock is trading for less than
$5.00 per share, then the Company's Common Stock would be considered a "penny
stock" under federal securities law. Additional regulatory requirements apply
to trading by broker-dealers of penny stocks which could result in the loss of
an effective trading market for the Company's Common Stock.
12. ARBITRARY DETERMINATION OF WARRANT EXERCISE PRICES. The exercise
prices of the Class A Warrants, the Representative's Class A Warrants and the
Representative's Warrants were arbitrarily set at prices above the Unit
offering price in the Company's initial public offering through negotiations
between the Company and the Representative of the underwriters in the initial
public offering, and bear no relationship to any other objective criteria of
value, and in no event should they be regarded as an indication of any future
market price of the Company's securities.
13. OUTSTANDING OPTIONS. Currently, the Company has outstanding
options to purchase up to 677,000 shares of Common Stock at prices ranging
-9-
from $3.0625 to $5.00 per share. For the term of such options, the holders
thereof will have an opportunity to profit from the rise in the market price
of the Company's Common Stock without assuming the risks of ownership. This
may have an adverse effect on the terms upon which the Company could obtain
additional capital. Furthermore, it might be expected that the holders of
such options would exercise them at a time when the Company would be able to
obtain equity capital on terms more favorable than those provided for by the
options. See "MANAGEMENT" and "DESCRIPTION OF SECURITIES."
14. CONTROL BY PARENT CORPORATION AND OFFICERS AND DIRECTORS. The
Company's Officers and Directors presently have beneficial ownership of
approximately 74% of the common stock of Las Vegas Discount Golf & Tennis,
Inc., the Company's Parent, which presently owns 66.7% of the shares
outstanding. Assuming that all of the Common Stock offered by this Prospectus
is purchased upon the exercise of Warrants, the Company's Officers and
Directors will have control over approximately 54.8% of the shares outstanding
through the Company's Parent. These percentages do not reflect the 500,000
shares of Series A Convertible Preferred Stock which are convertible into an
aggregate of 500,000 shares of common stock. As a result, the Company's
Officers and Directors currently are, and in the foreseeable future will
continue to be, in a position to effectively control the Company. See
"PRINCIPAL SHAREHOLDERS."
15. CURRENT REGISTRATION NEEDED TO EXERCISE WARRANTS; POSSIBLE
REDEMPTION OF WARRANTS. Investors holding warrants to purchase shares of the
Company's Common Stock will not be able to exercise such Warrants unless at
the time of exercise the registration statement of which this Prospectus is a
part is current or a post-effective amendment or new registration statement
registering the Common Stock issuable upon exercise of the Warrants is
effective and such shares have been registered under the Act and qualified or
deemed to be exempt under the securities laws of the state of residence of the
holder of the Warrants. The Company has agreed to maintain a current
prospectus relating thereto until the expiration of the Warrants. While the
Company has undertaken to do so in the Underwriting Agreement, there is no
assurance that it will be able to do so. The Warrants are subject to
redemption by the Company on 30 days prior written notice under certain
conditions. If the Warrants are redeemed, Warrantholders will lose their
right to exercise the Warrants except during such 30 day redemption period.
The Company presently has no intention of redeeming the Warrants. See
"DESCRIPTION OF SECURITIES -- Warrants."
16. POSSIBLE ISSUANCE OF PREFERRED STOCK. The Company is authorized
to issue 5,000,000 shares of Preferred Stock, $.001 par value. The Preferred
Stock may be issued in series from time to time with such designation, rights,
preferences and limitations as the Board of Directors of the Company may
determine by resolution. The potential exists, therefore, that preferred
stock might be issued which would grant dividend preferences and liquidation
preferences to preferred shareholders over common shareholders. Unless the
nature of a particular transaction and applicable statutes require such
approval, the Board of Directors has the authority to issue these shares
without shareholder approval. 500,000 shares of Series A Convertible
Preferred Stock are presently outstanding, and these shares are convertible
into an aggregate of 500,000 shares of Common Stock. The Company presently
has no plans to issue any other shares of Preferred Stock. (See "DESCRIPTION
OF SECURITIES.")
17. NON-REGISTRATION IN CERTAIN JURISDICTIONS OF SHARES UNDERLYING THE
CLASS A WARRANTS. Although Units in the Company's initial public offering
-10-
were not knowingly sold to purchasers in jurisdictions in which the Units were
not registered or otherwise qualified for sale, investors may buy Warrants in
the aftermarket or may move to jurisdictions in which the shares underlying
the Warrants are not so registered or qualified during the period that the
Warrants are exercisable. In this event, the Company would be unable to issue
shares to those persons desiring to exercise their Warrants unless and until
the shares could be registered or qualified for sale in jurisdictions in which
such persons reside, or an exemption to such qualification exists in such
jurisdictions. Although the Company has agreed to use its best efforts to
register or qualify its shares for sale upon the exercise of the Warrants in
any jurisdiction where the registered holders of 5% or more of the Class A
Warrants reside, no assurances can be given that the Company will be able to
effect any such registration or qualification. Further, the Company may
determine not to register or qualify the shares issuable upon the exercise of
the Warrants in jurisdictions where holders of less than 5% of the Class A
Warrants reside and where the time and expense do not justify such
registration or qualification. In the event that for any reason the shares
are not registered or qualified in particular jurisdictions, persons holding
Warrants in such jurisdictions may not be able to exercise their Warrants.
18. POSSIBLE RESALES OF COMMON STOCK. Of the 3,000,000 shares
outstanding as of the date of this Prospectus, 2,000,000 have not been
registered under the Securities Act of 1933, as amended (the "Act") but are,
under certain circumstances, available for public sale pursuant to Rule 144,
promulgated under the Act. The Representative has obtained the agreement of
Las Vegas Discount Golf & Tennis, Inc., the holder of the 2,000,000 shares, to
not sell, publicly transfer or assign the 2,000,000 Common Shares until
December 12, 1997, without the prior written consent of the Representative.
The possibility of sales under Rule 144 may adversely affect the market price
of the Company's securities. See "DESCRIPTION OF SECURITIES -- Shares
Eligible For Future Sale."
-11-
THE COMPANY
The Company has developed a concept for family-oriented sports theme
parks named "All-American SportPark," which will include a live action Sports
Entertainment Complex that will feature a Major League Baseball Slugger
Stadium; a NASCAR SpeedPark; an All-American SportPark Pavillion; and an
Allsport Arena. The other portion of the SportPark will be a Callaway Golf
Center, which is comprised of a lighted, nine-hole par 3 golf course, which
wraps around a state-of-the-art 110-tee driving range, and a 20,000 square
foot clubhouse and training center.
On July 12, 1996, the Company entered into a lease covering
approximately 65 acres of land in Las Vegas, Nevada, on which the Company
intends to develop its first All-American SportPark. The property is located
south of the Luxor Hotel on "The Strip" and borders the new I-215 Loop around
the City of Las Vegas. The land is adjacent to McCarran International Airport
and in the vicinity of the new Circus Circus multi-billion dollar hotel resort
development referred to as "The Millennium Project".
Prior to February 26, 1997, the Company was engaged in the business of
franchising retail stores which use the name "Las Vegas Discount Golf &
Tennis" and which sell a variety of golf and tennis equipment, including
apparel and accessories.
The Company's business began in 1974 when Vaso Boreta, the President and
Chairman of the Board of the Company, opened a "Las Vegas Discount Golf &
Tennis" retail store in Las Vegas, Nevada. This store, which is still owned
by Mr. Boreta, subsequently began distributing catalogs and developing a mail
order business for the sale, principally of golf, and, to a lesser extent,
tennis products. In 1984, the Company began to franchise the "Las Vegas
Discount Golf & Tennis" retail store concept and commenced the sale of
franchises. As of February 26, 1997, when the franchise business was sold,
the Company had 43 franchised stores in operation in 17 states and 2 foreign
countries.
The Company is a Nevada corporation which was incorporated on March 6,
1984, under the name "Sporting Life, Inc." The Company's name was changed to
"St. Andrews Golf Corporation" on December 27, 1988, and was further changed
to "Saint Andrews Golf Corporation" on August 12, 1994.
The Company was acquired by Las Vegas Discount Golf & Tennis, Inc., a
publicly-held company, in February 1988, from Vaso Boreta, who was its sole
shareholder. Vaso Boreta presently owns 49.3% of the outstanding stock of Las
Vegas Discount Golf & Tennis, Inc., and serves as the Chairman of the Board of
the Company and Chairman of the Board, President and CEO of Las Vegas Discount
Golf & Tennis, Inc. Las Vegas Discount Golf & Tennis, Inc. presently owns
2,000,000 shares of the Company's common stock, which represents approximately
66.7% of the Company's capital stock outstanding.
During July 1994, the Company set up a wholly-owned Nevada subsidiary
named All-American SportPark, Inc., which will be the entity under which the
All-American SportPark is to be operated. Saint Andrews Golf Corporation and
All-American SportPark, Inc. are referred to herein collectively as the
"Company."
On August 12, 1994, the Company effected a 4,000 for 1 stock split of
its Common Stock. All financial information and share data in this Report
gives retroactive effect to the stock split.
-12-
In December 1994, the Company completed an initial public offering of
1,000,000 Units, each Unit consisting of one share of Common Stock and one
Class A Warrant. Two Class A Warrants entitle the holder to purchase one
share of Common Stock at an exercise price of $6.50 per share. The net
proceeds to the Company from this public offering were approximately
$3,684,000.
On July 29, 1996, the Company sold 200,000 shares of its newly
designated Series A Convertible Preferred Stock to Three Oceans Inc. ("TOI"),
an affiliate of SANYO North America Corporation, for $2,000,000 in cash
pursuant to an Investment Agreement between the Company and TOI (the
"Agreement"). TOI purchased 300,000 additional shares of Series A Convertible
Preferred Stock for an additional $3,000,000 in September and October 1996,
pursuant to the Agreement. The Company is using the proceeds of these sales
to develop its first All-American SportPark in Las Vegas.
On December 16, 1996, the Company and its majority shareholder, Las
Vegas Discount Golf & Tennis, Inc. ("LVDG"), entered into negotiations
pursuant to an "Agreement for the Purchase and Sale of Assets" to sell all but
one of the four retail stores owned by LVDG, all of LVDG's wholesale
operations and the entire franchising business of the Company to Las Vegas
Golf & Tennis, Inc., an unaffiliated company. Accordingly, at December 31,
1996, the Company accounted for its franchise business segment as
"discontinued operations" and three retail stores to be sold as "held for
sale" in the consolidated financial statements included in this Report. On
February 26, 1997, the Company and LVDG completed this transaction, and as a
result the Company's operations, assets and liabilities now relate solely to
the development and operation of "All-American SportParks".
The total price for the transaction was $5,354,287 of which $4,600,000
was paid in cash, $264,176 was paid with a short-term unsecured receivable,
$200,000 was placed in escrow pending the accounting of inventory and trade
payables, $200,000 was placed in escrow for two years to cover potential
indemnification obligations, $60,475 was withheld for sales taxes, and $29,635
was withheld for accrued vacation liabilities. Of the total purchase price,
$2,603,787 was allocated to LVDG and $2,750,500 was allocated to the Company.
During the three months ended June 30, 1997, the Company recognized an
additional $113,000 of gain on the sale of the franchise assets.
In connection with the sale of the above-described assets, LVDG and the
Company agreed not to compete with the Buyer in the golf equipment business
except that the Company is permitted to sell golf equipment at SportPark and
driving range facilities which it may operate. In addition, the Buyer granted
Boreta Enterprises, Ltd., a limited partnership owned by Vaso Boreta, the
President of LVDG, Ron Boreta, the President of the Company, and John Boreta,
a principal shareholder of LVDG, the right to operate "Las Vegas Discount Golf
& Tennis" stores in southern Nevada, except for Summerlin, Nevada.
The Company and its majority shareholder, Las Vegas Discount Golf &
Tennis, Inc. ("LVDG"), have verbally agreed that they would merge the Company
into LVDG in a tax-free transaction with LVDG being the surviving corporation.
The two corporations have hired an independent appraiser to estimate the fair
market values of the Company and LVDG and to recommend an exchange ratio for
the number of LVDG shares to be issued for the shares of the Company's common
stock which are not owned by LVDG. Based on this report it is expected that
the final merger agreement will provide that LVDG will issue 2.4 shares of its
common stock for each share of the Company's common stock which is outstanding
and which is not already owned by LVDG.
-13-
The proposed merger would be subject to a number of contingencies
including, among other things, the effectiveness of a registration statement
which would be filed with the SEC, and the approval of the respective
shareholders of each corporation. The shareholders will also be asked to
approve a name change to All American SportPark, Inc. and a reverse split in
the range of 1 for 3 to 1 for 5 with the objective of making the shares of the
survivor eligible for listing on the NASDAQ National Market System and
inclusion on the Federal Reserve list of marginable securities.
During June 1997 the Company and Callaway Golf Company formed All
American Golf LLC, a California limited liability company which is owned 80%
by the Company and 20% by Callaway Golf Company. (See "BUSINESS -- Feature
Attractions.")
The Company's offices are located at 5325 South Valley View Boulevard,
Suite 4, Las Vegas, Nevada 89118. Its telephone number is (702) 798-7777.
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MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is traded in the over-the-counter market and
is quoted on the NASDAQ Small-Cap Market under the symbol "SAGC." The
following table sets forth the high and low sales prices of the Common Stock
for the periods indicated.
HIGH LOW
----------------------------- ----- -------
Year Ended December 31, 1995:
First Quarter $6.25 $4.50
Second Quarter $7.75 $5.625
Third Quarter $8.50 $4.875
Fourth Quarter $6.50 $4.375
Year Ended December 31, 1996:
First Quarter $6.375 $3.625
Second Quarter $7.875 $4.5625
Third Quarter $6.875 $3.875
Fourth Quarter $5.25 $3.25
Year Ended December 31, 1997:
First Quarter $4.375 $2.75
Second Quarter $4.625 $2.375
Third Quarter (through September 26,
1997) $4.75 $2.75
A recent closing price for the Company's Common Stock is set forth on
the cover page of this Prospectus.
The number of holders of record of the Company's $.001 par value Common
Stock at June 17, 1997, was 34. This does not include approximately 700
shareholders who hold stock in their accounts at broker/dealers.
Holders of Common Stock are entitled to receive such dividends as may be
declared by the Company's Board of Directors. No dividends have been paid
with respect to the Company's Common Stock and no dividends are anticipated to
be paid in the foreseeable future. It is the present policy of the Board of
Directors to retain all earnings to provide for the growth of the Company.
Payment of cash dividends in the future will depend, among other things, upon
the Company's future earnings, requirements for capital improvements and
financial condition.
-15-
USE OF PROCEEDS
The net proceeds to be realized from the exercise of the Class A
Warrants will be approximately $3,225,000 if all of the Class A Warrants are
exercised, an additional $390,000 will be realized if all of the
Representative's Class A Warrants are exercised, and an additional $540,000
will be realized if all of the Representative's Warrants are exercised. In
the event that any Warrants are exercised, management anticipates that the net
proceeds from these exercises will be used substantially as follows and
applied in the following order of priority:
Represen-
tative's Represen-
Class A Class A tative's
Application of Proceeds Warrants Warrants Warrants
- ----------------------- -------- -------- --------
Development of SportPark $3,000,000 $300,000 $500,000
General Corporate
Purposes<FN1> 225,000 90,000 40,000
---------- -------- --------
Total $3,225,000 $390,000 $540,000
_______________
<FN>
<FN1> Amounts allocated to general corporate purposes may be used for payment
of accounts payable, financing possible operating losses and other general
working capital.
</FN>
The amounts set forth above are only an estimate. The Company is unable
to predict precisely what amount will be used for any particular purpose. To
the extent the proceeds received are inadequate in any area of expenditures,
supplemental amounts may be drawn from working capital, if any. Conversely,
any amounts not required for proposed expenditures will be retained and used
for working capital. Should the proceeds actually received, if any, be
insufficient to accomplish the purposes set forth above, the Company may be
required to seek other sources to finance the Company's operations, including
individuals and commercial lenders.
Pending utilization, management intends to make temporary investment of
the proceeds in bank certificates of deposit, interest-bearing savings
accounts, prime commercial paper or government obligations. Such investment
in interest-bearing assets, if continued for an excessive period of time
within the definition of the Investment Company Act of 1940, could subject the
Company to classification as an "investment company" under the Act and to
registration and reporting requirements thereunder.
-16-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997, COMPARED TO SIX MONTHS ENDED JUNE 30, 1996
Total income increased to $179,000 from $5,000 for the same period in
1996. The increase in revenue was attributable primarily to an increase in
interest income resulting from the increased level of cash resulting from the
sale of the franchise business and proceeds received from the sale of
preferred stock in 1996.
Selling, general and administrative expenses increased $147,000
primarily as a result of a $100,000 bonus granted to the President during June
1997, while Sportpark development costs decreased by $49,000 resulting from
less activities related to noncapitalizable projects.
On December 16, 1996, the Company entered into an agreement to sell its
franchise operations including all rights under existing franchise agreements;
all trade names and trademarks, specific depreciable assets and a modified
covenant not to compete. The sale was consummated on February 26, 1997, with
the Company receiving proceeds of $2,801,000.
YEAR ENDED DECEMBER 31, 1996, COMPARED TO YEAR ENDED DECEMBER 31, 1995
DISCONTINUED OPERATIONS
Franchise fees and royalties revenues and expenses have been classified
as discontinued operations due to the disposal of the franchise business
segment.
Franchise fee revenue in 1996 was $240,000 compared to $245,000 in 1995.
Six new franchise locations were sold in both 1996 and 1995. Royalties
generated by the Company's 45 franchise stores in operation in 1996 totaled
approximately $1.2 million. The fifty franchises in operation in 1995 produced
approximately $25,000 more in royalty revenue for the Company.
Selling, general and administrative expenses related to the franchise
business segment totaled $1.7 million for the year ended December 31, 1996,
versus $1.5 million in 1995. The increase is due to higher marketing costs to
secure franchise locations and increases in training and other support service
costs related to administration of the franchise program.
The loss from discontinued operations of $329,000 in 1996 versus $24,400
in 1995 is principally due to increased selling, general and administrative
costs of $195,000 and increased bad debt expense of $52,000 in addition to the
decrease in $25,000 in royalty revenue.
CONTINUING OPERATIONS
INCOME. Interest income decreased from $86,200 in 1995 to $69,800 in
1996. Other income was $25,700 in 1996 versus $8,300 in 1995 representing an
increase in income recognition of deferred income related to advance royalty
payments from an agreement with a national credit card company.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and
administrative expenses related to continuing operations consist principally
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of payroll, rent and other corporate costs. The increase from $279,100 in
1995 to $305,600 in 1996 relates to an increase in allocated rental expense of
$25,000 related to the SportPark operations.
SPORTPARK DEVELOPMENT COSTS. The Company's strategic emphasis at this
point is the development of sports-oriented theme parks under the name
"All-American SportPark." During 1996, the Company expensed $207,000 in
development of this concept versus $108,000 in 1995. The Company has leased a
site for its first "All-American SportPark" development in Las Vegas, Nevada
and the Callaway Golf Center is scheduled to open to the public on October 1,
1997, and the Sports Entertainment Complex is expected to open in December
1997 (see discussion under "Liquidity and Capital Resources").
INCOME TAXES. Due to operating losses, the Company has no tax provision
nor has it recorded any tax benefits.
NET LOSS. The loss from continuing operations for the year ended
December 31, 1996 of $421,100 compared to a loss of $292,600 in 1995. The
losses are principally attributed to the startup nature of the Company's new
business focus involving the development of the "All-American SportPark"
operations.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1997, the Company had working capital of approximately
$3,719,000 as compared to working capital of approximately $5,510,000 at
December 31, 1996. Cash increased from $5,818,000 at December 31, 1996 to
$6,262,000 at June 30, 1997. This increase in cash was primarily attributable
to $2,801,000 in proceeds from the sale of franchise operations; $2,062,000 in
debt and minority interest proceeds from Callaway Golf Company for the
Callaway Golf Center; and a $1,252,000 increase in accounts payable. The
increase was partially offset by SportPark expenditures of $5,747,000.
On June 13, 1997 the Company and Callaway Golf Company ("Callaway Golf")
announced the formation of All American Golf, LLC, a limited liability
California corporation, to construct, manage and operate "Callaway Golf
Center", a premier golf facility at the site of the All-American Sportpark.
The total budgeted costs for the Callaway Golf Center are approximately $9.0
million. Callaway Golf will provide $5,250,000 in debt financing which bears
interest at 10 percent with interest only payments commencing 60 days after
the opening of the golf center through a date ten years after the opening at
which point the remaining accrued interest and principal will be due in full.
As of June 30, 1997, $1,312,000 had been drawn under this agreement. The
Company will own 80 percent of the members' units of the LLC for a
contribution of $3 million while Callaway Golf will own 20% for a contribution
of $750,000. The Company will manage the driving range, golf course and
tenant facilities in the clubhouse.
While the Company has secured financing for the Callaway Golf Center as
previously described, the Company has not secured financing for the
construction of the Sports Entertainment Complex portion of the SportPark
which is anticipated to require capital expenditures of approximately $20
million. The Company has been holding discussions with a number of potential
corporate sponsors who have expressed an interest in participating in the
SportPark, and management expects that corporate sponsors will contribute a
portion of the financing needed. The Company expects to receive the balance
of the financing from a combination of sources including outside equity and/or
-18-
debt investors, bank financing, and the Company's own cash. There is no
assurance that sufficient financing will be obtained from any of these
sources. No financing was received from corporate sponsors during the year
ended December 31, 1996, or for the six months ended June 30, 1997.
As of December 31, 1996 and 1995, the Company held cash and cash
equivalents of $5,818,100 and $125,100, respectively. Cash used in operating
activities in 1996 was $680,600. This compares to cash provided by operating
activities during 1995 of $661,200.
During the year ended December 31, 1996, the Company's principal source
of cash resulted from the sale of $5 million in Series A Convertible Preferred
Stock through a private placement.
Capital expenditures during the year related primarily to the Company's
on-going development efforts for the "All-American SportPark" concept.
Project development costs, both those expensed and deferred, totaled $763,000
in 1996. In July 1996, the Company entered into a lease for 65 acres of
undeveloped land in Las Vegas, Nevada, which will be the site of the Company's
first "All-American SportPark." As part of the lease arrangements, the
Company was required to post a refundable $500,000 deposit with the lessor.
This deposit will be applied against the minimum monthly rental payments.
The Company's sources of working capital are its current cash balance
and cash flows from operations. The Company has, in the past, funded a
portion of its cash needs through loans from its parent corporation (Las Vegas
Discount Golf & Tennis, Inc.), however, any future loans from the parent are
likely to be limited. The Company does not expect to have any significant
capital expenditures other than the development of the SportPark.
SAFE HARBOR PROVISION
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain information included in this
Prospectus contains statements that are forward-looking, such as statements
relating to plans for future expansion and other business development
activities, as well as other capital spending, financing sources, the effects
of regulations and competition. Such forward-looking information involves
important risks and uncertainties that could significantly affect anticipated
results in the future and, accordingly, such results may differ from those
expressed in any forward-looking statements by or on behalf of the Company.
These risks and uncertainties include, but are not limited to, those relating
to development and construction activities, dependence on existing management,
leverage and debt service (including sensitivity to fluctuations in interest
rates), domestic or global economic conditions (including sensitivity to
fluctuations in foreign currencies), changes in federal or state tax laws or
the administration of such laws, changes in regulations and application for
licenses and approvals under applicable jurisdictional laws and regulations.
-19-
BUSINESS
ALL-AMERICAN SPORTPARK
The Company has developed a concept for family-oriented sports theme
parks named "All-American SportPark," which will include a live action Sports
Entertainment Complex that will feature a Major League Baseball Slugger
Stadium; a NASCAR SpeedPark; an All-American SportPark Pavillion; and an
Allsport Arena. The other portion of the SportPark will be a Callaway Golf
Center, which is comprised of a lighted, nine-hole par 3 golf course, which
wraps around a state-of-the-art 110-tee driving range, and a 20,000 square
foot clubhouse and training center.
On July 12, 1996, the Company entered into a lease agreement covering
approximately 65 acres of land in Las Vegas, Nevada, on which the Company
intends to develop its first All-American SportPark. The property is located
south of the Luxor Hotel on "The Strip" and borders the new I-215 Loop around
the City of Las Vegas. The land is adjacent to McCarran International Airport
and in the vicinity of the new Circus Circus multi-billion dollar hotel resort
development referred to as "The Millennium Project".
On June 20, 1997, the lessor of the 65 acre tract agreed with the
Company to cancel the original lease and replace it with two separate leases:
one lease with All American Golf, LLC, which covers the 41 acres where the
Callaway Golf Center is located; and the second lease with the Company which
covers the 24 acres where the Sports Entertainment Complex is located.
Both leases are very similar in structure. They are both fifteen year
leases with options to extend for two additional five year terms. The lease
for the Callaway Golf Center commences when the golf center opens or February
1, 1998, whichever occurs first. The other lease commences when the Sports
Entertainment Complex portion of the SportPark opens, or June 1998, whichever
occurs first.
The minimum rent for the golf center lease is $398,077 per year for the
first five years and it increases by 10% at the end of each five years during
the term of the lease. The minimum rent for the other lease is $226,923 per
year for the first five years and it increases by 10% at the end of each five
years during the term of the lease. Both leases also provide for additional
rent to the extent that percentages ranging from 3% to 10% of gross receipts,
depending on the type of revenue, exceed the minimum rental. In connection
with the signing of the lease covering 24 acres, the Company paid a deposit of
$500,000 which will be applied to minimum rental payments, and a security
deposit of approximately $37,820 which will be applied to minimum rental
payments at the end of the fourth year of the lease.
As of the date of this Prospectus, the Company has only secured
financing for the golf facility portion of the first SportPark. The Company
has been holding discussions with a number of potential corporate sponsors who
have expressed an interest in participating in the SportPark, and management
expects that corporate sponsors will contribute a portion of the financing
needed. The Company expects to receive the balance of the financing from a
combination of sources including outside equity and/or debt investors, bank
financing, and the Company's own cash. There is no assurance that sufficient
financing will be obtained from these sources for the Sports Entertainment
Complex.
In April 1997, the Company broke ground on the Callaway Golf Center, and
the Company anticipates that the Callaway Golf Center will be open by October
1, 1997. The preliminary opening date of the Sports Entertainment Complex is
-20-
December 1997, however, the actual opening date could depend upon when the
financing for this portion is received. The projected opening date is also
subject to change due to construction delays due to availability of
construction personnel, materials, adverse weather; delays in obtaining
governmental permits and approvals; and other factors.
The Company has obtained project zoning, use permits and variances from
Clark County; Federal Aviation Administration approval for construction (due
to the SportPark's proximity to McCarran International Airport); approval of
the Clark County Department of Aviation; and architectural review approval by
the Planning Commission. The Company has submitted a comprehensive Water Plan
which was accepted for review by the Las Vegas Valley Water District in
February 1997. The Company's improvement plans were approved by the Clark
County Public Works in February 1997 pending review by the Clark County
Building Department.
FEATURE ATTRACTIONS
CALLAWAY GOLF CENTER. In June 1997, the Company completed a final
agreement with Callaway Golf Company ("Callaway Golf") to form a limited
liability company named All American Golf LLC (the "LLC") for the purpose of
operating a golf facility, to be called the "Callaway Golf Center," on
approximately forty-one (41) acres of land which is inside the All-American
SportPark located on approximately sixty-five (65) acres adjacent to Las Vegas
Boulevard in Las Vegas.
The Callaway Golf Center includes a 110-tee driving range in a two-tiered
format. The driving range is designed to have the appearance of an
actual golf course with ten impact greens and a 1-1/2 acre lake with cascading
waterfalls and an island green. Pro-line equipment and popular brand name
golf balls will be utilized. In addition, the golf center includes a lighted
nine hole, par three golf course named the "Divine Nine". The golf course has
been designed to be challenging, and has several water features including
lakes, creeks, water rapids and waterfalls, golf cart paths and designated
practice putting and chipping areas. At the entrance to the golf center is a
20,000 square foot clubhouse which includes The Callaway Golf Experience, a
David Leadbetter Golf Academy, a retail store, a restaurant and bar known as
Ely's Place, and an outdoor patio overlooking the golf course and driving
range with the Las Vegas "Strip" in the background. There is also a
tree-lined driveway with PGA Tour Player personality banners and an eight-foot
tall bronze statue of Bobby Jones.
Callaway Golf has constructed and will operate a state-of-the-art
training center at its own cost (estimated at $2,000,000) which will be known
as "The Callaway Golf Experience". The Callaway Golf Experience, located in
the clubhouse, is Callaway Golf's high-tech evaluation system that allows
golfers of all skill levels to compare the performance of different golf
clubs. The Company will manage the entire Callaway Golf Center except for the
Callaway Golf Experience and other tenant facilities for which it will receive
a management fee of 5% of revenues. Callaway Golf will receive 100% of the
revenues from the Callaway Golf Experience and will pay the LLC $50,000 per
year for the right to occupy that portion of the premises.
The LLC is owned 80% by the Company and 20% by Callaway Golf. Callaway
Golf agreed to contribute $750,000 of equity capital and loan the LLC
$5,250,000. The Company will contribute the value of expenses incurred by the
Company relating to the design and construction of the golf center and cash in
the combined amount of $3,000,000. Callaway Golf's loan to the LLC has a ten
year term and bears interest at 10%. The principal is due in 60 equal monthly
-21-
payments commencing five years after the golf center opens. Additional
payments of principal are required under certain conditions if the LLC is
making cash distributions to its owners before the loan has been repaid. The
loan can also be repaid without penalty at any time.
If during the first year after the effective date of the Callaway Golf
loan the Company contributes additional cash to the LLC for the purpose of
paying down the loan, Callaway Golf is required to also contribute to the LLC
in the form of equity 25% of the amount contributed by the Company up to a
maximum of $850,000.
The LLC has executed a license agreement with Callaway Golf pursuant to
which the LLC licenses the right to use the mark "Callaway Golf Center" from
Callaway Golf for an annual royalty not to exceed $50,000. Pursuant to this
agreement, Callaway Golf has the right to terminate the agreement at any time
without cause on ninety days prior written notice and with payment of
$500,000. Such termination could have an adverse impact on the success of the
golf center.
MAJOR LEAGUE BASEBALL SLUGGER STADIUM. The Slugger Stadium will be a
full size replica of a major league ballpark for batting and baseball
training. The Company has been granted a license from Major League Baseball
Properties to own and operate Major League Baseball Slugger Stadiums. Under
the license agreement, the Company also has the right to utilize certain Major
League Baseball trademarks including those of the All Star Game, Division
Series, League Championship Series and World Series. Slugger Stadium is a
nostalgic formatted batting stadium which attempts to duplicate a major league
experience for its patrons. Unlike batting cages which are the normal
industry standard, the Company's design is a full size stadium that replicates
many of the features of a modern baseball stadium. Plans include 16 batter
boxes and 16 on-deck circles. Batters will have the option of hitting hard or
soft balls delivered at three different speeds. Outfield wall replicas of
Fenway Park's "Green Monster" Wall, Baltimore's Camden Yards, Chicago's
Wrigley Field, Yankee Stadium, and The Ball Park in Arlington, Texas will be
designed to challenge batters to hit the balls out of the park. Completing
the Major League experience will be authentic turnstiles, classic ballpark
food and beverage concessions, baseball memorabilia, electronic scoreboard and
specially designed sound systems that provide typical baseball sounds
including proprietary designed umpire calls of balls and strikes. See
"Agreement with Major League Baseball" below.
NASCAR SPEEDPARK. The Company has a license agreement with The National
Association of Stock Car Auto Racing, Inc. ("NASCAR") for the operation of
SpeedParks as a part of the All-American SportPark or as a stand-alone NASCAR
SpeedPark. The agreement, as amended, provides that the Company has an
exclusive license to use certain trademarks and service marks in the
development, design and operation of go-kart racing facilities having a NASCAR
racing theme in the territories of Las Vegas, Nevada and Southern California.
The exclusive rights to Las Vegas are subject to the condition that the Las
Vegas SpeedPark is opened by March 1, 1998, and the exclusive rights to
Southern California are subject to the condition that the Southern California
SpeedPark is opened by March 1, 1999. If the Company opens the Las Vegas site
by March 1, 1998, the license for that site will continue until December 31,
2003, and if the Company opens the Southern California site by March 1, 1999,
the license for that site will continue until December 31, 2003.
As consideration for the license the Company has agreed to pay a fee of
$25,000 plus $25,000 for each new SpeedPark opened after the first SpeedPark.
In addition, the Company has agreed to pay NASCAR a royalty equal to five
-22-
percent (5%) of each SpeedPark's revenue from racing activities plus a royalty
ranging from two percent (2%) to five percent (5%) on revenues received from
sponsors and promoters of SpeedPark activities.
The SpeedPark will include three tracks to accommodate three styles of
racing: family, adult and junior tracks. The family go-kart track will be a
1,200 linear foot road course for five horsepower go-karts designed for
families and children 10 and up, and the other track will be a 2,200-foot road
course track for eighteen horsepower NASCAR-style go-karts designed for youths
and adults 16 years and older. The SpeedParks will be comprised generally of
the NASCAR Go-Kart SpeedPark, the Garage Experience, the Winner's Circle, the
Infield RV Park, Victory Lane, the NASCAR Jr. Track, the Tailgater's Dining
Circle and the NASCAR Retail Trackside Trailer Merchandising Experience.
Scale model, near emissions-free, gas-powered, stock cars complete with
sponsorship graphics and signage, will compete on the three tracks. The cars
are 5/8 scale NASCAR Winston Cup Stock Car replicas, 5/8 scale NASCAR
Craftsman Truck Series replicas and Jr. Track Stock Cars.
In May 1996, the Company entered into an agreement with Jeff Gordon, the
1997 NASCAR Winston Cup points leader, 1997 Daytona 500 Champion, 1997
Coca-Cola 600 Champion, 1995 Winston Cup Champion and former NASCAR Winston
Cup Rookie of the year, to serve as spokesperson of the NASCAR SpeedPark
through April 30, 2000. According to the original agreement, Mr. Gordon was
paid $25,000 for his services during 1996, and is to be paid $25,000 per
SpeedPark opening per year with a minimum guarantee over the life of the
agreement; .25% of net profits to go to a charity designated by Mr. Gordon;
and additional fees for recording television and radio spots and making more
than six appearances per year. Mr. Gordon was also granted options under the
Company's stock option plan. The Company is currently negotiating a reduction
in the amount of fees payable to Mr. Gordon based on the recent amendment to
the Company's agreement with NASCAR.
ALL-AMERICAN SPORTPARK PAVILION. The 100,000 square foot Pavilion will
include a multi-purpose sports arena (the "Allsport Arena"), speciality retail
areas, a video arcade, food courts, meeting rooms, special events space and
leased tenant facilities for food and beverage service.
ALLSPORT ARENA. This space can be used to accommodate indoor
professional beach volleyball tournaments, professional roller hockey
exhibition games, basketball tournaments, tennis matches, cultural and civic
special events, and annual super bowl parties which coincide with
internationally broadcasted major sporting events, music and entertainment
events. It will include a giant video display and movable seating which is
adaptable for 1,500 to 3,000 people to view an event. When the arena is not
in use for a scheduled event, it will accommodate the core business use for
in-line skaters who will be able to skate to an entertaining multimedia light
and sound performance.
AGREEMENT WITH MAJOR LEAGUE BASEBALL
In December 1994, the Company entered into an agreement with Major
League Baseball ("MLB") concerning a license for the use of MLB logos, marks
and mascots in the decor, advertising and promotions of the Company's Slugger
Stadium concept. This agreement was amended during August 1997. Pursuant to
the amended agreement, the Company holds the exclusive right to identify its
indoor and outdoor baseball batting stadiums as Major League Baseball Slugger
Stadiums. The license covers the United States and expires on November 30,
2000, subject to the right to extend for three additional years provided
certain conditions are met. As consideration for the license, the Company
-23-
agreed to pay $50,000 for each Stadium opened provided that in any year of the
term of the agreement a stadium is not opened, the Company must pay $50,000
during such year. The Company has made the payments required for 1995 and
1996. In addition to and as an offset against the minimum payments set out
above, the Company is required to pay to MLB a royalty based on the revenue
from the batting cages of the greater of (i) six and one-quarter percent
(6-1/4%) or (ii) the royalty rate payable by the Company to any other
individual or entity for the right to open or operate any attraction or event
in the Sports Entertainment Complex.
The Company's right to exclusively use MLB logos and other marks at its
baseball batting stadiums is dependent upon certain conditions set forth in
the agreement.
LETTER OF INTENT WITH PEPSI-COLA COMPANY
In January 1997, the Company entered into a non-binding letter of intent
with the Pepsi-Cola Company ("Pepsi") concerning an exclusive sponsorship
agreement. As of September 15, 1997, the Company was finalizing negotiations
with Pepsi for the agreement. Under the proposed agreement, Pepsi would
receive certain exclusive rights related to all non-alcoholic beverage
products, except for certain specialty tenants which may use their products
such as Starbucks Coffee Shop, and a few other minor exceptions, in exchange
for an annual fee and advertising support expenditures. In addition, the
agreement will provide that Pepsi will have specified signage rights and the
multipurpose arena is being named the AllSport Arena after Pepsi's Allsport
drink product. In addition, the agreement is expected to provide that Pepsi
will provide, without charge, all equipment needed to dispense its products at
the SporkPark.
The Company also anticipates that the agreement with Pepsi will provide
that the Company and Pepsi will participate in joint marketing programs such
as promotions on Pepsi's products and the SportPark.
In consideration for the above rights, Pepsi is expected to make annual
payments during the term of the lease.
AGREEMENT WITH SPORTSERVICE CORPORATION
In September 1997, the Company entered into a lease and concession
agreement with Sportservice Corporation ("Sportservice") which provides that
Sportservice has the exclusive right to prepare and sell all food, beverages
(alcoholic and non-alcoholic), candy and other refreshments throughout the All
American SportPark, including the Callaway Golf Center, during the ten year
term of the agreement. Sportservice has agreed to pay rent based on a
percentage of gross sales depending upon the level of sales, whether the
receipts are from concession sales, the Arena restaurant, the Clubhouse,
vending machines, mobile stands, or catering sales. Rents from the Callaway
Golf Center will be paid to All American Golf LLC and all other rents will be
paid to the Company.
Sportservice is expected to invest approximately $3.85 million into the
concessions and operations which includes all food service leasehold
improvements. Sportservice is a wholly-owned subsidiary of Delaware North
Company. Other Delaware North Companies include the Boston Garden, the Fleet
Center in Boston, and food service clients which include the Ballpark in
Arlington, Texas, California Speedway, Miller Park in Milwaukee, Space Port
USA @ Kennedy Space Center and Yosemite National Park.
-24-
The agreement also provides Sportservice with a right of first refusal
for future parks to be built by the Company in consideration for a $100,000
payment. An additional payment of up to $100,000 is due depending on whether
Sportservice's development costs for its leasehold improvements and food
service assets exceed the estimate of $3.85 million.
The agreement has a number of other terms and conditions including a
requirement that the Company and the LLC must develop and construct the
SportsPark in accordance with certain specifications provided to Sportservice,
and provide all necessary building structure and shell components. The
Company and the LLC must operate the SportsPark on a year-round, seven days a
week basis throughout the term of the agreement.
AGREEMENT WITH INTEGRATED SPORTS INTERNATIONAL
The Company has entered into a two year agreement with Integrated Sports
International ("ISI") whereby ISI has been retained to assist the Company in
obtaining corporate sponsorship for various areas of the SportPark.
ISI has agreed to serve as the SportPark's exclusive sponsorship sales
company and to serve as a consultant to develop ways to help the SportPark in
the areas of marketing and promotions that will improve perceived value from
tenants and sponsors. ISI is also to consult on and implement a
licensing/merchandising plan to enhance the image of the SportPark.
ISI will be paid a monthly consulting fee and a percentage of
sponsorship sales and product sponsorships. Although the agreement has a two
year term commencing June 10, 1997, the exclusive nature of the agreement will
terminate after the first six months if ISI is not successful in assisting the
Company in securing sponsorships during the first six months.
ISI represents Disney International and a number of sports celebrities.
LIABILITY INSURANCE
The Company intends to purchase a comprehensive general liability
insurance policy to cover possible claims for injury and damages from
accidents and similar activities. There is no assurance that such coverage
can be obtained, or if obtained, that it can be obtained at reasonable rates
nor that it will be sufficient to cover or be available for future claims.
MARKETING
Major League Baseball Slugger Stadium is the "Official Batting Stadium
of Major League Baseball". The unique baseball stadium concept is expected to
be expanded to other locations in the United States and overseas using the
prototype installation at the All-American SportPark as a demonstration
facility. Considerable market research by management has indicated a large
potential market for Slugger Stadium. Possible locations include new gated
sites inside major theme parks, attachments to regional and value oriented
shopping malls, inside new sports stadium and Major League Ballpark complexes
which are either in the planning and design phase or currently under
construction and other All-American SportParks or as stand alone sites.
Target consumers include the family, adults, softball players and all youth
baseball organizations.
The Callaway Golf Center which includes the nine-hole par 3 golf course,
driving range, and clubhouse is designed as a country club atmosphere for the
general public. This concept may be expanded into various hotel and resort
areas throughout the United States and overseas and can also be included in
-25-
the SportPark opportunities described above or as a stand alone business.
NASCAR SpeedPark is "The Official Go-Kart Racing Facility Licensed by
NASCAR". Management plans to develop the concept to include installations
alongside Superspeedways, NASCAR Team Race/Shops Racing Retail & Entertainment
Centers, stand alone facilities and as a separate gated attraction inside
major theme parks throughout the United States.
The All-American SportPark Pavilion area of the project can be recreated
as a stand alone development in a downtown urban setting alongside new arenas,
shopping malls, and football/baseball stadiums.
The Company's marketing efforts are directed towards a number of large
existing and potential markets for which there can be no assurance of
financial success. Further, to expand the concepts beyond the first location
in Las Vegas would require considerably more financial resources than the
Company presently has and more management and human resources than presently
exist at the Company.
COMPETITION
Any SportParks built by the Company will compete with any other
family/sports attractions in the city where the SportPark is located. Such
attractions could include amusement parks, driving ranges, water parks, and
any other type of family or sports entertainment. The Company will be relying
on the combination of active user participation in the sports activities and
competitive pricing to encourage visitors and patrons. There can be no
assurance that the Company will be able to operate the park on a profitable
basis.
TRADE NAMES AND TRADEMARKS
Saint Andrews has filed an "intent to use" trademark application for
"All-American SportPark" and a related design and "Slugger Stadium". The
Company has also filed "intent to use" trademark applications with regard to
the "St. Andrews" name and related designs with respect to mens' and womens'
clothing and certain golf equipment and accessories. The Company intends to
maintain the integrity of the trademarks, other proprietary names and marks
against unauthorized use.
The trademarks "Las Vegas Discount Golf & Tennis" and "St. Andrews" on
golf clubs and golf bags, are registered on the principal register of the
United States Patent and Trademark Office as well as in Canada and in the
State of Nevada. Management of the Company also believes that it and/or the
Company have developed proprietary rights to the name "Birdie Golf". In
February 1997, the rights to the trademarks "Las Vegas Discount Golf & Tennis"
and "Birdie Golf" were assigned to the purchaser in the sale of assets
transaction.
The purchaser of the assets granted back to Boreta Enterprises, Ltd. a
perpetual license to use the name Las Vegas Discount Golf & Tennis for retail
equipment stores in the State of Nevada, south of a line between Pahrump,
Nevada and Mesquite, Nevada, except for Summerlin, Nevada.
During September 1997, the Company agreed to sell its rights to the St.
Andrews name to Boreta Enterprises, Ltd. for a $20,000 two year promissory
note since the Company has comitted all of its efforts to the development of
the All- American SportPark and no longer intends to engage in the business of
selling golf equipment or apparel.
-26-
EMPLOYEES
As of September 1, 1997, the Company employed a total of 10 persons on a
full-time basis. None of the Company's employees are represented by a union,
and the Company believes that its employee relations are good. The Company
expects to add approximately 110 full-time and 40 part-time employees when the
Sports Entertainment Complex opens. The Callaway Golf Center expects to
employ approximately 36 full-time and 10 part-time persons when it is fully
open, however, these persons will be employees of the LLC.
FACILITIES
The Company currently occupies approximately 2,360 square feet of office
space and 2,857 square feet of warehouse space at 5325 South Valley View
Boulevard, Suite 4, Las Vegas, Nevada, and pays monthly rent of $2,944. The
space is leased from Voss Boreta, the Company's Chairman of the Board. The
rent is adjustable annually based on increases in the consumer price index and
the lease expires January 31, 2005. The Company's Board of Directors believes
that the rent paid is comparable to that which it would pay to an unaffiliated
party.
On June 20, 1997, the Company entered into a lease for approximately 24
acres of land in Las Vegas, Nevada, on which the Company intends to build the
Sports Entertainment Complex portion of its SportPark. In addition, All
American Golf LLC entered into a lease for approximately 41 acres of land
where the Callaway Golf Center is being built. The terms of both leases are
described above under the heading "BUSINESS OF THE COMPANY -- ALL AMERICAN
SPORTPARK."
LEGAL PROCEEDINGS
Except for the lawsuits described in the following paragraphs, the
Company is not presently a party to any legal proceedings, except for routine
litigation that is incidental to the Company's business.
On February 27, 1996, the Company filed a Complaint in the District
Court, Clark County, Nevada, against Gordon Gaming Corporation ("Gordon"), the
Company which purchased from Howard Hughes Corporation ("Hughes") the property
in Las Vegas where the Company was preparing to build its first SportPark.
The lawsuit is based on a lease which the Company entered into with Hughes on
May 31, 1994, for approximately 33 acres located at the corner of Sahara and
Las Vegas Boulevard South. Pursuant to the lease, Hughes had the right to
terminate the lease if the property was sold provided that the Company would
be reimbursed for certain expenditures up to a maximum of $3.5 million.
The lease was terminated on June 21, 1995, and according to the terms of
the lease, Hughes was required to pay the Company its reimbursable amount no
later than 30 days after the termination. When Gordon purchased the property
from Hughes, it assumed Hughes' obligations relating to the termination of the
lease. Gordon refused to make any payment to the Company, even the amount
which both parties agreed was reimbursable. The Complaint sought an
unspecified amount of compensatory damages, punitive damages, attorneys' fees
and costs.
In October 1996, a settlement of $3,217,500 was reached and paid to the
Company.
In 1995, Giant Ride, Inc. filed suit in the District Court of Clark
County, Nevada against the Company claiming that the Company had breached a
contract to purchase a giant slide for the Company's Las Vegas SportPark.
-27-
Giant Ride, Inc. is seeking an unspecified amount of damages. The Company
denies that it had a contract to purchase such a slide. The suit is currently
in the discovery stage.
-28-
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The Directors and Executive Officers of the Company are as follows:
NAME AGE POSITIONS AND OFFICES HELD
---- --- --------------------------
Vaso Boreta 64 Chairman of the Board
Ronald S. Boreta 34 President, Chief Executive Officer, Treasurer,
Secretary and Director
Robert R. Rosburg 70 Director
William Kilmer 57 Director
Motoharu Iue 60 Director
John A. Hoover, Jr. 43 General Manager of All-American SportParks
Kevin B. Donovan 35 Vice President of New Business Development
Except for the fact that Vaso Boreta and Ronald Boreta are father and
son, respectively, there is no family relationship between any Director or
Officer of the Company. The Company presently has no audit, compensation or
nominating committee.
All Directors hold office until the next Annual Meeting of Shareholders.
The Company has agreed with RAF Financial Corporation, the
Representative of the Underwriters of the Company's initial public offering,
that the Company will permit a representative of RAF Financial Corporation to
be present at all meetings of the Board of Directors of the Company for a
period of three years from December 13, 1994. However, such representative
will not have any voting rights.
The Callaway Golf Company ("Callaway Golf") has the right to designate a
person to be appointed to the Company's Board of Directors throughout the term
of the Company's agreement with Callaway Golf regarding the limited liability
company which was formed to operate the Callaway Golf Center. To date,
Callaway Golf has not designated anyone to be appointed to the Company's Board
of Directors.
Officers of the Company are elected annually by, and serve at the
discretion of, the Board of Directors.
The following sets forth biographical information as to the business
experience of each officer and director of the Company for at least the past
five years.
RONALD S. BORETA has served as President of the Company since 1992,
Chief Executive Officer since August 1994, and a Director since its inception
in 1984. He also served as an officer and director of the Company's Parent,
Las Vegas Discount Golf & Tennis, Inc., from 1988 until July 1994, and he
continues to serve as a director. He has been employed by the Company since
its inception in March 1984, with the exception of a 6-month period in 1985
when he was employed by a franchisee of the Company located in San Francisco,
-29-
California. Prior to his employment by the Company, Mr. Boreta was an
assistant golf professional at San Jose Municipal Golf Course in San Jose,
California, and had worked for two years in the areas of sales and warehousing
activities with a golf discount store in South San Francisco, California. Mr.
Boreta devotes 100% of his time to the business of the Company.
VASO BORETA has served as Chairman of the Board of Directors since
August 1994, and has been an Officer and Director of the Company since its
formation in 1984. He has also been an officer and director of the Company's
Parent, Las Vegas Discount Golf & Tennis, Inc., since 1988. In 1974, Mr.
Boreta first opened a specialty business named "Las Vegas Discount Golf &
Tennis," which retailed golf and tennis equipment and accessories. He was one
of the first retailers to offer golf merchandise at a discount. He also
developed a major mail order catalog sales program from his original store.
Mr. Boreta continues to operate his original store, which has been moved to a
new location adjacent to the Hard Rock Cafe in Las Vegas. Mr. Boreta devotes
approximately 10% of his time to the business of the Company, and the balance
to the Company's Parent and to operating his store.
ROBERT R. ROSBURG has served as a Director of the Company since August
1994, and has been a director of the Company's Parent, Las Vegas Discount Golf
& Tennis, Inc., since November 1989. Mr. Rosburg has been a professional
golfer since 1953. From 1953 to 1974 he was active on the Professional Golf
Association tours, and since 1974 he has played professionally on a limited
basis. Since 1975 he has been a sportscaster on ABC Sports golf tournament
telecasts. Since 1985 he has also been the Director of Golf for Rams Hill
Country Club in Borrego Springs, California. Mr. Rosburg received a
Bachelor's Degree in Humanities from Stanford University in 1948.
WILLIAM KILMER has served as a Director of the Company since August
1994, and has been a director of the Company's Parent, Las Vegas Discount Golf
& Tennis, Inc., since July 1990. Mr. Kilmer is a retired professional
football player, having played from 1961 to 1978 for the San Francisco
Forty-Niners, the New Orleans Saints and the Washington Redskins. Since 1978,
he has toured as a public speaker and also has served as a television analyst.
Mr. Kilmer received a Bachelor's Degree in Physical Education from the
University of California at Los Angeles.
MOTOHARU IUE has served as a Director of the Company since April 1997.
Mr. Iue has served as Chairman of the Board of Sanyo North America Corporation
("Sanyo") and President of Three Oceans Inc. ("Three Oceans") since October
1996. Mr. Iue previously served as President of Sanyo and as Chairman of the
Board of Three Oceans from 1992 to 1996 and still serves as Chief Executive
Officer of Sanyo and Three Oceans. From 1989 to 1992, he was Executive Vice
President of Tottori Sanyo Electric Co., Ltd. All three companies are
affiliates of Sanyo Electric Co., Ltd. ("Sanyo Electric"), and Three Oceans
Inc. is a shareholder of the Company. Mr. Iue has bee a director of Sanyo
Electric since 1977.
JOHN A. HOOVER, JR. has served as General Manager of All-American
SportParks since April 1995. From June 1993 until April 1995, he served as
Director of Operations of the MGM Grand Adventure Theme Park, a $120 million
theme park associated with the MGM Grand Hotel Resort in Las Vegas. From
January 1990 until June 1993, he served as operations manager for the Fiesta
Texas Theme Park in San Antonio, Texas, and from October 1986 until December
1990, he served as general manager for the Malibu Grand Prix/Castle Golf &
Games in San Antonio, Texas.
-30-
KEVIN B. DONOVAN has served as Vice President of New Business
Development since April 1994. Prior to joining the Company, from March 1992
to March 1994, he was President and Creative Director of Donovan Design
Agency, Dallas, Texas, which is engaged in designing corporate logos and
graphics, and providing marketing and package designs. From June 1989 to
March 1992, he was President, Chief Executive Officer and Creative Director
for Donovan & Houston Design For Retail, Dallas, Texas, which was engaged in
providing design services to retail oriented companies. From March 1986 to
June 1989, Mr. Donovan was Art Director and Creative Director for John Ryan &
Co. Retail Marketing Agency in Minneapolis, Minnesota, which was engaged in
providing design services to retail and banking companies. Mr. Donovan
received a B.A. Degree in Commercial Arts from St. Paul Technical College, St.
Paul, Minnesota, in 1983. He devotes his full time to the business of the
Company.
EXECUTIVE COMPENSATION
The following table sets forth information regarding the executive
compensation for the Company's President and each other executive officer who
received compensation in excess of $100,000 for the years ended December 31,
1996, 1995 and 1994 from the Company:
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------- --------
- ----------------
SECURI-
TIES
UNDERLY-
OTHER RE- ING
ALL
ANNUAL STRICTED OPTIONS/
OTHER
NAME AND PRINCIPAL COMPEN- STOCK SARs LTIP
COMPEN-
POSITION YEAR SALARY BONUS SATION AWARD(S)
(NUMBER)PAYOUTS SATION
- ------------------ ---- -------- ------ ------- -------- -------
- ------- ------
Ronald S. Boreta, 1996 $100,000 $5,500 $39,160 -- 325,000 --
$8,265
President and CEO <FN2>
<FN3>
<FN1> 1995 $100,000 -0- $19,071 -- -0- --
-0-
<FN2>
1994 $100,000 -0- $14,190 -- 110,000 --
-0-
<FN2>
Charles Hohl, 1996 $100,000 $22,000 $10,000 -- -0- --
-0-
Executive Vice <FN5>
President<FN4> 1995 $100,000 -0- $ 2,346 -- -0- --
-0-
<FN5>
_________________
<FN>
<FN1>
Ronald S. Boreta served as Vice President, Secretary and Treasurer of the
Company and Las Vegas Discount Golf & Tennis, Inc. until June 1992 when he
became President of the Company and Las Vegas Discount Golf & Tennis, Inc.
Until July 31, 1994, the Company paid one-half of Ronald S. Boreta's salary
and Las Vegas Discount Golf & Tennis, Inc. paid the other one-half. Effective
August 1, 1994, the Company pays all of Mr. Boreta's salary.
-31-
<FN2>
Represents amounts paid for country club memberships for Ronald S. Boreta and
contributions made by the Company to retirement plans on his behalf. For
1996, these amounts were $14,160 for club memberships and $25,000 to the
Company's Supplemental Retirement Plan.
<FN3>
Represents premiums paid on a life insurance policy for Ronald S. Boreta's
benefit.
<FN4>
Mr. Hohl's employment as Executive Vice President ended on February 26, 1997.
<FN5>
Represents amount contributed to the Company's retirement plan on behalf of
Mr. Hohl.
</FN>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
PERCENT
NUMBER OF OF TOTAL
SECURITIES OPTIONS/SARs
UNDERLYING GRANTED TO EXERCISE
OPTIONS/SARs EMPLOYEES IN OR BASE EXPIRATION
NAME GRANTED(#) FISCAL YEAR PRICE ($/SH) DATE
- ---------------- ------------ ------------ ----------- ----------
Ronald S. Boreta 125,000 36.1% $4.75 <FN1> 4-16-2001
200,000 57.8% $4.625 <FN1> 4-24-2001
___________
<FN>
<FN1>
On June 9, 1997, these options were reissued for the same number of shares at
a new exercise price of $3.0625 per share.
</FN>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
SECURITIES
UNDERLYING VALUE OF UNEXER-
SHARES UNEXERCISED CISED IN-THE
ACQUIRED OPTIONS MONEY OPTIONS/
ON SARs AT FY-END SARs AT FY-END
EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (NUMBER) REALIZED UNEXERCISABLE UNEXERCISABLE
- ---------------- -------- -------- -------------- ---------------
Ronald S. Boreta -0- -0- 110,000/325,000 $0 / $0
Charles Hohl -0- -0- 40,000/ 20,000 $0 / $0
EMPLOYMENT AGREEMENTS
Effective August 1, 1994, the Company entered into an employment
agreement with Ronald S. Boreta, the Company's President and Chief Executive
Officer, pursuant to which he receives a base salary of $100,000 per year plus
annual increases as determined by the Board of Directors. His salary was
increased to $120,000 for the year ended December 31, 1996. The employment
agreement was scheduled to terminate on December 31, 1996, but it is
automatically extended for additional one year periods unless 60 days' notice
-32-
of the intention not to extend is given by either party. In addition to his
base salary, Ronald S. Boreta also will receive a royalty equal to 2% of all
gross revenues directly related to the All-American SportPark and Slugger
Stadium concepts. However, such royalty is only payable to the extent that
the Company's annual consolidated income before taxes after the payment of the
royalty exceeds $1,000,000. Ronald S. Boreta also receives the use of an
automobile, for which the Company pays all expenses, and full medical and
dental coverage. The Company also pays all dues and expenses for membership
at two local country clubs at which Ronald S. Boreta entertains business
contacts for the Company. Ronald S. Boreta has agreed that for a period of
three years from the termination of his employment agreement that he will not
engage in a trade or business similar to that of the Company. In the event of
a change of more than 25% of the beneficial ownership of the Company or its
parent, the termination date is extended from December 31, 1996 to December
31, 1998, and it may be extended up to an additional five years under certain
conditions.
In June 1997, the Company's Board of Directors awarded a $100,000 bonus
to Ronald S. Boreta for his extraordinary services related to the raising of
capital and development of the Company's Las Vegas SportPark.
Effective October 1, 1996, the Company entered into a one year
employment agreement with Kevin B. Donovan, pursuant to which he receives a
base salary of $100,000 per year. In addition to his base salary, Mr. Donovan
will receive a $25,000 bonus payable two weeks prior to the opening of the
All-American SportPark, and a commission of 5% of all sponsorship sales
related to the All-American SportPark. Mr. Donovan also receives the use of
an automobile provided by the Company and received $5,000 for moving expenses.
Effective August 8, 1994, the Company entered into an employment
agreement with Charles L. Hohl, the Company's Executive Vice President,
Franchise Systems, pursuant to which he received a base salary of $100,000 per
year plus annual increases as determined by the Board of Directors. This
employment agreement ended on February 26, 1997, in connection with the sale
of the Company's franchise business and the termination of Mr. Hohl's
employment.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company do not receive any fees
for Board meetings they attend but are entitled to be reimbursed for
reasonable expenses incurred in attending such meetings.
STOCK OPTION PLAN
During July 1994, the Board of Directors adopted a Stock Option Plan
(the "Plan"). The Plan authorizes the issuance of options to purchase up to
300,000 shares of the Company's Common Stock.
The Plan allows the Board to grant stock options from time to time to
employees, officers, directors and consultants of the Company. The Board has
the power to determine at the time the option is granted whether the option
will be an Incentive Stock Option (an option which qualifies under Section 422
of the Internal Revenue Code of 1986) or an option which is not an Incentive
Stock Option. Vesting provisions are determined by the Board at the time
options are granted. The option price for any option will be no less than the
fair market value of the Common Stock on the date the option is granted.
-33-
Since all options granted under the Plan must have an exercise price no
less than the fair market value on the date of grant, the Company will not
record any expense upon the grant of options, regardless of whether or not
they are incentive stock options. Generally, there will be no federal income
tax consequences to the Company in connection with Incentive Stock Options
granted under the Plan. With regard to options that are not Incentive Stock
Options, the Company will ordinarily be entitled to deductions for income tax
purposes of the amount that option holders report as ordinary income upon the
exercise of such options, in the year such income is reported.
In August 1994, the Board of Directors granted stock options to the
following persons who were then Officers and Directors of the Company, to
purchase shares of the Company's Common Stock at $5.00 per share. These
options expire on August 8, 1999. On June 9, 1997, each of these options
(except Charles Hohl's) were reissued for the same number of shares at a new
exercise price of $3.0625 per share.
NAME SHARES SUBJECT TO OPTION
----------------- ------------------------
Vaso Boreta 110,000
Ronald Boreta 110,000
Charles Hohl 60,000<FN1>
Glenn Raynes 10,000
Robert R. Rosburg 5,000
William Kilmer 5,000
-------
Total 300,000
__________________
<FN>
<FN1>
Mr. Hohl's options expired upon termination of his employment in February
1997.
</FN>
In April 1996, the Company's Board of Directors approved increases in
the number of shares of Common Stock which may be issued under the Plan from
300,000 to 700,000, subject to approval by the Company's shareholders within
one year. Also in April 1996, the Company's Board of Directors granted stock
options as indicated below.
RELATIONSHIP SHARES SUBJECT EXERCISE
NAME TO THE COMPANY TO OPTION PRICE<FN3>
- ---------------- -------------------- -------------- ----------
Joel Rubenstein Consultant 10,000 $5.00
Ronald S. Boreta Officer and Director 125,000 $4.75
Ronald S. Boreta Officer and Director 200,000<FN1> $4.625
Kevin B. Donovan Officer 10,000 $4.75
John Hoover Officer 10,000 $4.75
Robert Finley Employee 1,000 $4.75
Ted Abbruzzese Consultant 10,000 $4.75
Jeff Gordon Consultant 10,000<FN2> $4.75
Hal Price Consultant 1,000 $4.75
___________________
<FN>
-34-
<FN1>
This option was not to vest until the Company completed a transaction with a
major business or investor made it probable that the Company will be able to
pursue its plan of building and operating Sportparks. This condition was met
in September 1996 as a result of the investment by Three Oceans, Inc. of
$5,000,000 in the Company.
<FN2>
This option is currently vested as to 5,000 shares and will vest as to an
additional 2,500 on April 24, 1998 and April 24, 1999.
<FN3>
On June 9, 1997, each of these options were reissued for the same number of
shares at a new exercise price of $3.0625 per share.
</FN>
401(k) PLAN
The Company's Parent maintains a 401(k) employee retirement and savings
program (the "401(k) Plan") which covers the Company's employees. Under the
401(k) Plan, an employee may contribute up to 15% of his or her gross annual
earnings, subject to a statutory maximum, for investment in one or more funds
identified under the plan. The Company's Parent makes matching contributions
equal to 25% of participants' contributions.
SUPPLEMENTAL RETIREMENT PLAN
In November 1996, the Company and its majority shareholder established a
Supplemental Retirement Plan, pursuant to which certain employees selected by
the Company's Chief Executive Officer receive benefits based on the amount of
compensation elected to be deferred by the employee and the amount of
contributions made on behalf of the employee by the Company. Company
contributions to the Supplemental Retirement Plan are immediately vested for
Category I employees, and vest 20% per year of employment for Category II
employees. Vested amounts under the Supplemental Retirement Plan are paid out
over 5 to 20 years upon retirement, disability, death or termination of
employment.
For 1996, Ronald S. Boreta (the President of the Company) was
designated as a Category I employee, and Charles Hohl (then Executive Vice
President of the Company) was designated as a Category II employee. The
Company made contributions to the Supplemental Retirement Plan on behalf of
these persons for 1996 as follows: Ronald S. Boreta - $25,000; and Charles
Hohl - $10,000.
The Company's Board of Directors has not yet determined the amounts, if
any, which will be contributed to the Supplemental Retirement Plan for 1997.
-35-
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number and percentage of shares of
the Company's no par value Common Stock owned beneficially, as of August 15,
1997, by any person, who is known to the Company to be the beneficial owner of
5% or more of such Common Stock, and, in addition, by each Director of the
Company, and Nominee for Director, and by all Directors, Nominees for Director
and Officers of the Company as a group. Information as to beneficial owner-
ship is based upon statements furnished to the Company by such persons.
AMOUNT AND PERCENT OF CLASS
NAME AND ADDRESS NATURE OF BENE- BEFORE AFTER
OF BENEFICIAL OWNER FICIAL OWNERSHIP OFFERING OFFERING
- ------------------- ---------------- -------- --------
Las Vegas Discount Golf &
Tennis, Inc.<FN1> 2,000,000 66.7% 54.8%
Suite 10
5325 S. Valley View Blvd.
Las Vegas, Nevada 89118
Vaso Boreta 110,000<FN2> 3.5% 2.9%
Suite 10
5325 S. Valley View Blvd.
Las Vegas, Nevada 89118
Ronald S. Boreta 435,000<FN2> 14.5% 10.6%
Suite 10
5325 S. Valley View Blvd.
Las Vegas, Nevada 89118
Robert R. Rosburg 5,000<FN2> 0.2% 0.1%
49-425 Avenida Club La Quinta
La Quinta, California 92253
William Kilmer 5,000<FN2> 0.2% 0.1%
1500 Sea Breeze Boulevard
Ft. Lauderdale, Florida 33316
Motoharu Iue 750,000<FN3> 20.0% 16.7%
666 - 5th Avenue
New York, New York 10103
Three Oceans Inc. 750,000<FN4> 20.0% 16.7%
2001 Sanyo Avenue
San Diego, California 92173
All Directors and 1,325,000<FN5> 30.6 26.6%
Officers as a Group
(9 Persons)
___________________
<FN>
<FN1>
Las Vegas Discount Golf & Tennis, Inc. is a publicly-held corporation of which
Vaso Boreta is President, Chairman of the Board and a principal shareholder;
Ronald S. Boreta is a Director and a principal shareholder; and Robert R.
Rosburg and William Kilmer are Directors. In addition, John Boreta, a son of
-36-
Vaso Boreta, is a principal shareholder of Las Vegas Discount Golf & Tennis,
Inc. The following sets forth the percentage ownership beneficially held by
such persons in Las Vegas Discount Golf & Tennis, Inc.:
Vaso Boreta 49.3%
Ronald S. Boreta 21.8%
Robert Rosburg 0.1%
William Kilmer 0.1%
John Boreta 12.2%
<FN2>
Represents shares underlying currently exercisable options held by the named
person. Does not include shares held by Las Vegas Discount Golf & Tennis,
Inc. of which such person is an Officer, Director and/or principal
shareholder.
<FN3>
Represents shares beneficially owned by Three Oceans, Inc., of which Mr.
Yamagata is President. These are the same shares listed under the name Three
Oceans, Inc.
<FN4>
Represents 500,000 shares of Common Stock issuable upon the conversion of
Series A Convertible Preferred Stock held by Three Oceans Inc. and 250,000
shares underlying stock options held by Three Oceans, Inc. (See "CERTAIN
TRANSACTIONS.")
<FN5>
Includes shares beneficially held by the five named Directors, 10,000 shares
underlying stock options held by Kevin B. Donovan and 10,000 shares underlying
options held by John Hoover, Executive Officers of the Company.
</FN>
-37-
CERTAIN TRANSACTIONS
Las Vegas Discount Golf & Tennis, Inc. ("LVDG"), a publicly-held
corporation, owns 66.7% of the Company's outstanding Common Stock. Vaso
Boreta, the Company's Chairman of the Board, is an Officer, Director and
principal shareholder of LVDG. Ronald S. Boreta, President and a Director of
the Company, is a Director and principal shareholder of LVDG. Robert S.
Rosburg and William Kilmer, Directors of the Company, are also Directors of
LVDG. In addition, John Boreta, the son of Vaso Boreta and the brother of
Ronald S. Boreta, is a principal shareholder of LVDG.
Until August 1, 1994, the Company and LVDG shared the expenses of
jointly-used facilities and administrative and accounting personnel on a 50-50
basis under a verbal agreement. Since August 1, 1994, the Company and LVDG
have allocated these costs on a pro rata basis based on which entity receives
the benefit of the particular expense. With respect to the lease for the
office and warehouse facilities, starting July 1, 1996 LVDG paid 33% of the
monthly lease payments and the Company paid 67%.
Effective August 1, 1994, LVDG also agreed to purchase, warehouse and
make available to the Company and its franchisees certain merchandise. In
exchange, the Company agreed to pay $350,000 from the proceeds of its December
1994 initial public offering to retire certain bank indebtedness described
below.
Effective August 1, 1994, LVDG granted the Company a license to use all
of its trademarks, trade names and other commercial names and symbols for so
long as such trademarks, tradenames and other commercial names and symbols are
being used by the Company and its franchisees.
Through February 1997, certain facilities used by the Company and LVDG
were leased by the Company from Vaso Boreta, the Company's Chairman of the
Board. LVDG leased approximately 15,500 square feet of warehouse space and
6,000 square feet of office space from Mr. Boreta at a base monthly rent of
$13,000. The Board of Directors of the Company believes that the terms of
this lease were at least as favorable as those which could have been obtained
from an unaffiliated entity.
Effective October 1, 1990, a franchise agreement with Vaso Boreta, the
Company's Chairman of the Board, was mutually terminated, and a new agreement
was entered into with him pursuant to which he was permitted to operate a Las
Vegas Discount Golf & Tennis store in Las Vegas, Nevada, which is not a
franchise store. The agreement also provided that Mr. Boreta may purchase
certain merchandise for his store at the same cost as the Company, use the
facilities and personnel of the Company on a limited basis, and operate a
limited mail order business from his store. In exchange for these rights, Mr.
Boreta paid the Company a fee of $3,000 per month. This agreement with the
Company was terminated on July 31, 1994. Mr. Vaso Boreta now has a similar
agreement with Las Vegas Discount Golf & Tennis, Inc. As a result of this
arrangement, Mr. Vaso Boreta did not pay any royalties to the Company even
though he may have received a benefit from the Company's activities including
any advertising conducted by the Company.
The Company and LVDG obtained $1,011,000 in loans from an unaffiliated
bank which Vaso Boreta and his wife personally guaranteed. The loans were
also collateralized by inventory and accounts receivable. This loan was
completely paid off during December 1994, and approximately $350,000 of the
proceeds from the Company's public offering was used to pay off the loan. The
loan proceeds were originally used for the purchase of property and equipment
and working capital.
-38-
Prior to becoming the Company's Vice President of New Business
Development in April 1994, Kevin B. Donovan was President and a major
shareholder of Donovan Design Agency, Inc., which performed certain design
services for the Company. During 1993, Donovan Design Agency billed the
Company $136,000 for such services of which $59,000 had been paid as of
December 31, 1993. During 1994, Donovan Design Agency billed the Company
$9,300 for additional services, and the Company paid $32,000 on its account.
As of December 31, 1995 and 1994, the Company owed Donovan Design Agency
$54,300. During 1996, the amount due was reduced to $36,000 and this amount
was paid. Kevin B. Donovan presently owns all of the outstanding stock of
Donovan Design Agency, however, this receivable has been assigned to an entity
with which Mr. Donovan has no affiliation.
In September 1994, Vaso Boreta, the Company's Chairman of the Board,
loaned the Company $120,000. This note was repaid in full during December
1994, and no interest was charged or paid.
As indicated above, the Company has extensive transactions with LVDG,
LVDG's other subsidiaries, and Voss Boreta's Las Vegas store. As of December
31, 1996, the Company was owed $461,500 by LVDG and its subsidiaries. This
amount was completely paid off during the six months ended June 30, 1997.
During September 1997, the Company agreed to sell its rights to the St.
Andrews name to Boreta Enterprises, Ltd. for a $20,000 two-year promissory
note since the Company has committed all of its efforts to the development of
the All-American SportPark and no longer intends to engage in the business of
selling golf equipment or apparel.
The Company's Board of Directors believes that the terms of the above
transactions were on terms no less favorable to the Company than if the
transactions were with unaffiliated third parties.
-39-
DESCRIPTION OF SECURITIES
COMMON STOCK
The authorized capital stock of the Company includes 10,000,000 shares
of $.001 par value Common Stock. All shares have equal voting rights and,
when issued, are fully paid and non-assessable. Voting rights are not
cumulative, and, therefore, the holders of more than 50% of the Common Stock
of the Company could, if they chose to do so, elect all the Directors.
Upon liquidation, dissolution or winding up of the Company, the assets
of the Company, after the payment of liabilities, will be distributed pro rata
to the holders of the Common Stock. The holders of the Common Stock do not
have preemptive rights to subscribe for any securities of the Company and have
no right to require the Company to redeem or purchase their shares. The
shares of Common Stock presently outstanding are, and the shares of Common
Stock to be sold pursuant to this offering will be, upon issuance, fully paid
and non-assessable.
Holders of Common Stock are entitled to share equally in dividends when,
as and if declared by the Board of Directors of the Company, out of funds
legally available therefor. The Company has not paid any cash dividends on
its Common Stock, and it is unlikely that any such dividends will be declared
in the foreseeable future.
CLASS A WARRANTS
The following discussion of certain terms and provisions of the Class A
Warrants is qualified in its entirety by reference to the Warrant Agreement
(as hereinafter defined) and also the detailed provisions of the form of
Warrant attached to the Warrant Agreement between the Company and Corporate
Stock Transfer, Inc. (the "Warrant Agent").
Two Class A Warrants entitle the holder to purchase, at a price of
$6.50, subject to adjustment, one share of Common Stock at any time until
November 14, 1997. The Company may redeem the Class A Warrants at $.10 per
Warrant upon 30 days' prior written notice in the event that the Common Stock
has traded above $9.75 for 20 consecutive trading days ending not more than
ten days prior to the mailing of the notice of redemption.
For purposes of determining the daily trading price of the Company's
Common Stock, if the Common Stock is listed on a national securities exchange,
is admitted to unlisted trading privileges on a national securities exchange,
or is on NASDAQ, then the last reported sale price of the Common Stock on such
exchange or NASDAQ each day shall be used. If the Common Stock is not so
listed on such exchange or system or admitted to unlisted trading privileges
then the average of the last reported bid prices reported by the National
Quotation Bureau, Inc. each day shall be used to determine such daily trading
price.
The Class A Warrants may only be redeemed if a current registration
statement is in effect. Any Warrantholder who does not exercise prior to the
redemption date, as set forth in the Company's notice of redemption, will
forfeit the right to purchase the shares of Common Stock underlying such
Warrants and, after the redemption date, any outstanding Warrants will become
void and be of no further force or effect. If the Company does not redeem the
Class A Warrants, such Warrants will expire, become void and be of no further
force or effect on conclusion of the exercise period. All of the Warrants of
a Class must be redeemed if any are to be redeemed of such Class.
-40-
The Class A Warrants have been issued pursuant to a Warrant Agreement
between the Company and the Warrant Agent. The Company has authorized and
reserved for issuance the shares of Common Stock issuable upon exercise of the
Class A Warrants. When delivered, all shares of Common Stock issued upon
exercise of the Class A Warrants will be duly and validly authorized and
issued, fully paid and non-assessable, and no preemptive rights or rights of
first refusal will exist with respect thereto.
Class A Warrants may be exercised upon surrender of the Warrant
certificate on or prior to its expiration date (or earlier redemption date) at
the offices of Corporate Stock Transfer, Inc., the Warrant Agent, with the
form of "Election to Purchase" on the reverse side of the Warrant certificate
completed and executed as indicated, accompanied by payment of the full
exercise price (by certified or bank check payable to the order of the
Company) for the number of shares with respect to which such Warrant is being
exercised.
The exercise price of the Class A Warrants and the number of shares to
be obtained upon exercise of such Warrants are subject to adjustment in
certain circumstances including a stock split of, or stock dividend on, or a
subdivision, combination, or recapitalization of the Common Stock. In the
event of liquidation, dissolution or winding up of the Company, holders of the
Class A Warrants, unless exercised, will not be entitled to participate in the
assets of the Company. Holders of the Class A Warrants will have no voting,
preemptive, liquidation or other rights of a shareholder, and no dividends
will be declared on the Class A Warrants.
TRANSFER AND WARRANT AGENT
Corporate Stock Transfer, Inc., Denver, Colorado, serves as transfer and
warrant agent for the Company's Common Stock and Class A Warrants.
REPRESENTATIVE'S CLASS A WARRANTS
The following discussion of certain terms and provisions of the
Representative's Class A Warrants is qualified in its entirety by reference to
the Warrant Agreement (as hereinafter defined) and also the detailed
provisions of the form of Warrant attached to the Warrant Agreement between
the Company and Corporate Stock Transfer, Inc. (the "Warrant Agent").
Two Representative's Class A Warrants entitle the holder to purchase, at
a price of $7.80, subject to adjustment, one share of Common Stock at any time
until November 14, 1997. The Company may redeem the Representative's Class A
Warrants at $.10 per Warrant upon 30 days' prior written notice in the event
that the Common Stock has traded above $9.75 for 20 consecutive trading days
ending not more than ten days prior to the mailing of the notice of redemp-
tion.
For purposes of determining the daily trading price of the Company's
Common Stock, if the Common Stock is listed on a national securities exchange,
is admitted to unlisted trading privileges on a national securities exchange,
or is on NASDAQ, then the last reported sale price of the Common Stock on such
exchange or NASDAQ each day shall be used. If the Common Stock is not so
listed on such exchange or system or admitted to unlisted trading privileges
then the average of the last reported bid prices reported by the National
Quotation Bureau, Inc. each day shall be used to determine such daily trading
price.
-41-
The Representative's Class A Warrants may only be redeemed if a current
registration statement is in effect. Any Warrantholder who does not exercise
prior to the redemption date, as set forth in the Company's notice of
redemption, will forfeit the right to purchase the shares of Common Stock
underlying such Warrants and, after the redemption date, any outstanding
Warrants will become void and be of no further force or effect. If the
Company does not redeem the Representative's Class A Warrants, such Warrants
will expire, become void and be of no further force or effect on conclusion of
the exercise period. All of the Warrants of a Class must be redeemed if any
are to be redeemed of such Class.
The Representative's Class A Warrants have been issued pursuant to a
Warrant Agreement between the Company and the Warrant Agent. The Company has
authorized and reserved for issuance the shares of Common Stock issuable upon
exercise of the Representative's Class A Warrants. When delivered, all shares
of Common Stock issued upon exercise of the Representative's Class A Warrants
will be duly and validly authorized and issued, fully paid and non-assessable,
and no preemptive rights or rights of first refusal will exist with respect
thereto.
Representative's Class A Warrants may be exercised upon surrender of the
Warrant certificate on or prior to its expiration date (or earlier redemption
date) at the offices of Corporate Stock Transfer, Inc., the Warrant Agent,
with the form of "Election to Purchase" on the reverse side of the Warrant
certificate completed and executed as indicated, accompanied by payment of the
full exercise price (by certified or bank check payable to the order of the
Company) for the number of shares with respect to which such Warrant is being
exercised.
The exercise price of the Representative's Class A Warrants and the
number of shares to be obtained upon exercise of such Warrants are subject to
adjustment in certain circumstances including a stock split of, or stock
dividend on, or a subdivision, combination, or recapitalization of the Common
Stock. In the event of liquidation, dissolution or winding up of the Company,
holders of the Representative's Class A Warrants, unless exercised, will not
be entitled to participate in the assets of the Company. Holders of the
Representative's Class A Warrants will have no voting, preemptive, liquidation
or other rights of a shareholder, and no dividends will be declared on the
Representative's Class A Warrants.
The Representative's Class A Warrants are generally non-transferable,
except that they may be transferred to officers of RAF Financial Corporation
and to other persons who immediately exercise such Warrants. In the event of
a transfer to a person who is not an officer of RAF Financial Corporation, the
Class A Warrants will expire if not exercised within three business days of
transfer.
REPRESENTATIVE'S WARRANTS
In connection with the Company's initial public offering, the Company
issued to the Representative of the Underwriters, Representative's Warrants to
purchase 100,000 shares of Common Stock. The Representative's Warrants are
exercisable at $5.40 per share through December 12, 1999. The
Representative's Warrants contain certain demand and piggyback registration
rights. The demand registration rights contained in the Representative's
Warrants are for a term of five years from December 13, 1994, and the
piggyback registration rights contained in the Representative's Warrants are
for a term of seven years after such date. The Representative's Warrants are
protected against dilution only in the event the Company makes a distribution
-42-
of securities to its shareholders. The Representative's Warrants may not be
transferred other than by will or pursuant to the laws of descent and
distribution, except that (i) the Representative's Warrants may be transferred
to a partner of an underwriter participating in the Offering which is a
partnership; or to a stockholder, officer, or director of an underwriter
participating in the Offering which is a corporation; or to a beneficiary of a
trust which is a stockholder of an underwriter participating in the Offering
which is a corporation, and (ii) the Representative's Warrants may be
transferred if, immediately after such transfer, such Warrants are exercised;
provided, however, if such exercise does not occur immediately after such
transfer then the Warrants transferred under item (ii) above shall expire.
PREFERRED STOCK
The Company is authorized to issue 5,000,000 shares of Preferred Stock,
$.001 par value. The Preferred Stock may be issued in series from time to
time with such designation, rights, preferences and limitations as the Board
of Directors of the Company may determine by resolution. The rights,
preferences and limitations of separate series of Preferred Stock may differ
with respect to such matters as may be determined by the Board of Directors,
including, without limitation, the rate of dividends, method and nature of
payment of dividends, terms of redemption, amounts payable on liquidation,
sinking fund provisions (if any), conversion rights (if any), and voting
rights. The potential exists, therefore, that preferred stock might be issued
which would grant dividend preferences and liquidation preferences to
preferred shareholders over common shareholders. Unless the nature of a
particular transaction and applicable statutes require such approval, the
Board of Directors has the authority to issue these shares without shareholder
approval. The issuance of Preferred Stock may have the affect of delaying or
preventing a change in control of the Company without any further action by
shareholders.
In July 1996, the Board of Directors designated 500,000 shares of its
Preferred Stock as Series A Convertible Preferred Stock. Each share of the
Series A Convertible Preferred Stock is convertible into one share of the
Company's Common Stock at any time. The Series A Convertible Preferred Stock
has a liquidation preference of $10 per share and the holder is entitled to
receive dividends equal to any declared on the Company's Common Stock. Under
certain circumstances, the Company may redeem the Series A Convertible
Preferred Stock at a redemption price of $12.50 per share. Each share of
Series A Convertible Preferred Stock is entitled to one vote and votes along
with the holders of the Company's Common Stock. As of June 17, 1997, 500,000
shares of Series A Convertible Preferred Stock are outstanding.
OPTION HELD BY THREE OCEANS, INC.
In July 1996, the Company issued an option to Three Oceans, Inc. in
connection with its purchase of shares of the Company's Series A Convertible
Preferred Stock. The option is exercisable to purchase 250,000 shares of
Common Stock at an exercise price of $5.00 per share. The option will expire
on July 29, 2001.
SHARES ELIGIBLE FOR FUTURE SALE
There are presently 2,000,000 shares of Common Stock outstanding which
are "restricted securities" as defined by Rule 144. In general, Rule 144
provides that a person (or persons whose shares are aggregated) who has
satisfied a two-year holding period may, under certain circumstances, sell
within any three-month period a number of securities which does not exceed the
greater of 1% of the then outstanding Common Stock or the average weekly
trading volume of the class during the four calendar weeks prior to such sale.
Rule 144 also permits, under certain circumstances, the sale of securities,
without any limitation, by a person who is not an affiliate of the Company and
who has satisfied a three-year holding period.
The Representative of the Underwriters in the Company's initial public
offering obtained the agreement of Las Vegas Discount Golf & Tennis, Inc. not
sell, publicly transfer or assign the 2,000,000 shares of Common Stock until
December 12, 1997, without the prior written consent of the Representative.
REPORTS TO SHAREHOLDERS
The Company intends to furnish annual reports to shareholders which will
include audited financial statements reported on by its independent auditors.
In addition, the Company may issue unaudited quarterly or other interim
reports to shareholders as it deems appropriate.
-43-
SELLING SECURITY HOLDERS
Included in the securities being offered by this Prospectus are 100,000
Representative's Class A Warrants, 100,000 Representative's Warrants and
150,000 shares of Common Stock issuable upon the exercise of such Warrants, as
shown in the following table:
NUMBER OF NUMBER OF
NUMBER OF SHARES REPRESENTA- REPRESEN-
OF COMMON STOCK TIVE'S CLASS TATIVE'S
BENEFICIALLY OWNED A WARRANTS WARRANTS
NAME OF SELLING ------------------ BEING BEING
SHAREHOLDER RECORD OTHER OFFERED OFFERED
- --------------- ------ --------- ------------ ---------
RAF Financial -0- 75,000<FN1> 50,000 50,000
Corporation
Robert L. Long -0- 75,000<FN1> 50,000 50,000
__________________
<FN>
<FN1>
Represents 25,000 shares underlying Representative's Class A Warrants and
50,000 shares underlying Representative's Warrants.
</FN>
NUMBER OF SHARES OF COMMON STOCK
TO BE BENEFICIALLY OWNED
NUMBER OF ON COMPLETION OF THE OFFERING
SHARES OF ----------------------------------
NAME OF SELLING COMMON STOCK PERCENT
SHAREHOLDER OFFERED RECORD OTHER OF CLASS
- --------------- ------------ ------ ----- --------
RAF Financial 75,000 -0- -0- -0-
Corporation
Robert L. Long 75,000 -0- -0- -0-
__________________
<FN>
<FN1>
Represents 25,000 shares underlying Representative's Class A Warrants and
50,000 shares underlying Representative's Warrants.
</FN>
-44-
PLAN OF DISTRIBUTION
EXERCISE OF CLASS A WARRANTS AND REPRESENTATIVE'S CLASS A WARRANTS
The shares of the Company's Common Stock which may be purchased upon the
exercise of the outstanding Class A Warrants and Representative's Class A
Warrants are being offered by the Company on a "best efforts" basis. No
commissions or fees will be paid to anyone for the solicitation of the
exercise of such Warrants.
Two Class A Warrants are exercisable to purchase one share of Common
Stock at a price of $6.50 per share until November 14, 1997.
Two Representative's Class A Warrants are exercisable to purchase one
share of Common Stock at a price of $7.80 per share until November 14, 1997.
Persons who wish to exercise Class A Warrants or Representative's Class
A Warrants must deliver an executed Warrant Certificate with the form of
Election to Purchase duly executed, accompanied with payment in check or money
order payable to Corporate Stock Transfer, Inc. (the "Warrant Agent") for the
number of shares subscribed. All payments must be received by the Warrant
Agent prior to the termination of the exercise period, and Warrants not
exercised prior to the termination of the exercise period will expire. (See
"DESCRIPTION OF SECURITIES.")
EXERCISE OF REPRESENTATIVE'S WARRANTS
The shares of the Company's Common Stock which may be purchased upon the
exercise of the outstanding Representative's Warrants are being offered by the
Company on a "best efforts" basis. No commissions or fees will be paid to
anyone for the solicitation of the exercise of the Representative's Warrants.
Each Representative's Warrant is exercisable to purchase one share of Common
Stock at a price of $5.40 per share until December 12, 1999.
Persons who wish to exercise their Representative's Warrants must
deliver an executed Warrant Certificate with the form of Election to Purchase,
duly executed, accompanied with payment in check or money order payable to
Saint Andrews Golf Corporation for the number of shares subscribed to the
Company. All payments must be received by the Company prior to the
termination of the exercise period, and Representative's Warrants not
exercised prior to the termination of the exercise period will expire. (See
"DESCRIPTION OF SECURITIES.")
SELLING SECURITY HOLDERS
Included in the securities offered by this Prospectus are 100,000
Representative's Class A Warrants, 100,000 Representative's Warrants, and
150,000 shares of Common Stock issuable upon exercise of such Warrants being
offered by the holders of such securities. (See "SELLING SECURITY HOLDERS.")
The Common Shares may be sold by the Selling Security Holders from time
to time, in ordinary brokers' transaction through Nasdaq at the market price
prevailing at the time of such sales, or in negotiated transactions, or a
combination of such methods of sale. The commissions payable will be the
regular commissions a broker receives for effecting such sales. The Common
Shares may sold be offered in block trades, private transactions or otherwise.
The net proceeds to the Selling Security Holders will be the proceeds received
by them upon such sales, less brokerage commissions. No market presently
exists for the Representative's Class A Warrants or Representative's Warrants,
-45-
it is not expected that any such market will develop in the future. Sales
of the Common Shares, the Representative's Class A Warrants and
Representative's Warrants may be made pursuant to this Prospectus or Rule 144
under the Securities Act of 1933. The Company knows of no underwriting
arrangements with respect to the Common Shares, Representative's Class A
Warrants and Representative's Warrants. There can be no assurance that the
Selling Security Holders will sell any or all of the securities registered
hereunder.
Investors are advised that if they purchase Representative's Class A
Warrants or Representative's Warrants from the Selling Security Holders that
they must immediately exercise such Warrants, or they will immediately expire.
(See "DESCRIPTION OF SECURITIES.")
LEGAL MATTERS
The legality of the securities of the Company offered will be passed on
for the Company by Krys Boyle Freedman & Sawyer, P.C., 600 Seventeenth Street,
Suite 2700 South Tower, Denver, Colorado 80202.
EXPERTS
The consolidated financial statements of the Company as of and for the
years ended December 31, 1996 and 1995 included in this Prospectus and
elsewhere in this Registration Statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with
respect thereto, and are included herein in reliance upon the authority of
said firm as experts in auditing and accounting in giving said reports.
-46-
INDEX TO FINANCIAL STATEMENTS
PAGE
Unaudited Condensed Consolidated Balance Sheets
as of June 30, 1997 and December 31, 1996 ..................... F-1
Unaudited Condensed Consolidated Statements of Income
for the six months ended June 30, 1997 and 1996 ............... F-2
Unaudited Condensed Consolidated Statement of Cash
Flows for the six months ended June 30, 1997 and 1996 ......... F-3
Notes to Unaudited Condensed Consolidated Financial
Statements .................................................... F-4
Report of Independent Public Accountants ...................... F-6
Consolidated Balance sheets as of December 31, 1996
and 1995 ...................................................... F-7
Consolidated Statements of Operations for the years
ended December 31, 1996 and 1995 .............................. F-8
Statements of Shareholders' Equity for the years ended
December 31, 1996 and 1995 .................................... F-9
Consolidated Statements of Cash Flows for the years ended
December 31, 1996 and 1995 ..................................... F-10
Notes to Financial Statements .................................. F-12
-47-
SAINT ANDREWS GOLF CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, December 31,
1997 1996
----------- -----------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 6,262,000 $ 5,818,000
Other receivables 44,000 480,000
Prepaid expenses and other 24,000 17,000
----------- -----------
Total current assets 6,330,000 6,315,000
FURNITURE, EQUIPMENT AND
LEASEHOLD IMPROVEMENTS, NET 94,000 84,000
PROJECT DEVELOPMENT COSTS 7,852,000 2,103,000
NET ASSETS OF DISCONTINUED OPERATIONS - 120,000
----------- -----------
$14,276,000 $ 8,622,000
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 2,168,000 $ 742,000
Deferred income - 63,000
Other payables 218,000 -
Income taxes payable 225,000 -
----------- -----------
Total current liabilities 2,611,000 805,000
DEFERRED INCOME 79,000 91,000
NOTE PAYABLE 1,312,000 -
MINORITY INTEREST 750,000 -
STOCKHOLDERS' EQUITY:
Common stock 3,000 3,000
Preferred stock 4,740,000 4,740,000
Options issued in connection with
preferred stock 260,000 260,000
Additional paid in capital 3,333,000 3,333,000
Common stock purchase warrants 187,000 187,000
Retained earnings (deficit) 1,001,000 (797,000)
----------- -----------
Total stockholders' equity 9,524,000 7,726,000
----------- -----------
$14,276,000 $ 8,622,000
NOTE: The balance sheet at December 31, 1996 has been taken from the
consolidated audited financial statements at that date and condensed.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
F-1
SAINT ANDREWS GOLF CORPORATION
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
For the Six Months
Ended June 30,
1997 1996
----------- -----------
(Unaudited) (Unaudited)
INCOME:
Interest income $ 163,000 $ 5,000
Royalties 12,000 -
Other 4,000 -
----------- -----------
Total income 179,000 5,000
EXPENSES:
Selling, general and administrative 350,000 203,000
SportPark development costs 152,000 201,000
----------- -----------
Total expenses 502,000 404,000
----------- -----------
LOSS BEFORE PROVISION FOR INCOME TAXES (323,000) (399,000)
PROVISION (BENEFIT) FOR INCOME TAXES - -
----------- -----------
LOSS FROM CONTINUING OPERATIONS (323,000) (399,000)
DISCONTINED OPERATIONS
Loss from operations of discontinued
franchise operations (41,000) (20,000)
Gain on disposal of franchise opera-
tions (less applicable income taxes
of $450,000) 2,162,000 -
----------- -----------
NET INCOME (LOSS) $ 1,798,000 $ (419,000)
INCOME (LOSS) FROM OPERATIONS:
Income (loss) from
continuing operations $ (.11) $ (.13)
Income (loss) from
discontinued operations .70 (.01)
----------- -----------
NET INCOME (LOSS) PER SHARE $ .59 $ (.14)
The accompanying notes are an integral part of these condensed consolidated
financial statements.
F-2
SAINT ANDREWS GOLF CORPORATION
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
For the Six Months
Ended June 30,
1997 1996
----------- -----------
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 1,798,000 $ (419,000)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 4,000 10,000
Gain on sale of franchise
operations (2,612,000) -
Changes in assets and liabilities:
Decrease in other receivables 436,000 6,000
Increase in inventory - (5,000)
(Increase) decrease in prepaid
expenses and other (7,000) 410,000
Increase(decrease) in accounts payable 1,252,000 (59,000)
Increase (decrease) in deferred income (75,000) 23,000
Increase in other payables 321,000 274,000
Increase in income tax payable 225,000 -
----------- -----------
Net cash provided by operating
activities 1,342,000 240,000
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Project development costs (5,747,000) (324,000)
Development cost refund - 85,000
Purchase of equipment (14,000) -
Proceeds from sale of franchise
operations 2,801,000 -
----------- -----------
Net cash provided (used) by investing
activities (2,960,000) (239,000)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from note payable 1,312,000 -
Proceeds from minority interest in
Callaway Golf Center 750,000 -
----------- -----------
Net cash provided by financing activities 2,062,000 -
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 444,000 1,000
CASH AND CASH EQUIVALENTS-
Beginning of period 5,818,000 125,000
----------- -----------
CASH AND CASH EQUIVALENTS - End of period $ 6,262,000 $ 126,000
----------- -----------
The accompanying notes are an integral part of these condensed consolidated
financial statements.
F-3
SAINT ANDREWS GOLF CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 1. CONDENSED FINANCIAL STATEMENTS
The accompanying condensed consolidated financial statements include the
accounts of Saint Andrews Golf Corporation and its wholly-owned subsidiary
All-American SportPark, Inc. (collective, the "Company"). All significant
intercompany transactions have been eliminated.
The accompanying financial statements have been prepared by the Company
without audit pursuant to the rules and regulations of the Securities and
Exchange Commission. In the opinion of management, all adjustments necessary
to present fairly the financial position, results of operations and cash flows
at June 30, 1997 and for all periods presented have been made.
On February 26, 1997, Las Vegas Discount Golf & Tennis, Inc. and the Company
completed the sale of certain of their assets and transferred certain
liabilities to an unrelated buyer who has incorporated under the name Las
Vegas Golf & Tennis, Inc. The total purchase consideration received was $5.3
million of which $4.6 million was paid in cash, $264,000 was received in the
form of a short-term unsecured receivable, $200,000 was placed in escrow
pending the accounting for inventory and trade payables, and $200,000 was
placed in escrow for two years to cover potential indemnification obligations.
Of the total consideration received, approximately $2,801,000 was allocated to
the Company.
The Company's operations, subsequent to the sale, consist solely of the
SportPark facility which is currently under development on the Las Vegas strip
in Las Vegas, Nevada. The assets, liabilities and operations related to the
franchise business have been presented as "Net Assets of Discontinued
Operations" and "Discontinued Operations," respectively, in the accompanying
balance sheet at December 31, 1996 and statement of operations as of and for
the three and six months ended June 30, 1997 and 1996.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed consolidated financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's December 31,
1996 audited financial statements. The results of operations for the periods
ended June 30, 1997 and 1996 are not necessarily indicative of the operating
results for the full year.
NOTE 2. EARNINGS PER SHARE
In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 ("SFAS 128"), "Earnings Per Share,"
effective for fiscal years ending after December 15, 1997. The Company will
adopt SFAS 128 for the year ending December 31, 1997. SFAS 128 requires the
computation and presentation of basic and diluted earnings per share for all
periods an income statement is presented. For the six months ended June 30,
1997 and 1996 the proforma calculations were as follows:
June 30, 1997 June 30, 1996
Six Months Basic Diluted Basic Diluted
----- ------- ----- -------
Income (loss) from operations $(.11) $(.11) $(.13) $(.13)
Loss from discontinued operations .70 .70 (.01) (.01)
----- ----- ----- -----
Net income (loss) per share $ .59 $ .59 $(.14) $(.14)
F-4
Options to purchase 657,000 and 677,000 shares of common stock were
outstanding at June 30, 1997 and 1996, respectively. On June 7, 1997 the
Board of Directors approved the repricing of 617,000 stock options granted
under the 1996 Plan at an exercise price of $3.06 per share, which was the
average price on that day. The remaining 40,000 options retained their
original exercise price of $5.00. These options had exercise prices of $4.625
to $5.40 at June 30, 1997 and of $5.00 to $5.40 at June 30, 1996,
respectively, prior to the repricing.
NOTE 3. NOTE PAYABLE AND AGREEMENT WITH CALLAWAY GOLF
On June 13, 1997 the Company and Callaway Golf Company ("Callaway Golf")
announced the formation of the All American Golf, LLC, a limited liability
California corporation, to construct, manage and operate "Callaway Golf
Center", a premier golf facility at the site of the All-American Sportpark.
The total budgeted costs for the Callaway Golf Center are approximately $9.0
million.
Callaway Golf will provide $5,250,000 in debt financing which bears interest
at 10 percent with interest only payments commencing 60 days after the opening
of the golf center through a date ten years after the opening at which point
the remaining accrued interest and principal will be due in full. As of June
30, 1997, $1,312,000 had been drawn under this agreement. The Company will
own 80 percent of the members' units of the LLC. The Company will manage the
driving range, golf course and tenant facilities in the clubhouse.
NOTE 4. STATEMENT OF CASH FLOWS
For purposes of the statements of cash flows, the Company considers all highly
liquid debt investments purchased with a maturity of three months or less to
be cash equivalents.
Cash paid during the six months ended on: June 30,
1997 1996
-------- --------
Interest - $ 31,000
Income taxes $225,000 -
NOTE 5. COMMITMENTS AND CONTINGENCIES
In December 1994, the Company entered into an agreement with Major League
Baseball ("MLB") concerning a license for the use of MLB logos, trade marks
and mascots in the decor, advertising and promotions of the Company's Slugger
Stadium concept. The Company obtained an exclusive license for indoor and
outdoor baseball batting stadiums in the United States through November 30,
2000, and in return the Company will pay a royalty of the gross revenues from
the batting cages with a minimum annual royalty for each stadium. The
Company's right to exclusively use MLB logos and other trade marks at its
baseball batting stadiums is dependent upon certain conditions set forth in
the agreement. The Company and MLB are currently in negotiations to extend
this agreement.
In May 1996, Saint Andrews entered into an agreement with Jeff Gordon, the
1995 NASCAR Winston Cup Champion and the 1997 Daytona 500 Champion, to serve
as spokesperson of the NASCAR SpeedPark through April 30, 2000. Mr. Gordon
will be paid $25,000 for his services during 1996, $25,000 per SpeedPark per
year thereafter ($325,000 guaranteed over the life of the agreement).
The Company has an exclusive license agreement with The National Association
of Stock Car Auto Racing, Inc. ("NASCAR") for the operations of SpeedParks as
a part of the All-American SportPark or as a stand-alone NASCAR SpeedPark in
Las Vegas, Nevada and Southern California through December 31, 2003 provided
certain conditions are satisfied.
F-5
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of
Saint Andrews Golf Corporation:
We have audited the accompanying consolidated balance sheets of SAINT ANDREWS
GOLF CORPORATION (a Nevada Corporation) and subsidiary as of December 31, 1996
and 1995, and the related consolidated statements of operations, shareholders'
equity and cash flows for the years then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Saint Andrews Golf
Corporation and subsidiary as of December 31, 1996 and 1995, and the results
of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Las Vegas, Nevada
January 17, 1997 (except with respect
to the matter discussed in Note 13,
as to which the date is February 26,
1997)
F-6
SAINT ANDREWS GOLF CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS-DECEMBER 31, 1996 AND 1995
ASSETS
1996 1995
---------- ----------
CURRENT ASSETS:
Cash and cash equivalents $5,818,100 $ 125,100
Lease termination receivable - 3,000,000
Due from Affiliate Store 5,400 -
Due from officer 13,000 -
Receivable from related entities 461,500 60,500
Prepaid expenses and other 17,000 7,400
Other receivables - 365,000
Total current assets 6,315,000 3,558,000
LEASEHOLD IMPROVEMENTS, net of accumulated
depreciation of $29,800 and $26,200,
respectively 83,800 87,400
DEPOSIT FOR LAND LEASE 500,000 -
PROJECT DEVELOPMENT COSTS 1,603,400 1,047,000
OTHER ASSETS - 1,000
NET ASSETS OF DISCONTINUED OPERATIONS 119,500 209,900
$8,621,700 $4,903,300
(Continued)
F-7
SAINT ANDREWS GOLF CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS-DECEMBER 31, 1996 AND 1995
(Continued)
LIABILITIES AND SHAREHOLDERS EQUITY
1996 1995
---------- ----------
CURRENT LIABILITIES:
Accounts payable $ 661,700 $1,031,900
Accrued expenses 79,900 53,300
Payable to related entities - 2,600
Deferred franchise fees 62,500 60,000
Total current liabilities 804,100 1,147,800
DEFERRED INCOME 91,000 116,700
COMMITMENTS AND CONTINGENCIES
SHAREHOLDER' EQUITY:
Preferred stock, $.01 par value, 5,000,000
shares authorized, no shares issued and
outstanding - -
Series A Convertible Preferred stock, $1
par value, 500,000 shares authorized and
outstanding 4,740,000 -
Options issued in connection with Series A
Convertible Preferred Stock to purchase
250,000 shares of Common stock 260,000 -
Common stock, $.001 par value, 10,000,000
shares authorized, 3,000,000 shares
issued and outstanding at December 31,
1996 and 1995 3,000 3,000
Additional paid-in-capital 3,333,300 3,495,300
Common stock purchase warrants, class A,
authorized and outstanding-1,000,000
warrants 187,500 187,500
Accumulated deficit (797,200) (47,000)
Total shareholders' equity 7,726,600 3,638,800
$8,621,700 $4,903,300
The accompanying notes are an integral part of these financial statements.
F-8
SAINT ANDREWS GOLF CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
1996 1995
---------- ----------
INCOME:
Interest $ 69,800 $ 86,200
Other 25,700 8,300
95,500 94,500
EXPENSES:
Selling, general and administrative 305,600 279,100
Sportpark development costs 207,000 108,000
Interest 4,000 -
Total expenses 516,600 387,100
LOSS BEFORE INCOME TAX PROVISION (421,100) (292,600)
Income tax provision - -
LOSS FROM CONTINUING OPERATIONS (421,100) (292,600)
DISCONTINUED OPERATIONS:
Loss from operations of franchise business
to be disposed of (no income taxes were
recorded in 1996 or 1995) (329,100) (24,400)
NET LOSS $ (750,200) $ (317,000)
LOSS PER SHARE:
Loss from continuing operations $ (.14) $ (.10)
Loss from discontinued operations (.11) (.01)
NET LOSS PER SHARE $ (.25) $ (.11)
The accompanying notes are an integral part of these financial statements.
F-9
SAINT ANDREWS GOLF CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
RETAINED
COMMON COMMON EARNINGS
STOCK ADDITIONAL STOCK (ACCUMU-
PREFERRED PURCHASE COMMON PAID IN PURHASE LATED)
TOTAL
STOCK OPTIONS STOCK CAPITAL WARRANTS DEFICIT
EQUITY
- ------------ --------- -------- ------- ---------- -------- ---------
- ----------
December 31,
1994 $ - - $3,000 $3,495,300 $187,500 $ 270,000
$3,955,800
Net loss - - - - - (317,000)
(317,000)
Balance,
December 31,
1995 - - 3,000 3,495,300 187,500 (47,000)
3,638,800
Issuance of
Series A
Convertible
Preferred
Stock 4,740,000 - - (162,000) - -
4,578,000
Issuance of
Common Stock
Purchase Op-
tions in Con-
nection with
Series A Con-
vertible Pre-
ferred Stock 260,000 - - - -
260,000
Net loss - - - - - (750,200)
(750,200)
Balance,
December 31,
1996 $4,740,000 $260,000 $3,000 $3,333,300 $187,500 $(797,200)
$7,726,600
The accompanying notes are an integral part of these financial statements.
F-10
SAINT ANDREWS GOLF CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
1996 1995
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (750,200) $ (317,000)
Adjustment to reconcile net loss to
net cash provided by (used in)
operating activities:
Depreciation and amortization 10,800 22,000
Changes in assets and liabilities:
Decrease in accounts and notes receivable 35,500 48,900
Decrease in inventories 56,900 16,700
(Increase) decrease in due from officer (13,000) 15,400
(Increase) decrease in prepaid expenses
and other (12,700) 18,800
Decrease (increase) in other receivables 365,100 (143,600)
Increase (decrease) in accounts payable
and accrued expenses (349,800) 883,300
Increase in deferred franchise fees 2,500 -
(Decrease) increase in deferred revenues (25,700) 116,700
Net cash provided by (used in) operating
activities (680,600) 661,200
CASH FLOWS FROM INVESTING ACTIVITIES:
Lease termination receivable 3,000,000 (3,000,000)
Decrease in other assets 1,000 -
Land lease deposit (500,000) -
Project development costs (556,400) (493,300)
Net cash provided by (used in)
investing activities 1,944,600 (3,493,300)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase to Affiliate Store and related
entities (409,000) (284,800)
Net proceeds from issuance of preferred
stock and options to purchase Common Stock 4,838,000 -
Net cash provided by (used in)
financing activities: 4,429,000 (284,800)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 5,693,000 (3,116,900)
CASH AND CASH EQUIVALENTS,
Beginning of year 125,100 3,242,000
CASH AND CASH EQUIVALENTS,
End of year $5,818,100 $ 125,100
The accompanying notes are an integral part of these financial statements.
F-11
SAINT ANDREWS GOLF CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
(continued)
SUPPLEMENTAL CASH FLOW INFORMATION:
1996 1995
---------- --------
Cash paid for:
Interest $ 4,000 $ -
NON-CASH DISCLOSURES:
During 1995, the Company reclassified deposits totaling $221,500 from other
long-term assets to current assets - other receivables. The Company
subsequently collected the deposit in 1996.
The accompanying notes are an integral part of these financial statements.
F-12
SAINT ANDREWS GOLF CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATIONAL STRUCTURE AND BASIS OF PRESENTATION
a. PRINCIPALS OF CONSOLIDATION
The consolidated financial statements of Saint Andrews Golf Corporation
("SAGC"), a Nevada corporation, include the accounts of SAGC and its
subsidiary, All-American Sportpark Inc., a Nevada corporation (collectively
the "Company"). All significant intercompany accounts and transactions have
been eliminated.
b. COMPANY BACKGROUND
In March 1984, the chairman and principal shareholder of LVDGT formed a
corporation named Sporting Life, Inc. (SLI). On December 27, 1988, the name
SLI was changed to St. Andrews Golf Corporation, and on August 12, 1994, the
name was further changed to SAGC. LVDGT acquired SAGC in February 1988.
Until December 13, 1994, Saint Andrews Golf Corporation was a wholly-owned
subsidiary of Las Vegas Discount Golf & Tennis, Inc. ("LVDGT"). On December
13, 1994, the Company completed an initial public offering of 1,000,000 Units
(representing one-third of the post offering shares outstanding) at a price of
$4.50 per Unit, each Unit consisting of one share of common stock and one
Class A Warrant. The net proceeds of this offering were $3,683,800. Two
Class A Common Stock Purchase Warrants entitle the holders to purchase one
share of the Company's common stock for $6.50 per share. The warrants expired
on December 13, 1996. The Company is extending the expiration date of the
warrants until written communication is sent to warrant holders that fully
describe the impact of the sale of the franchise business of the Company as
described in Note 1(d). LVDGT currently owns 66-2/3% of the Company's
outstanding common stock.
During July 1994, the Company established a wholly-owned subsidiary,
All-American Sportpark, Inc. which will operate the Company's All-American
Sportparks (see Note 5). As of December 31, 1996, All-American Sportpark,
Inc. had not yet conducted any business.
The Company's Chairman owns 100 percent of the original Las Vegas Discount
Golf & Tennis location opened in Las Vegas, Nevada in 1974. This store, which
is not a franchise store, is referred to herein as the "Affiliated Store" and
operates under an agreement with LVDGT (see Note 3).
c. PRIMARY BUSINESS ACTIVITIES
The primary business activity of the Company has historically been the sale
of franchises and the after-sale servicing of franchise retail sporting goods
stores specializing in golf and tennis merchandise and apparel. The franchise
stores operate under the name "Las Vegas Discount Golf & Tennis."
The Company is also engaged in developing a concept for sports-oriented theme
parks. The theme parks will use the name All-American Sportpark ("Sportpark")
and are planned to include a golf driving range and training center, a
baseball batting stadium, a golf pro shop, car racing tracks, a sports
festival, a video arcade, shops and restaurant facilities.
F-13
d. DISCONTINUED OPERATIONS
On December 16, 1996, the Company jointly entered into negotiations pursuant
to an "Agreement for the Purchase and Sale of Assets" (the "Agreement") along
with Las Vegas Discount Golf & Tennis, Inc. which will result in the disposal
of the Company's franchise business. The agreement also provides for the
assignment of all franchisor rights under existing franchise agreements.
Furthermore, the Company assigns all trade names and trade marks associated
with the business. The agreement also includes a covenant not to compete
which prohibits the Company, and its officers and directors from engaging in
the ownership or operation of franchised retail golf equipment outlets within
the continental United States. Certain exemptions have been granted by the
purchaser to Boreta Enterprises, Ltd., a related entity owned by the President
of the Company and the President of Las Vegas Discount Golf & Tennis, Inc.
with respect to the Company's right to own or operate retail golf equipment
outlets in connection with Saint Andrews Golf Corporation's Sportparks or
driving ranges.
The base purchase price to be paid by the buyer to the Company and Las Vegas
Discount Golf & Tennis, Inc. for all of the assets, subject to certain
adjustments for trade payables and inventory related to Las Vegas Discount
Golf & Tennis, Inc. is $5,000,000. To the extent that inventory exceeds trade
payables by $800,000 the base purchase price shall be increased by the excess.
Conversely, to the extent that inventory does not exceed trade payables by
$800,000 the base purchase price shall be reduced by such amount.
The Company's operations after the sale has been consummated will consist
solely of the Sportpark operations currently under development. The sale of
all assets, liabilities and rights related to the franchise business have been
presented as "Discontinued Operations" in the accompanying balance sheets and
statements of operations as of and for the years ended December 31, 1996 and
1995.
Assets and liabilities of the Company's franchise business to be disposed of
consisted of the following at December 31:
1996 1995
-------- --------
Accounts receivable, net of allowance
of $111,400 and $72,400, respectively $270,600 $306,100
Inventory - 57,000
Prepaid and other assets 10,500 7,400
Property, plant and equipment, net 6,000 13,200
Total assets 287,100 383,700
Accounts payable 75,600 82,300
Accrued liabilities 32,000 31,500
Deferred franchise fees 60,000 60,000
Net assets to be disposed of $119,500 $209,900
Revenues related to discontinued operations totaled $1,424,000 and $1,456,000
for the years ended December 31, 1996 and 1995, respectively. The Company and
Las Vegas Discount Golf & Tennis, Inc. anticipate that a gain will be
recognized on the sale of the franchise segment and, accordingly, has deferred
such gain until it is realized.
F-14
e. ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt investments with an original
maturity of three months or less to be cash equivalents.
b. ACCOUNTS RECEIVABLE AND DEFERRED INCOME
Accounts receivable consists of amounts due from franchisees for royalties,
and the sale of merchandise, computer equipment and supplies. Additionally,
during 1995, the Company entered into an agreement with MBNA America Bank,
N.A. (MBNA) which allows MBNA to use the Company's trademark on its credit
cards. The agreement provides for a $125,000 Advance Royalty payment which
was deferred and is being amortized into income over the 5 year period of the
agreement. LVDGT will receive royalties for the generation of credit card
accounts.
c. SPORTPARK DEVELOPMENT COSTS
The Company has applied an accounting policy regarding capitalization of
project development costs related to the All-American Sportpark concept which
excludes internal overhead costs and includes direct, incremental third party
expenditures including architectural and design costs and licensing
agreements. In July, 1996, SAGC entered into a land lease for the site of its
first All-American Sportpark in Las Vegas, Nevada. Since that time SAGC has
capitalized direct incremental payroll associated with such development.
During the years ended 1996 and 1995, the Company incurred and expensed
$207,000 and $108,000, respectively, in costs for the development of the
Sportpark concept. These costs included certain direct and indirect costs
including salaries and other administrative expenses.
d. PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation and amortization is
provided for on a straight-line basis over the lesser of the lease term or
estimated useful lives of the assets. Normal repairs and maintenance are
charged to expense when incurred. Expenditures which materially extend the
useful life of assets are capitalized.
e. INCOME TAXES
In May 1992, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS No. 109"), "Accounting for Income
Taxes". The Company adopted SFAS No. 109 during the year ended December 31,
1993. Previously, the Company accounted for income taxes under Opinion No. 11
of the Accounting Principles Board. Adoption of the new standard did not have
a significant effect on the Company's financial position or results of
operations.
F-15
f. LOSS PER COMMON SHARE
Loss per common share is computed using the weighted average number of common
shares outstanding. Weighted average shares outstanding at December 31, 1996
and 1995 were 3,000,000 shares.
g. CONCENTRATION OF SERVICES
Subsequent to the completion of the sale of the franchise business, the
Company's activities will consist solely of the development of the Sportpark
in Las Vegas, Nevada. There can be no assurance that the Company will be able
to operate the Sportpark on a profitable basis. Further, to expand beyond the
Las Vegas Sportpark will require considerably more financial and management
resources than presently exist at the Company.
h. RECLASSIFICATIONS
Certain reclassifications, which had no impact on the Company's results of
operations, have been made in prior year amounts to conform them to the
current year presentation.
3. RELATED PARTY TRANSACTIONS
The Company has extensive transactions and relationships with LVDGT and
subsidiaries ("the related entities"), the chairman and principal shareholder
of LVDGT, and the retail store owned by the Chairman of LVDGT (the "Affiliated
Store"). The Affiliated Store operates in Las Vegas, Nevada and is not a
franchise of the Company. As a result, this store pays no royalties to the
Company but purchases merchandise for the Affiliated Store at the same cost as
the Company. The Affiliated Store also may benefit from the Company's
activities, including any local and national advertising conducted by the
Company. As of December 31, 1996 and 1995, the Company had $461,500 and
$60,500 in receivables from related entities, respectively, and a $5,400
receivables due from the Affiliated Store as of December 31, 1996. As of
December 31, 1995 the Company also had a $2,600 payable to related entities.
The Company and LVDGT share office and warehouse facilities and LVDGT provides
certain administrative personnel in accounting, purchasing and warehousing.
These occupancy and administrative expenses are allocated proportionately
between the Company and LVDGT in ratios management believes are reasonable.
The monthly payments are subject to adjustment in the event LVDGT enters into
new office lease arrangements or if any salary increases or decreases are
effected by LVDGT with respect to the administrative or accounting personnel
that provide services to the Company.
On August 1, 1994, the Company and LVDGT entered into a written agreement
pursuant to which LVDGT agreed to grant the Company a license to use all of
its trademarks, trade names and other commercial names and symbols. LVDGT
also agreed to purchase, warehouse and make available to the Company and its
franchisees certain merchandise. In exchange, the Company subsequently repaid
with proceeds from its initial public offering loans previously obtained by
the Company and LVDGT from an unaffiliated bank in the amount of $350,000.
This agreement will expire on July 31, 1997.
The Company had outstanding non-interest bearing advances to the President of
the Company of $13,000 as of December 31, 1996.
F-16
4. LEASE TERMINATION RECEIVABLE
In May of 1994, the Company entered into a Ground Lease for approximately 33
acres of land on Las Vegas Boulevard which it intended to use for the
development of an All-American Sportpark. The Ground Lease contained
provisions which allowed the lessor to terminate the lease within the first 6
years of the 15 year lease term in the event that the lessor entered into a
sale of the property as long as the intended use of the property after the
sale was not a golf/sports park as contemplated by the Company.
In June 1995, the lessor notified the Company that it had entered into a sale
agreement for the parcel and that it was exercising its right of termination.
Pursuant to cancellation provisions contained within the Ground Lease the
Company was entitled to reimbursement of unamortized construction costs which
it incurred, based upon criteria contained within the Lease, up to an
aggregate amount of $3.5 million. The purchaser of the parcel assumed the
obligations relating to the termination of the lease.
Upon notification of the Ground Lease termination, the Company ceased
construction activities and submitted substantiation for construction costs
totaling approximately $3.9 million. Utilizing applicable formulas derived
from the Ground Lease the Company believed that $3,279,465 in costs were
reimbursable by the purchaser who assumed the original lessor's obligations
relating to the lease termination. Based upon all of the information
available as of December 31, 1995 the Company believed that the amount would
be collected in 1996 in the amount of $3,000,000 with regards to this
litigation and, accordingly, recorded the lease termination receivable as a
current asset.
In October, 1996 this matter was settled for $3,217,000 of which $3,000,000
was applied to the lease termination receivable balance while the remaining
$217,000 in proceeds was applied against legal fees incurred with respect to
the matter in the current year.
5. PROJECT DEVELOPMENT COSTS
The Company has a capitalized balance of costs incurred related to the
Sportpark of $1,603,000 and $1,047,000 as of December 31, 1996 and 1995,
respectively. These costs consist primarily of concept development and
design, exclusive long-term licensing fees, consulting fees, training and
procedures manuals for Sportpark operations and computer software. All of the
costs related to the balance as December 31, 1995 were to unrelated
third-parties vendors while the balance as of December 31, 1996 includes
$116,700 in capitalized payroll for those direct, incremental employees
working exclusively on the Las Vegas Sportpark.
SAGC is currently engaged in the planning and design of All-American
Sportparks. The first phase of the All-American Sportpark planned for Las
Vegas, Nevada will consist of an executive golf course and other related
amenities and is scheduled for completion by November 1997. The remaining
components of the project are expected to be completed by year-end 1997.
The Company currently has not secured financing for the construction of the
first SportPark. The Company has been holding discussions with a number of
potential corporate sponsors who have expressed an interest in participating
in the SportPark, and management expects that corporate sponsors will
contribute a portion of the financing needed. The Company expects to receive
the balance of the financing from a combination of sources including outside
equity and/or debt investors, bank financing and the Company's own cash.
There is no assurance that financing will be obtained from any of these
sources.
F-17
6. LEASES
The Company and LVDGT share office and warehouse facilities leased from the
Chairman of the Board under a non-cancelable operating lease agreement which
expires on January 31, 2005. The lease provides for initial monthly lease
payments which may be increased based on increases in the consumer price
index. Beginning August 1, 1994, the Company was allocated 33 percent of the
rent with the remaining 67 percent being allocated to LVDGT. Beginning on
July 1, 1996, the Company was allocated 67 percent and LVDGT was allocated 33
percent. Rent expenses for the Company's allocated share of this lease
totaled $76,800 and $51,800 for 1996 and 1995, respectively.
At December 31, 1996, minimum future rental commitments under all of the
Company's non-cancelable operating leases, including the Company's share of
the office and warehouse lease with the Chairman of the Board are as follows:
Year ending
1997 $ 136,700
1998 129,800
1999 128,600
2000 116,700
2001 115,600
Thereafter 577,900
$1,205,300
In July 1996, SAGC entered into a lease for 65 acres of undeveloped land in
Las Vegas, Nevada for the development of its first Las Vegas "All-American
Sportpark". The lease term is for a period of fifteen years with two
consecutive five year renewal periods and commences upon the satisfaction of
certain conditions. These conditions include a determination of economic
feasibility, secured estimates of reasonable infrastructure costs, Federal
Aviation Administration approvals (as the site is located near McCarran
International Airport), and the receipt of all necessary zoning approvals from
other governmental entities.
Beginning the earlier of twelve months after the lease commences, or after
SAGC opens substantially all of the facilities, SAGC will pay the lessor an
annual base amount of $625,000 due in monthly installments of $52,083.
Additionally, the Lease contains contingent rent based upon gross sales at the
park ranging from three to ten percent of the different sources of gross
revenues if such percentage revenues exceed $625,000 annually. If SAGC opens
a portion of the facility prior to the completion of the entire facility, the
fixed monthly rent will be $30,000 per month until the remainder of the
facility is opened. The minimum rent shall be increased at the end of the
fifth year of the term and every five years thereafter by an amount equal to
ten percent of the minimum monthly installment immediately preceding the
adjustment date.
As a condition to the lease, SAGC also entered into a Deposit Agreement which
required SAGC to post a refundable deposit to the lessor of $500,000. The
$500,000 deposit is secured by promissory notes which in turn are
collateralized by a first trust deed in certain unrelated parcels of real
estate owned by the lessor. The deposit will be returned to SAGC if the
conditions previously described are not met.
If SAGC satisfactorily resolves the conditions noted above the $500,000
deposit will be applied as follows: $104,166 as security deposit and the
remainder as prepaid rent to be amortized until exhausted. Future minimum
rental commitments under this lease, assuming the contingencies noted above
are resolved, would be as follows:
F-18
Year ending
1997 $ 60,000
1998 625,000
1999 625,000
2000 625,000
2001 625,000
Thereafter 7,783,750
$10,343,750
7. INCOME TAXES
The federal income tax provision (benefit) consists of the following at
December 31, 1996 and 1995:
1996 1995
Deferred benefit $(262,600) $(104,700)
Change in deferred tax asset
valuation allowance 262,600 104,700
$ - $ -
Deferred tax assets (liabilities) are related to the following at December 31,
1996 and 1995:
1996 1995
Provision for bad debt $ 39,000 $ 25,000
Deferred franchise fees 43,000 41,000
Vacation accrual 11,000 11,000
Commissions (7,000) (5,000)
Depreciation (2,000) (2,000)
Net operating loss carryforward 373,300 124,700
Other, net 1,000 1,000
458,300 195,700
Valuation allowance (458,300) (195,700)
Net deferred tax asset $ - $ -
A reconciliation of income tax expense computed by applying the federal
statutory income tax rate to the Company's income from continuing operations
before provision (benefit) for income taxes is as follows:
1996 1995
----------------- -----------------
Amount % Amount %
Federal income tax
provision (benefit)
at statutory rate $(262,600) (35) $(107,800) (34)
Change in deferred tax
asset valuation allowance 262,600 35 104,700 33
Other - - 3,100 1
$ - - $ - -
As of December 31, 1996, the Company has net operating loss carryforwards of
$875,000 which are available through 2010.
F-19
8. CAPITAL STOCK, STOCK OPTIONS, AND INCENTIVES
a. STOCK OPTION PLANS
The Company's Board of Directors adopted a stock option plan (the "1994 Plan")
on August 8, 1994 authorizing the issuance of up to 300,000 shares of the
Company's common stock. On April 16, 1996, the Board of Directors voted to
increase the number of authorized shares by 500,000 and on April 24, 1996
voted to increase total shares eligible for grant to 700,000. Three hundred
thousand options to purchase shares of common stock of Saint Andrew Golf
Corporation at an exercise price of $5.00 per share were granted in 1994. Two
hundred and forty thousand of these options are exercisable anytime on or
before August 8, 1999 while the remaining 60,000 options vest in increments of
20,000 annually commencing on August 8, 1995.
In April 1996, a total of 377,000 options were granted in connection with the
increase in shares available. These grants increased the total shares issued
under the plan to 677,000. All of the shares issued in April 1996 are
exercisable at an exercise price ranging between $4.625 and $4.75 through
April 2001. Three hundred and sixty-seven thousand of the shares are
exercisable anytime while 10,000 shares vest ratably over a four year period.
All shares issued by the Board of Directors in 1996 are subject to shareholder
approval which is anticipated to occur on April 16, 1997. The exercise price
was equal to or exceeded the fair market value of the common stock at the date
of grant. At December 31, 1996, 23,000 additional shares are reserved for
future options.
b. PREFERRED STOCK
The Company is authorized to issue 5,000,000 shares of preferred stock. As of
December 31, 1996, there were no preferred shares issued or outstanding.
c. SERIES A CONVERTIBLE PREFERRED STOCK
On July 11, 1996 the SAGC Board of Directors authorized the creation of
500,000 shares of Series A Convertible Preferred Stock with a $.001 par value.
On July 29, 1996, SAGC entered into an agreement which resulted in the sale,
on an installment basis, of the 500,000 shares of the Series A Convertible
Preferred Stock to Three Oceans Inc. ("TOI"), an affiliate of Sanyo North
America Corporation, at $10.00 per share for a total of $5,000,000. The
agreement also resulted in the assignment of certain rights to TOI. All
proceeds related to the agreement were received in accordance with the stated
terms to this agreement on October 7, 1996. Issuance costs totaling $162,000
were incurred related to the preferred stock and have been netted against
retained earnings.
Each share of the Series A Convertible Preferred Stock issued to TOI is
convertible at the option of TOI into one share of SAGC's common stock. In
the event of liquidation or dissolution of the Company, each share of Series A
Convertible Preferred Stock will have a $10.00 liquidation preference over all
other shareholders. In addition, holders of the Series A Convertible
Preferred Stock shall be entitled to receive dividends at a rate equal to the
rate per share payable to common stock holders, assuming conversion of the
Preferred shares. The Preferred shares can be redeemed by the Company upon a
registration statement being declared effective by the Securities and Exchange
Commission covering the issuance of the common stock upon conversion of the
Preferred Stock and the following two conditions being satisfied: (1) SAGC
earns $1,000,000 of pre-tax income for a fiscal year according to the year-end
audited financial statements; and (2) the closing bid price for the Company s
common stock is at
F-20
least $15.00 for 20 consecutive trading days. If SAGC notifies TOI of its
intent to redeem the Preferred Stock, TOI will have at least 30 days to elect
to convert its Preferred Stock or accept the redemption price of $12.50. Each
share of Series A Convertible Preferred Stock is entitled to vote along with
the holders of SAGC's common stock.
The rights granted to TOI in accordance with the agreement include the
following: (1) rights of first refusal with respect to debt and or equity
financing arrangements for Sportparks developed by SAGC's subsidiary
All-American Sportpark, Inc. for a period of 5 years commencing July 29, 1996
and for a period of 3 years for Anaheim, California and Las Vegas, Nevada, (2)
an obligation to obtain electrical and electronic equipment for such
Sportparks for a period of 5 years, (3) certain signage rights for TOI or its
designees at the first two Sportparks and (4) other miscellaneous rights as
defined. Pursuant to the agreement, SAGC also granted TOI an option to
purchase up to 250,000 shares of SAGC's common stock at $5.00 per share for a
period of 5 years from the date of the agreement.
The agreement also provides for certain demand and piggyback registration
rights with respect to the shares of common stock issuable upon the conversion
of the Series A Convertible Preferred Stock and the exercise of the option.
Pursuant to the agreement, SAGC expanded the number of Directors of SAGC from
four to five, and elected Hideki Yamagata as a Director of SAGC. Mr. Yamagata
is president of Three Oceans Inc.
d. COMMON STOCK AND COMMON STOCK PURCHASE WARRANTS
On December 13, 1994, the Company completed a public offering of 1,000,000
Units, each Unit consisting of one share of Common Stock and one Class A
Common Stock Purchase Warrant. As a result, 1,000,000 shares of Common Stock
and 1,000,000 Class A Warrants were issued. Net proceeds from the offering
were $3,684,000. Two Class A Warrants entitle the holder to purchase one
share of SAGC common stock for $6.50, $2 above the initial public offering
price. The Class A Warrants have been assigned a value of $.1875 for
financial reporting purposes. In connection with the December 1996
announcement by the Company that they had entered into a letter of intent to
sell the franchise business segment (see Note 1), the expiration date of the
Class A Warrants has been extended until after the sale is completed and
written communication to the warrantholders that fully describes the impact of
the sale occurs.
In connection with the initial public offering, the Company issued to the
Representative of the Underwriters, Representative's Warrants to purchase
100,000 shares (10 percent of the units purchased by the underwriters), with
an exercise price of $5.40 for a four year period beginning on December 13,
1995. These Representative's Warrants contain certain demand and piggyback
registration rights. The Company also issued to the Representative 100,000
Class A Warrants which entitle the Underwriter to purchase 50,000 shares of
Common Stock (5 percent of the units purchased by the underwriters), with an
exercise price of $7.80 per share exercisable beginning on December 13, 1995.
As of December 31, 1996, no warrants have been exercised.
e. ACCOUNTING FOR STOCK-BASED COMPENSATION
In 1995, 80,000 options were granted with exercise prices ranging between
$5.00 and $6.00. However, these options expired due to the fact that the
Company's shareholders did not approve the amendment to the 1994 Plan which
would have increased the number of shares eligible for grant.
F-21
The 377,000 options granted in 1996 are also subject to shareholder approval
which will be put to a vote in April 1997. As these options are not
authorized, no pro forma compensation expense and pro forma net income
disclosures required under Statement of Financial Accounting Standards No. 123
has been presented.
10. EMPLOYEES 401(k) PROFIT SHARING PLAN
The Company offers all its eligible employees participation in the Employees
401(k) LVDGT Profit Sharing Plan ("Plan"). The Plan provides for purchases of
certain investment vehicles by eligible employees through annual payroll
deductions of up to 15% of base compensation. For 1996 and 1995, the Company
matched 50% and 25%, respectively, of employees contributions up to a maximum
of 6% and 1-1/2% of an employee's base compensation. The Company had expenses
related to the Plan of $34,300 and $13,200 for 1996 and 1995, respectively.
11. SUPPLEMENTAL NON-QUALIFIED RETIREMENT PLAN
In 1995, the Company entered into a Supplemental Retirement Plan for certain
key employees of which the President of SAGC is included. This plan became
effective on January 1, 1996. During 1996, the Company expensed $35,000
related to the plan.
12. COMMITMENTS AND CONTINGENCIES
The Company has employment agreements with its President, as well as other key
employees which require the payment of fixed and incentive based amounts of
compensation.
The Company has entered into a letter agreement with Oracle One Partners, Inc.
("Oracle") whereby Oracle has been retained to assist the Company in obtaining
corporate sponsorship for certain areas of the All-American Sportpark projects
including a license agreement from Major League Baseball for a Slugger
Stadium. The initial period of the agreement was for the three month period
ending September 30, 1994, and the agreement has been continued on a
month-to-month basis since then. The Company is paying Oracle $4,000 a month
and has agreed to pay Oracle 15% of the gross of any sponsorship fees for
sponsors obtained through the efforts of Oracle. The Company paid Oracle
$60,000 for its efforts in obtaining the exclusive license agreement with
Major League Baseball described below.
In December 1994, the Company entered into an agreement with Major League
Baseball ("MLB") concerning a license for the use of MLB logos, trade marks
and mascots in the decor, advertising and promotions of the Company's Slugger
Stadium concept. The Company obtained an exclusive license for indoor and
outdoor baseball batting stadiums in the United States through December 31,
1997, and in return, the Company will pay a royalty of the gross revenues from
the batting cages with a minimum annual royalty for each stadium. The
Company's right to exclusively use MLB logos and other trade marks at its
baseball batting stadiums is dependent upon certain conditions set forth in
the agreement.
In May 1996, the Company entered into an agreement with Jeff Gordon, the 1995
NASCAR Winston Cup Champion and the 1997 Daytona 500 Champion, to serve as
spokesperson of the NASCAR SpeedPark through April 30, 2000. Mr. Gordon will
be paid $25,000 for his services during 1996, $25,000 per SpeedPark per year
thereafter ($325,000 guaranteed over the life of the agreement).
The Company has an exclusive license agreement with The National Association
of Stock Car Auto Racing, Inc. ("NASCAR") for the operation of SpeedParks as a
part of the All-American SportPark or as a standalone NASDCAR SpeedPark.
F-22
In January 1997, the Company entered into a non-binding letter of intent with
the Pepsi-Cola Company ("Pepsi") concerning an exclusive sponsorship
agreement. Under the proposed agreement, Pepsi would receive certain
exclusive rights related to soft drinks, tea products, juice products, bottled
water and similar products in exchange for a series of payments beginning when
the SportPark opens. The rights to be granted to Pepsi are expected to
include that Pepsi's products will be exclusively sold for the categories
listed, that only Pepsi identified cups will be used in the SportPark, and
that Pepsi would have the right to name the arena. In addition, the agreement
is expected to provide that Pepsi will provide the equipment needed to
dispense its products at the SportPark. The Company also anticipates that the
agreement with Pepsi will provide that the Company and Pepsi will participate
in joint marketing programs such as promotions on Pepsi's products and local
radio advertising.
The Company is involved in certain litigation as both plaintiff and defendant
related to its business activities. Management, based upon consultation with
legal counsel, does not believe that the resolution of these matters will have
a materially adverse effect upon the Company.
13. SUBSEQUENT EVENT
On February 26, 1997, Las Vegas Discount Golf & Tennis, Inc. and the Company
completed the sale of certain of their assets and transferred certain
liabilities to an unrelated buyer who has incorporated under the name Las
Vegas Golf & Tennis, Inc. in a transaction whose terms were substantially in
accordance with the "Agreement for the Purchase and Sale of Assets" described
in Note 1. The total consideration received was $5.3 million of which $4.6
million was paid in cash, $264,000 was received in the form of a short-term
receivable, $200,000 was placed in escrow pending the accounting for inventory
and trade payables, and $200,000 was placed in escrow for two years to cover
potential indemnification obligations. Of the total consideration received,
approximately $2,750,000 was allocated to SAGC.
F-23
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The only statute, charter provision, bylaw, contract, or other arrange-
ment under which any controlling person, Director or Officer of the Registrant
is insured or indemnified in any manner against any liability which he may
incur in his capacity as such, is as follows:
(a) Section 78.751 of the Nevada Business Corporation Act provides
that each corporation shall have the following powers:
"1. A corporation may indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, except an action by or in the right of the corporation, by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses, including
attorneys' fees, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with the action, suit or proceeding
if he acted in good faith and in a manner which he reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, does not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the corporation, and that, with respect
to any criminal action or proceeding, he had reasonable cause to believe that
his conduct was unlawful.
2. A corporation may indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses, including amounts paid in settlement and attorneys' fees actually
and reasonably incurred by him in connection with the defense or settlement of
the action or suit if he acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation. Indemnification may not be made for any claim, issue or matter
as to which such a person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable to the
corporation or for amounts paid in settlement to the corporation, unless and
only to the extent that the court in which the action or suit was brought or
other court of competent jurisdiction, determines upon application that in
view of all the circumstances of the case, the person is fairly and reasonably
entitled to indemnity for such expenses as the court deems proper.
3. To the extent that a director, officer, employee or agent of
a corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections 1 and 2, or in defense
of any claim, issue or matter therein, he must be indemnified by the
corporation against expenses, including attorneys' fees, actually and
reasonably incurred by him in connection with the defense.
II-1
4. Any indemnification under subsections 1 and 2, unless
ordered by a court or advanced pursuant to subsection 5, must be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances. The determination must be made:
(a) By the stockholders;
(b) By the board of directors by majority vote of a quorum
consisting of directors who were not parties to the act, suit or proceeding;
(c) If a majority vote of a quorum consisting of directors
who were not parties to the act, suit or proceeding so orders, by independent
legal counsel, in a written opinion; or
(d) If a quorum consisting of directors who were not
parties to the act, suit or proceeding cannot be obtained, by independent
legal counsel in a written opinion.
5. The certificate or articles of incorporation, the bylaws or
an agreement made by the corporation may provide that the expenses of officers
and directors incurred in defending a civil or criminal action, suit or
proceeding must be paid by the corporation as they are incurred and in advance
of the final disposition of the action, suit or proceeding, upon receipt of an
undertaking by or on behalf of the director or officer to repay the amount if
it is ultimately determined by a court of competent jurisdiction that he is
not entitled to be indemnified by the corporation. The provisions of this
subsection do not affect any rights to advancement of expenses to which
corporate personnel other than director or officers may be entitled under any
contract or otherwise by law.
6. The indemnification and advancement of expenses authorized
in or ordered by a court pursuant to this section:
(a) Does not exclude any other rights to which a person
seeking indemnification or advancement of expenses may be entitled under the
certificate or articles of incorporation or any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, for either an action in
his official capacity or an action in another capacity while holding his
office, except that indemnification, unless ordered by a court pursuant to
subsection 2 or for the advancement of expenses made pursuant to subsection 5,
may not be made to or on behalf of any director or officer if a final
adjudication establishes that his acts or omissions involved intentional
misconduct, fraud or a knowing violation of the law and was material to the
cause of action.
(b) Continues for a person who has ceased to be a
director, officer, employee or agent and inures to the benefit of the heirs,
executors and administrators of such a person."
(b) Article VII of the Registrant's Articles of Incorporation provides
in general that the Registrant shall indemnify its Officers and Directors to
the full extent permitted by the Nevada Business Corporation Act.
II-2
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses of the offering of the shares of the Registrant's
Common Stock underlying Warrants, all of which are to be borne by the
Registrant, are as follows:
Printing Expenses . . . . . . . . . . . . . . . . . . $ 2,000
Accounting Fees and Expenses. . . . . . . . . . . . . $ 5,000
Legal Fees and Expenses . . . . . . . . . . . . . . . $14,000
Blue Sky Fees and Expenses. . . . . . . . . . . . . . $ 2,500
Registrar and Transfer Agent Fees . . . . . . . . . . $ 500
Miscellaneous . . . . . . . . . . . . . . . . . . . . $ 1,000
Total . . . . . . . . . . . . . . . . . . . . . . $25,000
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
On July 29, 1996, Saint Andrews Golf Corporation (the "Company") sold
200,000 shares of its newly designated Series A Convertible Preferred Stock to
Three Oceans, Inc. ("TOI"), an affiliate of SANYO North America Corporation,
for $2,000,000 in cash pursuant to an Investment Agreement between the Company
and TOI (the "Agreement"). An additional 300,000 shares of Series A
Convertible Preferred Stock were sold to TOI for $3,000,000 in September and
October 1996 pursuant to the Agreement. The Company will use the proceeds of
these sales for the SportPark segment of its business. In connection with
this sale, the Company granted to TOI an option to purchase up to 250,000
shares of Common Stock at $5.00 per share through July 29, 2001.
In connection with this transaction, the Company relied on the exemption
from registration provided by Section 4(2) of the Securities Act of 1933, as
amended. TOI is an accredited investor and was given complete information
concerning the Company, and represented that it was acquiring the securities
for investment purposes only.
ITEM 27. EXHIBITS.
The following Exhibits are filed as part of this Registration Statement
pursuant to Item 601 of Regulation S-B:
EXHIBIT NO. DESCRIPTION LOCATION
1.1 Form of Underwriting Agreement Previously filed
1.2 Form of Selected Dealers Agreement Previously filed
1.3 Form of Agreement Among Underwriters Previously filed
2 Agreement for the Purchase and Sale Incorporated by ref-
of Assets, as amended erence to Exhibit 10
to the Registrant's
Current Report on Form
8-K dated February 26,
1997
3.1 Restated Articles of Incorporation Previously filed
and Bylaws
3.2 Certificate of Amendment to Articles Previously filed
of Incorporation
3.3 Revised Bylaws Previously filed
II-3
3.4 Certificate of Amendment to Articles Filed herewith
of Incorporation (Series A Convertible electronically
Preferred Stock)
4.1 Form of Warrant Agreement Previously filed
4.2 Form of Class A Warrant Certificate Previously filed
4.3 Form of Representative's Warrants Previously filed
5 Opinion of Krys Boyle Freedman Filed herewith
& Sawyer, P.C. concerning the legality electronically
of the securities being registered
10.1 Employment Agreement with Ronald S. Previously filed
Boreta
10.2 Stock Option Plan Previously filed
10.3 Ground Lease with Summa Corporation Previously filed
10.4 Agreement between the Company and Las Previously filed
Vegas Discount Golf & Tennis, Inc.
10.5 License Agreement between the Company Previously filed
and Las Vegas Discount Golf & Tennis,
Inc.
10.6 Employment Agreement with Kevin Previously filed
Donovan
10.7 Employment Agreement with Charles Previously filed
Hohl
10.8 Lease Agreement with A&R Management Previously filed
and Development Co., et al., and
Sublease to Las Vegas Discount Golf &
Tennis, Inc.
10.9 Lease Agreement with Vaso Boreta, Previously filed
as amended, and Assignment to Las
Vegas Discount Golf & Tennis, Inc.
10.10 Letter Agreement with Oracle One Previously filed
Partners, Inc.
10.11 Promissory Note to Vaso Boreta Previously filed
10.12 Agreement with Major League Baseball Incorporated by ref-
Properties, Inc. erence to Exhibit 10.12
to the Registrant's
Form 10-KSB for the
year ended December
31, 1995
10.13 License Agreement with National Incorporated by ref-
Association for Stock Car Auto erence to Exhibit 10.13
Racing, Inc. dated August 1, 1995 to the Registrant's
Form 10-KSB for the
year ended December
31, 1995
II-4
10.14 Concept Development and Trademark Incorporated by ref-
Agreement with Callaway Golf Company erence to Exhibit 10.14
dated May 23, 1995 to the Registrant's
Form 10-KSB for the
year ended December
31, 1995
10.15 Investment Agreement with Three Incorporated by ref-
Oceans, Inc. erence to Exhibit 10.1
to Registrant's Form
8-K dated July 29,
1996
10.16 Lease Agreement between Urban Land Filed herewith
of Nevada and All-American SportPark, electronically
Inc.
10.17 Lease Agreement between Urban Land Filed herewith
of Nevada and All-American Golf Center, electronically
LLC
10.18 Operating Agreement for All-American Filed herewith
Golf, LLC, a limited liability company electronically
10.19 Employment Agreement with Kevin Filed herewith
Donovan dated October 8, 1996 electronically
10.20 Lease and Concession Agreement with Filed herewith
Sportservice Corporation electronically
21 Subsidiaries of the Registrant Filed herewith
electronically
23.1 Consent of Krys Boyle Freedman Contained in the
& Sawyer, P.C. Opinion of Krys Boyle
Freedman & Sawyer,
P.C., Exhibit 5
23.2 Consent of Piercy, Bowler, Taylor & Previously filed
Kern, Certified Public Accountants &
Business Advisors, a Professional
Corporation
23.3 Consent of Arthur Andersen LLP Filed herewith
electronically
ITEM 28. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for indemni-
fication against such liabilities (other than the payment by the Registrant of
expenses incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been
II-5
settled by controlling precedent, submit to a court of appropriate jurisdic-
tion the question whether such indemnification by it is against public policy
as expressed in the Act and will be governed by the final adjudication of such
issue.
The undersigned Registrant hereby undertakes:
(1) For purpose of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(4) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(5) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(6) The undersigned Registrant hereby undertakes to provide to the
Underwriters at the closing specified in the underwriting agreements,
certificates in such denominations and registered in such names as required by
the Underwriters to permit prompt delivery to each purchaser.
II-6
SIGNATURES
In accordance with the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form SB-2 and authorized this Post
Effective Amendment No. 2 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Las
Vegas, State of Nevada, on the 29th day of September, 1997.
SAINT ANDREWS GOLF CORPORATION
By:/s/ Ronald S. Boreta
Ronald S. Boreta, President
In accordance with the requirements of the Securities Act of 1933,
this Post Effective Amendment No. 2 to the Registration Statement has been
signed by the following persons in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/Vaso Boreta Chairman of the Board September 29, 1997
Vaso Boreta and Director
/s/ Ronald S. Boreta President, Treasurer, September 29, 1997
Ronald S. Boreta (Chief Executive
Officer, Principal
Financial and Account-
ing Officer) and Director
/s/ Robert R. Rosburg Director September 29, 1997
Robert R. Rosburg
/s/ William Kilmer Director September 29, 1997
William Kilmer
/s/ Motoharu Iue Director September 29, 1997
Motoharu Iue