SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 of 15(d) of the
Securities Exchange Act of 1934
May 5, 1998
------------------------------------------------
Date of Report (date of earliest event reported)
SAINT ANDREWS GOLF CORPORATION
----------------------------------------------------
Exact name of Registrant as Specified in its Charter
Nevada 0-24970 88-0203976
- --------------------------- --------------- ---------------------------
State or Other Jurisdiction Commission File IRS Employer Identification
of Incorporation Number Number
5325 South Valley View Boulevard, Suite 4, Las Vegas, Nevada 89118
------------------------------------------------------------------
Address of Principal Executive Offices, Including Zip Code
(702) 798-7777
--------------------------------------------------
Registrant's Telephone Number, Including Area Code
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
During 1997, Saint Andrews Golf Corporation (the "Company") and Callaway
Golf Company ("Callaway") formed All-American Golf, LLC (the "LLC"), to
construct, manage and operate the "Callaway Golf Center", a premier golf
facility at the site of the All-American SportPark. The Company contributed
the value of expenses incurred relating to the design and construction of the
golf center plus cash in the combined amount of $3 million for 80% of the
membership units. Callaway contributed equity capital of $750,000 for the
remaining 20% of the membership units and loaned the LLC $5.25 million (the
"Callaway loan"). The Callaway loan bore interest at a rate of 10% per annum
with monthly interest payments commencing 60 days after the opening of the
golf center on October 1, 1997.
On May 5, 1998, the Company sold its 80% interest in All-American Golf to
Callaway in exchange for $1.5 million in cash and the cancellation of a $3
million collateralized note evidencing amounts loaned to the Company in March
and April 1998 by Callaway, and related accrued interest thereon. Of the
consideration, $500,000 was withheld by Callaway until it had secured all
rights necessary to operate the Callaway Golf Center of which all was
collected by September 30, 1998. In connection with the sale of its
membership units, the Company resigned as manager of the LLC and agreed not to
compete with the Callaway Golf Center in Clark County, Nevada for a period of
two years. The agreement also provides for a buy back option which enables
the Company to repurchase its 80% equity ownership for a period of 2 years on
essentially the same financial terms that it sold its interest to the Callaway
Golf Company.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(b) PRO FORMA FINANCIAL INFORMATION. The following pro forma financial
information is filed herewith:
Unaudited Pro Forma Financial Statements ................... F-1
Unaudited Pro Forma Condensed Consolidated
Balance Sheet as of March 31, 1998 ......................... F-2
Unaudited Pro Forma Condensed Consolidated Statement
of Operations for the Year Ended December 31, 1997 ......... F-3
Unaudited Pro Forma Condensed Consolidated Statement
of Operations for the Three Months Ended March 31, 1998 .... F-4
Notes to Unaudited Pro Forma Condensed Consolidated
Financial Statements ....................................... F-5
(c) EXHIBITS. The following exhibits are filed herewith:
EXHIBIT
NUMBER DESCRIPTION LOCATION
- ------- ----------- --------
10.27 Membership Interest Purchase Incorporated by reference to
Agreement dated May 5, 1998, Exhibit 10.27 to Registrant's
by and among Callaway Golf Report on Form 10-QSB for the
Company, CGV, Inc., Saint quarter ended September 30,
Andrews Golf Corporation, 1998
et al.
2
10.28 Option Agreement dated May 5, Incorporated by reference to
1998, between CVG, Inc. and Exhibit 10.28 to Registrant's
Saint Andrews Golf Corporation Report on Form 10-QSB for the
quarter ended September 30,
1998
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, hereunto duly authorized.
SAINT ANDREWS GOLF CORPORATION
Dated: January 20, 1999 By:/s/ Ronald S. Boreta
Ronald S. Boreta, President
3
SAINT ANDREWS GOLF CORPORATION
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The following pro forma financial data are not necessarily indicative of the
Company's results of operations that might have occurred had the transaction
been completed as of the dates specified, and do not purport to represent what
the Company's consolidated results of operations might be for any future
period.
The unaudited pro forma condensed consolidated financial statements are based
on assumptions the Company believes are reasonable, factually supportable and
directly attributable to the sale of its interest in All-American Golf. Such
unaudited pro forma condensed consolidated financial statements and
accompanying notes should be read in conjunction with the audited Consolidated
Financial Statements of the Company and the related notes thereto which are
included in the Company's Annual Report on form 10-KSB for its year ended
December 31, 1997, and the Company's Quarterly Report on Form 10-QSB for the
three months ended March 31, 1998.
The Unaudited Pro Forma Condensed Consolidated Balance Sheet as of March
31,1998, reflects the historical consolidated balance sheet of the Company
adjusted to give effect to the sale of its interest in All-American Golf to
Callaway as if the disposition had occurred on March 31, 1998.
The Unaudited Pro Forma Condensed Consolidated Statements of Operations for
the Year Ended December 31, 1997, and for the Three Months Ended March 31,
1998, reflect the historical consolidated statements of operations of the
Company adjusted to give effect to the sale of its interest in All-American
Golf to Callaway as if the disposition had occurred on October 1, 1997, the
inception date of operations of All-American Golf.
F-1
SAINT ANDREWS GOLF CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
Historical Pro Forma
March 31, March 31,
1998 Adjustments 1998
----------- ------------ -----------
(Unaudited) (Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 146,100 $ 2,588,700 (A) $ 2,610,500
(124,300)(B)
Accounts receivable 291,000 500,000 (C) 745,700
(45,300)(B) -
Due from affiliated store 46,500 (46,500)(B) -
Due from officer 3,000 - 3,000
Prepaid expenses and other 35,900 (11,500)(B) 24,400
Preopening costs, net 77,000 (77,000)(B) -
----------- ----------- -----------
Total current assets 599,500 2,784,100 3,383,600
Leasehold improvements and
equipment, net 9,844,900 (9,705,200)(B) 139,700
Notes receivable - related
party 20,000 - 20,000
Deposit for land lease 395,800 - 395,800
Project development costs 13,467,700 - 13,467,700
Other assets 7,700 - 7,700
----------- ----------- -----------
$24,335,600 $(6,921,100) $17,414,500
=========== =========== ===========
See accompanying notes to unaudited pro forma condensed consolidated financial
statements.
F-2
SAINT ANDREWS GOLF CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
Historical Pro Forma
March 31, March 31,
1998 Adjustments 1998
----------- ------------ -----------
(Unaudited) (Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of notes
payable $ 5,350,800 $(1,432,700)(D) $ 3,918,100
Current portion of obli-
gations under capital
leases 72,200 (30,800)(B) 41,400
Accounts payable and
accrued expenses 4,103,100 (936,200)(B) 3,166,900
Due to affiliated store 149,500 (40,500)(B) 109,000
Payable to related entities 457,000 - 457,000
----------- ------------ -----------
Total current liabilities 10,132,600 (2,440,200) 7,692,400
----------- ------------ -----------
Note payable to shareholder 400,000 - 400,000
----------- ------------ -----------
Note payable 5,250,000 (5,250,000)(B) -
----------- ------------ -----------
Obligations under capital
leases, net of current
portion 191,000 (191,000)(B) -
----------- ------------ -----------
Deferred income 570,500 - 570,500
----------- ------------ -----------
Minority interest 595,600 (595,600)(E) -
----------- ------------ -----------
SHAREHOLDERS' 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 - 4,740,000
Options issued in connection
with Series A convertible
preferred stock to purchase
250,000 shares of common
stock 260,000 - 260,000
Common stock, $.001 par value,
10,000,000 shares authorized,
3,000,000 shares issued and
outstanding 3,000 - 3,000
Additional paid-in-capital 3,333,300 - 3,333,300
Common stock purchase war-
rants, Class A, 1,000,000
warrants authorized and
outstanding 187,500 - 187,500
Retained earnings (accumu-
lated deficit) (1,327,900) 1,555,700 (F) 227,800
----------- ------------ -----------
Total shareholders' equity 7,195,900 1,555,700 8,751,600
----------- ------------ -----------
$24,335,600 $ (6,921,100) $17,414,500
=========== ============ ===========
See accompanying notes to unaudited pro forma condensed consolidated financial
statements.
F-3
SAINT ANDREWS GOLF CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
Historical Pro Forma
Year Ended Year Ended
December 31, December 31,
1997 Adjustments 1997
----------- ------------ -----------
(Unaudited) (Unaudited)
REVENUES $ 387,200 $ (321,700)(B) $ 65,500
COST OF REVENUES 570,300 (570,300)(B) -
----------- ------------ -----------
Gross Profit (183,100) 248,600 65,500
OPERATING EXPENSES
Selling, general and
administrative 878,000 - 878,000
Depreciation and amortization 138,700 (130,000)(B) 8,700
SportPark development costs 255,100 - 255,100
Preopening expenses 603,000 - 603,000
----------- ------------ -----------
Operating loss (2,057,900) 378,600 (1,679,300)
Interest income (expense), net 94,500 121,400 (B) 215,900
----------- ------------ -----------
Loss from continuing opera-
tions before income taxes
minority interest (1,963,400) 500,000 (1,463,400)
Provision for income taxes - - -
----------- ------------ -----------
Loss from continuing opera-
tions before minority
interest (1,963,400) 500,000 (1,463,400)
Minority interest 100,000 (100,000)(E) -
----------- ------------ -----------
LOSS FROM CONTINUING
OPERATIONS (1,863,400) 400,000 (1,463,400)
DISCONTINUED OPERATIONS:
Loss from disposed franchise
business operations (39,300) - (39,300)
Gain on disposal of franchise
operations, net of applic-
able income taxes of $450,000 2,123,400 - 2,123,400
----------- ------------ -----------
Income from discontinued
operations 2,084,100 - 2,084,100
----------- ------------ -----------
Net income $ 220,700 $ 400,000 $ 620,700
=========== ============ ===========
NET INCOME (LOSS) PER COMMON
SHARE - Basic and Diluted:
Loss from continuing opera-
tions $ (0.63) $ 0.13 $ (0.50)
Income from discontinued
operations 0.70 - 0.70
----------- ------------ -----------
$ 0.07 $ 0.13 $ 0.20
=========== ============ ===========
See accompanying notes to unaudited pro forma condensed consolidated financial
statements.
F-4
SAINT ANDREWS GOLF CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
Historical Pro Forma
Three Months Three Months
Ended Ended
March 31, March 31,
1998 Adjustments 1998
----------- ------------ -----------
(Unaudited)
REVENUES $ 538,100 $ (501,700)(B) $ 36,400
COST OF REVENUES 503,000 (503,000)(B) -
----------- ------------ -----------
Gross profit 35,100 1,300 36,400
OPERATING EXPENSES:
Selling, general and
administrative 566,400 - 566,400
Depreciation and amorti-
zation 116,600 (112,800)(B) 3,800
Preopening expenses 22,800 (22,800)(B) -
----------- ------------ -----------
Operating loss (670,700) 136,900 (533,800)
Interest (expense), net (135,100) 135,100 (B) -
----------- ------------ -----------
Loss before income taxes
and minority interest (805,800) 272,000 (533,800)
Provisions for income taxes - - -
----------- ------------ -----------
Loss before minority interest (805,800) 272,000 (533,800)
Minority interest 54,400 (54,400)(E) -
----------- ------------ -----------
Net loss $ (751,400) $ 217,600 $ (533,800)
=========== ============ ===========
NET LOSS PER COMMON SHARE -
Basic and Diluted $ (0.25) $ 0.07 $ (0.18)
=========== ============ ===========
See accompanying notes to unaudited pro forma condensed consolidated financial
statements.
F-5
SAINT ANDREWS GOLF CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(A) To reflect cash proceeds from sale of interest in All-American Golf LLC.
(B) To reflect removal of assets, liabilities and operating results of All-
American Golf LLC.
(C) To reflect proceeds withheld from sale of interest in All-American Golf
LLC until all rights secured by Callaway Golf Company.
(D) To reflect forgiveness of draws outstanding under note to Callaway Golf
Company as of March 31, 1998.
(E) To reflect removal of Callaway Golf Company minority interest in All-
American Golf LLC.
(F) To reflect gain on sale of interest in All-American Golf LLC.
F-6