SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
August 10, 2002
Date of Report (Date of earliest event reported)
Greens Worldwide Incorporated
Exact name of Registrant as specified in its charter
ARIZONA
(State or other jurisdiction of incorporation)
000-25025 86-0718104
(Commission File Number) (I.R.S. Employer Identification No.)
2111 E. Highland Avenue, Suite 210, Phoenix, AZ 85016
(Address of principal executive offices)
Registrant's telephone number, including area code 602-957-2777
Sedona Worldwide Incorporated, 3840 North 16th Street, Phoenix, Arizona 85016
Former Name and Address
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
On November 21, 2001, shareholders approved a plan to execute a tax-free
reorganization of the Company. On January 2, 2002 the Company entered into a
General Bill of Sale, Assignment and Assumption Agreement with ILX Resorts
Incorporated (ILX) whereby ILX assumed all of the assets and liabilities of the
Company, leaving a "shell company" available for the reorganization discussed
above.
On August 10, 2002, the Reorganization was completed. Pursuant to the
Memorandum of Understanding dated July 1, 2002 and incorporated herein by
reference, ILX purchased 8.0 million shares of the Company's common stock for
$1.0 million cash. Further, the Company issued an additional 8.0 million shares
of common stock to The Greens of Las Vegas, Inc. (GOLV).
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On August 10, 2002, the Company entered into an Asset Purchase Agreement,
incorporated herein by reference, wherein the Company issued 8.0 million shares
of common stock in exchange for the purchase of all of the assets of GOLV.
The assets acquired are detailed in the Asset Purchase Agreement and
include all intellectual property, all tangible personal property owned or
leased by GOLV, all intangible personal property, and original or true and
correct copies of all books and records.
ITEM 5. OTHER EVENTS
As part of the Reorganization, the Company changed its name from Sedona
Worldwide Incorporated (SWI) to Greens Worldwide Incorporated.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements
Financial statements for the period ended June 30, 2002, as well as the
years ended December 31, 2001 and 2000 for GOLV are attached. The SWI report on
form 10KSB for the years ended December 31, 2001 and 2000, as well as the report
on form 10QSB for the six months ended June 30, 2002 are incorporated herein by
reference.
(b) Proforma financial information
The pro forma financial information related to the Reorganization is also
attached.
EXHIBITS
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
10.1 The Greens of Las Vegas, Inc. Memorandum of
Understanding (incorporated by reference to the Current
Report on Form 8-K of the Company filed August 14, 2002).
10.2 Asset Purchase Agreement between Greens Worldwide
Incorporated and The Greens of Las Vegas, Inc.
(incorporated by reference to the Current Report on Form
8-K of the Company filed August 14, 2002).
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.
Greens Worldwide Incorporated
Date: October 22, 2002 /s/ Joseph P. Martori
----------------------------------------
Joseph P. Martori
Chairman
THE GREENS OF LAS VEGAS, INC.
(A Development Stage Company)
INDEX TO FINANCIAL STATEMENTS
PAGE
----
Report of Independent Certified Public Accountants.............................2
Financial Statements:
Balance Sheets at June 30, 2002 (Unaudited) and December 31, 2001.........3
Statements of Operations for the six months ended June 30, 2002
(Unaudited), for the years ended December 31, 2001 and 2000 and for
the period from July 2, 1999 (date of inception of the development
stage) through December 31, 2001 and June 30, 2002 (Unaudited)..........4
Statements of Stockholders' Equity for the period from July 2, 1999
(date of inception of the development stage) through December 31,
1999, for the years ended December 31, 2000 and 2001 and for the six
months ended June 30, 2002 (Unaudited)..................................5
Statements of Cash Flows for the six months ended June 30, 2002
(Unaudited), for the years ended December 31, 2001 and 2000 and for
the period from July 2, 1999 (date of inception of the development
stage) through December 31, 2001 and June 30, 2002 (Unaudited)..........6
Notes to Financial Statements.............................................7
1
[LETTERHEAD OF HANSEN, BARNETT & MAXWELL]
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
The Greens of Las Vegas, Inc.
We have audited the accompanying balance sheets of The Greens of Las Vegas, Inc.
(a development stage company) as of December 31, 2001 and the related statements
of operations, stockholders' equity, and cash flows for the years ending
December 31, 2001 and 2000 and for the cumulative period from July 2, 1999 (date
of inception of the development stage) through December 31, 2001. 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits 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 The Greens of Las Vegas, Inc.
(a development stage company) at December 31, 2001 and the results of its
operations and its cash flows for the December 31, 2001 and 2000 and for the
cumulative period from July 2, 1999 (date of inception of the development stage)
through December 31, 2001 in conformity with accounting principles generally
accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has an accumulated deficit and has incurred
net losses since inception. This condition raises substantial doubt about its
ability to continue as a going concern. Management's plans regarding those
matters are also described in Note 1. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
HANSEN, BARNETT & MAXWELL
Salt Lake City, Utah
October 14, 2002
2
THE GREENS OF LAS VEGAS, INC.
BALANCE SHEETS
(A Development Stage Company)
JUNE 30, DECEMBER 31,
ASSETS 2002 2001
----------- -----------
(unaudited)
CURRENT ASSETS
Cash $ 142 $ --
Deposits and other current assets 5,057 28,757
----------- -----------
TOTAL CURRENT ASSETS 5,199 28,757
----------- -----------
LONG TERM ASSETS
Construction in progress 354,428 354,428
Furniture and equipment, net 10,749 13,696
----------- -----------
TOTAL LONG TERM ASSETS 365,177 368,124
TOTAL ASSETS $ 370,376 $ 396,881
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 212,198 217,813
Accrued expenses 16,009 12,990
Advances from officers 4,200 --
----------- -----------
TOTAL CURRENT LIABILITIES 232,407 230,803
----------- -----------
TOTAL LIABILITIES 232,407 230,803
----------- -----------
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value; 25,000,000
authorized; 19,200,500 and 18,670,500
shares issued and outstanding, respectively 19,201 18,671
Additional paid-in capital 2,169,945 2,125,475
Subscription receivable (8,746) (10,000)
Subscription rights 25,625 25,625
Accumulated deficit (2,068,056) (1,993,693)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 137,969 166,078
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 370,376 $ 396,881
=========== ===========
The accompanying notes are an integral part of these financial statements.
3
THE GREENS OF LAS VEGAS, INC.
STATEMENTS OF OPERATIONS
(A Development Stage Company)
FOR THE FOR THE
PERIOD FROM JULY 2, PERIOD FROM JULY 2,
1999 (DATE OF 1999 (DATE OF
INCEPTION OF INCEPTION OF
THE DEVELOPMENT THE DEVELOPMENT
SIX MONTHS YEAR ENDED DECEMBER 31, STAGE) THROUGH STAGE) THROUGH
ENDED JUNE 30, ---------------------------- DECEMBER 31, JUNE 30,
2002 2001 2000 2001 2002
------------ ------------ ------------ ------------ ------------
(UNAUDITED) (UNAUDITED)
NET SALES $ 389,279 $ 17,330 $ -- $ 17,330 $ 406,609
COST OF SALES 295,966 200 -- 200 296,166
------------ ------------ ------------ ------------ ------------
GROSS PROFIT 93,313 17,130 -- 17,130 110,443
SELLING, GENERAL &
ADMINISTRATIVE EXPENSES 167,676 565,843 707,308 2,010,823 2,178,499
------------ ------------ ------------ ------------ ------------
NET LOSS $ (74,363) $ (548,713) $ (707,308) $ (1,993,693) $ (2,068,056)
============ ============ ============ ============ ============
BASIC AND DILUTED INCOME/
(LOSS) PER SHARE $ (0.00) $ (0.03) $ (0.04)
============ ============ ============
WEIGHTED AVERAGE SHARES OF
COMMON STOCK OUTSTANDING 18,861,596 17,248,390 15,934,425
============ ============ ============
The accompanying notes are an integral part of these financial statements.
4
THE GREENS OF LAS VEGAS, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
(A Development Stage Company)
COMMON STOCK ADDITIONAL TOTAL
-------------------- PAID-IN SUBSCRIPTION SUBSCRIPTION ACCUMULATED STOCKHOLDERS'
SHARES PAR CAPITAL RECEIVABLE RIGHTS DEFECIT EQUITY
---------- ------- ----------- -------- -------- ----------- ---------
BALANCE AS OF JULY 2, 1999 -- $ -- $ -- $ -- $ -- $ -- $ --
Shares issued to Founders 13,287,500 13,288 (13,288) -- -- -- --
Shares issued for cash
Sept-Dec $0.125 per share -- --
Sept-Dec $0.50 per share 427,000 427 213,073 -- -- -- 213,500
Sept-Dec $1.00 per share 430,000 430 429,570 -- -- -- 430,000
Shares issued for Services
Sept-Dec $0.125 per share 50,000 50 6,200 -- -- -- 6,250
Sept-Dec $0.25 per share 40,000 40 9,960 -- -- -- 10,000
Sept-Dec $0.50 per share 1,053,000 1,053 525,447 -- -- -- 526,500
Sept-Dec $1.00 per share 10,000 10 9,990 -- -- -- 10,000
Shares issued for construction
Dec $1.00 per share 150,000 150 149,850 -- -- -- 150,000
Dec $0.50 per share 50,000 50 24,950 -- -- -- 25,000
Subscribtion receivable
Sept-Dec $0.50 per share 30,000 30 14,970 (15,000) -- -- --
Sept-Dec $1.00 per share 10,000 10 9,990 (10,000) -- -- --
Cash received for right to receive shares -- -- -- -- 30,000 -- 30,000
Costs associated with raising capital -- -- (7,259) -- -- -- (7,259)
Net loss for period ended 12/31/99 -- -- -- -- -- (737,672) (737,672)
---------- ------- ----------- -------- -------- ----------- ---------
BALANCE AS OF DECEMBER 31, 1999 15,537,500 15,538 1,373,453 (25,000) 30,000 (737,672) 656,319
Shares issued for Cash
Jan-Dec $0.50 per share 400,000 400 199,600 -- -- -- 200,000
Jan-Dec $1.00 per share 170,000 170 169,830 -- -- -- 170,000
Shares issued for Services
Feb-Dec $0.50 per share 183,000 183 91,317 -- -- -- 91,500
Settlement of subscription receivable -- -- -- 15,000 -- -- 15,000
Cash received for right to receive shares -- -- -- -- 47,500 -- 47,500
Costs associated with raising capital -- -- (150,720) -- -- -- (150,720)
Net loss for year ended 12/31/00 -- -- -- -- -- (707,308) (707,308)
---------- ------- ----------- -------- -------- ----------- ---------
BALANCE AS OF DECEMBER 31, 2000 16,290,500 16,291 1,683,480 (10,000) 77,500 (1,444,980) 322,291
Shares issued for Cash
November $0.10 per share 75,000 75 7,425 -- -- -- 7,500
Jan-Dec $0.125 per share 1,968,488 1,968 244,093 -- -- -- 246,061
Jan-Dec $0.50 per share 115,000 115 57,385 -- -- -- 57,500
Jan-Dec $1.00 per share 10,000 10 9,990 -- -- -- 10,000
Shares issued for Services
Sept-Dec $0.125 per share 6,512 7 807 -- -- -- 814
Subscribtion receivable
January- $0.50 per share 60,000 60 29,940 (30,000) -- -- --
Settlement of Stock Rights
January- $0.50 per share 145,000 145 72,355 -- (72,500) -- --
Contributions from shareholders, no
additional shares issued -- -- 20,000 -- -- -- 20,000
Settlement of subscription receivable -- -- -- 30,000 -- -- 30,000
Cash received for right to receive shares -- -- -- -- 20,625 -- 20,625
Net loss for year ended 12/31/01 -- -- -- -- -- (548,713) (548,713)
---------- ------- ----------- -------- -------- ----------- ---------
BALANCE AS OF DECEMBER 31, 2001 18,670,500 18,671 2,125,475 (10,000) 25,625 (1,993,693) 166,078
Shares issued for Cash - $0.10 per share 450,000 450 44,550 -- -- -- 45,000
Shares issued to Founder 80,000 80 (80) -- -- -- --
Settlement of subscription receivable -- -- -- 1,254 -- -- 1,254
Net loss for six months ended 6/30/02 -- -- -- -- -- (74,363) (74,363)
---------- ------- ----------- -------- -------- ----------- ---------
BALANCE AS OF JUNE 30, 2002 (Unaudited) 19,200,500 $19,201 $ 2,169,945 $ (8,746) $ 25,625 $(2,068,056) $ 137,969
========== ======= =========== ======== ======== =========== =========
The accompanying notes are an integral part of these financial statements.
5
THE GREENS OF LAS VEGAS, INC.
STATEMENTS OF CASH FLOWS
(A Development Stage Company)
FOR THE FOR THE
PERIOD PERIOD
FROM JULY 2, FROM JULY 2,
1999 (DATE OF 1999 (DATE OF
INCEPTION OF INCEPTION OF
FOR THE SIX FOR THE FOR THE THE DEVELOPMENT THE DEVELOPMENT
MONTHS ENDED YEAR ENDED YEAR ENDED STAGE) THROUGH STAGE) THROUGH
JUNE 30, DECEMBER 31, DECEMBER 31, DECEMBER 31, JUNE 30,
2002 2001 2000 2001 2002
-------- --------- --------- ----------- -----------
(UNAUDITED) (UNAUDITED)
Cash Flows From Operating Activities
Net loss $(74,363) $(548,713) $(707,308) $(1,993,693) $(2,068,056)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 2,947 5,894 3,783 9,677 12,624
Stock issued for compensation and services -- 814 91,500 645,064 645,064
Change in current assets and liabilities:
Deposits and other current assets 23,700 (3,377) 33,345 (28,757) (5,057)
Accounts payable (5,615) 143,327 67,713 217,813 212,198
Accrued expenses 3,019 12,990 (4,070) 12,990 16,009
-------- --------- --------- ----------- -----------
NET CASH USED IN OPERATING ACTIVITIES (50,312) (389,065) (515,037) (1,136,906) (1,187,218)
-------- --------- --------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment -- (2,495) (20,878) (23,373) (23,373)
Purchases of construction in process -- (126) (23,511) (179,428) (179,428)
-------- --------- --------- ----------- -----------
NET CASH USED IN INVESTING ACTIVITIES -- (2,621) (44,389) (202,801) (202,801)
-------- --------- --------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 45,000 341,061 370,000 1,354,561 1,399,561
Proceeds from purchase of stock rights -- 20,625 47,500 98,125 98,125
Proceeds from settlement of subscription receivable 1,254 30,000 15,000 45,000 46,254
Costs associated with raising capital -- -- (150,720) (157,979) (157,979)
Proceeds from short-term advance 4,200 -- -- 100,000 104,200
Payment of short-term advance -- -- (100,000) (100,000) (100,000)
-------- --------- --------- ----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 50,454 391,686 181,780 1,339,707 1,390,161
-------- --------- --------- ----------- -----------
NET INCREASE (DECREASE) IN CASH 142 -- (377,646) -- 142
CASH AT BEGINNING OF YEAR -- -- 377,646 -- --
-------- --------- --------- ----------- -----------
CASH AT END OF PERIOD $ 142 $ -- $ -- $ -- $ 142
======== ========= ========= =========== ===========
SUPPLEMENTAL CASH FLOW
Cash paid for income taxes $ -- $ -- $ -- $ -- $ --
Cash paid for interest -- -- -- -- --
The accompanying notes are an integral part of these financial statements.
6
THE GREENS OF LAS VEGAS, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO THE SIX-MONTH
PERIOD ENDING JUNE 30, 2002 IS UNAUDITED)
(A Development Stage Company)
NOTE 1--DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
The Greens of Las Vegas, Inc. (the "Company" or "GOLV") was incorporated in the
State of Nevada on July 2, 1999. The Company is considered to be a development
stage company whose activities to date have consisted of developing a business
plan, conducting feasibility studies, selling golf-related retail items and
obtaining construction plans to develop 23 acres of property located one mile
from the southern part of the Las Vegas STRIP. The facility will include a
sports themed restaurant and bar, pro shop and six 18-hole natural grass putting
courses. Four of the putting courses will be developed using 24 full-sized
championship putting greens, each inspired by famous greens known around the
world.
In August 2002, the Company entered into an Asset Purchase Agreement with Greens
Worldwide Incorporated (GWWI) whereby GWWI acquired all of the assets of the
Company in return for 8,000,000 shares of GWWI stock and the assumption of
$5,000 of the Company's liabilities. The assets purchased include, but are not
limited to, all plans, designs, concepts and any and all proprietary rights to
be utilized in the execution of the GOLV business plan. The Asset Purchase
Agreement was executed as part of a Memorandum of Understanding that provided
for ILX Resorts Incorporated (ILX) to purchase 8 million shares of GWWI common
stock for $1 million. In addition, an officer of the Company was issued a stock
option from ILX to purchase 1 million shares of GWWI at $0.125 per share, with
the exercise price to increase 10% per year.
SIGNIFICANT ACCOUNTING POLICIES
CASH
Cash and cash equivalents include investments in highly liquid debt instruments
with an original maturity of three months or less.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets, which range
from three to five years.
CONSTRUCTION IN PROGRESS
Construction in progress includes construction costs and architectural plans
stated at cost.
IMPAIRMENT OF LONG-LIVED ASSETS
The company reviews its long-lived assets for impairment when events or changes
in circumstances indicate that the carrying value of an asset may not be
recoverable. The Company evaluates, at each balance sheet date, whether events
and circumstances have occurred which indicate possible impairment. The Company
uses an estimate of future undiscounted net cash flows from the related asset or
group of assets over their remaining life in measuring whether the assets are
recoverable. As of June 30, 2002 and December 31, 2001, the Company does not
consider any of its long-lived assets to be impaired.
7
THE GREENS OF LAS VEGAS, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO THE SIX-MONTH
PERIOD ENDING JUNE 30, 2002 IS UNAUDITED)
(A Development Stage Company)
REVENUE RECOGNITION
The Company has minimal revenue to date consisting of banquet sales and sales of
retail golf related items. The Company recognizes revenue on the date of the
banquet for banquet sales and when items are delivered to the customer on retail
sales.
INCOME TAXES
Income taxes are accounted for using Statement of Financial Accounting Standards
("SFAS") No. 109, "Accounting For Income Taxes." Under SFAS No. 109, deferred
tax assets and liabilities are recognized for the estimated future tax effects
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases.
ADVERTISING EXPENSE
Advertising expense consists of promotional costs and is expensed as incurred.
Advertising expense for the six months ended June 30, 2002 and for the years
ended December 31, 2001 and 2000 was $7,098, $165,658 and $86,720, respectively.
No advertising was capitalized as of June 30, 2002, December 31, 2001 and 2000.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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.
BASIS OF PRESENTATION
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. During the six months ended June
30, 2002 and years ended December 31, 2001 and 2000 the Company incurred net
losses of $74,363, $548,713 and $707,308, respectively. As of December 31, 2001,
the Company had nominal revenue and losses accumulated from inception totaling
$1,993,693. These factors create an uncertainty about the Company's ability to
continue as a going concern. The financial statements do not include any
adjustments that might be necessary if the Company is unable to continue as a
going concern.
The Company's continuation as a going concern is dependent upon its ability to
generate sufficient cash flow to meet its obligations on a timely basis, to
obtain financing, and ultimately to attain profitable operations. In August
2002, the Company entered into an Asset Purchase Agreement with GWWI whereby
GWWI assumed all of the assets of the Company in return for 8,000,000 shares of
GWWI stock (see "Description of Business").
LOSS PER SHARE
BASIC AND DILUTED LOSS PER SHARE -- Basic loss per share amounts are computed by
dividing net loss by the weighted-average number of common shares outstanding
during each period. Diluted loss per share amounts are computed assuming the
8
THE GREENS OF LAS VEGAS, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO THE SIX-MONTH
PERIOD ENDING JUNE 30, 2002 IS UNAUDITED)
(A Development Stage Company)
issuance of common stock for potentially dilutive common stock equivalents. None
of the outstanding options (see Note 5) were included in the computations of
diluted loss per share because their effects would be antidilutive.
NOTE 2--PROPERTY AND EQUIPMENT
Property and equipment at June 30, 2002 and December 31, 2001 consist of the
following:
2002 2001
-------- --------
Leasehold improvements $ 146 $ 146
Furniture and fixtures 19,332 19,332
Computer equipment 3,895 3,895
-------- --------
Total 23,373 23,373
-------- --------
Less accumulated depreciation (12,624) (9,677)
-------- --------
Property and equipment, net $ 10,749 $ 13,696
======== ========
Depreciation expense was $2,947, $5,894 and $3,783 for the six months ended June
30, 2002 and the years ended December 31, 2001 and 2000, respectively.
NOTE 3--OPERATING LEASES
In May 2002 the Company entered into a lease for its principal office facility
located in Las Vegas, Nevada for $1,420 per month, pursuant to a 24-month lease
agreement.
During 2001, the Company leased its principal office facility located in Las
Vegas, Nevada for $1,515 per month, pursuant to a three-year lease assumed from
Nationwide Escrow Inc., a company owned by Matthew G. Pearson, who was an
officer of the Company until July 2000. The lease expired in March 2002.
In 1999 the Company entered into a lease agreement with Las Vegas Golf Center,
LLC (LVGC) for approximately 23 acres of a 44-acre parcel of land on the corner
of Paradise and Tropicana in Las Vegas, Nevada. The Company paid LVGC a $50,000
deposit, but did not fully execute the lease. In 2000, LVGC subleased the entire
parcel of land to Varsity Clubs of America - Nevada (VCA-NV), a subsidiary of
ILX. LVGC returned $20,000 to the Company and retained the remaining $30,000 to
pay for legal expenses incurred as a result of the lease. The Company then paid
VCA-NV a lease deposit of $25,425. The lease was not executed as of December 31,
2001. The Company's failure to execute its lease with VCA-NV resulted in the
forfeiture of its deposit of $25,425 during the six months ended June 30, 2002.
The Company had rent expense of $35,758, $23,021and $33,076 for the six months
ended June 30, 2002 and the years ended December 31, 2001 and 2000,
respectively.
NOTE 4--SHAREHOLDERS' EQUITY
The Company issued 13,287,500 shares of common stock to officers of the Company
during the period ended December 31, 1999. The shares were considered founders
shares and had no value.
9
THE GREENS OF LAS VEGAS, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO THE SIX-MONTH
PERIOD ENDING JUNE 30, 2002 IS UNAUDITED)
(A Development Stage Company)
The value per share for common stock issued for services was the market value on
the date of grant based on shares sold for cash or negotiations of shares for
cash.
The Company issued 150,000 shares of common stock at $1.00 per share and 50,000
shares of common stock at $0.50 per share for construction costs that were
capitalized during the period ended December 31, 1999. The value per share for
the common stock issued for construction was the market value on the date of
grant based on shares sold for cash or negotiations of shares for cash.
The Company issued 30,000 shares of common stock at $0.50 per share and 10,000
shares of common stock at $1.00 per share for a subscription receivable during
the period ended December 31, 1999.
The Company received $30,000 to be used toward the purchase of common stock at
$0.50 per share during the period ended December 31, 1999.
The Company incurred costs of $7,259 in connection with the raising of capital
during the period ended December 31, 1999. The costs related to an offering that
was abandoned and are a direct reduction to shareholders' equity.
The Company received $15,000 in settlement of a subscription receivable during
the year ended December 31, 2000.
The Company received $47,500 to be used toward the purchase of common stock
during the year ended December 31, 2000. Of the $47,500 received, $45,000 was
for the purchase of common stock at $0.50 per share and $2,500 was for the
purchase of common stock at $0.125 per share.
The Company incurred costs of $150,720 in connection with the raising of capital
during the year ended December 31, 2000. The costs related to an offering that
was abandoned and are a direct reduction to shareholders' equity.
The Company issued 60,000 shares of common stock at $0.50 per share for a
subscription receivable that was paid within the year ended December 31, 2001.
The Company received $20,625 to be used toward the purchase of common stock
during the year ended December 31, 2001. Of the $20,625 received, $20,000 was
for the purchase of common stock at $0.50 and $625 was for the purchase of
common stock at $0.125.
The Company issued 145,000 shares of common stock at $0.50 per share in
settlement of previous stock rights granted, during the year ended December 31,
2001.
The Company issued 80,000 shares of common stock to an officer of the Company
during the period ended June 30, 2002. The shares were considered founders
shares and had no value.
The Company received $1,254 in settlement of a subscription receivable during
the period ended June 30, 2002.
10
THE GREENS OF LAS VEGAS, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO THE SIX-MONTH
PERIOD ENDING JUNE 30, 2002 IS UNAUDITED)
(A Development Stage Company)
NOTE 5--STOCK OPTIONS
During 1999, the Company issued stock options to an individual to purchase 500
shares of common stock at $1.25 per share. During 2000, the Company issued stock
options to an individual to purchase 80,000 shares of common stock at $1.25 per
share. The options vested immediately and had a life of 3 years. The options
were issued as incentive for shareholders who located additional investors.
Because the options were issued in connection with efforts of the Company to
raise funds through private placements of its stock, the related cost is a
direct reduction of stockholders' equity. As of June 30, 2002, 80,500 stock
options remained unexercised.
NOTE 6--INCOME TAXES
Deferred income tax assets are provided for temporary and permanent differences
between financial statement and income tax reporting, primarily for net
operating loss carryover, which was $1,991,421 as of December 31, 2001. The
Company's net operating losses will expire in 2014, 2020 and 2021. Section 382
of the Internal Revenue Code imposes limitations on the utilization of net
operating losses by a corporation following various types of ownership changes
which result in more than a 50% change in ownership of a corporation within a
three year period. If such a subsequent change occurs, the limitations of
Section 382 would apply and may limit or deny the future utilization of the net
operating loss by the Company, which could result in the Company paying
additional federal and state taxes.
Net deferred income taxes at December 31, 2001 and 2000 consist of the
following:
Year Ended Year Ended
December 31, December 31,
2001 2000
--------- ---------
Deferred income tax assets:
Operating loss carry forward $ 677,083 $ 491,157
Valuation allowance (677,083) (491,157)
--------- ---------
Net deferred income tax asset $ -- $ --
========= =========
A reconciliation of the income tax benefit and the amount that would be computed
using statutory federal income tax rates is as follows:
Year Ended Year Ended
December 31, December 31,
2001 2000
--------- ---------
Federal, computed on income before taxes $(186,562) $(240,485)
Non-deductible expense 636 136
Change in valuation allowance 185,926 240,349
--------- ---------
Income tax benefit $ -- $ --
========= =========
NOTE 7--DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value estimates are made at a specific point in time and are based on
relevant market information and information about the financial instrument; they
are subjective in nature and involve uncertainties, matters of judgment and,
therefore, cannot be determined with precision. These estimates do not reflect
any premium or discount that could result from offering for sale at one time the
Company's entire holdings of a particular instrument. Because the fair value is
11
THE GREENS OF LAS VEGAS, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO THE SIX-MONTH
PERIOD ENDING JUNE 30, 2002 IS UNAUDITED)
(A Development Stage Company)
estimated as of December 31, 2001, the amounts that will actually be realized or
paid in settlement of the instruments could be significantly different.
The carrying amount of cash is its fair value. The carrying amount of deposits
and other current assets, accounts payable, accrued expenses and advances from
officers is assumed to be the fair value because of the short maturity of these
items.
NOTE 8--RELATED PARTY TRANSACTION
On August 2, 2000 the Company assumed a lease from Nationwide Escrow Inc. and
Matthew G. Pearson, the former Chief Operating Officer of the Company. The lease
was for 1,212 square feet used for the Company's office space in Las Vegas,
Nevada. The Company also purchased furniture and equipment and relieved
liabilities to Nationwide Escrow Inc. for the amount of $20,000.
The Company has $354,428 of construction costs as of June 30, 2002. These
construction costs include payments of $112,870 to a construction company that
is owned by an officer of Greens of Las Vegas, Inc.
As of June 30, 2002, the Company had received advances of $4,200 from an officer
with no established payment terms.
NOTE 9--SUBSEQUENT EVENTS
In August 2002, the Company entered into an Asset Purchase Agreement with Greens
Worldwide Incorporated (GWWI) whereby GWWI acquired all of the assets of the
Company in return for 8,000,000 shares of GWWI stock and the assumption of
$5,000 of the Company's liabilities. The assets purchased include, but are not
limited to, all plans, designs, concepts and any and all proprietary rights to
be utilized in the execution of the GOLV business plan. The Asset Purchase
Agreement was executed as part of a Memorandum of Understanding that provided
for ILX to purchase 8 million shares of GWWI common stock for $1 million. In
addition, an officer of the Company was issued a stock option from ILX to
purchase 1 million shares of GWWI at $0.125 per share, with the exercise price
to increase 10% per year.
In August 2002, GWWI entered into a lease agreement with VCA-NV for the 23 acre
property in Las Vegas (see Note 1).
12
GREENS WORLDWIDE INCORPORATED
UNAUDITED PRO FORMA
COMBINED FINANCIAL STATEMENTS
The following unaudited Pro Forma Combined Balance Sheet is derived from
the Balance Sheets of Greens Worldwide Incorporated (the Company as of June 30,
2002. The unaudited Pro Forma Balance Sheet reflects the Company's asset
acquisition of The Greens of Las Vegas (GOLV) and assumes that such acquisition
was consummated as of June 30, 2002. The following unaudited Pro Forma
Statements of Operations are derived from the Statements of Operations elsewhere
or incorporated by reference into this Current Report, and from the historical
financial statements of the Company and GOLV. The unaudited Pro Forma Combined
Statements of Operations for the year ended December 31, 2001 and the six-month
period ended June 30, 2002 give effect to the asset acquisition as if it had
occurred at January 1, 2001.
The unaudited Pro Forma Combined Balance Sheet and Statements of Operations
should be read in conjunction with the financial statements of the Company and
GOLV, and the respective Notes thereto included elsewhere in this Current
Report. The Pro Forma Combined Statements of Operations do not purport to
represent what the results of operations would actually have been if the
acquisition had occurred on the date indicated or to project the results of
operations for any future period or date. The pro forma adjustments, as
described in the accompanying data, are based on available information and the
assumptions set forth in the Notes thereto.
1
GREENS WORLDWIDE INCORPORATED
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
JUNE 30, 2002
GREENS
WORLDWIDE PRO FORMA
ASSETS INCORPORATED ADJUSTMENTS COMBINED
------------ ----------- -----------
CURRENT ASSETS
Cash and cash equivalents $ -- $1,000,142(1) $ 1,000,142
Deposits and other current assets -- 5,057(1) 5,057
----------- ---------- -----------
TOTAL CURRENT ASSETS -- 1,005,199 1,005,199
----------- ---------- -----------
LONG TERM ASSETS
Construction in progress -- 500,000(1) 500,000
Furniture and equipment, net -- 10,749(1) 10,749
----------- ---------- -----------
TOTAL ASSETS $ -- $1,515,948 $ 1,515,948
=========== ========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Current Liabilities $ 3,229 $ 5,000(1) $ 8,229
----------- ---------- -----------
TOTAL CURRENT LIABILITIES 3,229 5,000 8,229
----------- ---------- -----------
TOTAL LIABILITIES 3,229 5,000 8,229
----------- ---------- -----------
STOCKHOLDERS' EQUITY
Preferred stock, $10 par value; 5,000,000
shares authorized;none issued and outstanding
Common stock, no par value; 50,000,000 authorized;
21,760,902 shares issued and outstanding 1,089,783 1,510,948(2) 2,600,731
Additional paid-in capital 2,545,730 -- 2,545,730
Subscription receivable
Subscription rights
Accumulated deficit (3,638,742) -- (3,638,742)
----------- ---------- -----------
TOTAL STOCKHOLDERS' EQUITY (3,229) 1,510,948 1,507,719
----------- ---------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ -- $1,515,948 $ 1,515,948
=========== ========== ===========
See notes to unaudited pro forma combined financial statements
2
GREENS WORLDWIDE INCORPORATED
UNAUDITED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2002
GREENS
WORLDWIDE THE GREENS OF PRO FORMA
INCORPORATED LAS VEGAS, INC. ADJUSTMENTS COMBINED
------------ -------------- ------------ ------------
NET SALES $ -- $ 389,279 $ -- $ 389,279
COST OF SALES -- 295,966 -- 295,966
------------ ------------ ------------ ------------
GROSS PROFIT -- 93,313 -- 93,313
SELLING, GENERAL & ADMINISTRATIVE EXPENSES 3,229 167,676 -- 170,905
------------ ------------ ------------ ------------
LOSS FROM OPERATIONS (3,229) (74,363) -- (77,592)
------------ ------------ ------------ ------------
NET INCOME/(LOSS) $ (3,229) $ (74,363) $ -- $ (77,592)
============ ============ ============ ============
WEIGHTED AVERAGE SHARES OF COMMON STOCK
OUTSTANDING 21,760,902
BASIC AND DILUTED INCOME PER SHARE $ (0.00)
============
See notes to unaudited pro forma combined financial statements
3
GREENS WORLDWIDE INCORPORATED
UNAUDITED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2002
GREENS
WORLDWIDE THE GREENS OF PRO FORMA
INCORPORATED LAS VEGAS, INC. ADJUSTMENTS COMBINED
------------ -------------- ------------ ------------
NET SALES $ 580,138 $ 17,330 $ (580,138)(3) $ 17,330
COST OF SALES 284,146 200 (284,146)(3) 200
------------ ------------ ------------ ------------
GROSS PROFIT 295,992 17,130 (295,992) 17,130
SELLING, GENERAL & ADMINISTRATIVE EXPENSES 442,387 565,843 (442,387)(3) 565,843
------------ ------------ ------------ -------------
LOSS FROM OPERATIONS (146,395) (548,713) 146,395 (548,713)
INTEREST EXPENSE 10,873 -- (10,873)(3) --
NET INCOME/(LOSS) $ (157,268) $ (548,713) $ 157,268 $ (548,713)
============ ============ ============ ============
WEIGHTED AVERAGE SHARES OF COMMON STOCK
OUTSTANDING 20,769,121
BASIC AND DILUTED INCOME PER SHARE $ (0.03)
============
See notes to unaudited pro forma combined financial statements
4
GREENS WORLDWIDE INCORPORATED
NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
1. The Pro forma asset adjustment to reflect the assets acquired through the
Asset Acquisition Agreement between the Company and GOLV incorporated
herein by reference to their fair value. On August 10, 2002, the company
assumed all of the assets of GOLV in return for 8,000,000 shares of the
Company's stock. Because GOLV is considered development stage entity it is
not considered a business. Therefore, the acquisition of GOLV's assets was
accounted for as the purchase of assets and recorded at the fair value of
the assets acquired. The assets purchased include, but are not limited to,
all plans, designs, concepts and any and all proprietary rights to be
utilized in the execution of the GOLV business plan. The agreement also
stipulates that GWWI will only assume $5,000 of GOLV liabilities.
The following table indicates the original cost of the assets and
liabilities acquired, the adjustment required to fair value and the fair
value of the assets.
ORIGINAL
COST ADJUSTMENT FAIR VALUE
-------- ---------- ----------
Cash and cash equivalents $ 142 -- $ 142
Deposits and other current assets 5,057 -- 5,057
Construction in progress 354,428 145,572 500,000
Furniture and equipment, net 10,749 -- 10,749
Current liabilities 232,407 (227,407) 5,000
2. The Pro forma common stock adjustment includes $1,000,000 for 8,000,000
shares purchased at $0.125 by ILX as stipulated in the Asset Acquisition
Agreement and Memorandum of Understanding incorporated herein by reference.
3. The Pro forma income statement adjustments remove the January through
December 2001 activity for the Company. The 2001-year was prior to the
Reorganization as discussed in the Memorandum of Understanding incorporated
herein by reference and the numbers are not reflective of Greens Worldwide
operations.
5