UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004
( )TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the transition period from to
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Commission File Number: 000-50283
Golf Two, Inc.
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(Exact name of small business issuer as specified in its charter)
Delaware 04-3625550
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1521 West Orangewood Avenue, Orange, California 92868
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(Address of principal executive offices)
(714)350-7323
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(Issuer's Telephone Number)
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practical date. As of November 8, 2004, there were
7,418,336 shares of the issuer's $.001 par value common stock issued and
outstanding.
1
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GOLF TWO, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET - SEPTEMBER 30, 2004
(UNAUDITED)
ASSETS
Current assets -
cash and cash equivalents $ 24,843
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities -
accounts payable and accrued expenses $ 4,700
-----------
Note payable, related party 50,000
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Stockholders' deficit:
Preferred stock, $0.001 par value, 5,000,000 shares authorized;
no shares issued or outstanding -
Common stock, $0.001 par value, 50,000,000 shares authorized;
7,418,336 issued and outstanding 7,418
Additional paid-in capital 154,507
Deficit accumulated during development stage (191,782)
-----------
(29,857)
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$ 24,843
===========
The accompanying notes form an integral part of these financial statements.
2
GOLF TWO, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE PERIOD
FOR THE THREE MONTHS FOR THE NINE MONTHS FROM MARCH 15,
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, 2001 (INCEPTION)
2004 2003 2004 2003 TO SEPTEMBER 30, 2004
------------ ------------ ------------ ------------ -----------------
Net revenue $ - $ - $ - $ - $ -
General and administrative expenses 6,419 4,300 22,337 19,024 189,782
------------ ------------ ------------ ------------ ----------------
Loss from operations (6,419) (4,300) (22,337) (19,024) (189,782)
Other income (expense):
Interest income - 3 - 58 300
Interest expense (500) (--) (1,500) - (2,300)
------------ ------------ ------------ ------------ ----------------
Loss before provision for income taxes (6,919) (4,297) (23,837) (18,966) (191,782)
Provision for income taxes - - - - -
------------ ------------ ------------ ------------ ----------------
Net loss $ (6,919) $ (4,297) $ (23,837) $ (18,966) $ (191,782)
============ ============ ============ ============ ================
Net loss available to common stockholders
per common share - basic and dilutive:
Loss per common share $ (0.00) $ (0.00) $ (0.00) $ (0.00) $ (0.03)
============ ============ ============ ============ ================
Weighted average common shares
outstanding - basic and dilutive 7,418,336 7,418,336 7,418,336 7,418,336 5,988,685
============ ============ ============ ============ ================
The accompanying notes form an integral part of these financial statements.
3
GOLF TWO, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' DEFICIT
DEFICIT
ACCUMULATED
ADDITIONAL DURING TOTAL
COMMON STOCK PAID-IN DEVELOPMENT STOCKHOLDERS'
SHARES AMOUNT CAPITAL STAGE EQUITY (DEFICIT)
-------------- --------------- --------------- --------------- ---------------
Balance at March 15, 2001, - $ - $ - $ - $ -
date of incorporation
Issuance of Founders Shares for
services at $0.01 per share
(March 2001) 2,325,000 2,325 - - 2,325
Capital contribution for office space - - 1,500 - 1,500
Net loss - - - (14,303) (14,303)
-------------- --------------- --------------- --------------- ---------------
Balance at December 31, 2001 2,325,000 2,325 1,500 (14,303) (10,478)
Issuance of common stock for
services at $0.03 per share
(February 2002) 3,000,000 3,000 87,000 - 90,000
Issuance of common stock for cash
at $0.03 per share (April 2002) 2,093,336 2,093 60,707 - 62,800
Capital contribution for office space
and interest expense - - 1,400 - 1,400
Net loss - - - (123,572) (123,572)
-------------- --------------- --------------- --------------- ---------------
Balance at December 31, 2002 7,418,336 7,418 150,607 (137,875) 20,150
Capital contribution for office space
and interest expense - - 1,500 - 1,500
Net loss - - - (30,070) (30,070)
-------------- --------------- --------------- --------------- ---------------
Balance at December 31, 2003 7,418,336 7,418 152,107 (167,945) (8,420)
Capital contribution for office space
and interest expense (unaudited) - - 2,400 - 2,400
Net loss for the nine months ended
September 30, 2004 (unaudited) - - - (23,837) (23,837)
-------------- --------------- --------------- --------------- ---------------
Balance at September 30, 2004 (unaudited) 7,418,336 $ 7,418 $ 154,507 $ (191,782) $ (29,857)
============== =============== =============== =============== ===============
The accompanying notes form an integral part of these financial statements.
4
GOLF TWO, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE PERIOD
FOR THE NINE MONTHS FROM MARCH 15,
ENDED SEPTEMBER 30, 2001 (INCEPTION)
2004 2003 TO SEPTEMBER 30, 2004
-------------------- ------------------- ---------------------
Cash flows provided by (used for) operating activities:
Net loss $ (23,837) $ (18,966) $ (191,782)
-------------------- ------------------- ---------------------
Adjustments to reconcile net loss to net cash
provided by (used for) operating activities:
Non-cash issuance of common stock for services - - 92,325
Non-cash contribution to capital 2,400 900 6,800
Increase (decrease) in liabilities -
accounts payable and accrued expenses (4,450) (3,850) 4,700
-------------------- ------------------- ---------------------
Total adjustments (2,050) (2,950) 103,825
-------------------- ------------------- ---------------------
Net cash used for operating activities (25,887) (21,916) (87,957)
-------------------- ------------------- ---------------------
Cash flows provided by (used for) financing activities:
Proceeds from note payable-related party - - 60,000
Payments on note payable-related party - - (10,000)
Proceeds from issuance of common stock - - 62,800
-------------------- ------------------- ---------------------
Net cash provided by financing activities - - 112,800
-------------------- ------------------- ---------------------
Net increase (decrease) in cash (25,887) (21,916) 24,843
Cash, beginning of period 50,730 27,150 -
-------------------- ------------------- ---------------------
Cash, end of period $ 24,843 $ 5,234 $ 24,843
==================== =================== =====================
Supplemental disclosure of cash flow information:
Income taxes paid $ - $ - $ -
==================== =================== =====================
Interest paid $ - $ - $ -
==================== =================== =====================
Supplemental disclosure of non-cash financing activities:
In April 2001, the Company entered into a $10,000 non-interest bearing note with
a stockholder. The note was due upon demand and repaid in April 2002. The
Company recorded $800 of interest expense on this note at 8% per annum as a
contribution to capital for the period from March 15, 2001 (inception) to
December 31, 2002.
An officer of the Company provices office space to the Company for $100 per
month on a month-to-month basis, which was recorded as a contribution to
capital. Total office expense for the three months ended September 30, 2004 and
2003 and for the period from March 15, 2001 (inception) to September 30, 2004
amounted to $300, $300, and $5,000, respectively.
In March 15, 2001, the Company issued 2,325,000 shares of its common stock in
exchange for services to incorporate the Company, totaling $2,325. The Founder
Shares were valued at the par value of the Company's common stock, which
represented its fair market value on the date of issuance.
In February 2002, 3,000,000 shares of common stock were issued at $0.03 per
share in exchange for prior services rendered for a total of $90,000, which
represented its fair market value on the date of issuance.
On November 5, 2003, the Company was loaned $50,000 by a stockholder in exchange
for a promissory note. For the three and nine months ended September 30, 2004
and for the period from March 15, 2001 (inception) to September 30, 2004, the
Company recorded interest expense of $500, $1,500, and $1,800, respectively,
related to this note as a contribution to capital.
The accompanying notes form an integral part of these financial statements.
5
GOLF TWO, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003 AND THE
PERIOD FROM MARCH 15, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
NATURE OF BUSINESS:
Golf Two, Inc. (the "Company") is currently a development stage company under
the provisions of Statement of Financial Accounting Standards ("SFAS") No. 7 and
was incorporated under the laws of the State of Delaware on March 15, 2001. The
Company plans to operate retail golf stores that will feature indoor golf
instruction and sell custom golf clubs throughout California. As of September
30, 2004, the Company has not produced revenues since inception (unaudited) and
will continue to report as a development stage company until significant
revenues are produced.
INTERIM FINANCIAL STATEMENTS:
The accompanying unaudited financial statements for the three and nine months
ended September 30, 2004 include all adjustments (consisting of only normal
recurring accruals), which, in the opinion of management, are necessary for a
fair presentation of the results of operations for the periods presented.
Interim results are not necessarily indicative of the results to be expected for
a full year. The unaudited financial statements should be read in conjunction
with the audited financial statements included in the 10-KSB, as filed with the
Securities and Exchange Commission on March 19, 2004 for the year ended December
31, 2003.
BASIS OF PRESENTATION:
The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplate continuation of the Company as a going concern. However, the Company
has no established source of revenue and, without realization of additional
capital, it would be unlikely for the Company to continue as a going concern.
This matter raises substantial doubt about the Company's ability to continue as
a going concern.
Management recognizes that the Company must generate additional resources to
enable it to continue operations. Management intends to continue to raise
additional financing through debt financing and equity financing or other means
and interests that it deems necessary, with a view to moving forward and
sustaining a prolonged growth in its strategy phases. However, no assurance can
be given that the Company will be successful in raising additional capital.
Further, there can be no assurance, assuming the Company successfully raises
additional equity, that the Company will achieve profitability or positive cash
flow. If management is unable to raise additional capital and expected
significant revenues do not result in positive cash flow, the Company will not
be able to meet its obligations and may have to cease operations.
The Company's expenses will significantly increase as it begins to implement its
business plan and currently has no source of revenue. Management hopes that the
Company's initial source of revenue will be sales from its proposed website.
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
On November 5, 2003, the Company entered into a promissory note for $50,000 with
one of its shareholders, payable by November 5, 2008, at the rate of 4% per year
calculated yearly, in order to engage a web developer. However, management
estimates that its proposed website will not be operational until late 2004.
Management hopes that, once operational, the website will become a source of
revenue to the Company.
Subsequently, the Company plans to locate and begin developing its first brick
and mortar retail location, which management anticipates will not occur before
2005. To begin that step, management recognizes that the Company's funding needs
will be significantly greater and it will require additional sources of funding
since the Company is not yet able to generate revenues from operations. Because
the Company does not currently have the funds it believes are needed to open its
first retail location, and because revenues that may be generated from operation
of the Company's proposed website are likely not to be sufficient, the Company
hopes to raise an additional $475,000, the amount management estimates it needs
need to open its first retail location. Management projects that such financing
will need to be raised through borrowings and equity financing. Management hopes
to begin raising this amount during 2004. If the Company fails to raise this
amount by the end of 2004, management will focus the Company's efforts on its
proposed internet operations and website.
USE OF ESTIMATES:
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reported periods.
(2) EQUITY:
PREFERRED STOCK
The Company is authorized to issue 5,000,000 shares of preferred stock, par
value at $.001 per share. As of September 30, 3004, none of the shares were
issued or outstanding (unaudited).
6
(2) EQUITY, CONTINUED:
COMMON STOCK
In March 2001, the Company issued 5,650,000 shares of its common stock in
exchange for services to incorporate the Company. In February 2002, the Board of
Directors declared that the Company had not received consideration for the
issuance of 3,325,000 shares of the previously issued shares and canceled those
shares leaving 2,325,000 shares totaling $2,325. The Founder Shares were valued
at the par value of the Company's common stock, which represented its fair
market value on the date of issuance. The Company has not recognized the
issuance of the cancelled shares in the financial statements.
In February 2002, 3,000,000 shares of common stock were issued at $0.03 per
share in exchange for prior services rendered for a total of $90,000, which
represented its fair market value on the date of issuance.
In April 2002, the Company performed a private placement and issued 2,093,366
shares of its common stock at $0.03 per share for an aggregate total of $62,800.
(3) RELATED PARTY TRANSACTIONS:
OFFICE SPACE
A stockholder of the Company provided office space to the Company at $100 per
month on a month-to-month basis, which was recorded as a contribution to
capital. Total office expense for the three and nine months ended September 30,
2004 and 2003 amounted to $300 and $900, respectively, and for the period from
March 15, 2001 (inception) to September 30, 2004 amounted to $5,000 (unaudited).
NOTE PAYABLE
On November 5, 2003, the Company was loaned $50,000 by a stockholder in exchange
for a promissory note. The principal is due and payable on November 5, 2008 with
interest payable on the unpaid balance at 4% per annum. The Company records
interest expense as a contribution to capital. Total interest expense for the
three and nine months ended September 30, 2004 amounted to $500 and $1,500,
respectively, and for the period from March 15, 2001 (inception) to September
30, 2004 amounted to $1,800 (unaudited).
7
ITEM 2. PLAN OF OPERATIONS
THIS FOLLOWING INFORMATION SPECIFIES CERTAIN FORWARD-LOOKING STATEMENTS OF
MANAGEMENT OF THE COMPANY. FORWARD-LOOKING STATEMENTS ARE STATEMENTS THAT
ESTIMATE THE HAPPENING OF FUTURE EVENTS AND ARE NOT BASED ON HISTORICAL FACT.
FORWARD-LOOKING STATEMENTS MAY BE IDENTIFIED BY THE USE OF FORWARD-LOOKING
TERMINOLOGY, SUCH AS "MAY", "SHALL", "COULD", "EXPECT", "ESTIMATE",
"ANTICIPATE", "PREDICT", "PROBABLE", "POSSIBLE", "SHOULD", "CONTINUE", OR
SIMILAR TERMS, VARIATIONS OF THOSE TERMS OR THE NEGATIVE OF THOSE TERMS. THE
FORWARD-LOOKING STATEMENTS SPECIFIED IN THE FOLLOWING INFORMATION HAVE BEEN
COMPILED BY OUR MANAGEMENT ON THE BASIS OF ASSUMPTIONS MADE BY MANAGEMENT AND
CONSIDERED BY MANAGEMENT TO BE REASONABLE. OUR FUTURE OPERATING RESULTS,
HOWEVER, ARE IMPOSSIBLE TO PREDICT AND NO REPRESENTATION, GUARANTY, OR WARRANTY
IS TO BE INFERRED FROM THOSE FORWARD-LOOKING STATEMENTS.
THE ASSUMPTIONS USED FOR PURPOSES OF THE FORWARD-LOOKING STATEMENTS SPECIFIED IN
THE FOLLOWING INFORMATION REPRESENT ESTIMATES OF FUTURE EVENTS AND ARE SUBJECT
TO UNCERTAINTY AS TO POSSIBLE CHANGES IN ECONOMIC, LEGISLATIVE, INDUSTRY, AND
OTHER CIRCUMSTANCES. AS A RESULT, THE IDENTIFICATION AND INTERPRETATION OF DATA
AND OTHER INFORMATION AND THEIR USE IN DEVELOPING AND SELECTING ASSUMPTIONS FROM
AND AMONG REASONABLE ALTERNATIVES REQUIRE THE EXERCISE OF JUDGMENT. TO THE
EXTENT THAT THE ASSUMED EVENTS DO NOT OCCUR, THE OUTCOME MAY VARY SUBSTANTIALLY
FROM ANTICIPATED OR PROJECTED RESULTS, AND, ACCORDINGLY, NO OPINION IS EXPRESSED
ON THE ACHIEVABILITY OF THOSE FORWARD-LOOKING STATEMENTS. WE CANNOT GUARANTY
THAT ANY OF THE ASSUMPTIONS RELATING TO THE FORWARD-LOOKING STATEMENTS SPECIFIED
IN THE FOLLOWING INFORMATION ARE ACCURATE, AND WE ASSUME NO OBLIGATION TO UPDATE
ANY SUCH FORWARD-LOOKING STATEMENTS.
CRITICAL ACCOUNTING POLICY AND ESTIMATES. Our Management's Discussion and
Analysis of Financial Condition and Results of Operations section discusses our
consolidated financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States of America. The
preparation of these financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. On an on-going basis, management evaluates
its estimates and judgments, including those related to revenue recognition,
accrued expenses, financing operations, and contingencies and litigation.
Management bases its estimates and judgments on historical experience and on
various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying value of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions. The most significant accounting estimates inherent in
the preparation of our financial statements include estimates as to the
appropriate carrying value of certain assets and liabilities which are not
readily apparent from other sources. These accounting policies are described at
relevant sections in this discussion and analysis and in the notes to the
consolidated financial statements included in our Quarterly Report on Form
10-QSB for the three months ended September 30, 2004.
8
We incorporated in Delaware on March 15, 2001. We are a development stage
company and we plan to market and sell our goods and services by means of our
proposed website, www.golftwo.com. As of November 2003, we have engaged Pacific
Coast Consulting to develop our website. We anticipate that the cost for
developing our website will be approximately $17,500, and that our website will
be completed by the fourth quarter of 2004 or first quarter of 2005.
We have not taken any other steps to implement our business plan except for
engaging this website consultant and obtaining $50,000 in funding as described
herein.
Once we have sufficient funds, as discussed below, we hope to initiate,
establish and operate retail golf stores which will feature indoor golf
instruction and custom golf clubs. Each retail location will offer custom-fitted
golf clubs, individualized to our customers' needs and marketed under the Golf
Two brand name. Golf instruction and training will be conducted on-site by
in-store staff under the direction of a professional at each store.
We anticipate that our retail stores will be approximately 5,000 square feet and
will include two virtual reality golf simulators, two computer swing analysis
systems and a club fitting analysis system. Private label and brand name golf
merchandise and related products will also be available for sale at each retail
store. We seek to promote the enjoyment of the game of golf by helping golfing
enthusiasts of all levels play better. Accordingly, we intend to offer indoor
golf training available and individualized, quality golf clubs and related
products to our clientele.
LIQUIDITY AND CAPITAL RESOURCES. We have cash of $24,843 as of September 30,
2004. Our total assets were also $24,843 as of September 30, 2004. Our current
liabilities were $4,700 as of September 30, 2004, consisting only of accounts
payable. We also had $50,000 in a note payable to a related party. We believe
our cash is sufficient to pay our day to day expenses for the next twelve
months.
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003.
RESULTS OF OPERATIONS.
REVENUES. We have realized no revenues from our inception on March 15, 2001 to
September 30, 2004.
OPERATING EXPENSES. For the three months ended September 30, 2004, our operating
expenses were $6,419, which was represented solely by general and administrative
expenses. We also had $500 in interest expense. Therefore, for the three months
ended September 30, 2004, we experienced a net loss of $6,919. This is in
comparison to the three months ended September 30, 2003, where we had operating
expenses of $4,300, also represented solely by general and administrative
expenses. Our operating expenses were lower for the period ending in 2004
because during the same period ending in 2003 we were preparing our registration
statement. For the three months ended September 30, 2003, we also had $3 in
interest income and no interest expense, making our net loss $4,297. Our
interest expenses are due to the note payable we entered into during the fourth
quarter of 2003, so we had no comparable expense during this period in 2003.
9
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003.
RESULTS OF OPERATIONS.
OPERATING EXPENSES. For the nine months ended September 30, 2004, our total
expenses were $22,337, which was represented solely by general and
administrative expenses. We also had $1,500 in interest expense. Therefore, for
the nine months ended September 30, 2004, we experienced a net loss of $23,837.
This is in comparison to the nine months ended September 30, 2003, where we had
expenses of $19,024 from operations, which was represented solely by general and
administrative expenses. We also had $58 of interest income, making our net loss
$18,966. Operating expenses for the nine months ended September 30, 2004 were
significantly higher than for the same period ended September 30, 2003, because
during that later period we were incurring expenses associated with the
development of our business. For the period from inception on March 15, 2001
through September 30, 2004, we experienced a net loss from operations of
$189,782, and we also had $300 in interest income and $2,300 in interest
expense, so that our net loss since inception totaled $191,782. Of that amount,
$90,000 was represented by stock issued in exchange for services.
OUR PLAN OF OPERATION FOR THE NEXT TWELVE MONTHS. To effectuate our business
plan during the next twelve months, we plan to begin marketing our products and
services by means of our proposed website and develop our brand image. We have
been focused on developing our brand name and have reserved the domain name
www.golftwo.com, though our website is not yet operational. Our operations to
date have been focused on engaging a website contractor, which we were able to
do by borrowing funds from one of our shareholders, and locating sources of
additional funding needed to further implement our business plan. We have not
taken any other steps to implement our business plan to date. Our next step will
be to attempt to establish strategic relationships with providers of golf
products. In the next twelve months, we hope to accomplish the steps listed
below to implement our business plan:
o Complete development of our website to promote our brand name and
services and take product orders;
o Begin advertising by means of direct mail, flyers and magazine inserts
to develop brand name recognition;
o Engage golf pro / instructor staff;
o Explore possible suitable retail locations for our initial store; and
o Explore debt financing options
As of November 2003, we have engaged Pacific Coast Consulting to develop our
proposed website, located at www.golftwo.com. We have already reserved the
domain name. We anticipate that the cost for developing our website will be
approximately $17,500, and that our website will be completed by the fourth
quarter of 2004 or the first quarter of 2005. We hope to use our website to
market our proposed selection of customized golf clubs which we hope to obtain
from local independent golf retailers, such as golf pro shops located at golf
courses.
10
During the time our website is being developed, we plan to review the website
templates for each page of our website as they become available from our website
contractor. We also plan to begin marketing space on our website to potential
suppliers of golf equipment, which we hope to engage as "Community Members" on
our site. We propose to use mailers, telemarketing, search engines and other
media to promote our brand name among potential suppliers.
Before our website goes "live", we will allow potential suppliers or "Community
Members" to view these templates after they are uploaded to the privately
viewable version of our website as it is being constructed. During this phase,
we hope to conclude agreements with these potential suppliers for us to sell
their products on our website.
Also, during the time our site is under construction, we also plan to locate the
specific golf shops, course pro shops and other potential suppliers whom we hope
to engage as part of our supplier base. Each potential supplier will be notified
of the terms and conditions of being one of our "Community Members" and how and
when they will be able to begin uploading their inventory to our site. We will
not go live with our site until we have engaged a minimum number of Community
Members. We believe that some of the marketing tools that we will be using to
attract "Community Members" are available at a nominal cost.
In addition to our proposed online "Community," we hope to utilize two
fulfillment companies to help us fulfill our internet orders. One of our
officers and directors personally knows the owners of two independent
fulfillment companies, and they have verbally agreed to provide us with a net
discount once a volume of orders is established. We envision that these
companies will purchase, stock and finance all orders and a complete inventory
product line that will be available to customers online. We believe that this
will give us a very large product line with minimal capital outlay. We plan to
generate revenues from the commissions of everything sold from our site.
As our website is being launched, we intend to take steps to acquire and operate
from our first retail location, which we believe will require approximately
$475,000 in funding to lease a site and prepare it for retail operations. We are
continuing to locate additional funds sufficient to finance this proposed retail
location, though we have not yet been able to do so to date. Once we have
secured financing, we plan to enter into a lease for the premises we will use
for our retail location. Once the lease has been secured, we will arrange to
begin tenant improvements, begin vendor procurement for inventory, install
fixtures and equipment, hire and train employees, and undertake other necessary
efforts to begin operations. As of November 2003, we have identified two
potential locations and have begun discussions with the owners of these
properties, though we have not yet begun discussions regarding possible lease
terms. As of November 2003, we have also begun discussions with one of our
officers and directors, who is an architect, who we believe will assist us with
quantifying the costs of the tenant improvements that we would require,
depending on which of the two proposed premises are leased. In addition, we have
spoken with a tenant improvement specialist at Bickel Underwood Architect
located in Newport Beach, California as to the scope of this type of project.
11
We have cash of $24,843 as of September 30, 2004. In the opinion of management,
available funds will not satisfy our working capital requirements through the
next twelve months if we are to take additional steps to implement our business
plan. We believe that our expenses will significantly increase as we begin to
implement our business plan. Therefore, as of November 5, 2003, we have entered
into a promissory note for $50,000 with one of our shareholders, payable by
November 5, 2008, at the rate of 4% per year calculated yearly. These funds have
allowed us to engage a web developer, as we have no other source of revenues. We
estimate that our proposed website, our only potential source of revenue, will
not be operational until late 2004 or early 2005. Once we locate and begin
developing our first brick and mortar retail location, which we anticipate will
not occur before 2005, our funding needs will be significantly greater and we
will require additional sources of funding since we are not yet able to generate
revenues from operations. We do not currently have the funds we believe we need
to open our first retail location, but hope to raise an additional $475,000, the
amount we estimate we need to open our first retail location, within the next 12
to 18 months. We will need to raise this amount through borrowings and equity
financing since we have no other source of revenue. If we fail to raise this
amount by the end of 2004, we will focus our efforts on our internet operations
and website. Our forecast for the period for which our financial resources will
be adequate to support our operations involves risks and uncertainties and
actual results could fail as a result of a number of factors.
We are not currently conducting any research and development activities other
than the development of our website and do not anticipate conducting such
activities in the near future. Unless we raise funds to accommodate additional
expenditures, we do not anticipate that we will purchase any significant
equipment. In the event that we generate significant revenues and expand our
operations, then we may need to hire additional employees or independent
contractors as well as purchase or lease additional equipment. We do not
anticipate incurring expenses to hire a golf pro or instructor staff, at least
initially, in that we hope to engage such individuals on a fee-splitting or
commission basis.
ITEM 3. CONTROLS AND PROCEDURES
The Company maintains a system of disclosure controls and procedures that
is designed to provide reasonable assurance that information, which is required
to be disclosed by the Company in the reports that it files or submits under the
Securities and Exchange Act of 1934, as amended, is accumulated and communicated
to management in a timely manner. The Company's Chief Executive Officer and
Chief Financial Officer have evaluated this system of disclosure controls and
procedures as of the end of the period covered by this annual report, and
believe that the system is operating effectively to ensure appropriate
disclosure. There have been no changes in the Company's internal control over
financial reporting during the most recent fiscal year that have materially
affected, or are reasonably likely to materially affect, the Company's internal
control over financial reporting.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
31. Rule 13a-14(a)/15d-14(a) Certifications.
32. Section 1350 Certifications.
(b) Reports on Form 8-K
None.
12
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Golf Two, Inc.,
a Delaware corporation
November 15, 2004 By: /s/ David Bennett
-----------------------------------
David Bennett
principal executive, accounting and
financial officer, president, treasurer,
and a director