U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Golf Two, Inc.
--------------
(Exact name of registrant as specified in its charter)
Delaware 5941 04-3625550
-------- ---- ----------
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation or
organization)
1537 West Orangewood Avenue, Orange, California 92868
----------------------------------------------- -----
(Address of registrant's principal executive offices) (Zip Code)
(714) 633-1400
--------------
(Registrant's Telephone Number, Including Area Code)
Michael J. Muellerleile
MC Law Group
4100 Newport Place, Suite 830
Newport Beach, California 92660
949.250.8655
Facsimile 949.250.8656
(Name, Address and Telephone Number of Agent for Service)
Approximate date of proposed sale to the public: From time to time after this
Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] _______
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]_______
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
================================== =================== ==================== ======================= ================
Title of each class Amount Proposed maximum Proposed maximum Amount of
of securities to be offering price aggregate registration
to be registered registered per share offering price fee
---------------------------------- ------------------- -------------------- ----------------------- ----------------
Common Stock, $.001 par value 2,418,336 $0.10 $241,833 $22.25
================================== =================== ==================== ======================= ================
The offering price per share for the selling security holders was estimated
solely for the purpose of calculating the registration fee pursuant to Rule 457
of Regulation C.
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until this Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
1
Preliminary Prospectus
Golf Two, Inc.,
a Delaware corporation
2,418,336 Shares of Common Stock
This prospectus relates to 2,418,336 shares of common stock of Golf Two, Inc.,
which are issued and outstanding shares of our common stock, acquired by the
selling security holders in private placement transactions which were exempt
from the registration and prospectus delivery requirements of the Securities Act
of 1933. Our common stock is presently not traded on any market or securities
exchange, and we have not applied for listing or quotation on any public market.
See "Risk Factors" on pages 5 to 8 for factors to be considered before investing
in the shares of our common stock.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of the prospectus. Any representation to the contrary is a
criminal offense.
The information in this prospectus is not complete and may be changed. The
selling security holders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
The date of this prospectus is September 16, 2002
Subject to completion.
2
TABLE OF CONTENTS
Prospectus Summary ............................................................4
Risk Factors...................................................................5
Forward Looking Statements.....................................................7
Use of Proceeds................................................................7
Determination of Offering Price................................................8
Dilution.......................................................................8
Selling Security Holders.......................................................8
Plan of Distribution...........................................................9
Legal Proceedings.............................................................10
Directors, Executive Officers, Promoters and Control Persons..................10
Security Ownership of Certain Beneficial Owners and Management................11
Description of Our Securities.................................................11
Interest of Named Experts and Counsel.........................................12
Disclosure of Commission Position on Indemnification for
Securities Act Liabilities....................................................12
Organization Within Last Five Years...........................................12
Description of Business.......................................................12
Management's Discussion and Analysis of Financial Condition
and Results of Operations.....................................................14
Description of Property.......................................................15
Certain Relationships and Related Transactions................................16
Market for Common Equity and Related Stockholder Matters......................16
Executive Compensation........................................................17
Financial Statements..........................................................18
Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure......................................................31
Legal Matters.................................................................31
Experts.......................................................................31
Additional Information........................................................31
Indemnification of Directors and Officers.....................................31
Other Expenses of Issuance and Distribution...................................33
Recent Sales of Unregistered Securities.......................................33
Exhibits......................................................................34
Undertakings..................................................................34
Signatures....................................................................35
Outside Back Cover Page
Dealer Prospectus Delivery Obligation
Until _______, all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealers' obligations to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
3
Prospectus Summary
------------------
Our business: We incorporated in Delaware on March 15,
2001. Our principal business address is 1537
West Orangewood Avenue, Orange, California
92868. Our telephone number is 714.633.1400.
We are a developmental stage company and we
plan 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.
Number of shares being offered: The selling security holders want to sell
2,418,336 shares of our common stock. The
offered shares were acquired by the selling
security holders in private placement
transactions, which were exempt from the
registration and prospectus delivery
requirements of the Securities Act of 1933.
The selling security holders will sell their
shares at $0.10 per share until our shares
are quoted on the OTC Bulletin Board and
thereafter at prevailing market prices or
privately negotiated prices.
Number of shares outstanding: 7,418,336 shares of our common stock are
issued and outstanding. We have no other
securities issued.
Estimated use of proceeds: We will not receive any of the proceeds from
the sale of those shares being offered.
4
RISK FACTORS
In addition to the other information in this prospectus, the following risk
factors should be considered carefully in evaluating our business before
purchasing any of our shares of common stock. A purchase of our common stock is
speculative and involves a significant and substantial number of risks. Any
person who is not in a position to lose the entire amount of his investment
should forego purchasing our common stock.
Risks related to our business:
We are a new company with losses since our formation and we may not be able to
achieve profitable operations or raise sufficient financing to continue with our
business plans.
We were incorporated on March 15, 2001. Our lack of operating history makes an
evaluation of our business and prospects very difficult. Our prospects must be
considered speculative considering the risks, expenses and difficulties
frequently encountered in the golf industry. We will encounter difficulties as
an early stage company with little operating capital in the rapidly evolving and
highly competitive golf industry. To implement our business plan and open our
planned locations, we will be required to obtain additional financing. At this
time, we have no firm commitments for such financing. If we are unable to raise
additional financing, our plans to open a retail location will be harmed. If our
planned retail facilities are not successful and if we continue to experience
losses, our ability to continue with our business plan will be harmed. As a
result, our shareholders could lose their entire investment.
We do not have commitments for additional financing and our inability to obtain
acceptable financing will harm our development and growth strategy as we will be
unable to finance our development and any future expansion.
We will require substantial amounts of working capital to continue executing our
business plan, including, but not limited to, funds to secure our initial
location and funds for equipment and inventory. We cannot guaranty that
additional financing will be available. In fact, we have not yet identified the
source of any such funding. We expect to require substantial capital to fund our
development and operating expenses. We anticipate that our available funds will
be sufficient to meet our anticipated needs for working capital and capital
expenditures through the next 12 months. Our anticipation of the time through
which our financial resources will be adequate to support our operations is a
forward-looking statement that involves risks and uncertainties, and actual
results could vary as a result of a number of factors, including those described
elsewhere in this risk factor section. We cannot be certain that additional
financing will be available to us on favorable terms or at all. If we are unable
to obtain sufficient additional capital when needed, we could be forced to alter
our business strategy, or delay or abandon some of our development plans. Any of
these events would impair our ability to raise revenue and would likely
interfere with our ability to expand our planned operations.
We face significant competition from traditional golf retail locations. Our
operations and our ability to generate revenues will be harmed if we are unable
to establish a positive reputation as a provider of golf products.
Our success will depend on our ability to compete in the highly competitive
retail golf industry. To succeed, we must establish our reputation for providing
quality golf products and instruction. We must establish our initial presence in
Orange County, California. We will compete with traditional golf retail
locations that are either independent shops or part of large regional or
national retail chains such as Roger Dunn or Nevada Bob's. We may not be able to
compete effectively with those traditional golf retail locations. If we do not
compete effectively, our ability to earn revenue will be affected and we may not
be able to continue our planned operations.
5
We have no existing brand identity and customer loyalty; if we fail to develop
and maintain our proposed brand, our business could suffer.
Since we have not yet launched the Golf Two brand, we currently do not have
strong brand identity or brand loyalty. We believe that establishing and
maintaining brand identity and brand loyalty is critical to attracting
consumers. In order to attract and retain consumers and vendors and respond to
competitive pressures, we may need to spend substantial funds to create and
maintain brand loyalty among these groups. If our branding efforts are not
successful, our ability to generate significant revenues will be harmed.
Our officers and directors are engaged in other activities which could divert
their time away from our activities and could conflict with our business
interests which could harm our ability to continue proceeding with our plan to
open retail locations.
Our officers and directors engage in other activities. Those activities may
divert our officers and directors' time away from our business activities. If
our officers and directors are not able to devote sufficient time to our
business activities, our ability to operate at a profit could be harmed. Our
officers and directors may have conflicts of interests in allocating time,
services, and functions between the other business ventures in which those
persons may be or become involved. Neither of our officers devotes their entire
business hours to our operations. However, we believe that as soon as we secure
the location for our first store in Orange County, California, our officers will
increase the time they dedicate to our business.
Risks related to owning our common stock:
Our officers, directors and principal security holders own approximately 70.10%
of our outstanding shares of common stock, allowing these shareholders control
matters requiring approval of our shareholders.
As a result of such ownership by our officers, directors and principal security
holders, investors will have no control over matters requiring approval by our
security holders, including the election of directors. Our officers and
directors can control matters requiring approval by our security holders,
including the election of directors. Moreover, if our officers and directors
decide to sell a significant number of their shares, investors will likely lose
confidence in our ability to earn revenues and will see such a sale as a sign
that our business is failing. Each of these factors by independently or
collectively, will likely harm the market price of our stock. Moreover, such
concentrated control may also make it difficult for our shareholders to receive
a premium for their shares of our common stock in the event we merge with a
third party or enter into different transactions which require shareholder
approval.
We are registering 200,000 shares of common stock owned by our officers and
directors. Those officers and directors may sell those shares as soon as
possible, which could decrease the price of our common stock and reduce their
desire to see us succeed.
In the event that this individual sells his shares, the price of our common
stock could decrease significantly. Also, a conflict of interest will occur
between his duties to us and his personal interest in selling his shares. We
cannot assure you that this individual will not sell those shares as soon as
they are registered.
Because we will be subject to the "penny stock" rules, the level of trading
activity in our stock may be reduced, which may make it difficult for investors
in our common stock to sell their shares.
6
Broker-dealer practices in connection with transactions in "penny stocks" are
regulated by certain penny stock rules adopted by the Securities and Exchange
Commission. Penny stocks, like shares of our common stock, generally are equity
securities with a price of less than $5.00, other than securities registered on
certain national securities exchanges or quoted on NASDAQ. The penny stock rules
require a broker-dealer, prior to a transaction in a penny stock not otherwise
exempt from the rules, to deliver a standardized risk disclosure document that
provides information about penny stocks and the nature and level of risks in the
penny stock market. The broker-dealer also must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction, and, if the broker-dealer
is the sole market maker, the broker-dealer must disclose this fact and the
broker-dealer's presumed control over the market, and monthly account statements
showing the market value of each penny stock held in the customer's account. In
addition, broker-dealers who sell these securities to persons other than
established customers and "accredited investors" must make a special written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. Consequently,
these requirements may have the effect of reducing the level of trading
activity, if any, in the secondary market for a security subject to the penny
stock rules, and investors in our common stock may find it difficult to sell
their shares.
We lack a public market for shares of our common stock, which may make it
difficult for investors to sell their shares.
There is no public market for shares of our common stock. An active public
market may not develop or be sustained. Therefore, investors may not be able to
find purchasers for their shares of our common stock. Should there develop a
significant market for our shares, the market price for those shares may be
significantly affected by such factors as our financial results and introduction
of new products and services. Factors such as announcements of new or enhanced
products by us or our competitors and quarter-to-quarter variations in our
results of operations, as well as market conditions in our sector may have a
significant impact on the market price of our shares. Moreover, the stock market
has experienced extreme volatility that has particularly affected the market
prices of stock of many companies and that often has been unrelated or
disproportionate to the operating performance of those companies.
Because we lack a public market for shares of our common stock, the selling
security holders will arbitrarily determine the offering price of the shares.
Therefore, investors may lose all or part of their investment if the price of
their shares is too high.
Our common stock is not publicly traded and we do not participate in an
electronic quotation medium for securities. We cannot guaranty that an active
public market for our stock will develop or be sustained. Therefore, the selling
security holders may arbitrarily determine the offering price of shares of our
common stock. Accordingly, purchasers may lose all or part of their investments
if the price of their shares is too high. A purchase of our stock in this
offering would be unsuitable for a person who cannot afford to lose his entire
investment.
Forward Looking Statements
--------------------------
Information in this prospectus contains "forward looking statements" which can
be identified by the use of forward-looking words such as "believes",
"estimates", "could", "possibly", "probably", "anticipates", "estimates",
"projects", "expects", "may", "will", or "should" or other variations or similar
words. No assurances can be given that the future results anticipated by the
forward-looking statements will be achieved. The following matters constitute
cautionary statements identifying important factors with respect to those
forward-looking statements, including certain risks and uncertainties that could
cause actual results to vary materially from the future results anticipated by
those forward-looking statements. Among the key factors that have a direct
bearing on our results of operations are the effects of various governmental
regulations, the fluctuation of our direct costs and the costs and effectiveness
of our operating strategy. Other factors could also cause actual results to vary
materially from the future results anticipated by those forward-looking
statements.
Use of Proceeds
---------------
We will not receive any proceeds from the sale of shares of our common stock
being offered by the selling security holders.
7
Determination of Offering Price
-------------------------------
The selling security holders will sell their shares at $0.10 per share until our
shares are quoted on the OTC Bulletin Board and thereafter at prevailing market
prices or privately negotiated prices.
Dilution
--------
The shares offered for sale by the selling security holders are already
outstanding and, therefore, do not contribute to dilution.
Selling Security Holders
------------------------
The following table sets forth information concerning the selling security
holders including:
1. the number of shares owned by each selling security holder prior to
this offering;
2. the total number of shares that are to be offered for each selling
security holder; and
3. the total number of shares and the percentage of common stock that
will be owned by each selling security holder upon completion of the
offering.
The shares offered for sale constitute all of the shares known to us to be
beneficially owned by the selling security holders. None of the selling security
holders has held any position or office with us, except as specified in the
following table. Other than the relationships described below, none of the
selling security holders had or have any material relationship with us. None of
the selling security holders is a broker-dealer or an affiliate of a
broker-dealer to our knowledge.
-------------------------------- ---------------------------------- ---------------------------------- -----------------------------
Name of Selling Security Holder Amount of Shares of Common Stock Amount of Shares of Common Stock Amount of Shares and the
Owned by Selling Security Holder to be Offered by the Selling Percentage of Common Stock
Before the Offering Security Holder Owned by Selling Security
Holder After the Offering is
Complete
-------------------------------- ---------------------------------- ---------------------------------- -----------------------------
------------------------------------------------------------------------------------------------------------------------------------
Jeff & Dawn Miller 66,667 66,667 0
------------------------------------------------------------------------------------------------------------------------------------
Mark Bartolo 33,333 33,333 0
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Shakeel Sorathia 100,000 100,000 0
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Lisa Kristin Forman 16,667 16,667 0
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Linda Bennett 133,333 133,333 0
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Kevin R. Moore 66,667 66,667 0
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Gina M. Sharp 66,667 66,667 0
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Anita L. De Barros 66,667 66,667 0
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Young Hom & Shellee Hom 16,667 16,667 0
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James M. Butchy 166,667 166,667 0
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Daniel R. Bernstein,
secretary, director 2,033,333 33,333 2,000,000 shares (26.96%)
------------------------------------------------------------------------------------------------------------------------------------
Ronald Rosenow 166,667 166,667 0
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Yvonne Homan 33,333 33,333 0
------------------------------------------------------------------------------------------------------------------------------------
William P. Ridley 33,333 33,333 0
------------------------------------------------------------------------------------------------------------------------------------
Howard Lawrence Hull III 16,667 16,667 0
------------------------------------------------------------------------------------------------------------------------------------
Glen Kangas 16,667 16,667 0
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Martha Gewertz 33,333 33,333 0
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Keri Ann Keele 10,000 10,000 0
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Leon Matthews &
Julie Webster-Matthews 16,667 16,667 0
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8
Gerda Osward 66,667 66,667 0
------------------------------------------------------------------------------------------------------------------------------------
Barbara J. Moore 66,667 66,667 0
------------------------------------------------------------------------------------------------------------------------------------
Robert DeLuna 66,667 66,667 0
------------------------------------------------------------------------------------------------------------------------------------
William H. Boren 16,667 16,667 0
------------------------------------------------------------------------------------------------------------------------------------
Becky Moore 66,667 66,667 0
------------------------------------------------------------------------------------------------------------------------------------
Curtis A. Stickfort 33,333 33,333 0
------------------------------------------------------------------------------------------------------------------------------------
Michelle Bennett, spouse of
David Bennett, our president,
treasurer and director 166,667 166,667 0
------------------------------------------------------------------------------------------------------------------------------------
Kent S. Handleman 66,667 66,667 0
------------------------------------------------------------------------------------------------------------------------------------
Edward C. Ball 33,333 33,333 0
------------------------------------------------------------------------------------------------------------------------------------
Phillip M. Handleman 166,667 166,667 0
------------------------------------------------------------------------------------------------------------------------------------
Albert DiPaolo 33,333 33,333 0
------------------------------------------------------------------------------------------------------------------------------------
Bradley Podosin 100,000 100,000 0
------------------------------------------------------------------------------------------------------------------------------------
George Scott Watrous 50,000 50,000 0
------------------------------------------------------------------------------------------------------------------------------------
James T. Smith 33,333 33,333 0
------------------------------------------------------------------------------------------------------------------------------------
Harry R. Steele 33,333 33,333 0
------------------------------------------------------------------------------------------------------------------------------------
Carol Jean Gehlke 325,000 325,000 0
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Plan of Distribution
--------------------
The selling security holders will sell their shares at $0.10 per share until our
shares are quoted on the OTC Bulletin Board and thereafter at prevailing market
prices or privately negotiated prices. The selling security holders may sell our
common stock in negotiated transactions or otherwise. The selling security
holders may sell our common stock at prices then prevailing or at negotiated
prices. The shares will not be sold in an underwritten public offering.
The shares may be sold directly or through brokers or dealers. The methods by
which the shares may be sold include:
o purchases by a broker or dealer as principal and resale by such broker
or dealer for its account;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
o privately-negotiated transactions.
Brokers and dealers engaged by selling security holders may arrange for other
brokers or dealers to participate. Brokers or dealers may receive commissions or
discounts from selling security holders, or, if any such broker-dealer acts as
agent for the purchaser of such shares, from such purchaser, in amounts to be
negotiated. Broker-dealers may agree with the selling security holders to sell a
specified number of such shares at a stipulated price per share, and, to the
extent such broker-dealer is unable to do so acting as agent for a selling
security holder, to purchase as principal any unsold shares at the price
required to fulfill the broker-dealer commitment to such selling security
holder. Broker-dealers who acquire shares as principal may resell those shares
from time to time in the over-the-counter market or otherwise at prices and on
terms then prevailing or then related to the then-current market price or in
negotiated transactions and, in connection with such resales, may receive or pay
commissions.
The selling security holders and any broker-dealers participating in the
distributions of the shares may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act of 1933. Any profit on the sale
of shares by the selling security holders and any commissions or discounts given
to any such broker-dealer may be deemed to be underwriting commissions or
discounts. The shares may also be sold pursuant to Rule 144 under the Securities
Act of 1933 beginning one year after the shares were issued.
We have filed the Registration Statement, of which this prospectus forms a part,
with respect to the sale of the shares by the selling security holders. The
selling security holders may not sell any or all of the offered shares.
9
Under the Securities Exchange Act of 1934 and the regulations thereunder, any
person engaged in a distribution of the shares of our common stock offered by
this prospectus may not simultaneously engage in market making activities with
respect to our common stock during the applicable "cooling off" periods prior to
the commencement of such distribution. Also, the selling security holders are
subject to applicable provisions which limit the timing of purchases and sales
of our common stock by the selling security holders.
We have informed the selling security holders that, during such time as they may
be engaged in a distribution of any of the shares we are registering by this
Registration Statement, they are required to comply with Regulation M. In
general, Regulation M precludes any selling security holder, any affiliated
purchasers and any broker-dealer or other person who participates in a
distribution from bidding for or purchasing, or attempting to induce any person
to bid for or purchase, any security which is the subject of the distribution
until the entire distribution is complete. Regulation M defines a "distribution"
as an offering of securities that is distinguished from ordinary trading
activities by the magnitude of the offering and the presence of special selling
efforts and selling methods. Regulation M also defines a "distribution
participant" as an underwriter, prospective underwriter, broker, dealer, or
other person who has agreed to participate or who is participating in a
distribution.
Regulation M prohibits any bids or purchases made in order to stabilize the
price of a security in connection with the distribution of that security, except
as specifically permitted by Rule 104 of Regulation M. These stabilizing
transactions may cause the price of our common stock to be more than it would
otherwise be in the absence of these transactions. We have informed the selling
security holders that stabilizing transactions permitted by Regulation M allow
bids to purchase our common stock if the stabilizing bids do not exceed a
specified maximum. Regulation M specifically prohibits stabilizing that is the
result of fraudulent, manipulative, or deceptive practices. Selling security
holders and distribution participants are required to consult with their own
legal counsel to ensure compliance with Regulation M.
Legal Proceedings
-----------------
There are no legal actions pending against us nor are any legal actions
contemplated by us at this time.
Directors, Executive Officers, Promoters and Control Persons
------------------------------------------------------------
Executive Officers and Directors. Our officers and directors are specified on
the table below:
==================== =============== =========================================
Name Age Position
-------------------- --------------- -----------------------------------------
David Bennett 37 President, Treasurer, Director
-------------------- --------------- -----------------------------------------
Daniel Bernstein 42 Secretary, Director
==================== =============== =========================================
David Bennett. Mr. Bennett has been our president, treasurer and one of our
directors since February 2002. Mr. Bennett is responsible for marketing,
business development and day to day operations of our management. From August
2001 to the present, Mr. Bennett has been employed as a programmer and manager
by Cyberbucks.com. From 1994 to 2000, Mr. Bennett was the president and manager
of Beneducci, Inc., and from 1982 to 1994, Mr. Bennett was a manager, partner
and technician of Ramco Refrigeration. Mr. Bennett's background in marketing and
management has given Mr. Bennett the necessary experience to understand the
market trends essential for the implementation of our business strategy. Mr.
Bennett is not an officer or director of any reporting company.
Daniel Bernstein. Mr. Bernstein has been our secretary and one of our directors
since our inception. From 1982 to the present, Mr. Bernstein has been
self-employed as a builder, specializing in steep hillside contemporary homes.
Mr. Bernstein graduated with a Masters in architectural design from the Southern
California Institute of Architecture in 1987. Mr. Bernstein earned a Bachelor of
Science in economics from the University of California, Los Angeles in 1982. Mr.
Bernstein also possesses a general contractor's license in the state of
California. Mr. Bernstein is not an officer or director of any reporting
company.
10
There is no family relationship between any of our officers or directors. There
are no orders, judgments, or decrees of any governmental agency or
administrator, or of any court of competent jurisdiction, revoking or suspending
for cause any license, permit or other authority to engage in the securities
business or in the sale of a particular security or temporarily or permanently
restraining any of our officers or directors from engaging in or continuing any
conduct, practice or employment in connection with the purchase or sale of
securities, or convicting such person of any felony or misdemeanor involving a
security, or any aspect of the securities business or of theft or of any felony,
nor are any of the officers or directors of any corporation or entity affiliated
with us so enjoined.
Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of September 16, 2002 by each person or entity
known by us to be the beneficial owner of more than 5% of the outstanding shares
of common stock, each of our directors and named executive officers, and all of
our directors and executive officers as a group.
======================= ==================================== =================================== =====================
Title of Class Name of Beneficial Owner Amount of Beneficial Owner Percent of Class
----------------------- ------------------------------------ ----------------------------------- ---------------------
Common Stock David Bennett
1537 West Orangewood Avenue 3,166,667 shares(1),
Orange, CA 92868 president, treasurer, director 42.69%
----------------------- ------------------------------------ ----------------------------------- ---------------------
Common Stock Daniel Bernstein
1537 West Orangewood Avenue 2,033,333 shares,
Orange, CA 92868 secretary, director 27.41%
----------------------- ------------------------------------ ----------------------------------- ---------------------
Common Stock All directors and named executive
officers as a group 5,200,000 shares 70.10%
======================= ==================================== =================================== =====================
(1) Michelle Bennett, who is the spouse of David Bennett, our president,
treasurer and director, owns 166,667 shares of our common stock.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. In accordance with Securities and Exchange
Commission rules, shares of our common stock which may be acquired upon exercise
of stock options or warrants which are currently exercisable or which become
exercisable within 60 days of the date of the table are deemed beneficially
owned by the optionees. Subject to community property laws, where applicable,
the persons or entities named in the table above have sole voting and investment
power with respect to all shares of our common stock indicated as beneficially
owned by them.
Changes in Control. Our management is not aware of any arrangements which may
result in "changes in control" as that term is defined by the provisions of Item
403(c) of Regulation S-B.
Description Of Our Securities
------------------------------
Description of Capital Stock. Our authorized capital stock consists of
50,000,000 shares of $.001 par value common stock, of which 7,418,336 are issued
and outstanding as of September 16, 2002, and 5,000,000 shares of $.001 par
value preferred stock, of which no such shares are issued and outstanding as of
September 16, 2002. Holders of shares of our common stock are entitled to
receive dividends when and as declared by our Board of Directors from funds
legally available therefore. All the shares of our common stock have equal
voting rights and are nonassessable. Each shareholder of our common stock is
entitled to share ratably in any assets available for distribution to holders
our equity securities upon our liquidation.
Dividend Policy. We have never declared or paid a cash dividend on our capital
stock. We do not expect to pay cash dividends on our common stock in the
foreseeable future. We currently intend to retain our earnings, if any, for use
in our business. Any dividends declared in the future will be at the discretion
of our Board of Directors and subject to any restrictions that may be imposed by
our lenders.
11
Preferred Stock. We are authorized to issue 5,000,000 shares of $.001 par value
preferred stock, of which no such shares are issued and outstanding. We have not
designated the right and preferences of our preferred stock. The availability or
issuance of these shares could delay, defer, discourage or prevent a change in
control.
Interest of Named Experts and Counsel
-------------------------------------
No expert or our counsel was hired on a contingent basis, or will receive a
direct or indirect interest in us.
Disclosure of Commission Position on Indemnification for Securities Act
Liabilities
-----------------------------------------------------------------------
Article Seventh of our Certificate of Incorporation provides, among other
things, that our directors shall not be personally liable to us or our
shareholders for monetary damages for breach of fiduciary duty as a director,
except for liability:
o for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law; or
o for unlawful payments of dividends or unlawful stock purchase or
redemption by us.
Accordingly, our directors may have no liability to our shareholders for any
mistakes or errors of judgment or for any act of omission, unless the act or
omission involves intentional misconduct, fraud, or a knowing violation of law
or results in unlawful distributions to our shareholders.
Section 17 of our Bylaws also provides that our officers and directors shall be
indemnified and held harmless by us to the fullest extent permitted by the
provisions of Section 145 of the Delaware General Corporation Law.
Indemnification Agreements. We will enter into indemnification agreements with
each of our executive officers. We will agree to indemnify each such person for
all expenses and liabilities, including criminal monetary judgments, penalties
and fines, incurred by such person in connection with any criminal or civil
action brought or threatened against such person by reason of such person being
or having been our officer or director or employee. In order to be entitled to
indemnification by us, such person must have acted in good faith and in a manner
such person believed to be in our best interests. With respect to criminal
actions, such person must have had no reasonable cause to believe his or her
conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in that act and is, therefore, unenforceable.
Organization Within Last Five Years
-----------------------------------
Transactions with Promoters. Daniel Bernstein was issued 2,000,000 shares of our
common stock in exchange for his services as our promoter. The value of the
services performed by Mr. Bernstein was approximately $2,000, which represented
the fair value of the common stock on the date of issuance.
Description of Business
------------------------
Our Background. We were incorporated pursuant to the laws of the State of
Delaware on March 15, 2001.
Our Business. We are a developmental stage company and we plan to initiate,
establish and operate retail golf stores which will feature indoor golf
instruction and custom golf clubs. We intend to operate retail locations which
will offer custom-fitted golf clubs tailored to our customers' needs and
marketed under the Golf Two brand name. We expect that golf instruction and
training will be conducted on-site by in-store staff under the direction of a
professional at each store.
12
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. We also plan to offer private label
and brand name golf merchandise and related products 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. As such, we intend to offer indoor golf
training available and individualized, quality golf clubs and related products
to our clientele.
Our Proposed Products. We anticipate that our retail locations will offer
customized golf clubs made on site and tailored to our customers' needs. In
addition to our customized golf-clubs, we plan to offer our customers related
products such as private label and brand name golf merchandise and accessories,
related clothing items, instructional golf books and videos and golf novelty
items.
Our Proposed Services. We seek to promote the enjoyment of the game of golf by
helping golfing enthusiasts of all levels play better. We intend to offer indoor
golf training available and individualized, quality golf clubs and related
products to our clientele. We hope to offer our customers with on-site, indoor,
individual instructional lessons with trained and qualified golf instructors
utilizing the virtual reality equipment available on the market. We anticipate
providing our customers with access to introductory, intermediate and advanced
golf instruction and technique analysis. By providing these classes, we hope to
build a client base familiar with our products and services and gain increased
exposure to our brand name.
Our Business Strategy. As the popularity of golf continues to grow, we expect
that easy and affordable access to proper training and specialized equipment and
products is in high demand and will continue to remain so. We hope to be
strategically positioned to fill the growing need for golfing instruction
demanded by golf enthusiasts in the United States and what we believe to be the
ever-growing number of new golf enthusiasts. We propose to offer our customers:
o computerized swing analysis;
o indoor golf practice and simulation;
o golf lessons and instruction for beginners and experts alike;
o customized golf clubs tailored to an individual's particular needs;
and
o related private label and brand-name gold merchandise.
Furthermore, we will strive to maintain clean, well-merchandised, attractive
stores that we believe will appeal to high-caliber clientele. We hope to become
a premier "center" where golfing enthusiasts of all abilities will feel welcomed
and comfortable such that they will enjoy the time they spend with us and will
want to return.
Our Target Markets and Marketing Strategy. We anticipate that our primary target
market will consist of golfers throughout California, specifically patrons of
nearby golf courses, country clubs, driving ranges and putting greens. We plan
to market and promote our retail stores locally. We anticipate that our
marketing initiatives will include:
o utilizing direct response print advertisements placed primarily in
specialized golf industry print media such as magazines and local
newspapers;
o advertising by television, radio, banners, affiliated marketing and
direct mail in California and surrounding areas; and,
o word of mouth advertising based on the customer loyalty and high
quality service.
Growth Strategy. We seek to establish a profitable retail golf store and
training facility with the intention of expanding our efforts in areas outside
California. Our strategy is to provide unparalleled customer service and
high-quality, competitively-priced merchandise and offer on-site, indoor,
individual instructional lessons with trained and qualified golf instructors
utilizing the finest virtual reality equipment available on the market, thereby
creating a fun, friendly and comfortable atmosphere which we believe will
achieve unequaled customer satisfaction. We intend to initiate growth throughout
California by establishing more alliances with leading and local vendors and
long-term customer relationships and aim to replicate this model in many markets
across the United States.
13
Our Competition. We expect to face significant competition from existing golf
stores. There are currently numerous local and national chains, such as Roger
Dunn, that we will be competing with us as well as individually owned
businesses. Current and new competitors may be able to establish new locations
relatively quickly. We anticipate we will also compete directly with other
companies and businesses that have several golf retail locations which will be
competitive with the golf retail stores developed by us. We cannot guaranty that
we will be able to compete effectively with those competitors. Many of those
competitors have greater financial and other resources, and more experience in
the establishment of golf retail facilities, than we have.
Government Regulation. Each retail location facility we establish will be
subject to licensing and reporting requirements by numerous governmental
authorities. These governmental authorities include federal, state and local
health, environmental, labor relations, sanitation, building, zoning, fire and
safety departments. Difficulties in obtaining or failure to obtain the necessary
licenses or approvals could delay or prevent the development or operation of a
given retail location. Any problems that we may encounter in renewing such
licenses in one jurisdiction, may impact our licensing status on a federal,
state or local level in other relevant jurisdictions.
Our Research and Development. We are not currently conducting any research and
development activities other than the development of our website. We do not
anticipate conducting such activities in the near future.
Intellectual Property. We do not presently own any patents, trademarks,
copyrights, licenses, concessions or royalties.
We own the Internet domain name www.golftwo.com. Under current domain name
registration practices, no one else can obtain an identical domain name, but
someone might obtain a similar name, or the identical name with a different
suffix, such as ".org", or with a country designation. The regulation of domain
names in the United States and in foreign countries is subject to change, and we
could be unable to prevent third parties from acquiring domain names that
infringe or otherwise decrease the value of our domain names.
Employees. As of September 16, 2002, we have two part-time employees. We do not
currently anticipate that we will hire any employees in the next six months,
unless we complete our business development. From time-to-time, we anticipate
that we will use the services of independent contractors and consultants to
support our business development. We believe our future success depends in large
part upon the continued service of our senior management personnel and our
ability to attract and retain highly qualified managerial personnel.
Facilities. Our headquarters are located at 1537 West Orangewood Avenue, Orange,
California 92868. We believe that our facilities are adequate for our needs and
that additional suitable space will be available on acceptable terms as
required. We do not own any real estate.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
--------------------------------------------------------------------------
For the six month period ended June 30, 2002.
---------------------------------------------
Liquidity and Capital Resources. We have cash of $42,019 as of June 30, 2002.
Our total assets were approximately $42,019 as of June 30, 2002. Our total
liabilities were approximately $2,563 as of June 30, 2002. In April 2002, we
sold 2,093,336 shares of our common stock for $0.03 per share. The net proceeds
from the sale of those shares were $62,800. Those proceeds were used to provide
us with additional working capital.
Results of Operations.
Revenues. We have realized no revenues during the period ended June 30, 2002. We
anticipate that we will generate more revenues as we commence operations and
build our customer base.
14
Operating Expenses. For the period ended June 30, 2002, our total expenses were
approximately $103,503, which were represented by general and administrative
expenses. Of that amount, $90,000 was represented by stock issued for services.
For the period ended June 30, 2002, we experienced a net loss of approximately
$103,666.
For the Period from March 15, 2001, our date of formation, through December 31,
2001.
------------------------------------------------------------------------------
Liquidity and Capital Resources. We had no cash as of December 31, 2001.
Results of Operations. We did not yet realize any revenue from operations for
the period from March 15, 2001, our date of formation, through December 31,
2001. Our expenses of approximately $13,703 consist of start-up costs from
formation through December 31, 2001.
Our Plan of Operation for the Next Twelve Months. To effectuate our business
plan during the next twelve months, we must locate a suitable location for our
planned retail location, market our products and services and develop our brand
image. Our operations to date have been focused on developing our brand name and
attempting to establish strategic relationships with providers of golf products.
Our plan of operation is materially dependent on our ability to raise additional
working capital. We believe that we have sufficient cash resources to fund most
of our initial development plans. However, we will need additional capital to
finance our proposed retail location. We are in the process of estimating the
cost of opening our initial retail location. We hope to open our initial retail
location in the next twelve months if we have adequate funding to do so. There
is no guaranty that we will be able to arrange for financing. We may raise the
necessary funds through equity financings or through loans from banks or other
lending institutions. We may not be able to arrange for loans on favorable
terms. Such additional capital may be raised through public or private
financing. We cannot guaranty that additional funding will be available on
favorable terms, if at all. If adequate funds are not available, then our
ability to commence operations may be harmed.
We have cash of $42,019 as of June 30, 2002. In the opinion of management,
available funds will satisfy our working capital requirements through the next
twelve months. For the next twelve months, we anticipate that our day-to-day
expenses will be approximately $1,000 per month until and unless we secure our
first location. We believe that our expenses will significantly increase once we
begin renovating and developing our first location. 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 and do
not anticipate conducting such activities in the near future. We do not
anticipate that we will purchase or sell of 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.
Description of Property
------------------------
Property held by us. As of the date specified in the following table, we held
the following property:
============================================= ===============================
Property June 30, 2002
--------------------------------------------- -------------------------------
Cash $42,019
--------------------------------------------- -------------------------------
Property and Equipment, net $0
============================================= ===============================
Our Facilities. Our headquarters are located at 1537 West Orangewood Avenue,
Orange, California 92868. David Bennett, our president, treasurer and one of our
directors, currently provides office space to us totalling $100 per month on a
month-to-month basis, which is recorded as a contribution to capital. We do not
have a written lease or sublease agreement and Mr. Bennett does not expect to be
paid or reimbursed for providing office facilities.
15
Certain Relationships and Related Transactions
----------------------------------------------
David Bennett, our president, treasurer and one of our directors, currently
provides office space to us valued at $100 per month on a month-to-month basis,
which is recorded as a contribution to capital.
In April 2001, we entered into a $10,000 non interest-bearing note with a
stockholder. The note was due upon demand and repaid in April 2002. We recorded
interest expense on this note at 8% per annum as a contribution to capital.
With regard to any future related party transaction, we plan to fully disclose
any and all related party transactions, including, but not limited to, the
following:
o disclosing such transactions in prospectuses where required;
o disclosing in any and all filings with the Securities and Exchange
Commission, where required;
o obtaining disinterested directors consent; and
o obtaining shareholder consent where required.
Market for Common Equity and Related Stockholder Matters
--------------------------------------------------------
Reports to Security Holders. Our securities are not listed for trading on any
exchange or quotation service. We are not required to comply with the timely
disclosure policies of any exchange or quotation service. The requirements to
which we would be subject if our securities were so listed typically include the
timely disclosure of a material change or fact with respect to our affairs and
the making of required filings. Although we are not required to deliver an
annual report to security holders, we intend to provide an annual report to our
security holders, which will include audited financial statements.
When this registration statement becomes effective, we will be a reporting
company pursuant to the Securities Exchange Act of 1934. We will be required
file annual, quarterly and periodic reports with the Securities and Exchange
Commission. The public may read and copy any materials filed with the Securities
and Exchange Commission at the Security and Exchange Commission's Public
Reference Room at 450 Fifth Street N.W., Washington, D.C. 20549. The public may
also obtain information on the operation of the Public Reference Room by calling
the Securities and Exchange Commission at 1-800-SEC-0330. The Securities and
Exchange Commission maintains an Internet site that contains reports, proxy and
information statements, and other information regarding issuers that file
electronically with the Securities and Exchange Commission. The address of that
site is http://www.sec.gov.
There are no shares of our common stock that can be sold pursuant to Rule 144.
There are no outstanding options or warrants to purchase, or securities
convertible into, shares of our common stock. There are no outstanding shares of
our common stock that we have agreed to register under the Securities Act for
sale by security holders. The approximate number of holders of record of shares
of our common stock is thirty-six.
There have been no cash dividends declared on our common stock. Dividends are
declared at the sole discretion of our Board of Directors.
Penny Stock Regulation. Shares of our common stock are subject to rules adopted
by the Securities and Exchange Commission that regulate broker-dealer practices
in connection with transactions in "penny stocks". Penny stocks are generally
equity securities with a price of less than $5.00, other than securities
registered on certain national securities exchanges or quoted on the NASDAQ
system, provided that current price and volume information with respect to
transactions in those securities is provided by the exchange or system. The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from those rules, deliver a standardized risk
disclosure document prepared by the Securities and Exchange Commission, which
contains the following:
o a description of the nature and level of risk in the market for penny
stocks in both public offerings and secondary trading;
o a description of the broker's or dealer's duties to the customer and
of the rights and remedies available to the customer with respect to
violation to such duties or other requirements of securities' laws;
o a brief, clear, narrative description of a dealer market, including
"bid" and "ask" prices for penny stocks and the significance of the
spread between the "bid" and "ask" price;
16
o a toll-free telephone number for inquiries on disciplinary actions;
o definitions of significant terms in the disclosure document or in the
conduct of trading in penny stocks; and
o such other information and is in such form including language, type,
size and format, as the Securities and Exchange Commission shall
require by rule or regulation.
Prior to effecting any transaction in penny stock, the broker-dealer also must
provide the customer the following:
o the bid and offer quotations for the penny stock;
o the compensation of the broker-dealer and its salesperson in the
transaction;
o the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the
market for such stock; and
o monthly account statements showing the market value of each penny
stock held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitably statement. These
disclosure requirements may have the effect of reducing the trading activity in
the secondary market for a stock that becomes subject to the penny stock rules.
Holders of shares of our common stock may have difficulty selling those shares
because our common stock will probably be subject to the penny stock rules.
Executive Compensation
----------------------
Any compensation received by our officers, directors, and management personnel
will be determined from time to time by our Board of Directors. Our officers,
directors, and management personnel will be reimbursed for any out-of-pocket
expenses incurred on our behalf.
Summary Compensation Table. The table set forth below summarizes the annual and
long-term compensation for services in all capacities to us payable to our Chief
Executive Officer and our other executive officers whose total annual salary and
bonus are anticipated to exceed $50,000 during the years ending December 31,
2001 and 2002. Our Board of Directors may adopt an incentive stock option plan
for our executive officers which would result in additional compensation.
=================================== ======= ============= ============= ===================== =====================
Name and Principal Position Year Annual Bonus ($) Other Annual All Other
Salary ($) Compensation ($) Compensation
----------------------------------- ------- ------------- ------------- --------------------- ---------------------
David Bennett - president, 2002 None None None $90,000 (1)
treasurer
----------------------------------- ------- ------------- ------------- --------------------- ---------------------
Scott Watrous - former president, 2001 None None None None
treasurer
----------------------------------- ------- ------------- ------------- --------------------- ---------------------
Daniel Bernstein - secretary 2002 None None None None
----------------------------------- ------- ------------- ------------- --------------------- ---------------------
Daniel Bernstein - secretary 2001 None None None $2,000 (1)
=================================== ======= ============= ============= ===================== =====================
(1) Represents stock issued for services.
Compensation of Directors. Our current directors are also our employees and
receive no extra compensation for their service on our board of directors.
Employment Contracts. We anticipate that we will enter into an employment
agreement with David Bennett, although we do not currently know the terms of
that employment agreement.
Stock Option Plan. We anticipate that we will adopt a stock option plan,
pursuant to which shares of our common stock will be reserved for issuance to
satisfy the exercise of options. The stock option plan will be designed to
retain qualified and competent officers, employees, and directors. Our Board of
17
Directors, or a committee thereof, shall administer the stock option plan and
will be authorized, in its sole and absolute discretion, to grant options
thereunder to all of our eligible employees, including officers, and to our
directors, whether or not those directors are also our employees. Options will
be granted pursuant to the provisions of the stock option plan on such terms,
subject to such conditions and at such exercise prices as shall be determined by
our Board of Directors. Options granted pursuant to the stock option plan shall
not be exercisable after the expiration of ten years from the date of grant.
Financial Statements
--------------------
GOLF TWO, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
PERIOD FROM MARCH 15, 2001 (INCEPTION)
TO DECEMBER 31, 2001, SIX MONTHS
ENDED JUNE 30, 2002 AND THE
PERIODS FROM MARCH 15, 2001 (INCEPTION)
TO JUNE 30, 2002 AND 2001
18
INDEPENDENT AUDITORS' REPORT
Board of Directors
Golf Two, Inc.
Newport Beach, California
We have audited the accompanying balance sheets of Golf Two, Inc. (A Development
Stage Company) as of June 30, 2002 and December 31, 2001, the related statements
of operations, stockholders' equity and cash flows for the period from March 15,
2001 (inception) to December 31, 2001, six months ended June 30, 2002 and the
periods from March 15, 2001 (inception) to June 30, 2002 and 2001. We have
audited the accompanying statements of stockholders' equity (deficiency), for
the period from March 15, 2001 (inception) to June 30, 2002. These financials
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 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 Golf Two, Inc. as of June 30,
2002 and December 31, 2001 and the results of its operations and its cash flows
for the period from March 15, 2001 (inception) to December 31, 2001, six months
ended June 30, 2002 and the periods from March 15, 2001 (inception) to June 30,
2002 and 2001 in conformity with accounting principles generally accepted in the
United States.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
accompanying financial statements, the Company has no established source of
revenue, which raises substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are also discussed in
Note 1. These financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
CERTIFIED PUBLIC ACCOUNTANTS
Irvine, California
August 16, 2002
19
GOLF TWO, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
ASSETS
------
June 30, December 31,
2002 2001
------------------- -------------------
Current assets:
Cash and cash equivalents $ 42,019 $ -
------------------- -------------------
Total assets $ 42,019 $ -
=================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
-------------------------------------------------
Current liabilities:
Accounts payable $ 2,563 $ -
Accounts payable-related party - 478
Notes payable-related party - 10,000
------------------- -------------------
Total current liabilities 2,563 10,478
------------------- -------------------
Stockholders' equity (deficiency):
Preferred stock, $0.001 par value, 5,000,000 shares authorized, no
shares issued or outstanding, respectively - -
Common stock, $0.001 par value, 50,000,000 shares authorized,
7,418,336 and 2,325,000 issued and outstanding, respectively 7,418 2,325
Additional paid-in capital 150,007 1,500
Deficit accumulated during development stage (117,969) (14,303)
------------------- -------------------
Total stockholders' equity (deficiency) 39,456 (10,478)
------------------- -------------------
Total liabilities and stockholders' equity (deficiency) $ 42,019 $ -
=================== ===================
See accompanying independent auditors' report and notes to financial statements
20
GOLF TWO, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
------------------------
For the For the For the
period from For the period from period from
March 15, 2001 six months March 15, 2001 March 15, 2001
(inception) to ended (inception) to (inception) to
December 31, 2001 June 30, 2002 June 30, 2001 June 30, 2002
-------------------- --------------- --------------- ---------------
Revenue $ - $ - $ - $ -
General and administrative expenses 13,703 103,503 13,103 117,206
-------------------- --------------- --------------- ---------------
Loss from operations (13,703) (103,503) (13,103) (117,206)
Other income expenses:
Interest income - 37 - 37
Interest expense (600) (200) (200) (800)
-------------------- --------------- --------------- ---------------
Loss before provision for income taxes (14,303) (103,666) (13,303) (117,969)
Provision for income taxes - - - -
-------------------- --------------- --------------- --------------
Net loss $ (14,303) $ (103,666) $ (13,303) $ (117,969)
==================== =============== =============== ===============
Net loss available to common stockholders
per common share - basic and dilutive:
Loss per common share ($0.01) ($0.02) ($0.01) ($0.03)
==================== =============== =============== ===============
Weighted average common shares
outstanding - basic and dilutive 2,325,000 5,378,352 2,325,000 3,698,000
==================== =============== =============== ===============
See accompanying independent auditors' report and notes to financial statements
21
GOLF TWO, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
-----------------------------------------------
Deficit
accumulated Total
Common stock Additional during stockholders'
-------------------------------- paid-in development equity
Shares Amount capital stage (deficiency)
--------------- --------------- -------------- --------------- ---------------
Balance at March 15, 2001, - $ - $ - $ - $ -
date of incorporation
Issuance of Founders Shares for
services, March 2001 2,325,000 2,325 - - 2,325
Additional paid in capital - - 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
Additional paid in capital - - 800 - 800
Net loss - - - (103,666) (103,666)
--------------- --------------- -------------- --------------- ----------------
Balance at June 30, 2002 7,418,336 $ 7,418 $ 150,007 $ (117,969) $ 39,456
=============== =============== ============== =============== ================
See accompanying independent auditors' report and notes to financial statements
22
GOLF TWO, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
------------------------
For the For the For the
period from For the period from period from
March 15, 2001 six months March 15, 2001 March 15, 2001
(inception) to ended (inception) to (inception) to
December 31, 2001 June 30, 2002 June 30, 2001 June 30, 2002
----------------- --------------- -------------- ---------------
Cash flows used for operating activities:
Net loss $ (14,303) $ (103,666) $ (13,303) $ (117,969)
----------------- --------------- -------------- ---------------
Adjustments to reconcile net loss to net cash
used for operating activities:
Non-cash issuance of common stock for services 2,325 90,000 2,325 92,325
Non-cash additional paid-in-capital contributed 1,500 800 500 2,300
Increase (decrease) in liabilities -
Accounts payable - 2,563 - 2,563
Accounts payable-related party 478 (478) 478 -
----------------- --------------- -------------- ---------------
Total adjustments 4,303 92,885 3,303 97,188
----------------- --------------- -------------- ---------------
Net cash used for operating activities (10,000) (10,781) (10,000) (20,781)
----------------- --------------- -------------- ---------------
Cash flows provided by financing activities:
Proceeds from note payable-related party 10,000 - 10,000 10,000
Repayment of note payable-related party - (10,000) - (10,000)
Proceeds from issuance of common stock - 62,800 - 62,800
----------------- --------------- -------------- ---------------
Net cash provided by financing activities 10,000 52,800 10,000 62,800
----------------- --------------- -------------- ---------------
Net increase in cash and cash equivalents - 42,019 - 42,019
Cash and cash equivalents, beginning of period - - - -
----------------- --------------- -------------- ---------------
Cash and cash equivalents, end of period $ - $ 42,019 $ - $ 42,019
================= =============== ============== ===============
Supplemental disclosure of cash flow information:
Income taxes paid $ - $ - $ - $ -
================= =============== ============== ===============
Interest paid $ - $ - $ - $ -
================= =============== ============== ===============
See accompanying independent auditors' report and notes to financial statements
23
GOLF TWO, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
PERIOD FROM MARCH 15, 2001 (INCEPTION)
TO DECEMBER 31, 2001, SIX MONTHS
ENDED JUNE 30, 2002 AND THE
PERIODS FROM MARCH 15, 2001 (INCEPTION)
TO JUNE 30, 2002 AND 2001
(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.
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. This matter raises substantial
doubt about the Company's ability to continue as a going
concern. These financial statements do not include any
adjustments relating to the recoverability and classification
of recorded asset amounts, or amounts and classification of
liabilities that might be necessary should the Company be
unable to continue as a going concern.
Management plans to take the following steps that it believes
will be sufficient to provide the Company with the ability to
continue in existence:
Management intends to continue to raise additional financing
through joint venturing of projects, exchange of asset, debt
financing, equity financing or other means and interests which
it deems necessary with a view to moving forward and sustain a
prolonged growth in its strategy phases.
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.
Comprehensive Income:
SFAS No. 130, "Reporting Comprehensive Income," establishes
standards for the reporting and display of comprehensive
income and its components in the financial statements. As of
June 30, 2002 and December 31, 2001, and for the periods from
inception to June 30, 2002, the Company has no items that
represent other comprehensive income and, therefore, has not
included a schedule of comprehensive income in the
consolidated financial statements.
See accompanying independent auditors' report.
24
GOLF TWO, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
PERIOD FROM MARCH 15, 2001 (INCEPTION)
TO DECEMBER 31, 2001, SIX MONTHS
ENDED JUNE 30, 2002 AND THE
PERIODS FROM MARCH 15, 2001 (INCEPTION)
TO JUNE 30, 2002 AND 2001
(1) Summary of Significant Accounting Policies, Continued:
Cash and Cash Equivalents:
For purposes of the statement of cash flows, the Company
considers all highly liquid investments purchased with
original maturities of three months or less to be cash
equivalents.
Basic and Diluted Loss Per Share:
In accordance with SFAS No. 128, "Earnings Per Share," the
basic loss per common share is computed by dividing net loss
available to common stockholders by the weighted average
number of common shares outstanding. Diluted loss per common
share is computed similar to basic loss per common share
except that the denominator is increased to include the number
of additional common shares that would have been outstanding
if the potential common shares had been issued and if the
additional common shares were dilutive. As of June 30, 2002,
the Company does not have any equity instruments outstanding
that can be converted into common stock.
Income Taxes:
The Company accounts for income taxes under SFAS 109,
"Accounting for Income Taxes." Under the asset and liability
method of SFAS 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to
differences between the financial statements carrying amounts
of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be
recovered or settled. Under SFAS 109, the effect on deferred
tax assets and liabilities of a change in tax rates is
recognized in income in the period the enactment occurs. A
valuation allowance is provided for certain deferred tax
assets if it is more likely than not that the Company will not
realize tax assets through future operations.
See accompanying independent auditors' report.
25
GOLF TWO, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
PERIOD FROM MARCH 15, 2001 (INCEPTION)
TO DECEMBER 31, 2001, SIX MONTHS
ENDED JUNE 30, 2002 AND THE
PERIODS FROM MARCH 15, 2001 (INCEPTION)
TO JUNE 30, 2002 AND 2001
(1) Summary of Significant Accounting Policies, Continued:
Stock-Based Compensation:
The Company accounts for stock-based employee compensation
arrangements in accordance with the provisions of Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued
to Employees" and complies with the disclosure provisions of
SFAS 123, "Accounting for Stock-Based Compensation." Under APB
25, compensation cost is recognized over the vesting period
based on the excess, if any, on the date of grant of the
deemed fair value of the Company's shares over the employee's
exercise price. When the exercise price of the employee share
options is less than the fair value price of the underlying
shares on the grant date, deferred stock compensation is
recognized and amortized to expense in accordance with FASB
Interpretation No. 28 over the vesting period of the
individual options. Accordingly, because the exercise price of
the Company's employee options equals or exceeds the market
price of the underlying shares on the date of grant, no
compensation expense is recognized. Options or shares awards
issued to non-employees are valued using the fair value method
and expensed over the period services are provided.
Fair Value of Financial Instruments:
The estimated fair values of cash and cash equivalents,
accounts payable and accrued expenses, approximate their
carrying value because of the short term maturity of these
instruments or the stated interest rates are indicative of
market interest rates.
Advertising Costs:
Advertising costs are expensed as incurred. There were no
advertising expenses for any of the periods from March 15,
2001 (inception) to June 30, 2002.
Segment Reporting:
Based on the Company's integration and management strategies,
the Company operated in a single business segment. For the
periods from inception to June 30, 2002, all revenues have
been derived from domestic operations.
See accompanying independent auditors' report.
26
GOLF TWO, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
PERIOD FROM MARCH 15, 2001 (INCEPTION)
TO DECEMBER 31, 2001, SIX MONTHS
ENDED JUNE 30, 2002 AND THE
PERIODS FROM MARCH 15, 2001 (INCEPTION)
TO JUNE 30, 2002 AND 2001
(1) Summary of Significant Accounting Policies, Continued:
New Accounting Pronouncements:
In July 2001, the FASB issued SFAS No. 141 "Business
Combinations." SFAS No. 141 supersedes Accounting Principles
Board ("APB") No. 16 and requires that any business
combinations initiated after June 30, 2001 be accounted for as
a purchase; therefore, eliminating the pooling-of-interest
method defined in APB 16. The statement is effective for any
business combination initiated after June 30, 2001 and shall
apply to all business combinations accounted for by the
purchase method for which the date of acquisition is July 1,
2001 or later. The Company has implemented this pronouncement
and has concluded that the adoption has no material impact to
the financial statements.
In July 2001, the FASB issued SFAS No. 142, "Goodwill and
Other Intangibles." SFAS No. 142 addresses the initial
recognition, measurement and amortization of intangible assets
acquired individually or with a group of other assets (but not
those acquired in a business combination) and addresses the
amortization provisions for excess cost over fair value of net
assets acquired or intangibles acquired in a business
combination. The statement is effective for fiscal years
beginning after December 15, 2001, and is effective July 1,
2001 for any intangibles acquired in a business combination
initiated after June 30, 2001. The Company has implemented
this pronouncement and has concluded that the adoption has no
material impact to the financial statements.
In October 2001, the FASB recently issued SFAS No. 143,
"Accounting for Asset Retirement Obligations," which requires
companies to record the fair value of a liability for asset
retirement obligations in the period in which they are
incurred. The statement applies to a company's legal
obligations associated with the retirement of a tangible
long-lived asset that results from the acquisition,
construction, and development or through the normal operation
of a long-lived asset. When a liability is initially recorded,
the company would capitalize the cost, thereby increasing the
carrying amount of the related asset. The capitalized asset
retirement cost is depreciated over the life of the respective
asset while the liability is accreted to its present value.
Upon settlement of the liability, the obligation is settled at
its recorded amount or the company incurs a gain or loss. The
statement is effective for fiscal years beginning after June
30, 2002. The Company does not expect the adoption to have a
material impact to the Company's financial position or results
of operations.
See accompanying independent auditors' report.
27
GOLF TWO, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
PERIOD FROM MARCH 15, 2001 (INCEPTION)
TO DECEMBER 31, 2001, SIX MONTHS
ENDED JUNE 30, 2002 AND THE
PERIODS FROM MARCH 15, 2001 (INCEPTION)
TO JUNE 30, 2002 AND 2001
(1) Summary of Significant Accounting Policies, Continued:
New Accounting Pronouncements, Continued:
In October 2001, the FASB issued SFAS No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets." Statement
144 addresses the accounting and reporting for the impairment
or disposal of long-lived assets. The statement provides a
single accounting model for long-lived assets to be disposed
of. New criteria must be met to classify the asset as an asset
held-for-sale. This statement also focuses on reporting the
effects of a disposal of a segment of a business. This
statement is effective for fiscal years beginning after
December 15, 2001. The Company has implemented this
pronouncement and has concluded that the adoption has no
material impact to the financial statements.
In April 2002, the FASB issued Statement No. 145, "Rescission
of FASB Statements No. 4, 44, and 64, Amendment of FASB
Statement No. 13, and Technical Corrections." This Statement
rescinds FASB Statement No. 4, "Reporting Gains and Losses
from Extinguishment of Debt", and an amendment of that
Statement, FASB Statement No. 64, "Extinguishments of Debt
Made to Satisfy Sinking-Fund Requirements" and FASB Statement
No. 44, "Accounting for Intangible Assets of Motor Carriers."
This Statement amends FASB Statement No. 13, "Accounting for
Leases", to eliminate an inconsistency between the required
accounting for sale-leaseback transactions and the required
accounting for certain lease modifications that have economic
effects that are similar to sale-leaseback transactions. The
Company does not expect the adoption to have a material impact
to the Company's financial position or results of operations.
(2) Related-Party Transactions:
Note Payables
-------------
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 interest expense on this note at 8%
per annum as a contribution to capital.
Office Expense
--------------
An officer of the Company provides office space to the Company for $100
per month on a month-to-month basis, which was recorded as a
contribution to capital.
See accompanying independent auditors' report.
28
GOLF TWO, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
PERIOD FROM MARCH 15, 2001 (INCEPTION)
TO DECEMBER 31, 2001, SIX MONTHS
ENDED JUNE 30, 2002 AND THE
PERIODS FROM MARCH 15, 2001 (INCEPTION)
TO JUNE 30, 2002 AND 2001
(3) Stockholders' Equity:
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 was fair market value of the Company's common stock on
the date of issuance.
In April 2002, the Company performed a private placement and issued
2,093,336 shares of its common stock at $0.03 per share for an
aggregate total of $62,800.
Preferred Stock
The Company is authorized to issue 5,000,000 shares of Preferred stock,
par value at $.001 per share. As of June 30, 2002 and December 31,
2001, none of the shares was issued and outstanding.
(4) Provision for Income Taxes:
The reconciliation of the effective income tax rate to the federal
statutory rate for the year ended December 31, 2001, the periods ended
June 30, 2001 and 2000, and for the period from March 15, 2001
(inception) to June 30, 2002 is as follows:
For the period
from March 15, Period from For the period
2001 (inception) For the six March 15, 2001 from March 15, 2001
to December 31, months ended (inception) to (inception) to
2001 June 30, 2002 June 30, 2001 June 30, 2002
------------ ------------- ------------- -------------
Computed "expected" benefit $ 200 $ 34,300 $ 4,400 $ 38,900
Increase (decrease) in income taxes
resulting from:
Increase in valuation allowance (200) (34,300) (4,400) (38,000)
------------ ------------- ------------- -------------
$ - $ - $ - $ -
============ ============= ============= =============
See accompanying independent auditors' report.
29
GOLF TWO, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
PERIOD FROM MARCH 15, 2001 (INCEPTION)
TO DECEMBER 31, 2001, SIX MONTHS
ENDED JUNE 30, 2002 AND THE
PERIODS FROM MARCH 15, 2001 (INCEPTION)
TO JUNE 30, 2002 AND 2001
(4) Provision for Income Taxes, Continued:
Deferred tax assets and liabilities reflect the net effect of temporary
differences between the carrying amount of assets and liabilities for
financial reporting purposes and amounts used for income tax purposes.
Significant components of the Company's deferred tax assets and
liabilities at June 30, 2002 and December 31, 2001 are as follows:
June 30, December 31,
2002 2001
---------------- --------------
Deferred tax assets:
Net operating loss carryforwards $ 38,900 $ 4,600
Less: valuation allowance 38,900 4,600
---------------- --------------
$ - $ -
================ ==============
At December 31, 2001 and June 30, 2002, the Company has provided a 100%
valuation allowance for the deferred tax asset since management has not
been able to determine that the realization of that asset is more
likely than not. The net change in the valuation allowance for the six
months ended June 30, 2002 and the year ended December 31, 2001 was an
increase of $34,300 and $200, respectively. As of June 30, 2002, the
Company had net operating loss carryforwards ("NOLs") of approximately
$118,000. If unused, the NOLs will begin to expire during 2019.
See accompanying independent auditors' report.
30
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
-------------------------------------------------------------------------
In July 2002, our Board of Directors appointed Stonefield Josephson, Inc.,
independent accountant, to audit our financial statements for the period from
March 15, 2001, our date of formation, through June 30, 2002. Prior to our
appointment of Stonefield Josephson, Inc. as our auditor, our financial
statements had not been audited. Prior to engaging Stonefield Josephson, Inc.,
we had not consulted with them on the application of accounting principles to a
specified transaction, either completed or proposed; or the type of audit
opinion that might be rendered on our financial statements. There have been no
disagreements with our accountant since our formation required to be disclosed
pursuant to Item 304 of Regulation S-B.
Legal Matters
------------
The validity of the issuance of the shares of common stock offered by the
selling security holders has been passed upon by MC Law Group, located in
Newport Beach, California.
Experts
-------
Our financial statements for the period from March 15, 2001, our date of
formation, through June 30, 2002, appearing in this prospectus which is part of
a Registration Statement have been audited by Stonefield Josephson, Inc., and
are included in reliance upon such reports given upon the authority of
Stonefield Josephson, Inc., as experts in accounting and auditing.
Additional Information
----------------------
We have filed a Registration Statement on Form SB-2 with the Securities and
Exchange Commission pursuant to the Securities Act of 1933 with respect to the
common stock offered by the selling security holders. This prospectus does not
contain all of the information set forth in the Registration Statement and the
exhibits and schedules to the Registration Statement. For further information
regarding us and our common stock offered hereby, reference is made to the
Registration Statement and the exhibits and schedules filed as a part of the
Registration Statement.
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Indemnification of Directors and Officers
------------------------------------------
Article Seventh of our Certificate of Incorporation provides, among other
things, that our directors shall not be personally liable to us or our
shareholders for monetary damages for breach of fiduciary duty as a director,
except for liability:
o for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law; or
o for unlawful payments of dividends or unlawful stock purchase or
redemption by us.
Accordingly, our directors may have no liability to our shareholders for any
mistakes or errors of judgment or for any act of omission, unless such act or
omission involves intentional misconduct, fraud, or a knowing violation of law
or results in unlawful distributions to our shareholders.
31
Our Certificate of Incorporation provides that we will indemnify our directors
to the extent permitted by Delaware General Corporation Law, including
circumstances in which indemnification is otherwise discretionary under the
Delaware General Corporation Law. Our Certificate of Incorporation also provides
that to the extent that Delaware General Corporation Law is amended to permit
further indemnification, we will so indemnify our directors.
Section 145 of the Delaware General Corporation Law provides that a corporation
shall have the power to indemnify any person who was or is a party or is
threatened to be made a party to or is involved in any pending, threatened, or
completed civil, criminal, administrative, or arbitration action, suit, or
proceeding, or any appeal therein or any inquiry or investigation which could
result in such action, suit, or proceeding, because of his or her being or
having been our director, officer, employee, or agent or of any constituent
corporation absorbed by us in a consolidation or merger or by reason of his or
her being or having been a director, officer, trustee, employee, or agent of any
other corporation or of any partnership, joint venture, sole proprietorship,
trust, employee benefit plan, or such enterprise, serving as such at our request
or of any such constituent corporation, or the legal representative of any such
director, officer, trustee, employee, or agent, from and against any and all
reasonable costs, disbursements, and attorney's fees, and any and all amounts
paid or incurred in satisfaction of settlements, judgments, fines, and
penalties, incurred or suffered in connection with any such proceeding.
Section 17 of our Bylaws also provides that our officers and directors shall be
indemnified and held harmless by us to the fullest extent permitted by the
provisions of Section 145 of the Delaware General Corporation Law.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have 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.
Other Expenses of Issuance and Distribution
--------------------------------------------
We will pay all expenses in connection with the registration and sale of the
common stock by the selling security holders. None of the expenses will be borne
by the selling security holders. The estimated expenses of issuance and
distribution are set forth below.
========================================= ==================== ================
Registration Fees Approximately $22.25
----------------------------------------- -------------------- ----------------
Transfer Agent Fees Approximately $650.00
----------------------------------------- -------------------- ----------------
Costs of Printing and Engraving Approximately $500.00
----------------------------------------- -------------------- ----------------
Legal Fees Approximately $10,000.00
----------------------------------------- -------------------- ----------------
Accounting Fees Approximately $2,500.00
========================================= ==================== ================
Recent Sales of Unregistered Securities
---------------------------------------
There have been no sales of unregistered securities within the last three years
which would be required to be disclosed pursuant to Item 701 of Regulation S-B,
except for the following:
In April 2002, we issued 2,093,336 shares of our common stock to thirty-four
investors for $0.03 per share. The shares were issued in a transaction which we
believe satisfies the requirements of that exemption from the registration and
prospectus delivery requirements of the Securities Act of 1933, which exemption
is specified by the provisions of Section 4(2) of that act and Rule 506 of
Regulation D promulgated pursuant to that act by the Securities and Exchange
Commission. Specifically, the offer was made to "accredited investors", as that
term is defined under applicable federal and state securities laws, and no more
than 35 non-accredited investors. We believe that each purchaser who was not an
accredited investor has such knowledge and experience in financial and business
matters that he is capable of evaluating the merits and risks of the prospective
investment. Each investor was given adequate access to sufficient information
about us to make an informed investment decision. There were no commissions paid
on the sale of these shares. The net proceeds to us were $62,800.
32
In February 2002, we issued 3,000,000 shares of our common stock to David
Bennett, our president, treasurer and one of our directors. We believe that Mr.
Bennett has such knowledge and experience in financial and business matters that
he is capable of evaluating the merits and risks of the prospective investment.
In addition, Mr. Bennett had sufficient access to material information about us
because he was our president, treasurer and one of our directors. The shares
were issued in a transaction which we believe satisfies the requirements of that
certain exemption from the registration and prospectus delivery requirements of
the Securities Act of 1933, which exemption is specified by the provisions of
Section 4(2) of the Securities Act of 1933, as amended. The shares were issued
in exchange for services provided to us, which were valued at $90,000. That
amount represented the fair value of the common stock on the date of issuance.
In March 2001, we issued 2,325,000 shares of our common stock to two
individuals, one of which was Daniel Bernstein, our secretary and one of our
directors. We believe that those shareholders have such knowledge and experience
in financial and business matters that they are capable of evaluating the merits
and risks of the prospective investment. The shares were issued in a transaction
which we believe satisfies the requirements of that certain exemption from the
registration and prospectus delivery requirements of the Securities Act of 1933,
which exemption is specified by the provisions of Section 4(2) of the Securities
Act of 1933, as amended. The shares were issued in exchange for services
provided to us, which were valued at $2,325. That amount represented the fair
value of the common stock on the date of issuance.
Exhibits
--------
Copies of the following documents are filed with this Registration
Statement as exhibits:
Exhibit No.
-----------
1. Underwriting Agreement (not applicable)
3.1 Certificate of Incorporation
3.2 Bylaws
5. Opinion Re: Legality
8. Opinion Re: Tax Matters (not applicable)
11. Statement Re: Computation of Per Share Earnings*
15. Letter on unaudited interim financial information (not applicable)
23.1 Consent of Auditors
23.2 Consent of Counsel**
24. Power of Attorney is included on the Signature Page of the
Registration Statement
* Included in Financial Statements
** Included in Exhibit 5
Undertakings
------------
A. Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
33
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities, other than the payment by us of expenses incurred or paid by
our director, officer or controlling person 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, we will, unless in
the opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
B. We hereby undertake:
(1) 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 specify in the prospectus any facts or events
arising after the effective date of the Registration
Statement or 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. Notwithstanding
the foregoing, any increase or decrease in volume of
securities offered, if the total dollar value of
securities offered would not exceed that which was
registered, and any deviation from the low or high
end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Securities and Exchange Commission pursuant to Rule
424(b), Section 230.424(b) of Regulation S-B, if, in
the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum
aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective Registration Statement; and
(iii) To include any additional or changed 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.
(2) 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.
(3) 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.
34
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as amended,
we certify that we have reasonable grounds to believe that we meet all of the
requirements of filing on Form SB-2 and authorized this Registration Statement
to be signed on our behalf by the undersigned, in the city of Orange,
California, on September 17, 2002.
Golf Two, Inc.
a Delaware corporation
By: /s/ David Bennett
-----------------------------------------
David Bennett
Its: principal executive and financial officer
president, treasurer, and a director
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates stated:
/s/ David Bennett September 17, 2002
--------------------------------------------
David Bennett
principal executive and financial officer
president, treasurer and a director
/s/ Daniel Bernstein September 17, 2002
--------------------------------------------
Daniel Bernstein
secretary and a director