13-Jan-2014
Quarterly Report
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Forward-looking statements
When used in this Report, words or phrases such as "will likely result," "management expects," "we expect," "will continue," "is anticipated," "estimated" or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on any such forward-looking statements, each of which speaks only at the date made. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. We have no obligation to publicly release the result of any revisions which may be made to any forward-looking statements to reflect anticipated or unanticipated events or circumstances occurring after the date of such statements. Forward-looking statements involve a number of risks and uncertainties including, but not limited to, general economic conditions, our ability to find a suitable company to effect a business combination with, competitive factors and other risk factors as set forth in Exhibit 99.1 of our Annual Report on Form 10-KSB for the year ended August 31, 2008.
The following discussion should be read in conjunction with the condensed consolidated financial statements and related notes included in this Report.
Our Ability to Continue as a Going Concern
The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. During the three months ended November 30, 2013, the Company had a net loss of $48,424, used cash in operations of $61,850, and had no revenues from operations. These factors among others indicate that the Company may be unable to continue as a going concern. The Company's existence is dependent upon management's ability to effect a business combination with a target business and/or obtain additional funding sources. There can be no assurance that the Company's financing efforts will result in profitable operations or the resolution of the Company's liquidity problems. The accompanying financial statements do not include any adjustments that might result should the Company be unable to continue as a going concern.
Overview
General
Golf Rounds.com, Inc. (the "Company") was incorporated in 1968 as a Delaware corporation, which is also authorized to conduct business in Georgia. Until the fourth quarter of fiscal 1992, the Company was engaged in the wholesale distribution of aluminum alloys, steel and other specialty metals under the name American Metals Service, Inc. In the fourth quarter of fiscal 1992, the Company liquidated its assets and did not conduct any business operations until May 1999. In May 1999, the Company acquired the assets of PKG Design, Inc., the developer of two (2) sports - related Internet websites: golfrounds.com and skiingusa.com. In connection with the acquisition of these websites, the Company changed its name to Golf Rounds.com, Inc.
In August 2001, the Company ceased operations of its golfrounds.com and skiingusa.com websites since continued maintenance of these websites was not a productive use of the Company's resources.
On September 19, 2003, the Company and its wholly owned subsidiary, DPE Acquisition Corp., (formed on September 2, 2003), entered into an agreement and plan of reorganization and merger with Direct Petroleum Exploration, Inc. ("DPE"), which was not consummated. The Company continues to maintain the subsidiary for use in any other potential future acquisition. This subsidiary is currently inactive and has no operations.
On September 17, 2010, the Company declared a special cash dividend of $0.50 per share of common stock issued and outstanding to be paid on October 21, 2010 to stockholders of record as of September 30, 2010 using cash from its general funds. On October 21, 2010, the aggregate dividend paid was $1,783,689.
On December 18, 2013, Golf Rounds.com, Inc. (the "Company") entered into an Agreement and Plan of Merger (the "Merger Agreement") with Fuse Medical, LLC ("Fuse"), Project Fuse LLC, a wholly owned subsidiary of the Company ("Merger Sub"), and D. Alan Meeker, solely in his capacity as the representative of the Fuse members (the "Representative"). Upon consummation of the transactions contemplated by the Merger Agreement, Merger Sub will merge with and into Fuse, with Fuse surviving as a wholly owned subsidiary of the Company (the "Merger"). The Merger is expected to be completed during the second or third fiscal quarter of 2014.
Our Business Plan
Upon completion of the foregoing Merger transaction, the Company will conduct operations through Fuse.
Fuse is designed to become a physician partnered, national distributor and provider of select healthcare products and supplies that meet or exceed market standards while striving to document cost savings and clinical outcomes to its manufacturers, physicians, health insurers and medical facility partners.
Critical Accounting Policies and Use of Estimates
The preparation of our condensed consolidated financial statements requires us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenue and expense, and the disclosure of contingent assets and liabilities. We evaluate our estimates and assumptions on an ongoing basis. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe that it is important for investors to be aware that there is a particularly high degree of subjectivity involved in estimating the fair value of stock-based compensation, that the expenses recorded for stock-based compensation in the Company's financial statements may differ significantly from the actual value realized by the recipients of the stock awards, and that the expenses recorded for stock-based compensation will not result in cash payments from Golf Rounds.com.
Results of Operations
We have had no revenues (other than interest and dividend income) since 1992 and will not generate any revenues (other than interest and dividend income) until, at the earliest, the completion of a business combination.
Three months ended November 30, 2013 compared to three months ended November 30, 2012
Other income (expense) for the three months ended November 30, 2013 decreased to ($335) from $0 for the three months ended November 30, 2012. The increase in interest expense to ($335) from $0 was due to the issuance of $80,250 of notes payable.
General, administrative and other expenses for the three months ended November 30, 2013 increased to $48,089 from $32,172 for the three months ended November 30, 2012, an increase of 49.5%. The increase was due to higher legal expenses of $13,877, directors and officers liability insurance expenses of $3,130, payroll expenses of $1,198, audit and accounting fee expenses of $800, and taxes and license expenses of $10, offset by lower office sharing expenses of $2,700, stockholder service expenses of $347, and bank charges of $51.
General, administrative and other expenses for the three months ended November 30, 2013 consisted of legal expenses of $20,854, audit and accounting fee expenses of $10,800, payroll expenses of $8,698, directors and officers liability insurance expenses of $5,005, stockholder service expenses of $2,574, taxes and license expenses of $119 and bank charges of $39.
Liquidity and Capital Resources
General
As of November 30, 2013, cash and cash equivalents were $1,951, which includes $74 invested in a money market account with a yield of 0.02% and $1,877 in a non-interest bearing checking account. As of November 30, 2013, there was a working capital deficiency of $70,019.
The Company's total current liabilities at November 30, 2013 were $98,720, which was comprised of notes payable of $63,000, accounts payable of $35,178 and accrued liabilities of $542.
Cash flows used in operating activities for the three months ended November 30, 2013 of $61,850 stems from a net loss of $48,424 and an increase in prepaid expenses of $16,050, offset by an increase in accounts payable and accrued expenses of $2,624.
Currently, our working capital is not sufficient to last for more than 12 months. If we acquire a business, our-post acquisition capital needs may be more substantial and our current capital resources may not be sufficient to meet our requirements. We currently believe that if we need capital in the future, we will be able to raise capital through sales of equity and institutional or investor borrowings, although we cannot assure you we will be able to obtain such capital. We anticipate that after any acquisition we may complete in accordance with our business plan, we will use substantially all our then existing working capital to fund the operations of the acquired business. In addition, we believe that any new business operations may require additional capital to fund its operations.
Contractual obligations
The Company has no material contractual obligations other than those relating to employment as described in our Annual Report on Form 10-K for the year ended August 31, 2013 and the Agreement and Plan of Merger with Fuse Medical, LLC as described in this Quarterly Report on Form 10-Q.
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