FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 for the quarterly period ended March 30, 2003.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the transition period from _____ to _____.
Commission File Number: 0-14146
WOMEN'S GOLF UNLIMITED, INC.
----------------------------
(Exact Name of Registrant as Specified in its Charter)
New Jersey 22-2388568
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
18 Gloria Lane, Fairfield, NJ 07004
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(Address of Principal Executive Office) (Zip Code)
(973) 227-7783
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--- ---
On March 30, 2003, 3,227,215 shares of common stock, $.01 par value, were issued
and outstanding.
WOMEN'S GOLF UNLIMITED, INC.
FORM 10-Q
For Quarterly Period Ended March 30, 2003
INDEX
PART I. FINANCIAL INFORMATION Page Number
Item 1. Financial Statements
Balance Sheets -
March 30, 2003 and December 31, 2002 2
Statements of Operations -
Three Months Ended March 30, 2003
and March 31, 2002 3
Statements of Cash Flows -
Three Months Ended March 30, 2003
and March 31, 2002 4
Notes to Financial Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK 8
PART II. OTHER INFORMATION 9
Item 6. EXHIBITS AND REPORTS ON FORM 8-K 9
SIGNATURES 10
CERTIFICATION 11
EXHIBIT INDEX 13
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WOMEN'S GOLF UNLIMITED, INC.
BALANCE SHEETS
AS OF MARCH 30, 2003 (UNAUDITED)
AND DECEMBER 31, 2002
March 30, December 31,
2003 2002
--------- -------------
ASSETS
Current Assets
Cash $ 3,580 $ 3,551
Accounts Receivable - Net 3,351,174 2,318,286
Inventories 3,960,848 3,742,026
Prepaid Expenses 49,607 63,522
Deferred Income Taxes 195,000 177,000
------------ ------------
Total Current Assets 7,560,209 6,304,385
Plant and Equipment - Net 213,410 231,898
Deferred Income Taxes 56,000 61,000
Intangible Asset - Net 2,829,936 2,925,023
Other Assets - Net 87,622 49,745
------------ ------------
Total Assets $ 10,747,177 $ 9,572,051
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current Portion Long Term Debt $ 125,602 $ 202,413
Obligation under Capital Lease, Current Portion 34,250 33,537
Short-term Borrowings 4,456,401 2,857,920
Accounts Payable 412,823 889,150
Accrued Expenses 446,836 244,887
------------ ------------
Total Current Liabilities 5,475,912 4,227,907
Long-Term Liabilities
Obligation under Capital Lease, less Current Portion 51,070 62,143
------------ ------------
Total Liabilities 5,526,982 4,290,050
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Shareholders' Equity
Common Stock, $.01 Par; 12,000,000 Shares
Authorized: 3,227,215 & 3,227,215 Issued
& Outstanding at March 30, 2003 and
December 31, 2002, respectively 32,272 32,272
Additional Paid in Capital 6,354,274 6,354,274
Accumulated Deficit (1,166,351) (1,104,545)
------------ ------------
Total Shareholders' Equity 5,220,195 5,282,001
------------ ------------
Total Liabilities and Shareholders' Equity $ 10,747,177 $ 9,572,051
============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
2
WOMEN'S GOLF UNLIMITED, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
MARCH 30, 2003 AND MARCH 31, 2002
(UNAUDITED)
March 30 March 31
2003 2002
----------- -----------
Net Sales $ 2,773,646 $ 3,622,795
Cost of Goods Sold 1,806,849 2,165,578
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Gross Profit 966,797 1,457,217
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Operating Expenses:
Selling 532,888 661,267
General & Administrative 522,428 559,237
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Total Operating Expenses 1,055,316 1,220,504
Operating Income (Loss) (88,519) 236,713
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Other Income (Expense)
Interest Expense (50,015) (71,968)
Other 33,678 35,107
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(16,337) (36,861)
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Income (Loss) Before Income Taxes (104,856) 199,852
Provision (Benefit) for Income Taxes (43,050) 69,052
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Income (Loss) before Cumulative Effect of Accounting Change (61,806) 130,800
----------- -----------
Cumulative Effect of Accounting Change, Net of Tax 1,806,448
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Net (Loss) Income ($ 61,806) ($1,675,648)
=========== ===========
Earnings per Common Share from before Cumulative Effect
Of Accounting Change Basic $ (0.02) $ 0.04
=========== ===========
Diluted $ (0.02) $ 0.04
=========== ===========
Cumulative Effect of Accounting Change Basic $ -- $ (0.56)
=========== ===========
Diluted $ -- $ (0.55)
=========== ===========
Loss Per Share Basic $ (0.02) $ (0.52)
=========== ===========
Diluted $ (0.02) $ (0.51)
=========== ===========
Weighted Average Number of Common Shares Outstanding -
Basic 3,227,215 3,225,173
Diluted 3,227,215 3,256,480
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
3
WOMEN'S GOLF UNLIMITED, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
MARCH 30, 2003 AND MARCH 31, 2002
(UNAUDITED)
March 30, March 31,
2003 2002
-------------- ------------
OPERATING ACTIVITIES
Net Loss $ (61,806) $(1,675,648)
Adjustments to Reconcile Net Loss to
Net Cash (Used By) Operating Activities:
Goodwill Impairment 1,806,448
Depreciation 26,051 16,877
Amortization 53,560 53,560
Deferred Income Taxes (13,000) (39,000)
Bad Debt Expense 61,026 72,000
Changes in Assets and Liabilities:
Accounts Receivable (1,093,914) (1,137,885)
Inventories (218,822) 38,260
Prepaid Expenses 13,915 70,914
Other Assets 3,650 7,874
Accounts Payable (476,327) 186,922
Accrued Expenses 201,949 196,694
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NET CASH USED BY OPERATING ACTIVITIES (1,503,718) (402,984)
----------- -----------
INVESTING ACTIVITIES
Purchases of Equipment (7,563)
Proceeds from Disposal of Plant & Equipment 1,967
-----------
NET CASH PROVIDED BY(USED BY) INVESTING ACTIVITIES (7,563) 1,967
----------- -----------
FINANCING ACTIVITIES
Repayments of long-term debt (87,171) (94,545)
Proceeds from Revolving Line of Credit, Net 1,598,481 488,245
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,511,310 393,700
----------- -----------
INCREASE (DECREASE) IN CASH 29 (7,317)
CASH - BEGINNING OF PERIOD 3,551 7,717
----------- -----------
CASH - END OF PERIOD $ 3,580 $ 400
=========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash Paid During the Period For:
Interest $ 42,663 $ 58,527
=========== ===========
Income Taxes $ 10,501 $ 94,470
=========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
4
NOTES TO FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited financial statements of Women's Golf Unlimited, Inc.,
(the "Company") have been prepared in accordance with accounting principles
generally accepted in the United States of America for interim financial
reporting. In the opinion of management, all material adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three months ended March 30, 2003 are
not necessarily indicative of the results that may be expected for the fiscal
year ending December 31, 2003. The unaudited financial statements and related
notes are presented as permitted by Form 10-Q and do not contain certain
information included in the Company's annual financial statements and notes
thereto. For further information, refer to the Company's annual financial
statements and notes thereto included in the Company's annual report on Form
10-K for the fiscal year ended December 31, 2002.
As of March 30, 2003, the Company had a working capital surplus of approximately
$2,048,000 and an accumulated deficit of approximately $1,166,000. For the
period ended March 30, 2003, the Company has incurred a loss of approximately
$62,000 and used cash in operations of approximately $1,504,000. In addition,
the Company's remaining availability on its line of credit is approximately
$286,000.
Management's near and long-term operating strategies focus on exploiting
existing and potential competitive advantages while eliminating or mitigating
competitive disadvantages. In response to current market conditions and a part
of its ongoing corporate strategy, the Company is pursuing several initiatives,
such as expanding its presence in key markets and aggressive cost cutting
programs. These initiatives are intended to increase liquidity and better
position the Company to compete under current market conditions.
1) EARNINGS (LOSS) PER SHARE
Basic earnings per share ("EPS") excludes dilution and is computed by dividing
net income (loss) available to common stockholders by the weighted average
number of common shares outstanding for the period. Diluted EPS reflects the
potential dilution that could occur if stock options or other contracts to issue
common stock were exercised and resulted in the issuance of common stock that
then shared in the earnings of the Company. Diluted EPS is computed using the
treasury stock method when the effect of common stock equivalents would be
dilutive. The only reconciling item between the denominator used to calculate
basic EPS and the denominator used to calculate diluted EPS is the dilutive
effect of stock options issued to employees of the Company and other parties.
The Company has issued no other potentially dilutive common stock equivalents.
2) STOCK BASED COMPENSATION
In December 2002, the Financial Accounting Standards Board (FASB) issued
Statements of Financial Accounting Standards (SFAS) No. 148, Accounting for
Stock Based Compensation. SFAS No. 148 amends SFAS No. 123, to provide
alternative methods of transition for a
5
voluntary change to the fair value based method of accounting for stock-based
employee compensation. In addition, this Statement amends the disclosure
requirements of SFAS No. 123 to require prominent disclosures in both annual and
interim financial statements about the method of accounting for stock-based
employee compensation and the effect of the method used on reported results. The
Company has implemented SFAS No. 148. Due to the insignificant effect on the
financial statements, interim disclosure is not presented.
INVENTORIES
Inventories are valued at the lower of cost, determined on the basis of the
first-in, first-out method, or market.
Inventories at March 30, 2003 and December 31, 2002 consisted of the following
components:
3/30/03 12/31/02
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Raw Materials $ 712,953 $ 673,565
Finished Goods 3,247,895 3,068,461
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$3,960,848 $3,742,026
========== ==========
SHORT TERM BORROWINGS
The Company has a secured revolving line of credit allowing a maximum credit
limit of $8,000,000, less 50% of the aggregate face amount of all outstanding
letters of credit, and subject to various borrowing bases through September 30,
2003. The availability of funds under this line of credit varies as it is based,
in part, on a borrowing base of 80% of eligible accounts receivable and 60% of
qualified inventory. Substantially all of the Company's assets are used as
collateral for the credit line. Interest rates are at prime plus one-quarter
percent, paid monthly; the interest rate was 4.50% as of March 30, 2003 and
December 31, 2002. The Company's remaining availability on the line of credit,
as of March 30, 2003 was approximately $ 286,000.
The credit facility contains certain covenants, which, among other items,
require the maintenance of certain financial ratios including tangible net worth
and working capital. Any event of default under the credit facility permits the
lender to cease making additional loans there-under. The Company was in
compliance with all covenants and conditions of the facility as of March 30,
2003.
QUARTERLY ENDS
The Company reports its interim financial statements as of the Sunday closest to
month-end of the quarter. Therefore, the interim quarters for fiscal 2003 will
end on March 30, 2003, June 29, 2003 and September 28, 2003. The Company reports
its year-end financial statements as of December 31.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Net Sales for the three-months ended March 30, 2003 were $2,773,646 compared to
$3,622,795 for the same period in 2002. Management attributes this 23.4%
decrease for the three-month period to the softness in the equipment industry
caused by the general economic slowdown and bad weather in parts of the country
in the spring. The Square Two brand was down 31.1% and the NancyLopezGolf brand
was down 33.4% for the three-months ended March 30, 2003. The
6
Lady Fairway shoe brand had increased sales of 18.1% for the three-months ended
March 30, 2003. This increase was the result of better price points, better
styling and better fit.
Gross profit as a percentage of sales for the three-month period ended March 30,
2003 was 34.9% as compared to 40.2% for the same period in 2002. The decrease in
gross margins was primarily the result of lower production in the first quarter
resulting in lower overhead absorption due to lower volume.
Selling expenses for the three-month period ended March 30, 2003 was $532,888
compared to $661,267 for the same period in 2002. The three-month decrease of
approximately $128,000 is a result of a decrease in advertising, reduced
national show expense as well as a reduction in commissions, due to decreased
sales.
General and Administrative expenses for the three-month period ended March 30,
2003 was $522,428 compared to $559,237 the same period in 2002. The three-month
decrease are mainly decreased legal and professional fees as well as a reduction
to bad debt expense.
Interest expense for the three-month period ended March 30, 2003 was $50,015
compared to $71,968 for the same period in 2002. The average loan balance for
the three-month period ended March 30, 2003 was $4,243,792 compared to
$4,335,575 for the same period in 2002. The decrease in the average outstanding
balance resulted mainly from better management of inventories and receivables.
Interest rates for the three-month period ended March 30, 2003 were lower than
the same period in 2002, therefore decreasing the interest paid on the term loan
and line of credit. In addition, in 2002 interest was paid on a promissory note
that was paid in full as of December 31, 2002.
Other income (expense) for the three-month period ended March 30, 2003 was
$33,678 compared to $35,107 for the same period in 2002. This decrease is due to
a decrease in royalty income from international distributors.
The provision for income taxes for the three-month period ended March 30, 2003
was ($43,050) compared to $69,052 for the same period in 2002. This decrease is
mainly the result of the Company's reduced income before taxes in 2003.
The Company's net income (loss) for the three-month period ended March 30, 2003
was ($61,806) compared to $130,800 for the same period in 2002. The decrease in
net income for the three-months ended March 30, 2003 was a result of decreased
net revenue as well as decreased margins, offset by reduced selling of
approximately $128,000, general and administrative expense $37,000 and interest
$21,000.
FINANCIAL CONDITION AND LIQUIDITY
The Company's working capital increased by $7,819 for the three-month period
ended March 30, 2003, compared to December 31, 2002. Current assets increased by
$1,255,824 and current liabilities increased $1,248,005. Accounts receivable
increased by approximately $1,033,000 and inventory increased by $219,000, which
was typical for the Company due to the cyclical nature of the golf industry. In
addition, Prepaid expenses decreased approximately $14,000, while deferred taxes
increased $18,000. The short-term borrowings of the Company increased by
approximately $1,598,000. In addition, accounts payable decreased by
approximately $476,000 and accrued expenses increased approximately $202,000 for
the three-month period ended March 30, 2003.
7
Cash used by operations was $1,503,718 for the three-month period ended March
30, 2003, compared to $402,984 for the same period ended March 31, 2002. Cash
provided by financing activities totaled $1,511,310 for the three-months ended
March 30, 2003, compared to $393,700 for the same period ended March 31, 2002.
During the three-month period ended March 30, 2003, cash used for the payment of
equipment purchased was $7,563 compared to cash provided for the disposal of
equipment purchased was $1,967 for the same period ended March 31, 2002. Cash
paid for interest charges on short and long-term borrowing was $42,663 and
$58,527 for the three-month periods ended March 30, 2003 and March 31, 2002,
respectively.
CRITICAL ACCOUNTING POLICIES
The Company's accounting policies and practices are described in Note 1 to the
financial statements included herein, "Summary of Significant Accounting
Policies." Application of the Company's accounting policies requires judgments
by management and incorporates expectations about future events. The Company has
established reserves and accruals for possible losses on collection of accounts
receivable as well as on obsolete inventory. Management uses all available facts
and circumstances in establishing such accruals or reserves.
CALCULATION OF ALLOWANCES FOR DOUBTFUL ACCOUNTS
Management reviews on a revolving basis a schedule listing each customer account
containing balances that are 90 or more days past due, and determines whether
collection of each outstanding balance is anticipated. If collection is
anticipated, no reserve for such account is established. If collection is
questionable, management applies a reserve of between 20% and 100% of the total
amount due. In determining whether to apply a reserve and if so, the amount of
such reserve, management draws on its knowledge of the progress of internal
collection efforts, the customer's payment history, and other information about
the customer. Management also applies a reserve of 2% of accounts receivable
that are up to 90 days past due.
CALCULATION OF RESERVES FOR OBSOLESCENCE
Periodically management reviews all inventory for the purpose of evaluating
current reserves for obsolescence, which is determined on the basis of
historical and current sales of each product, inventory level, and other
factors. A reserve of between 10% and 90% of present book value is assigned for
all questionable inventory, to which is added an additional miscellaneous
amount.
Certain information in the preceding "Management's Discussion and Analysis of
Financial Condition and Results of Operations" constitutes forward-looking
information that involves certain risks and uncertainties.
ACCOUNTS RECEIVABLE
The Company carries its accounts receivable at cost less an allowance for
doubtful accounts. On a periodic basis, the Company evaluates its accounts
receivable and establishes an allowance for doubtful accounts based on a history
of past write-offs, collections and current credit conditions. Accounts are
written off as un-collectible on a case-by-case basis.
INVENTORIES
Inventories are valued at the lower of cost, determined on the basis of the
first-in, first-out method, or market. Inventories consist of materials, labor
and manufacturing overhead.
8
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Within 90 days prior to the date of this Quarterly Report, the Company carried
out an evaluation, under the supervision and with the participation of the
Company's management, including the Company's Chief Executive Officer/Chief
Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures. Based upon that evaluation, the
Chief Executive Officer/Chief Financial Officer concluded that the Company's
disclosure controls and procedures are effective. There are no significant
changes in the Company's internal controls or in other factors that could
significantly affect these controls subsequent to the date of their evaluation.
Disclosure controls and procedures are the controls and other procedures of the
Company that are designed to ensure that the information required to be
disclosed by the Company in its reports filed or submitted under the Exchange
Act is recorded, processed, summarized and reported, within the time periods
specified in the Securities and Exchange Commission's rules and forms.
Disclosure controls and procedures include, with limitation, controls and
procedures designed to ensure that information required to be disclosed by the
Company, in its reports filed under the Exchange Act is accumulated and
communicated to the Company's management, including the principal executive
officer and principal financial officer, as appropriate to allow timely
decisions regarding disclosure.
The Company's exposure to market risks is limited to interest rate risks
associated with the variable interest rates on its revolving line of credit and
term loan. Changes in the interest rates affect the Company's earnings and cash
flows, but not the fair value of the Company's debt instruments. If the
indebtedness outstanding at December 31, 2002 were to remain constant, a 1.0%
increase in interest rates occurring on January 1, 2003 would result in an
increase in interest expense for the following 12 months of approximately
$42,449. There have been no material changes in the market risks faced by the
Company since December 31, 2002.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The exhibits listed on the attached Exhibit Index are filed as part of
this report.
(b) The Company filed no reports on for 8K during the quarter for which
this report is filed.
9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
WOMEN'S GOLF UNLIMITED, INC.
05/14/2003 /s/ Douglas A. Buffington
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Dated By:
Douglas A. Buffington
Director, President, Chief
Financial Officer, Chief Operating
Officer and Treasurer
10
CERTIFICATION
I, Douglas A Buffington, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Women's Golf
Unlimited, Inc.
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date");
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: May 14, 2003
/s/Douglas A. Buffington
------------------------------------------------
Director, President, Chief Financial Officer,
Chief Operating Officer and Treasurer
CERTIFICATION
I, Robert L. Ross, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Women's Golf
Unlimited, Inc.
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date");
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: May 14, 2003
/s/Robert L. Ross
-----------------------------------------------
Chairman of the Board and Chief Executive Officer
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT*
3.1 Amended and Second Restated Certificate of Incorporation of the
registrant dated June 28, 1991 (incorporated by reference to Exhibit
3.1 to the registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1991).
3.2 Certificate of Amendment to the Amended and Second Restated
Certificate of Incorporation of the registrant (incorporated by
reference to Exhibit 99.0 to the registrant's current report on Form
8-K reporting the event dated June 12, 2001).
3.3 Amended and Restated By-laws of the registrant dated December 6,
1991 (incorporated by reference to Exhibit 3.2 of the registrant's
Annual Report on Form 10-K for the year ended December 31, 1991).
4.1 Common Stock Purchase Warrant in favor of Wesmar Partners dated
February 28, 1988 (incorporated by reference to Exhibit 4.4 of the
registrant's Registration Statement No. 33-37371 on Form S-3).
4.2 Common Stock Purchase Warrant in favor of Wesmar Partners dated
February 28, 1988 (incorporated by reference to Exhibit 4.5 of the
registrant's Registration Statement No. 33-37371 on Form S-3).
4.3 Stock Option Agreement between the registrant and Wesmar Partners
dated February 29, 1988 (incorporated by reference to Exhibit 4.6 of
the registrant's Registration Statement No. 33-37371 on Form S-3).
10.0 Loan and Security Agreement between the registrant and Midlantic
Bank, National Association dated December 29, 1994 (incorporated by
reference to Exhibit 99 of the registrant's Current Report on Form
8-K dated December 26, 1994).
10.1 First Amendment to Loan and Security Agreement between the
registrant and Midlantic Bank, National Association made as of April
9, 1996 (incorporated by reference to Exhibit 10.1 of the
registrant's Annual Report on Form 10-K for the year ended December
31, 2000).
10.2 Second Amendment to Loan and Security Agreement between registrant
and PNC Bank, National Association as successor in interest of
Midlantic Bank, National Association made as of December 1, 1997
(incorporated by reference to Exhibit 10.12 of the registrant's
Annual Report on Form 10-K for the year ended December 31, 1997).
10.3 Fourth Amendment to Loan and Security Agreement between the
registrant and PNC Bank, National Association dated as of July 3l,
2000 (incorporated by reference to Exhibit 10.14 to the registrant's
Registration Statement No. 333-47908 on Form S-4).
10.4 Fifth Amendment to Loan and Security Agreement between the
registrant and PNC Bank, National Association made of January 3,
2001 (incorporated by reference to Exhibit 10.4 of the registrant's
Annual Report on Form 10-K for the year ended December 31, 2000).
10.5 Sixth Amendment to Loan and Security Agreement between the
registrant and PNC Bank, National Association made as of August 13,
2001 (incorporated by reference to Exhibit 10.20 of the registrant's
Quarterly Report on Form 10-Q for the quarter ended September 28,
2001).
10.6 Replacement Promissory Note of the registrant in favor of James E.
Jones dated December 29, 2000 and letter agreement in connection
with same (incorporated by reference to Exhibit 10.6 of the
registrant's Annual Report on Form 10-K for the year ended December
31, 2001).
10.7 Lease between the registrant and Kobrun Investments, III, L.L.C.
dated August 30, 2001 (incorporated by reference to Exhibit 10.7 of
the registrant's Annual Report on Form 10-K for the year ended
December 31, 2001).
10.8 Amended and Restated Licensing Agreement between Ladies Professional
Golf Association and the registrant dated January 1, 1999
(incorporated by reference to Exhibit 10.2 of the registrant's
Annual Report on Form 10-K for the year ended December 31, 1999).
10.9 Endorsement Agreement between the registrant and Kathy Whitworth
dated October 13, 1999 (incorporated by reference to Exhibit 10.13
to the registrant's Annual Report on Form 10-K for the year ended
December 31, 1999).
10.10 Licensing Agreement between Nancy Lopez Enterprises, Inc. and the
registrant made as of July 31, 2000 (incorporated by reference to
Exhibit 10.10 of the registrant's Annual Report on Form 10-K for the
year ended December 31, 2000).
10.11 License Agreement between the registrant and Raymond Lanctot
Ltee/Ltd. dated June 28, 1999 (incorporated by reference to Exhibit
10.12 to the registrant's Annual Report on Form 10-K for the year
ended December 31, 1999).
10.12 Asset Purchase Agreement among the registrant, APGC Holdings
Company, LLC and The Arnold Palmer Golf Company dated July 31, 2000
(incorporated by reference to Exhibit 2.0 to the registrant's
Current Report on Form 8-K reporting the event dated July 31, 2000).
10.13 Agreement and Plan of Reorganization, dated as of June 22, 2000,
among the registrant, S2 Golf Acquisition Corp., Ladies Golf
Equipment Company, Inc., James E. Jones and Brian Christopher
(incorporated by reference to Exhibit 2.0 of the registrant's
Registration Statement No. 333-47908 on Form S-4).
10.14 1992 Stock Plan for Independent Directors of S2 Golf Inc. dated
December 29, 1992 (incorporated by reference to Exhibit 10.11 to the
registrant's Annual Report on Form 10-K for the year ended December
31, 1992).
10.15** 1998 Employee Stock Plan of the registrant (incorporated by
reference to Exhibit 10.15 to the registrant's Annual Report on Form
10-K for the year ended December 31, 2000).
10.16** Agreement between the registrant and Randy A. Hamill dated January
2, 1997 (incorporated by reference to Exhibit 10.10 to the
registrant's Annual Report on Form 10-K for the year ended December
31, 1997).
10.17** Employment Agreement between the registrant and Douglas A.
Buffington, made April 3, 2001 and effective as of January 1, 2001
(incorporated by reference to Exhibit 10.17 of the registrant's
Quarterly Report on Form 10-Q for the quarter ended March 30, 2001).
10.18** Consulting Services Agreement between the registrant and MR &
Associates made as of December 15, 2000, effective as of January 1,
2000 (incorporated by reference to Exhibit 10.18 of the registrant's
Annual Report on Form 10-K for the year ended December 31, 2000).
10.19** Employment Agreement among the registrant, S2 Golf Acquisition Corp.
and James E. Jones dated as of January 1, 2001 (incorporated by
reference to Exhibit 10.19 of the registrant's Annual Report on Form
10-K for the year December 31, 2000).
10.20 Agreement and Plan of Merger between the registrant and its
wholly-owned subsidiary S2 Golf Acquisition Corp. dated as of June
15, 2001 (incorporated by reference to Exhibit 10.20 of the
registrant's Quarterly Report on Form 10-Q for the quarter ended
June 30, 2001).
10.21 Sixth Amendment to Loan and Security Agreement between the
registrant and PNC Bank, National Association made as of August 13,
2001 (incorporated by reference to Exhibit 10.21 of the registrant's
Quarterly Report on Form 10-Q for the quarter ended September 28,
2001)
99.1 Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350.
99.2 Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350.
* In the case of incorporation by reference to documents filed by the
registrant under the Exchange Act, the registrant's file number under the
Act is 0-14146.
** Management contract or management compensatory plan or arrangement.