GolfGear International Inc. announced net sales for 2002 decreaased 27.9% to $1,546,234 vs. $2,143,371 for the prior year, and loss per basic and diluted share of ($0.14) vs. ($0.06).
Net loss for the full year was ($4,272,673), compared with ($1,016,981) last year. The net loss for the year included non-cash interest expense charges of $2,300,688 associated with the issuance of Convertible Debentures earlier in the year. Without the non-cash interest charges the net loss would have been ($1,971,985) or ($0.07) per basic and diluted share.
Net sales for the quarter ended Dec. 31, 2002, were $485,603 vs. $414,484 for the prior year (an increase of 17.2%) and net loss per basic and diluted share was ($0.08) vs. ($0.02). Net loss for the quarter was ($2,014,855) vs. ($261,348) for the prior period.
The net loss for the quarter included non-cash interest expense charges of $1,467,568 associated with the issuance of Convertible Debentures earlier in the year. Without the non-cash interest charges the net loss would have been ($547,287) or ($0.02) per basic and diluted share.
Michael A. Piraino, president and chief operating officer stated: “This was a very challenging year for us at GolfGear. Our momentum was interrupted early in the year due to a shortage of working capital (which was remedied by the issuance of $2.1 million in Convertible Debentures in June 2002) and again over the summer months when industry confusion arose over the United States Golf Association’s consideration of the C.O.R. rule change.
“These two events contributed heavily to reduced sales during the golf season and the resulting net loss.
“Net sales for the fourth quarter of 2002 were better than expected (an increase of 17.2% over the comparable period in 2001),” Piraino continued, “and the first quarter of 2003 when reported will represent an increase over the comparable period in 2001.”
In January 2003 GolfGear successfully introduced the new Tsunami 360 cc and 400 cc drivers at the PGA Show and announced the hiring of Chris Holiday, former Callaway Golf senior sales executive, as senior vice president of sales and marketing. “We are working to build the finest sales and marketing organization in the golf business,” Piraino said.
“We have excellent momentum as we begin this year’s golf selling season and our products continue to consistently outperform the competition.”
In 2002 GolfGear’s 340 cc Tsunami driver was twice certified as the number one driver in distance according to testing done by Rankmark International, the golf industry’s premier club testing company. In comparative testing against more than 40 competitors, including current models of all major brands, GolfGear’s Tsunami driver finished number one in distance, surpassing the top-selling clubs.
Piraino concluded: “This coming year 2003 should be a much better one for GolfGear. We expect to be successful in raising some additional capital, rolling out a direct-response program promoting the Tsunami driver and growing sales.”
Year Ended Dec. 31, Quarter Ended Dec. 31,
2002 2001 2002 2001
Sales, net $1,546,234 $2,143,371 $485,603 $414,484
Cost of goods sold 1,286,210 1,205,609 420,217 235,273
Gross profit 260,024 937,762 65,386 179,211
Operating expenses 2,202,291 1,926,067 551,090 423,604
Loss from operations (1,942,267) (988,305) (485,704) (244,393)
Other income (expense):
Interest expense:
Beneficial conversion
feature on convertible
debt (1,102,897) - (381,456) -
Fair value of
warrants issued
with convertible
debt (997,103) - (997,103) -
Interest including
amortization of
deferred financing
costs (302,528) - (157,564) -
Other 72,122 (28,676) 6,972 (16,955)
Net loss $(4,272,673)$(1,016,981)$(2,014,855) $(261,348)
