**UNITED STATES SECURITIES AND EXCHANGE COMMISSION**

**Washington, DC 20549**

**FORM 10-K**

| x | **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE** |
|---|----------------------------------------------------------|

**SECURITIES EXCHANGE ACT OF 1934**

**For the fiscal year ended December 31, 2009**

| **o** | **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE** |
|-------|--------------------------------------------------------------|

**SECURITIES EXCHANGE ACT OF 1934**

For the transition period from _________________ to _________________.

 

**Commission File No. 333-140685**

 

**World Series of Golf, Inc.**

(Exact Name of Registrant as Specified in Its Charter)

 

| **Nevada**(State or Other Jurisdiction of Incorporation or Organization) | **87-0719383**(I.R.S. Employer Identification No.) |
|--------------------------------------------------------------------------|----------------------------------------------------|

 

**10161 Park Run Dr., Suite 150**

**Las Vegas, Nevada 89145**

(Address of Principal Executive Offices)

 

**(702) 740-1740**

(Registrant’s Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Exchange Act:  None.

Securities registered under Section 12(g) of the Exchange Act:  None.

 

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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  o     No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  o     No  x

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  o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of  “large accelerated filed,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One):  

 

| Large accelerated filer  o | Accelerated filer  o | Non-accelerated filer  o | Smaller reporting company x |
|--------------------------------------|--------------------------------|------------------------------------|----------------------------------|

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  o     No  x

On March 31, 2010, 22,151,561 shares of the registrant’s common stock were outstanding.

The aggregate market value of the registrant’s voting stock held by non-affiliates of the registrant was approximately $428,900 as of June 30, 2009. Shares of voting stock held by each executive officer and director of the registrant and each person who beneficially owns 10% or more of the registrant’s outstanding voting stock has been excluded from the calculation. This determination of affiliated status may not be conclusive for other purposes. 

 

 

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**TABLE OF CONTENTS**

 

|        |   |                                                                                                              | **Pages** |
|-------------|--------|-------------------------------------------------------------------------------------------------------------------|-----------|
|        |   |                                                                                                              |           |
|        |   | **PART I**                                                                                                        |      |
| Item 1.     |   | Business                                                                                                          | 2         |
| Item 2.     |   | Properties                                                                                                        | 9         |
| Item 3.     |   | Legal Proceedings                                                                                                 | 10        |
| Item 4.     |   | Submission of Matters to a Vote of Security Holders                                                               | 10        |
|        |   |                                                                                                              |      |
|        |   | **PART II**                                                                                                       |      |
| Item 5.     |   | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 11        |
| Item 7.     |   | Management’s Discussion and Analysis of Financial Condition and Results of Operations                        | 11        |
| Item 8.     |   | Financial Statements and Supplementary Data                                                                       | 20        |
| Item 9.     |   | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                              | 20        |
| Item 9A(T). |   | Controls and Procedures                                                                                           | 20        |
| Item 9B.    |   | Other Information                                                                                                 | 23        |
|        |   |                                                                                                              |      |
|        |   | **PART III**                                                                                                      |      |
| Item 10.    |   | Directors, Executive Officers and Corporate Governance                                                            | 24        |
| Item 11.    |   | Executive Compensation                                                                                            | 25        |
| Item 12.    |   | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                    | 30        |
| Item 13.    |   | Certain Relationships and Related Transactions and Director Independence                                          | 32        |
| Item 14.    |   | Principal Accountant Fees and Services                                                                            | 32        |
|        |   |                                                                                                              |      |
|        |   | **PART IV**                                                                                                       |      |
| Item 15.    |   | Exhibits and Financial Statement Schedules                                                                        | 33        |
|        |   |                                                                                                              |      |
|        |   | **SIGNATURES**                                                                                                    |      |

 

 

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**FORWARD-LOOKING STATEMENTS**

This Annual Report on Form 10-K and the documents incorporated herein by reference, if any, contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, an amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements reflect our current views with respect to future events or our financial performance, and involve certain known and unknown risks, uncertainties and other factors, including those identified below, which may cause our or our industry’s actual or future results, levels of activity, performance or achievements to differ materially from those expressed or implied by any forward-looking statements or from historical results. We intend such forward-looking statements to be covered by the safe harbor provisions forforward-looking statements contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include information concerning our possible or assumed future results of operations and statements preceded by, followed by, or that include the words “may,” “will,” “could,” “would,” “should,” “believe,” “expect,” “plan,” “anticipate,” “intend,” “estimate,” “predict,” “potential” or similar expressions.

Forward-looking statements are inherently subject to risks and uncertainties, many of which we cannot predict with accuracy and some of which we might not even anticipate. Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions at the time made, we can give no assurance that such expectations will be achieved. Future events and actual results, financial and otherwise, may differ materially from the results discussed in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements. We have no duty to update, supplement or revise any forward-looking statements after the date of this report or to conform them to actual results, new information, future events or otherwise.

The following factors, among others, could cause our or our industry’s future results to differ materially from historical results or those anticipated:  (1) the availability of additional funds to enable us to successfully pursue our business plan; (2) the uncertainties related to the appeal and acceptance of our proprietary method of play and our planned online products; (3) the success or failure of our development of additional products and services; (4) our ability to maintain, attract and integrate management personnel; (5) our ability to secure suitable broadcast and sponsorship agreements; (6) our ability to effectively market and sell our services to current and new customers; (7) changes in the rules and regulations governing our business; (8) the intensity of competition; and (9) general economic conditions. As a result of these and other factors, we mayexperience material fluctuations in future operating results on a quarterly or annual basis, which could materially and adversely affect our business, financial condition, operating results and stock price.

 

 

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**PART I**

In this Annual Report on Form 10-K, we will refer to World Series of Golf, Inc., a Nevada corporation, as  “our company,” “we,” “us” and “our.”

**ITEM 1. – BUSINESS**

**Overview**

We are a sports entertainment company that hosts amateur golf tournaments and events and seeks to create branded products, games, media and entertainment based on our proprietary golf tournament method of play which we call “The World Series of Golf”. We believe our unique method of play enhances the entertainment value of the skilled game of golf by incorporating elements of strategy similar to those found in “Texas Hold ‘Em”, a popular style of the card game poker. 

Since we began operating our current line of business in 2006, we have held three three-day World Series of Golf tournaments in Las Vegas, Nevada, during the month of May in each of 2007, 2008 and 2009. Our third tournament took place from May 12-14, 2009 at the Las Vegas Paiute Golf Resort in Las Vegas, Nevada. We anticipate holding a series of tournaments at satellite locations and are contemplating a tournament in Las Vegas in 2010, although as of the date of this filing, these plans are tentative based on additional funding, as well as venue availability such as golf courses and hotel accommodations and transportation logistics. Through our media partners, we broadcast our tournaments on domestic and international television and via other media outlets, as live events or as a produced series. We also sell sponsorships for our live tournaments and television coverage.  Dueto our funding constraints we have delayed the launch of our multi-player online video game that we are building with our partner, The World Golf Tour, operator of www.wgt.com. We plan to offer through our website, www.worldseriesofgolf.com, a multi-player online video game which we intend to launch during the fourth quarter of 2010, assuming we can obtain sufficient capital to complete development of the game. The multi-player online video game is based on our unique method of play and is tied into a social network/web community where interested players can not only play the online version of The World Series of Golf but will also be able to communicate with each other, share information and buy related products online. 

We generate revenue primarily through entry fees paid by the amateur players entering our tournaments and advertising and sponsorship fees. In the prior year, we recognized revenue under a brand licensing agreement with the Custom Group, which we have terminated. For the years ended December 31, 2009 and 2008, approximately 53% and 22% were derived from player entry fees, approximately 47% and 40% of our revenues were derived from sponsorships and advertising arrangements, and  approximately 0% and 38% were derived from our licensing contract with the Custom Group . We anticipate that, once we fully implement our online game strategy, revenue from subscription fees for online games and sponsorship fees to become a material percentage of our total revenues.

Our principal executive offices are located at 10161 Park Run Drive, Suite 150, Las Vegas Nevada 89145, and our telephone number at that address is (702) 740-1740. We maintain an Internet website at www.worldseriesofgolf.com. Information on our website is not part of this Annual Report.

**Products and Services**

***The Game***

Central to all of our product and services offerings and our business strategy are the unique rules of the World Series of Golf tournament play. The World Series of Golf, first introduced at our 2007 inaugural tournament, is our proprietary golf tournament format that incorporates the highly skilled game of golf with the popular “Texas Hold ‘Em” style of poker. The World Series of Golf is a hole-by-hole hit and bet, no limit amateur prize tournament, which is played on professional 18-hole golf courses in accordance with our specific rules of play. To date, the game has been available for play only in live, “land-based” tournaments held in Las Vegas, Nevada. As further described herein, we are also developing an online game format having rules of play closely based on those of our live tournaments.

***Events/Tournaments***

Since we began operating our current line of business in 2006, we have held three annual three-day World Series of Golf tournaments in Las Vegas, Nevada, during the month of May in each of 2007, 2008 and 2009. Each year the number of players in our 

 

 

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event has increased. In our 2007, 2008 and 2009 events, we had 60, 80 and 125 amateur golfers, respectively, who competed for a total of $530,000, $580,000 and $720,000 in cash prizes, respectively. Each player paid a $10,000 entry fee to enter the tournament, except for certain players whose fee was waived pursuant to various sponsorship or other agreements. The 2007 and 2008 events were televised and broadcasted by major television networks (NBC and CBS, respectively) as two-hour television shows. The 2009 event was broadcasted domestically on the WGN America network as a thirteen week, one hour episodic television series, with an additional thirteen weeks of repeats.

Our third tournament took place, from May 12 to May 14, 2009, at the Las Vegas Paiute Golf Resort in Las Vegas, Nevada, an international golf destination with three 18 hole professional golf courses. We acquired exclusive rights to utilize all golf courses and other facilities at the resort for our tournament, including 5,000 square feet of hospitality space. For the 2009 event, we arranged or provided training of tournament personnel, hardware, software, signage, training and maintenance support, whereas in 2007 and 2008, we retained the services of an event management firm to provide such services. Approximately 70% of the players in the 2009 event were repeat players from our prior tournaments. 

As part of our growth strategy, we plan to create a qualifying circuit of World Series of Golf tournaments to be held at various times during the year at various highly-rated golf courses, both domestically and internationally. The winners of these qualifying tournaments would compete against one another in an end-of-season tournament to be held in Las Vegas at which we will crown the World Series of Golf grand champion for that season.

*Summary Rules of Play.*Our tournament is only open to amateur golfers who may register at our website or by contacting our offices directly. The tournament is typically played over several days with up to 125 amateur player participants on the first day of the tournament. 

At the start of the tournament, the players are divided into foursomes, fivesomes or sixsomes depending on the total number of players in the event. A ‘dealer’ (which we call a ‘croupier’) remains with each group to keep track of all wagers and scores, as well as to address rule interpretations or violations. Players in our World Series of Golf format compete with one another for the largest “bank” or “purse” among their respective groups in order to continue playing in the tournament on succeeding days as their competitors are eliminated. On the final day of the tournament, the remaining players (those not eliminated) are grouped in a foursome, fivesome or sixsome and compete with one another until one player is declared the winner of the World Series of Golf tournament.  Players who advance out of day one are paid $10,000. Players whoadvance out of day two, which has been five in each one of our prior events, are paid according to their order of finish. Payouts for the 2009 event were $300,000 for first place, $100,000 for second place, $50,000 for third place, $40,000 for fourth place and $30,000 for fifth place. A total of 25 players received payouts in the 2009 event.

Under our unique method of play, players must ante at the beginning of each hole. A specific order of play is determined and maintained throughout the round. At each hole, the first player makes his or her wager prior to hitting the first shot. Thereafter, the other players in the group may bet, raise, check or fold, with no betting limit. This process is repeated after each round of golf shots.  Antes are 1% of the total purse on the tee. On day one, each player’s purse is $10,000 and antes are $100 and double every three holes. Antes increase on days two and three as a result of one player in each group from day one accumulating all of the purses of the group. On day two, each player begins with $50,000 in his or her purse and antes are initially $500 and then double every three holes. On day three, each of the five finalists has $250,000 in their purse and their antes are initially $2,500 andthen double every three holes. Each of the antes on each respective day is also the minimum bet. Players are then permitted to raise in $100 increments and can go “all in” at any time. 

At the conclusion of 18 holes (assuming at least two members of the group have not been eliminated prior to then), if more than one player has enough money to match an ante, then extra holes are played and the antes double on each successive hole. For example, on day one, if more than one player has over $6,400, they play an extra hole and if more than one player has over $12,800, they play a second extra hole. The match ends after a second extra hole. In the event of a tie on any hole, the players split the pot. In the event every player in a group ties a hole, antes will carry over to the next hole. Players are eliminated when they cannot ante on a hole. Players are not permitted to buy back in. The winner of the tournament is the last player remaining after all other players have been eliminated.  The foregoing summary is for illustrative purposes only. Actual rules ofplay are available from the company on our website. 

***Broadcast/Media***

We believe that increasing exposure to our live tournaments will lead to increased revenue from sponsorships and other advertising in addition to the revenue we generate from our tournament entry fees. We believe we can obtain a greater degree of exposure for our tournaments (and our website offerings) and thus increase the value of our sponsorships and advertising rights, by 

 

 

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promoting our tournaments, including our unique method of play, through television distribution. To this end, we seek production and broadcast partners in connection with the broadcast of our tournaments.

*Production*. We film the game play at our live World Series of Golf tournaments, as well as “behind the scenes” in the clubhouse and the sponsoring hotel and then edit all footage into episodes of varying lengths that are distributed for telecasting to domestic and international television audiences. We use outside productions companies to provide us with these services. For our 2007 tournament, we produced two one-hour episodes which were broadcast on NBC. For our 2008 tournament, we produced two one-hour television shows that were broadcast domestically on CBS and internationally on Setanta Golf network.

Echo Entertainment, Inc., a full-service production company, produced thirteen one-hour episodes in high definition television based on our 2009 tournament which were provided in ready-to-air format for broadcasting on WGN America. Echo Entertainment produced all of the on-course and in-hotel remote coverage and delivered the finished programming to WGN America. Echo Entertainment also produced the content based on our 2008 tournament. 

We seek to structure our broadcasts in the manner of reality shows where viewers can follow the background stories and play-by-play struggles of relatable and interesting ‘common person’ golfers. We believe this type of presentation and approach to our tournaments will lead to more watchable and compelling television than the professional golf tournaments that are commonly broadcast on television today. Through our player application process, we attempt to select a varied playing field for the World Series of Golf tournament that will provide viewers with a number of memorable characters and interesting story lines.  

*Broadcasting.*Since our first tournament in 2007, we have entered into broadcast agreements for the domestic and international telecast of our productions. 

Domestic Telecasts. For our 2009 World Series of Golf tournament, we licensed production of the event to WGN Continental Broadcasting Company, a Tribune Entertainment company and the owner and operator of WGN America, a domestic television network that reaches approximately 72 million households, whereby it broadcast on WGN America a 13-week episodic television series based on our 2009 World Series of Golf tournament.

WGN America broadcast our programming for thirteen consecutive weeks beginning in July 2009 on Sundays at 11a.m. with a rebroadcast on Saturdays at 1p.m. We granted WGN America the right to extend our agreement to cover any similar events in 2010 and 2011. Due to a change in programming direction where WGN is moving away from their previous sports focus and moving to comedy programming, we are in discussion with several other television networks to carry the next series of tournaments that we will broadcast in the future. 

WGN America had the right to incorporate four billboards into the episodes and retained one-half of the commercial minutes for each episode. We had the right to sell the remaining commercial minutes to advertisers. We also have the right to reformat the 2009 tournament and rebroadcast in partnership with other networks. Additional terms of the agreement provided that WGN America will serve as a sponsor of our 2009 World Series of Golf tournament. See “Sponsorships”  herein.

In 2008, our two one-hour television shows were broadcast on CBS.

International Telecasts. We seek to capitalize on the international appeal of the game of golf by introducing our unique method of play to international audiences. We believe that international telecasts of our production are essential to growing international interest in our game. Beginning with our 2008 World Series of Golf tournament, we began licensing rights to the international telecast of our episodes.

We licensed our 2009 World Series of Golf tournament production to Setanta, a leading international sports broadcaster with operations in Great Britain, Ireland, Luxembourg, Canada and Australia and which owns and operates premium sports TV channels that are made available to customers on a subscription basis via satellite, cable, digital, broadband and mobile distribution, for telecast outside the U.S. in Setanta coverage areas including Great Britain, Scotland, Ireland, the DISH Network and DirectTV. Under the license, we provided thirteen one-hour episodes in ready-to-air format for broadcasting on Setanta Sports beginning in September 2009. We retained the rights to place all advertising during the airing of the telecast. In connection with a change in the ownership structure of Setanta in July 2009, our planned international broadcast of our tournament did not occur and wedid not receive any revenue related to the international programming rights.

We licensed our 2008 tournament production to Setanta Sports. Our production initially aired on the Setanta Golf channel and later on the Setanta Sports 1 channel. The telecast included a thirty minute preview show explaining the rules of the games and 

 

 

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four one-hour episodes covering the 2008 event. All episodes aired in prime time (Thursday evenings) and generated over 125 hours of content on the network (an initial airing plus at least five rebroadcasts).

Internet Broadcast. We also plan to broadcast the production of our May 2009 tournament and future tournaments on Internet TV. At this time, we are in discussions to partner with companies that offer this type of service. However, there can be no assurance that we will be successful in reaching an agreement. We believe this outlet can vastly expand our broadcast capability globally via the Internet and provide high definition, studio quality video to enhance the high resolution quality of our online game.

*Sponsorships*. In connection with our live tournaments, our telecasts and our website, we grant or sell sponsorships to interested advertisers pursuant to which the advertiser’s products or services may be identified as an “official” product or service provider of the World Series of Golf and we grant “naming rights” that entitle one such advertiser to be the sole sponsor of the live tournament. Sponsorships are an important part of our business strategy as they allow us to partner with complementary service providers to bring greater awareness to our products and services. Sponsorships also allow us to acquire necessary products and services at little or no cost (in the case of in-kind sponsorships) and generate additional revenue. Some of our 2009 event sponsors included:

|   | **•** | WGN America – Under our agreement with WGN Broadcast Company, the WGN America network was referred to as the “Official Broadcast Partner of the World Series of Golf” for our 2009 tournament. |
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|   | **•** | The Mirage Casino Hotel – The Mirage, a 3,323 room hotel and casino resort located in Las Vegas, Nevada, is the “Official Hotel and Casino of the World Series of Golf.”  Under our sponsorship agreement, The Mirage provided us with hotel accommodations, preferred guest room rates, convention space and catering, an opening night draw party for 350 persons, tournament event space and closing night awards mixer. The Mirage has been one of our sponsors since our inaugural tournament. In 2009 and 2008, we recognized revenue and related cost of sales of approximately $243,600 and $454,000, respectively, related to our agreement with The Mirage. |
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|   | **•** | FullTiltPoker.net – Under an agreement with Pocket Kings, Ltd., the developer and operator of FullTiltPoker.net, the second largest poker website in the U.S., our 2009 World Series of Golf tournament was referred to as the “FullTiltPoker.net World Series of Golf”. We also provided other signage display rights at the event and incorporated the FullTiltPoker.net logo and other graphics into our television broadcasts. According to the terms of our agreement, Pocket Kings, Ltd. pays us a sponsorship package fee which includes additional amounts for certain entitlements such as player entry fees and other rights in connection with our European broadcasts. We also granted Pocket Kings, Ltd. a right of first refusal to sponsor future events. In 2008, we recognized revenue of $395,000 related to our agreement with Pocket Kings, Ltd. Our 2009agreement with Pocket Kings, Ltd. was for $495,000, of which we recognized $370,000 during 2009, $25,000 is in deferred revenue as of December 31, 2009 as it related to an up-front payment, and the remaining $100,000 was not received and will not be recognized as it related to European broadcasting rights which did not occur as discussed above. |
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***Planned Internet Offerings***

*Online Video Games and Social Networking.*In addition to our amateur live tournaments, we plan to offer World Series of Golf game enthusiasts the opportunity to play our game in a multi-player online video game format, without the need to pay an entry fee or wager using real money and to socially network with other game enthusiasts in a web community at our website. Under a joint development agreement with World Golf Tour, Inc. (“WGT”), a company that designs and develops video games to be played on the Internet, WGT will build a World Series of Golf branded version of WGT’s existing life-like interactive online golf video game which will be appropriately modified to incorporate our unique method of play and scoring. The game will enable multiple players to play famous golf courses throughout the world and compete withone another in tournament play. We plan to offer a monthly subscription package for unlimited play, as well as online play on a per game or per “click” basis. Profits derived from the player fees and advertising will be shared between WGT and us.

Management believes that much of our potential for long-term growth resides with the development of an online game and revenue base. The number of participants in our land-based events is inherently limited by the requirements of bringing players together in one place, by the $10,000 high-stakes buy-in, and by the logistical challenges that will mount in any live event as more and more participants are added.  By bringing our proprietary game to the Internet, we hope to transcend these limitations.

Under the agreement with WGT, we will pay WGT a fee for developing the online game and the parties will share revenues generated by the online game and other related product lines, including advertising and sponsorship of the online game. The agreement with WGT has an initial term of two years from the date of the live launch of the online game, which term will be automatically extended for additional one year terms unless terminated by either party.

 

 

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The online game being developed in partnership with the WGT will contain several valuable features: it will (1) require users to register; (2) allow people to play and get familiar with our format and (3) encourage the development of a social networking community related to  the game and its online play. Through the online game, we expect to be able to conduct events 24 hours a day, seven days a week. Players will be able to compete in varied types of play, including 3 hole, 6 hole, 9 hole, or 18 hole events. Most of these events will be buy-in events. Registered players will acquire credits and then use these credits to participate in the online events they choose. Management expects this to not only drive revenue, but give the users an opportunity to learn the format.  We anticipate leveraging our land based events, media and strategic partner relations to drive trafficto the online game site.

Once a critical number of players have familiarized themselves with our game and have refined their skills using our U.S.-based online game, we will explore opportunities to incorporate online gaming into the online games. Under the terms of our agreement with WGT, we have the right to license the operating system being developed to create a gambling platform to put on top of our game and operate in those parts of the world where online gaming is legal.

*Internet TV.* During the second half of 2010, we plan to launch a highly-interactive online web-TV site. We plan to model our Internet TV site on an exclusive country club and to offer visitors a merchandise mart, screening rooms, game rooms, a practice area, a pro shop and a golf inventor’s gallery. We believe that such a site will enhance our customers’ experience and provide a social networking opportunity for members. 

***Brand Licensing***

We seek to generate additional revenue from the World Series of Golf brand in the U.S. and worldwide by pursuing the license of our name, logo and other proprietary marks for use with products and services that we wish to be associated with. We have only recently begun our licensing program. In September 2007, we licensed the World Series of Golf name and logo to the Custom Group of the United Kingdom, in exchange for license fees of approximately $931,000 which we received and recognized as revenue in 2008. We terminated this agreement in 2009 due to the Custom Group’s default.

**Growth Strategy**

Management’s objective is to build a global brand for World Series of Golf and our unique method of play by providing an integrated offering of “real world,” live events, broadcast coverage and a high-quality online gaming experience and a strong web community. The key elements of our growth strategy include the following:

|   |   | **•** | Identifying and securing long-term broadcasting partners for the domestic and international distribution of our production content; |
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|   |   | **•** | Securing high-quality sponsorships from advertisers offering strategic advantages and having products and services that are complementary to our business; |
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|   |   | **•** | Building awareness of, and increasing interest in, our game through an comprehensive marketing program consisting of strategic alliances, sponsorships, online advertising and traditional media advertising; |
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|   |   | **•** | Producing additional media content derived from our existing and future live, “land-based” events for broadcasting on various media; |
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|   |   | **•** | Continuing to develop, improve and protect our technology and intellectual property assets, such as our website, our proposed online game and Internet broadcast network and our trademarks; |
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|   |   | **•** | Expanding our live, “land-based” tournaments into other markets, nationally and internationally, by developing qualifying tournaments that culminate in a final, season-ending tournament; and |
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|   |   | **•** | Hiring additional managerial, technical and administrative personnel to support our planned growth. |
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**Competition**

We believe that our unique method of play differentiates us from any other amateur, land-based, televised golf tournament. We believe that the unique scoring and wagering component of our method of play is so central to our game format that we do not directly compete with traditional amateur golf tournaments or professional, televised golf tournaments. However, we face 

 

 

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competition from other areas. Since we operate our land-based tournament in Las Vegas, Nevada, a major resort destination, we compete with resort-based gaming and non-gaming entertainment operating in the immediate and surrounding market areas, such as poker tournaments and other forms of casino and hotel entertainment. To the extent we compete in this market, we may be at a disadvantage due to the greater marketing resources, brand recognition, financial strength and entertainment diversity of such competitors. With regard to our television broadcasts, we compete for viewership and sponsorship with televised sporting events and other television programming that may air at the same time as our television broadcasts.

**Sales and Marketing**

We market our live tournaments to the general public through our website, the websites of our World Series of Golf partners, such as The Mirage and Pocket King Ltd.’s FullTiltPoker.net, direct mail and through the awareness we build from our domestic and international television broadcasts and news articles and features written about us in local publications and trade magazines. We also work directly with the marketing department of MGM’s Mirage hotel, one of our tournament sponsors, to promote our land-based tournaments. Advertising within the Mirage includes in-house television channels, flat screen television displays, outside marquee signs, table tents, flyers, slot toppers and show cards to stimulate curiosity and tournament play, as well as full-page coverage in their in-room magazine.

**Regulation**

We are not aware of any material legal or other regulatory restrictions that may adversely affect our business. Generally, in the U.S., games of skill are distinguished at law from games of chance by the predominant role of skill in determining the outcome of the game. We believe, after consultation with our gaming law counsel, that our unique method of play constitutes a game of skill and that we are not subject to Nevada State gaming regulations in connection with the operation of our World Series of Golf tournament play. It is possible, however, that our golf tournaments could become the subject of future federal or state gaming legislation or regulations or that federal or state authorities could take the position that our planned activities are subject to existing regulations. 

In addition, we believe that our planned online video games to be offered via the Internet are games of skill and not gambling subject to U.S. federal or state regulations regarding Internet gambling. Most U.S. states do not prohibit offering games of skill with prizes for a fee, but do prohibit offering games of chance with prizes for a fee. However, as a result of the enactment of the Unlawful Internet Gambling Enforcement Act of 2006 (the “UIGEA”) in the U.S., there can be no assurance that regulators will not choose to interpret and administer laws in a manner that would restrict our online video game operations. Whether a particular game involves the requisite amount of skill is ultimately a question of fact for regulators and courts to decide. These determinations of fact can differ from state to state. Should there be any change to the laws or to theinterpretation of these laws in any state or changes in federal law, a change in the interpretation of existing federal law or in any states in which we offer our services or an interpretation of the UIGEA restricting our operations, we may no longer be able to offer our services in certain states or may be required to modify its services at a cost to comply with changes in the law or its interpretation. Proposed legislation was recently introduced in the U.S. House of Representatives which, if enacted, would relax certain restrictions on online poker and Internet gambling under UIGEA. The proposed legislation would allow licensed online operators to accept bets and wagers from individuals in the U.S. and allow financial institutions to handle such transactions. We view this legislation as beneficial to our business; however, there can be no assurance that it will be adopted.

In the United States, there exists other legislation that regulates certain other aspects of the Internet, including online content, user privacy, taxation, liability for third party activities and jurisdiction, some of which may be or become applicable to our business.

**Research and Development**

We are not engaged in any meaningful research and development activities and we do not have a research and development staff. We regularly monitor and assess the effectiveness of the rules of our game and make adjustments accordingly to maximize efficiency of the game interest of our participants. 

**Intellectual Property**

We create, own and distribute intellectual property. It is our practice to protect our technology through patents, trademarks, copyrights, trade secret laws, restrictions on disclosure and other methods. 

We filed a U.S. utility patent application (Application No. 10/958,933) for the invention, entitled “Method for Conducting Sports Tournaments With Wagering” with respect to our unique World Series of Golf method of play. The patent application is currently pending. 

 

 

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We have a registered trademark for the name “World Series of Golf” and its related logo. We have applied for registration for the following marks: “World Series of Professional Men’s Golf”, “World Series of Professional Ladies Golf”, and “World Series of Amateur Golf” and “World Series of Golf Club Championship.” We also have a registered trademark in Japan and Canada for the name “World Series of Golf”.

We have no foreign patents or other foreign trademarks. Prior to expanding our live tournaments into foreign markets, we plan to take measures to protect our intellectual property in such markets. 

We also rely on trade secrets, know-how and other unpatented proprietary information in our business. Most of our employees are required to enter into confidentiality and non-competition agreements. However, there is no assurance that these agreements would be enforceable if they are breached or, if enforced, that they would adequately protect us or provide an adequate remedy for the damages that may be caused by such a breach. 

**Seasonality**

In 2009 and 2008, we earned approximately 85% and 70%, respectively, of our annual revenues during the second quarter of the year due to the fact that we have held our tournaments during the month of May. Participants in our tournaments typically register online at our website and pay their entry fee during the first or second quarter of the year. In addition, we recognize sponsorship and advertising revenue when we provide the advertising, which is in connection with the tournament, or when we utilize the in-kind services or products, which are typically utilized in connection with the tournaments, such as player gifts and hotel rooms. We expect this trend to continue until such time as we successfully expand the number of tournaments we offer in other locations throughout the year or increase the revenues we generate from other sources, such as broadcast license fees andmerchandise sales.

**Industry**

Due to the unique nature of our business, we do not operate in a single industry, but rather across discrete segments of several industries that we believe are complimentary and offer the opportunity for several diversified revenue models. These industries are sports and entertainment, gaming and online games.

*Sports and Entertainment.*Golf is one of the most popular sports in the United States and worldwide. Part of what makes the game so popular, we believe, is its appeal as a spectator sport as well as a player sport. As evidence of the sport’s popularity in relation to other sports, golf facility revenues in the U.S. exceeded revenues from all professional and semi-professional sports combined, according to a 2008 study by Golf 20/20, an industry trade group. Golf Magazine, a monthly print publication, reported having over six million subscribers in 2008, and the top five golf websites had 3.7 million visitors during the same period. World Golf Tour, Inc., an operator of online golf games, reported having about 250,000 unique visitors to its website each month. Golf’s international appeal is evidenced by the televisionbroadcast of the 2008 PGA Tour events in over 200 countries. 

The golf industry is expected to achieve revenues in the United States of $81 billion in 2009 and grow to $91 billion by 2012 despite the current economic downturn, according to estimates by National Diversity Solutions, a research firm focusing on diversity matters. The sport’s appeal as both a player and spectator sport creates opportunities for markets in various sectors of the larger golf market, such as golf facilities, broadcast, print, and online media, golf apparel, golf equipment, online golf games, among others. 

Our business strategy seeks to capitalize on the popularity and projected growth of golf, domestically and internationally, by incorporating our proprietary method of golf play to create a suite of products and services for commercial sale to golf and gaming enthusiasts alike.

*Gaming.*Due to the scoring elements of our method of play (which resemble poker wagering), we also operate in a small segment of the larger gaming industry, which is a $70 billion dollar industry in the U.S. according to the American Gaming Association. The uniqueness of our game, which involves skill and gaming elements similar to poker, make industry segmentation and comparisons difficult. However, we believe that a fraction of customers of gaming facilities, of which there are more than 40 million, according to the Las Vegas Visitor and Convention Authority, represent potential customers for our tournaments and our other planned product offerings. These potential customers may include, without limitation, participants in sports wagering, in which individuals place bets against each other in relation to sporting events, which hadrevenues of approximately $17 billion in North America during 2008.

*Online Games*. Once we launch our planned online World Series of Golf game, which is being jointly developed with World Golf Tour, Inc., we will enter the fast-growing online games industry. Our World Series of Golf online game will be categorized as a 

 

 

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skill-based game. The International Game Developers Association (IGDA) defines a “skill based game” as a web game played in a tournament format, with each player paying a cash entry fee to play and with a cash or merchandise prize going to the winner or winners of the tournament. Online games also typically generate revenue from advertising and so-called “micro-transactions” in which gamers make smaller dollar purchases on the website. Skill based games are so named because the outcome of each competition is based on the players’ ability and performance, with any elements of luck either eliminated or greatly reduced. 

The Internet has been the fastest growing market for goods and services over the last ten years and within this marketplace the sector known as online skill games is growing four times faster than the Internet itself, according to analyst firm DFC Intelligence. Online skill games generated $3.4 billion in 2005 and are projected to exceed $13 billion by 2011, according to recent figures obtained from DFC Intelligence. Furthermore, the number of U.S. online gamers is projected to increase from 153 million in 2009 to over 180 million in 2012, according to IDC, a research firm.

The online skill games sector has been identified as a natural progression in online entertainment for people of all ages, playing by the millions from all over the world and at any one time there are game networks with hundreds of thousands of players online. We believe that the ease and speed of online games makes them more attractive than console games, which require the purchase of a gaming system, such as Xbox or Nintendo Wii.

**Employees**

As of December 31, 2009, we had two employees, Joseph F. Martinez, our chief executive officer, and John Daly, our Vice President of Tournament Operations. All of our other employees were on furlough as of December 31, 2009, as we lacked sufficient working capital and cash from operations to continue to pay salaries. We believe our relations with our employees are good.

**Development of Business**

We were incorporated in the State of Nevada on June 30, 2006 under the name “Innovative Consumer Products, Inc.”  During the period from our incorporation until January 31, 2008, we generated no significant revenues and accumulated no significant assets, as we attempted to develop and finance our plan to manufacture several alternative prototypes of a proprietary clamp (or hook) device that attaches to the edge of a table or other surface to provide a safe and elevated place to store a purse and other items. 

On January 31, 2008, we acquired all of the outstanding capital stock of World Series of Golf, Inc., a privately-held Nevada corporation (“WSG-NV”) engaged in the sports entertainment industry that conducted golf tournament events under a proprietary method of play format and produced its own content for television and online applications. We immediately ceased prior business and began devoting all resources to the acquired business of WSG-NV.

The acquisition was consummated pursuant to an Agreement and Plan of Merger, dated January 31, 2008, among our company, WSG-NV, and WSG Acquisition, Inc. (“Acquisition Sub”), a newly formed wholly-owned Nevada subsidiary, whereby WSG-NV merged with and into Acquisition Sub. This transaction is commonly referred to as a “reverse acquisition” in which all of the outstanding capital stock of WSG-NV was effectively exchanged for a controlling interest in our company, which was a publicly-held “shell” corporation at the time of the transaction. This was considered a capital transaction (a recapitalization) rather than a business combination. Accordingly, no goodwill or other intangible assets were recorded. On February 1, 2008, we merged with Acquisition Sub in a short form merger under Nevada law and changed our name to “World Series of Golf, Inc.” 

**Business of Predecessor**

WSG-NV, in which we acquired a 100% interest on January 31, 2008, was formed in 2003. As indicated above, WSG-NV was engaged in sports entertainment. Since WSG-NV was considered to be the acquirer for financial reporting purposes, our historical financial statements for any period prior to January 31, 2008, are those of WSG-NV.

**ITEM 2. – PROPERTIES**

We do not own any real property. Our corporate offices at 10161 Park Run Dr., Suite 150, in Las Vegas, Nevada are leased from Plaza Offices LLC (formerly Ideawide LLC) on a month-to-month basis. 

In 2008 and 2009, we held our golf tournaments at the Las Vegas Paiute Golf Resort. For each three-day tournament, we secured exclusive use of the resort’s golf courses and other facilities. In 2009, we purchased the right to use the resort’s three golf courses for approximately $56,000. 

 

 

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We also previously leased residential property in Las Vegas, Nevada for use by management personnel at a cost of $2,500 per month, on a month-to-month basis. We terminated this lease effective June 30, 2009.

We have granted a security interest in all of our assets to The Slitz Family Trust, of which Mr. John Slitz, Jr., our Chairman, is the trustee, as security for our payment of amounts due to the trust under an outstanding promissory note.

**ITEM 3. – LEGAL PROCEEDINGS**

As of December 31, 2009, we were not a party to any pending legal proceeding and were not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us. 

**ITEM 4. – SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**

No matters were submitted to a vote of our security holders during the fourth quarter of our fiscal year ended December 31, 2009.

 

 

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**PART II**

**ITEM 5. – MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES**

Our common stock is quoted on the OTC Bulletin Board under the symbol WSGF. Our common stock was previously quoted on the Pink OTC Markets, Inc. under the symbol “WSGF”. 

The following table sets forth the range of high and low bid quotations for our common stock for each of the periods indicated as reported by the OTC Bulletin Board or the Pink Sheets, as applicable. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. The high and low prices listed have been rounded up to the next highest two decimal places. 

 

|           |   | High   |   | Low    |
|----------------|--------|--------|--------|--------|
|           |   |        |   |        |
| 2008           |   |   |   |   |
| First Quarter  |   | $1.60  |   | $1.60  |
| Second Quarter |   | $1.20  |   | $1.10  |
| Third Quarter  |   | $0.22  |   | $0.22  |
| Fourth Quarter |   | $0.08  |   | $0.08  |
| 2009           |   |   |   |   |
| First Quarter  |   | $0.09  |   | $0.01  |
| Second Quarter |   | $0.15  |   | $0.01  |
| Third Quarter  |   | $0.19  |   | $0.02  |
| Fourth Quarter |   | $0.05  |   | $0.01  |

On March 31, 2010 the closing price of our common stock on the OTC Bulletin Board was $0.01 per share.

**Holders of Our Common Stock**

At March 31, 2010, there were approximately 126 holders of record of our common stock. This number excludes any estimate by us of the number of beneficial owners of shares held in street name, the accuracy of which cannot be guaranteed.

**Dividends**

During our fiscal years ended December 31, 2009 and 2008, we did not pay any dividends on any class of common equity. We do not anticipate that we will pay any cash dividends on our outstanding common stock in the foreseeable future.

**Recent Sales of Unregistered Securities**

None.

**ITEM 7. – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

**Overview**

The following management’s discussion and analysis of our financial condition and results of operations is intended to provide information necessary to understand our audited consolidated financial statements and highlight certain other information which, in the opinion of management, will enhance a reader’s understanding of our financial condition, changes in financial condition 

 

 

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and results of operations. In particular, the discussion is intended to provide an analysis of significant trends and material changes in our financial position and operating results of our business during the year ended December 31, 2009 as compared to the year ended December 31, 2008. The following discussion and analysis should be read in conjunction with our consolidated financial statements and notes appearing elsewhere in this Report.

This Item is organized as follows: 

|   | **•** | The section entitled “Background” describes our principal operational activities and summarizes significant trends and developments in our business and in our industry. |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | The section entitled “Recent Developments” describes certain significant recent financing agreements, management changes and other agreements. |
|--------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | “Critical Accounting Policies and Estimates and Recent Accounting Pronouncements” discusses our most critical accounting policies and new accounting standards. |
|--------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | “Consolidated Results of Operations” discusses the primary factors that are likely to contribute to significant variability of our results of operations for the year ended December 31, 2009 as compared to the year ended December 31, 2008. |
|--------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | “Liquidity, Capital Resources and Going Concern” discusses our cash requirements, sources and uses of cash and liquidity, including going concern qualifications. |
|--------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | “Off-Balance Sheet Arrangements” indicates that we did not have any off-balance sheet arrangements as of December 31, 2009. |
|--------|------------|--------------------------------------------------------------------------------------------------------------------------------------------|

In addition, Item 9A(T) “Controls and Procedures” contains management’s assessment of our internal controls over financial reporting as of December 31, 2009. 

**Background**

On January 31, 2008, Innovative Consumer Products, Inc. (“ICP”), a public Nevada shell corporation, acquired all of the outstanding capital stock of World Series of Golf, Inc., a privately-held Nevada corporation (“WSG-NV”) engaged in the sports entertainment industry. 

The acquisition was consummated pursuant to an Agreement and Plan of Merger, dated January 31, 2008, whereby WSG-NV merged with and into WSG Acquisition, Inc. (“Acquisition Sub”), a newly formed wholly-owned Nevada subsidiary of ICP. This transaction is commonly referred to as a “reverse acquisition” in which all of the outstanding capital stock of WSG-NV was effectively exchanged for a controlling interest in ICP. This type of transaction is considered to be a recapitalization rather than a business combination. Accordingly, no goodwill or other intangible assets were recorded and WSG-NV was considered to be the acquirer for financial reporting purposes. Our historical financial statements for any period prior to January 31, 2008 are those of WSG-NV. On February 1, 2008, we merged with Acquisition Sub in a short form merger under Nevada law and changed ourname to “World Series of Golf, Inc.” 

We are a sports entertainment company that hosts amateur golf tournaments and events and seeks to create branded products, games, media and entertainment based on our proprietary golf tournament method of play which we call “The World Series of Golf”. We believe our unique method of play enhances the entertainment value of the skilled game of golf by incorporating elements of strategy similar to those found in “Texas Hold ‘Em”, a popular style of the card game poker. 

We have held a three-day World Series of Golf tournament in Las Vegas, Nevada during May in each of 2007, 2008 and 2009. We anticipate holding a series of tournaments at satellite locations and are contemplating a tournament in Las Vegas in 2010, although as of the date of this filing, these plans are tentative based on additional funding, as well as venue availability such as golf courses and hotel accommodations and transportation logistics. Through our media partners, we broadcast our tournaments on domestic and international television and via other media outlets, as live events or as a produced series. We also sell sponsorships for our live tournaments and television coverage. Due to our funding constraints we have delayed the launch of our multi-player online video game that we are building with our partner, The World Golf Tour, operator of www.wgt.com. We plan to offer through our website, www.worldseriesofgolf.com, a multi-player online video game which we intend to launch during the fourth quarter of 2010. The multi-player online video game is based on our unique method of play and is tied into a social network/web community where 

 

 

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interested players can not only play the online version of The World Series of Golf but will also be able to communicate with each other, share information and buy related products online. 

We generate revenue primarily through entry fees paid by the amateur players entering our tournaments and advertising and sponsorship fees. In the prior year, we recognized revenue under a brand licensing agreement with the Custom Group, which we have terminated. For the years ended December 31, 2009 and 2008, approximately 53% and 22% of our revenues were derived from player entry fees, approximately 47% and 40% were derived from sponsorships and advertising arrangements, and approximately 0% and 38% were derived from our licensing contract with the Custom Group . We anticipate that, once we fully implement our online game strategy, revenue from subscription fees for online games and sponsorship fees to become a material percentage of our total revenues.

**Recent Developments**

*Green Life, Inc. Agreement*

On April 13, 2010, we entered into a securities purchase agreement with GreenLife Inc. (“Green Life”) pursuant to which Green Life agreed topurchase 2,000 shares of our Series A convertible preferred stock(“Preferred Shares”) for an aggregate purchase price of $200,000 and aconvertible debenture in the principal amount of $50,000. The total investmentwas $250,000 and the transaction closed on April 14, 2010.

In connection with the purchase agreement, we executed a Certificate ofDesignation, Preference and Rights of the Series A Convertible Preferred Stockwhich will be filed with the Secretary of State of Nevada (“Certificate ofDesignation”). Under the Certificate of Designation, at any time afterSeptember 1, 2010, the Preferred Shares are convertible into shares of commonstock at a price equal to the average of the closing “volume weightedaverage price” of our common stock for the five (5) consecutive trading daysprior to conversion. The Certificate of Designation provides that the PreferredShares shall vote together with the common stock and have 51% of the votingpower. It also contains certain approval rights of the holders of the PreferredShares which require us to obtain the consent of at least 75% of the outstandingPreferred Shares before taking certain corporate actions such as a merger,payment of dividends, making certain capital expenditures and the like.

The convertible debenture has a stated interestrate of 8% and is due on April 13, 2011, unless earlier converted. The debenture(principal or interest, any portion thereof) is convertible either at the holder’sor our option at a price equal to 50% of the closing price of our common stockon the date of conversion. The note contains a blocker provision which restrictsGreen Life’s conversion of the note to the extent that the conversion wouldresult in Green Life beneficially owning more than 4.9% of our outstandingcommon stock.

Pursuant to a registration rights agreement withGreen Life also executed on April 13, 2010, we are required to file a registrationstatement with the Securities and Exchange Commission for the resale of our commonstock underlying the convertible Preferred Stock and convertible debenture.

On April 13, 2010, we also entered into an exchange agreement with Green Lifewhereby we agreed to exchange an outstanding convertible promissory note in theprincipal amount of $200,000 previously issued to Green Life for a newconvertible debenture in the same form as the debenture described above. We areobligated to register the conversion shares for resale.

In connection with the transactions above, John F. Slitz, our Secretary andChairman of the Board agreed to sell $1,000,000 of Company indebtedness payableto him to a non-affiliate designee of Green Life in exchange for $10,000.

*Management Changes*

*R. Terry Leiweke –* Effective as of September 6, 2009, Mr. R. Terry Leiweke resigned from his position as a director and as President. In connection with his resignation, we entered into a severance agreement with Mr. Leiweke, pursuant to which we will pay him severance of $112,500, comprised of a cash payment of $12,500 upon completion of a financing or series of financings totaling at least $1.0 million, additional seven monthly cash payments of $10,000 each, and a final payment on the seventh month of $30,000, after we have consummated a financing or series of financings of at least $2.0 million.

*Joseph F. Martinez* – Effective as of September 6, 2009, our board of directors appointed Mr. Joseph F. Martinez, our current Chief Executive Officer and a member of our board of directors, as the new President. Mr. Martinez does not receive any additional compensation for serving as President.

*John Daly –*As previously reported in our Current Report on Form 8-K, filed with the Securities and Exchange Commission (“SEC”) on October 7, 2009, effective as of October 6, 2009, our board of directors appointed Mr. John Daly as our Vice President of Broadcast Operations. We also entered into an employment agreement (the “Daly Agreement”) with Mr. Daly, pursuant to which Mr. Daly will serve as our Vice President of Broadcast Operations for a term beginning on October 6, 2009 (the “Effective Date”) and ending at any time upon termination by either party. Pursuant to the Daly Agreement, Mr. Daly will be entitled to annual base compensation of $180,000. Mr. Daly’s base salary shall accrue monthly, on the first business day of each calendar month, beginning on the EffectiveDate and payment of all or any portion of base salary shall be deferred by the Company until consummation of our sale of 10% convertible secured promissory notes, convertible into shares of our common stock, par value $0.001 per share, for aggregate proceeds of at least $5,000,000. Mr. Daly is also eligible to receive a target annual bonus of $50,000, with the actual amount to be determined by our board of directors. Pursuant to the Daly Agreement, we granted Mr. Daly options to purchase up to 500,000 shares of our common stock, at an exercise price of $0.02 per share. The options vest monthly in equal installments over a thirty-six (36) month period, beginning the first month after the Effective Date, and expire ten (10) years after the grant date. The grant was made pursuant to the standard form of grant agreement under our 2009 Equity Incentive Plan. 

*Compass Agreement*

As previously reported in our Current Report on Form 8-K, filed with the SEC on November 5, 2009, on October 30, 2009, we entered into a letter agreement (the “Compass Agreement”) with Compass Entertainment LLC, a diversified entertainment production company based in Las Vegas, Nevada (“Compass”). Pursuant to the Compass Agreement, we granted to Compass an exclusive, worldwide license to produce and distribute the television content we generate from our annual World Series of Golf amateur golf tournament and from a series of live regional or “satellite” amateur golf tournaments that Compass will organize, promote and produce on our behalf. Compass is required to secure national television broadcasting for the programming content derived from our tournaments. Compass will pay all of the costs incurred to stage the live satellite tournaments and allcosts to produce and distribute the television programming derived from each our tournaments. We also granted Compass the right to represent us for ninety days, subject to an additional ninety day extension period, in the promotion and commercialization of previously recorded programming derived from our past annual tournaments. Under the Compass Agreement, Compass will pay us 

 

 

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the following amounts in consideration of the rights granted under the agreement: (i) 30% of the net aggregate player entry fees for each tournament staged by Compass, such amount to be calculated after deduction of all production costs and expenses incurred by Compass relating to such tournament, payable once annually following our annual championship tournament and (ii) 15% of all gross advertising and sponsorship revenue received in connection with the tournaments. The Compass Agreement has a term of five years and can be renewed annually by Compass for up to an additional five years.

*World Golf Tour Agreement*

In January 2009, we, through our wholly owned subsidiary, World Series of Golf Online, Inc. (“WSGO”) entered into a Development, Hosting, and License Agreement (the “WGT Agreement”) with World Golf Tour, Inc. (“WGT”). WGT is the developer of an online simulated golf game. Pursuant to the WGT Agreement, WGT will create, host, operate and manage an online version of the World Series of Golf game format using a modified version of WGT’s online simulated golf game (the “WSGO Game”). WSGO will pay WGT an aggregate of $300,000 for its services provided pursuant to the WGT Agreement, and the parties will share revenues generated by the WSGO Game and other products lines related to the WSGO game, including advertising and sponsorship of the WSGO game. The WGT Agreement has an initial term of two years from the date of the live launch of theWSGO Game, which term will be automatically extended for additional one year terms unless terminated by either party.

The WGT Agreement provides that WGT will retain all right, title and interest in and to the intellectual property rights of the online WGT game, the golf course visuals, and any content provided by WGT, all software and technology, derivative works, embellishments, modifications and translations thereof, except for unique aspects, features and functionality created specifically for the WSGO Game. We retain all right, title and interest in and to the intellectual property rights to the World Series of Golf format, WSGO trademarks and content, and the WSGO website URL name. Furthermore, WSGO grants WGT a worldwide, limited, non-exclusive license to use, reproduce, adapt, incorporate, integrate, and display the World Series of Golf format and the WSGO trademarks in connection with the WSGO Game, and to provide links from the WGT website to the WSGO Game. Conversely, WGT grantsWSGO a worldwide, limited, non-exclusive license to use, reproduce, display, and publicly perform the WSGO Game visuals in advertising and in any television broadcasts of live golf tournament events sponsored by WSGO, WGT or their affiliates. The WGT Agreement contemplates that WGT will create a hyperlink directly from its website to the WSGO Game. WSGO will create a hyperlink from its website to the WGT game site. During 2009, there were an aggregate of $25,000 in fees incurred under this agreement, which has been placed on hold due to our funding constraints.

**Critical Accounting Policies and Estimates and Recently Issued Accounting Standards**

We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the U.S. As such, we are required to make certain estimates, judgments and assumptions that we believe are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the periods presented. Actual results could differ significantly from those estimates under different assumptions and conditions. We believe that the following discussion addresses our most critical accounting estimates, which are those that we believe are most important to the portrayal of our financial condition and results of operations and which require our most difficult and subjective judgments, often as a result ofthe need to make estimates about the effect of matters that are inherently uncertain. Other key estimates and assumptions that affect reported amounts and disclosures include estimates as to valuation of fair value for goods and services received in barter transactions, valuation of share-based payments and valuation allowance for deferred income tax assets. We also have other policies that we consider key accounting policies; however, these policies do not meet the definition of critical accounting estimates because they do not generally require us to make estimates or judgments that are difficult or subjective. 

*Revenue recognition*

Revenue is recognized when there is persuasive evidence that an arrangement exists, delivery has occurred, collectability is reasonably assured, and fees are fixed or determinable. We derive our revenues from sponsorship and advertising, license agreements and player entry fees. Sponsorship and advertising revenue includes fees obtained for the right to sponsor our tournament events and for advertising in our television programming. 

We recognize revenue from sponsorship and advertising agreements when earned in connection with the applicable tournament as set forth in the sponsorship or advertising agreement either upon completion of the tournament or publication or airing of the advertising. Upfront non-refundable payments, where we are providing continuing services related to the airing of a tournament series, are deferred and recognized as revenue over the contract period. Revenues and related expenses from barter transactions in which we receive goods or services in exchange for sponsorships of tournaments are recorded at fair value. Barter transactions accounted for approximately $329,000 and $531,000 of total revenue for the years ended December 31, 2009 and 2008, respectively.

 

 

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We have had only one license agreement to date whereby we licensed our brand (The World Series of Golf) to the Custom Group in the United Kingdom in exchange for $2.0 million. Due to circumstances with respect to assurance of collectability, we recognized revenue under this license agreement when cash was received. We recognized approximately $931,000 related to this agreement during 2008. We terminated this agreement in the second quarter of 2009 due to the Custom Group’s default. 

We recognize player entry fees upon the successful completion of a scheduled tournament. We record player entry fees revenue on a net basis, in that we do not record gifted or sponsored buy-ins to player entry fees revenue with an offset to expense. Player entry fees collected prior to a scheduled tournament are deferred and recognized when earned upon the occurrence of the scheduled tournament.

*Income taxes*

We account for income taxes using an asset and liability method which generally requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to amounts expected to be realized. The provision for income taxes represents the tax payable for the period and change during the period in net deferred tax assets and liabilities. 

We have identified our federal tax return as our “major” tax jurisdiction, as defined. The periods subject to examination for our federal income tax returns are the tax years ended in 2006 and thereafter, since we have net operating loss carryforwards for tax years starting in 2006. We do not believe any reserves for uncertain income tax positions are required. Our policy for recording interest and penalties associated with audits is to record such items as a component of income (loss) before taxes. 

*Share-Based Payments*

We have granted shares of our common stock and stock options and warrants to purchase shares of our common stock to various parties for services and in connection with financing activities. The fair values of shares issued have been based on closing market prices of our common stock. We use the Black-Scholes option-pricing model as our method of valuation for share-based awards. Share-based compensation expense is based on the value of the portion of the stock-based award that will vest during the period, adjusted for expected forfeitures. Our determination of the fair value of share-based awards on the date of grant using an option pricing model is affected by our stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the expected life of the award, expected stock price volatility overthe term of the award and historical and projected exercise behaviors. The estimation of share-based awards that will ultimately vest requires judgment, and to the extent actual or updated results differ from our current estimates, such amounts will be recorded in the period estimates are revised. We use the simplified method for estimating expected term for all of our grants of option awards, as we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. Although the fair value of share-based awards is determined in accordance with authoritative guidance, the Black-Scholes option pricing model requires the input of highly subjective assumptions and other reasonable assumptions could provide differing results. Non-cash compensation expense is recognized on a straight-line basis over the applicable vesting periods of one to three years (deemed the requisite service period), based on the fair value of such share-based awards onthe grant date. 

*Recent Accounting Pronouncements*

In October 2009, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance on revenue arrangements with multiple deliverables that are outside the scope of the software revenue recognition guidance (which does not have impact on our accounting). Under the new guidance, when vendor specific objective evidence or third party evidence for deliverables in an arrangement cannot be determined, a best estimate of a selling price is required to separate deliverables and allocate arrangement consideration using the relative selling price method. The new guidance includes new disclosure requirements on how the application of the relative selling price method affects the timing and amount of revenue recognition. We believe adoption of this new guidance will not have a material effect on our financial statements.

**Consolidated Results of Operations**

Percentage comparisons have been omitted within the following table where they are not considered meaningful. All amounts, except amounts expressed as a percentage, are presented in thousands in the following table. 

 

 

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|                                                                                         |   | **Years Ended****December** **31,** |   | **Change** |   |
|----------------------------------------------------------------------------------------------|--------|------------------------------------------|--------|------------|--------|
|                                                                                         |   |                                          |   |            |   |
|                                                                                         |   | **2009**                                 |   | **2008**   |   | **$** |   | **%** |   |
|                                                                                         |   |                                          |   |            |   |  |   |  |   |
| **Revenue**                                                                                  |   |                                     |   |       |   |   |   |   |   |   |   |   |
| Sponsor and advertising                                                                      |   | $                                        | 699    |       | $      | 964 |   | $ | (265 | ) | (27 | )% |
| Licensing                                                                                    |   |                                     | — |       |   | 931 |   |   | 931 |   | (100 | )% |
| Player entry fees                                                                            |   |                                     | 790    |       |   | 543 |   |   | 247 |   | 45 | % |
|                                                                                         |   |                                          |        |       |        |  |   |  |  |   |   |   |
| Total revenue                                                                                |   |                                     | 1,489  |       |   | 2,438 |   |   | (949 | ) | (39 | )% |
| **Operating expenses**                                                                       |   |                                     |   |       |   |   |   |   |   |   |   |   |
| Cost of revenue                                                                              |   |                                     | 1,770  |       |   | 2,715 |   |   | (945 | ) | (35 | )% |
| Sales and marketing                                                                          |   |                                     | 67     |       |   | 1,300 |   |   | (1,233 | ) | (95 | )% |
| General and administrative                                                                   |   |                                     | 1,791  |       |   | 1,633 |   |   | 158 |   | 10 | % |
|                                                                                         |   |                                          |        |       |        |  |   |  |  |   |   |   |
| Total operating expenses                                                                     |   |                                     | 3,628  |       |   | 5,648 |   |   | (2,020 | ) | (36 | )% |
| **Loss from operations**                                                                     |   |                                     | (2,139 | )          |   | (3,210 | ) |   | 1,071 |   | 33 | % |
| Interest expense, including amortization of debt discount of $11 and $1,135 in 2009 and 2008 |   |                                     | (199   | )          |   | (1,274 | ) |   | 1,075 |   | 84 | % |
| Change in fair value of derivative liability for price adjustable warrants                   |   |                                     | 92     |       |   | — |   |   |   |   |   |   |
|                                                                                         |   |                                          |        |       |        |  |   |  |  |   |   |   |
| **Net loss**                                                                                 |   | $                                        | (2,246 | )          | $      | (4,484 | ) | $ | 2,238 |   | 50 | % |
|                                                                                         |   |                                          |        |       |        |  |   |  |  |   |   |   |

***Comparison of the Year Ended December*** ***31, 2009 to the Year Ended December*** ***31, 2008***

***Revenue***. We generate revenue primarily through a combination of (i) entry fees paid by the players entering our golf tournaments, (ii) the sale of sponsorships and advertising in connection with our tournaments, and (iii) the license of our proprietary marks/brands. During 2009 and 2008, a significant portion of our revenue was derived from a small number of customers. In 2009, Pocket Kings, Ltd. (operator of FullTiltPoker.net) accounted for approximately 25% of total revenue and The Mirage accounted for approximately 16% of total revenue. In 2008, the Custom Group (a licensing customer), accounted for approximately 38% of total revenue, Pocket Kings, Ltd. accounted for approximately 16% of total revenue and The Mirage accounted for approximately 19% of total revenue. Total revenue decreased by $949,000, or approximately 39% in2009 as compared to 2008, due primarily to a significant decrease in licensing revenue and, to a lesser degree, decreased sponsorship and advertising revenue, partially offset by increased player fees revenue. We expect revenue to continue to decrease in 2010.

*Sponsorship and advertising revenue*. Sponsorship and advertising revenue is comprised of in-kind barter and trade revenue and advertising revenue from our sponsors, primarily The Mirage and Pocket Kings, Ltd. We record barter and in-kind revenue at gross, and record the related sponsorship expenses to cost of sales when used. Revenue from our sponsorship partners decreased in the year ended December 31, 2009 compared to the year ended December 31, 2008.

 

 

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Sponsorship and advertising revenue declined in 2009 due primarily to the fact that our contract with The Mirage for 2009 was valued at approximately $263,400 or approximately 42% less than the value we recorded during the year ended December 31, 2008. Competition in the travel and entertainment industry as well as the general economic downturn placed downward pressure on our sponsorship and advertising packages and this trend continued throughout 2009. During the year ended December 31, 2009, we also recognized $100,000 for the player positions portion of our contract with Pocket Kings Ltd., $195,000 for airing the series on WGN-America and $75,000 in amortization of a $100,000 up-front payment from Pocket Kings, Ltd, as well as $85,000 in additional barter revenue recorded in trade for vendor credits. During the year ended December 31, 2008, we recognized revenue ofapproximately $454,000 related to our sponsorship and advertising package with The Mirage and $395,000 related to our contract with Pocket Kings, Ltd. 

*Licensing revenue*. During 2008, we recorded revenue related to our licensing contract with the Custom Group. There was no licensing revenue recorded during 2009. In the second quarter 2009, we terminated this contract due to the Custom Group’s default. We do not expect to record licensing revenue during 2010.

*Player entry fees revenue.* Player entry fees revenue is comprised of the tournament entry fees paid by the amateur players in our live events, which were $10,000 per player for our 2009 and 2008 events. We record player entry fees revenue on a net basis, in that we do not record gifted or sponsored buy-ins to player entry fees revenue with an offset to expense. Revenue from player entry fees increased in the year ended December 31, 2009 compared to the year ended December 31, 2008. In 2009, we had 125 playing positions, with 74 players paying the full entry fee and 17 sponsored players. In 2008, we had 80 playing positions, with 54 players paying the full entry fee and 23 sponsored players. 

***Cost of revenue***. Cost of revenue primarily consists of barter transactions, player payout (tournament prizes), media production costs and other event costs. Cost of revenue decreased in the year ended December 31, 2009 compared to the year ended December 31, 2008, due primarily to the reduction in barter transactions and our cost reduction efforts. 

|   | **•** | Barter transactions included in cost of sales totaled approximately $329,000 for the year ended December 31, 2009 compared to $531,000 for the year ended December 31, 2008 due to factors discussed above. |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | Player payouts increased to $671,000 in 2009 compared to $580,000 in 2008 due to an increase in the number of players. |
|--------|------------|------------------------------------------------------------------------------------------------------------------------|

|   | **•** | Media and production costs were approximately $425,000 in 2009 compared to $883,000 in 2008 due to our cost reduction efforts. |
|--------|------------|--------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | Other event costs, which are primarily comprised of golf course management fees and tournament signage, were approximately $0.3 million in 2009 compared to $0.7 million for 2008 due to our cost reduction efforts. |
|--------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Sales and marketing***. Sales and marketing expense consists primarily of consulting, public relations, sales materials and advertising. The 95% decrease in sales and marketing expense in the year ended December 31, 2009 compared to the year ended December 31, 2008 resulted primarily from the inclusion in 2008 of shares of our common stock valued at $600,000, issued in 2008 to a consulting group which provided public relations and promotional services and cost reductions in the current year. We expect sales and marketing expenses to remain consistent in future periods. 

***General and administrative***. General and administrative expense consists primarily of salaries and other personnel-related expenses to support our tournament operations, non-cash stock-based compensation for general and administrative personnel, professional fees, such as accounting and legal, corporate insurance and facilities costs. The 10% increase in general and administrative expenses in the year ended December 31, 2009 compared to December 31, 2008 resulted primarily from increased consulting and personnel expenses related to accounting and management personnel hired in the first and second quarters of 2009.

***Interest Expense***. In January 2008, the original promissory note due to the chairman of our board of directors in the amount of $985,000 was replaced by a second promissory note in the principal amount of $961,000, bearing interest at a rate of 12% per annum. This new note was due on January 1, 2009. During 2008, we recorded interest expense of approximately $115,000 related to this note. 

In February 2009, the existing obligations under our promissory note with the chairman of our board of directors were replaced by another promissory note for $1,150,000. In connection with the refinancing of the obligations under the promissory note, we recorded $78,000 in February 2009 as a financing fee. The new note, as amended and restated in May 2009, is payable within five 

 

 

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days after the demand of the holder, and bears interest at 8% per annum. During the year ended December 31, 2009, we recorded interest expense of approximately $183,000 related to this note.

In 2008, we borrowed an aggregate of $1,135,000 pursuant to convertible promissory notes. The convertible notes bear interest at 6% per annum and were due, if not previously converted into shares of common stock, on October 31, 2008. The convertible notes when issued included a beneficial conversion feature because they allowed the holders to acquire common shares of the company at an effective conversion price that was less than the fair value per share of our common stock of at issuance. We recognized interest expense related to amortization of the beneficial conversion feature of $1,135,000 during the year ended December 31, 2008. Two of the notes, in an aggregate principal amount of $900,000, were converted into shares of common stock in December 2008. The remaining notes, in the aggregate principal amount of $235,000, are still outstanding and are classified as current onthe accompanying consolidated balance sheets. During the year ended December 31, 2009, we recorded interest expense of $16,000 related to these notes.

**Liquidity, Capital Resources and Going Concern**

We have prepared our consolidated financial statements assuming that we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. As of December 31, 2009, we had an accumulated deficit of approximately $13.1 million, negative cash flows from operations since inception and expect to incur additional losses in the future as we continue to develop and grow our business. We have funded our losses primarily through sales of common stock and warrants in private placements and borrowings from related parties and other investors and revenue provided by our sponsorships and advertising contracts, licensing arrangements and tournaments. The further development of our business will require capital. At December 31, 2009, we had a working capital deficit (current assets less current liabilities) of $4.1million and approximately $1,000 in cash. Our operating expenses will consume a material amount of our cash resources. 

We    are still in the early stages of executing our business strategy. Our current    cash levels, together with the cash flows we generate from operating activities,    are not sufficient to enable us to execute our business strategy. We require    additional financing to execute our business strategy and to satisfy our    near-term working capital requirements. In the event that we cannot obtain    additional funds, on a timely basis or our operations do not generate sufficient    cash flow, we may be forced to curtail or cease our activities, which would    likely result in the loss to investors of all or a substantial portion of    their investment. We are actively seeking to raise additional capital through    the sale of shares of our capital stock to institutional investors and throughstrategic investments. On April 13, 2010, we entered into a securities purchase    agreement with Green Life Inc. (“Green Life”) pursuant to which    Green Life agreed to purchase 2,000 shares of our Series A convertible preferred    stock (“PreferredShares”) for an aggregate purchase price of $200,000 and a convertibledebenture in the principal amount of $50,000. The total investment was $250,000and the transaction closed on April 14, 2010. If    management deems necessary, we might also seek additional loans from related    parties. However, there can be no assurance that we will be able to consummate    any of these transactions, or that these transactions will be consummatedon a timely basis or on terms favorable to us.

*Discussion of Cash Flows*

We used cash of approximately $1.0 million in our operating activities in 2009 compared with $1.6 million in 2008. Cash used in operating activities relates primarily to funding net losses, partially offset by non-cash expenses related to share-based payments for services and depreciation. We expect to use cash for operating activities in the foreseeable future as we continue our operating activities. 

Our investing activities used cash of approximately $3,000 in 2009 compared to $22,000 in 2008. Changes in cash from investing activities are due primarily to purchases of equipment. 

Our financing activities provided cash of approximately $915,000 in 2009 compared to $1.5 million in 2008. In 2009, changes in cash from financing activities related to advances from the chairman of our board of directors. In 2008, changes in cash from financing activities were primarily due to issuance of common stock and warrants and proceeds of convertible notes payable and notes payable to related party. 

*Recent Financing Activities*

In February 2009, the existing obligations under our promissory note with the chairman of our board of directors were replaced by another promissory note for $1,150,000. In connection with the refinancing of the obligations under the promissory note, we recorded interest expense of $78,000 in February 2009. The new note, as amended and restated in May 2009, is payable within five days after the demand of the holder, and bears interest at 8% per annum. The note is convertible at the option of the holder, and the conversion price is $0.50 per share. In addition, in connection with the promissory note, we issued the holder warrants to 

 

 

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purchase 1,150,000 shares of our common stock at an exercise price of $0.50 per share through February 15, 2015. Obligations under the promissory note are secured by all of our tangible and intangible assets, including intellectual property.

In May and June 2008, we issued convertible promissory notes in an aggregate amount of $1,135,000. The notes bore interest at 6% per annum and are repayable on or before October 31, 2008. The notes and related accrued interest were convertible into shares of our common stock at $1.00 per share at the option of the holder. The convertible promissory notes were issued together with warrants with an exercise price of $1.05 per share, exercisable for three years. Terms of the convertible notes and warrants provide that the conversion price of the notes and the exercise price of the warrants will be reduced in the event of subsequent financings at an effective price per share less than the conversion or exercise price, subject to certain exceptions. In September 2008, the conversion price of certain of the convertible notes in an aggregate principal amount of $235,000 was reducedfrom $1.00 to $0.50. In addition, the conversion price of certain of the warrants to purchase an aggregate of 235,000 shares of common stock was reduced from $1.05 to $0.50. In December 2008, $900,000 of the convertible notes were converted into common stock at $1.00 per share. The remaining $235,000 convertible notes are currently in default and are classified as current on the accompanying balance sheet.

In February, March and May 2008, we raised net proceeds of approximately $380,000 through the issuance of 304,000 units at $1.25 per unit, each unit comprised of one share of common stock and one three-year warrant to purchase one share of common stock at an exercise price of $2.00 per share. In addition, we issued 120,000 shares of our common stock to a consultant in connection with the offering.

*Going Concern*

Our independent registered public accounting firm has added an explanatory paragraph in its report relating to our consolidated financial statements for the year ended December 31, 2009, which states that we have experienced recurring losses from operations and have a substantial accumulated deficit. These conditions give rise to substantial doubt about our ability to continue as a going concern. Our ability to expand operations and generate additional revenue and our ability to obtain additional funding will determine our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

*Summary*

We are dependent on existing cash resources and external sources of financing to meet our working capital needs. Current sources of liquidity are insufficient to provide for budgeted and anticipated working capital requirements. Our convertible notes in the aggregate principal amount of $235,000 are in default. We will therefore be required to seek additional financing to satisfy our working capital requirements. No assurances can be given that such capital will be available to us on acceptable terms, if at all. In addition to equity financing and strategic investments, we may seek additional related party loans. If we are unable to obtain any such additional financing or if such financing cannot be obtained on terms acceptable to us, we may be required to delay or scale back our operations, including the development of our online game, which would adversely affect our abilityto generate future revenues and may force us to curtail or cease our operating activities. 

To attain profitable operations, management’s plan is to execute its strategy of (i) increasing the number of tournaments; (ii) leveraging the existing tournament to generate ancillary revenue streams via Internet TV or other venues; (iii) continuing the ongoing development of the online game; and (iv) continuing to build sponsorship, advertising and related revenue, including license fees related to the sale of branded merchandise. We will continue to be dependent on outside capital to fund our operations for the foreseeable future. Any financing we obtain may further dilute or otherwise impair the ownership interest of our current stockholders. If we fail to generate positive cash flows or fail to obtain additional capital when required, we could modify, delay or abandon some or all of our plans. These factors, among others, raise substantial doubt about our ability tocontinue as a going concern.

**Off-Balance Sheet Arrangements**

As of December 31, 2009, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K. 

 

 

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**ITEM 8. – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**

 

|                                                                                                             | Page No. |
|------------------------------------------------------------------------------------------------------------------|----------|
| Report of Independent Registered Public Accounting Firm                                                          | F-1      |
| Consolidated Balance Sheets as of December 31, 2009 and 2008                                                     | F-3      |
| Consolidated Statements of Operations for fiscal years ended December 31, 2009 and 2008                          | F-4      |
| Consolidated Statements of Stockholders’ Equity (Deficit) for fiscal years ended December 31, 2009 and 2008 | F-5      |
| Consolidated Statements of Cash Flows for fiscal years ended December 31, 2009 and 2008                          | F-6      |
| Notes to Consolidated Financial Statements                                                                       | F-7      |

**ITEM 9. – CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE**

None.

**ITEM 9A(T). – CONTROLS AND PROCEDURES.**

(a) Disclosure Controls and Procedures. As of the end of the period covered by this Annual Report on Form 10-K, we carried out an evaluation, under the supervision and with the participation of senior management, including Mr. Joseph F. Martinez, our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon that evaluation, our CEO/CFO concluded that our disclosure controls and procedures were not effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act. Adiscussion of the material weaknesses in our controls and procedures is described below.

(b) Internal Control over Financial Reporting. There have been no changes in our internal controls over financial reporting or in other factors during the fourth fiscal quarter ended December 31, 2009 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting subsequent to the date we carried out our most recent evaluation.

(c) Management Report on Internal Control. Management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, is a process designed by, or under the supervision of, our CEO/CFO, or persons performing similar functions, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our management, with the participation of our CEO/CFO, has established and maintained policies and procedures designed to maintain the adequacy of our internal control over financial reporting, and include thosepolicies and procedures that: 

|   | **•** | pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and |
|--------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
|--------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Management has used the framework set forth in the report entitled*Internal* Co*ntrol* *– Integrated Framework* published by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission to evaluate the effectiveness of our internal control over financial reporting. As a result of the material weaknesses described below, management has concluded that our internal control over financial reporting was not effective as of December 31, 2009.

 

 

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**Management’s Assessment**

Management has determined that, as of the December 31, 2009 measurement date, there were deficiencies in both the design and the effectiveness of our internal control over financial reporting. Management has assessed these deficiencies and determined that there were various material weaknesses in our internal control over financial reporting. As a result of our assessment that material weaknesses in our internal control over financial reporting existed as of December 31, 2009, management has concluded that our internal control over financial reporting was not effective as of December 31, 2009. The existence of a material weakness or weaknesses is an indication that there is a more than remote likelihood that a material misstatement of our financial statements will not be prevented or detected in a future period.  

Management has assigned a high priority to the short- and long-term improvement of our internal control over financial reporting. We have listed below the nature of the material weaknesses we have identified, the steps we are taking to remediate these material weaknesses and when we expect to have the material weaknesses remediated. 

***Inadequate entity-level controls**.* As of December 31, 2009, we did not have effective entity level controls with respect to our overall control environment and monitoring efforts as defined in the COSO framework. The pervasive nature of the material weaknesses in our internal control over financial reporting in itself constitutes a material weakness. We failed to systematically communicate company-wide policies and procedures and to uniformly and consistently communicate the importance of controls. We also had failed to implement processes to ensure periodic monitoring of our internal control activities. As a result, management concluded that there are deficiencies in the design and execution of our entity-level controls that constitute a material weakness in our internal control overfinancial reporting and errors in our financial statements that have not been prevented by our entity level controls could occur. 

|   | **•** | *Remediation*. In April 2009, we hired Mr. Joseph Martinez as our new CEO and retained independent public accounting consultants to advise our company on improving internal controls and procedures. We also recently retained a consultant on financial operations who provides guidance on the coordination and operational aspects of finance, planning and pricing of products. In addition, we recently retained new legal counsel to advise on disclosure requirements and new independent registered public accountants to audit our financial statements. Under the guidance of our new CEO and new legal and financial advisors, we began to implement new controls and procedures designed to ensure that company-wide policies and procedures are systematically communicated and that documentation evidencing employees’receipt thereof is retained. In the second quarter of 2009, we also began developing an ongoing monitoring system to facilitate continuous monitoring of our internal control over financial reporting. In the fourth quarter of 2009, we were forced to suspend these efforts due to funding constraints. |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | *Timing*. We anticipate completing our remediation efforts during the third quarter of 2010, assuming we can obtain sufficient financing to allow us to implement our plans. |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Deficiencies pertaining to inadequate segregation of duties consistent with control objectives***. The lack of segregation of duties among management resulted in deficiencies in our financial reporting. 

|   | **•** | *Remediation.* As discussed above, we recently hired a new CEO and retained independent public accounting consultants and a consultant on financial operations to assist the company in meeting its control objects. |
|--------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | *Timing*. We anticipate completing our remediation efforts during the third quarter of 2010, assuming we can obtain sufficient financing to allow us to implement our plans. |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Deficiencies pertaining to insufficiently skilled personnel and a lack of human resources within our finance and accounting reporting functions.***The lack of appropriately skilled personnel could result in material misstatements to financial statements not being detected in a timely manner. 

|   | **•** | *Remediation.* As discussed above, we retained (i) independent public accounting consultants and (ii) a consultant on financial operations who provides guidance on the coordination and operational aspects of our business, to assist our finance and accounting reporting functions. |
|--------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | *Timing*. We anticipate completing our remediation efforts during the third quarter of 2010, assuming we can obtain sufficient financing to allow us to implement our plans. |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Insufficient oversight of financially significant processes and systems, including deficiencies relating to monitoring and oversight of the work performed by our finance and accounting personnel.***Due primarily to the lack of human resources in our accounting and finance department during 2008 and 2009, we noted deficiencies related to insufficient review and approval and 

 

 

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documentation of the review and approval of the work being performed by employees within our accounting and finance department relating to the following matters: 

|   | **•** | All journal entries; |
|--------|------------|----------------------|

|   | **•** | Periodic reconciliations of sub ledgers, balance sheet and income statement accounts; |
|--------|------------|---------------------------------------------------------------------------------------|

|   | **•** | Payroll and employee benefit related processing and accounting; |
|--------|------------|-----------------------------------------------------------------|

|   | **•** | Processes related to the invoicing of customers and the processing of credits to customers; |
|--------|------------|---------------------------------------------------------------------------------------------|

|   | **•** | Processes related to the purchasing of and the payment for goods and services received; |
|--------|------------|-----------------------------------------------------------------------------------------|

|   | **•** | Accrual of expenses; |
|--------|------------|----------------------|

|   | **•** | Documents supporting the monthly, quarterly and annual general ledger closing process; and |
|--------|------------|--------------------------------------------------------------------------------------------|

|   | **•** | Periodic financial reporting. |
|--------|------------|-------------------------------|

As a result, we do not have sufficient internal control over financial reporting to ensure underlying transactions are being appropriately and timely accounted for, which could lead to material misstatements in the financial statements not being detected in a timely manner. 

|   | **•** | *Remediation*. In the second quarter of 2009, we began to implement new controls and procedures designed to ensure proper oversight of work performed by employees in our accounting and finance functions. As of December 31, 2009, these efforts were not complete or sufficiently integrated into our existing control environment. |
|--------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | *Timing*. We anticipate completing our remediation efforts during the third quarter of 2010, assuming we can obtain sufficient financing to allow us to implement our plans. |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Deficiencies pertaining to the lack of controls or ineffectively designed controls**.* We noted that there are an insufficient number of effectively designed controls or there are ineffectively designed controls to ensure that: 

|   | **•** | All revenue transactions occurred, are accurately calculated in accordance with the terms of the applicable contract, are processed properly and are accurately reflected in the proper period in the general ledger; |
|--------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | All sponsor-related transactions occurred, are accurately calculated in accordance with the terms of the applicable contract, are processed properly and are accurately reflected in the proper period in the general ledger; and |
|--------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | All revenue transactions are properly authorized before entry into the general ledger. |
|--------|------------|----------------------------------------------------------------------------------------|

As a result, adjustments to our revenue and sponsor-related accounts and financial statements could occur. 

|   | **•** | *Remediation*. Beginning in May 2009, we focused our remediation efforts with respect to these deficiencies on designing systems for tracking, reporting and recording revenue generating transactions and associated sponsor-related obligations. |
|--------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | *Timing*. We anticipate completing our remediation efforts during the third quarter of 2010, assuming we can obtain sufficient financing to allow us to implement our plans. |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Deficiencies in our general computer controls relating to financially significant applications and business processes, including application level design and documentation deficiencies.***We identified design and documentation deficiencies in our general computer controls including: 

|   | **•** | Insufficient password management and unauthorized sharing of passwords; |
|--------|------------|-------------------------------------------------------------------------|

|   | **•** | Insufficient physical access controls that could allow unauthorized access to our general computer controls; and |
|--------|------------|------------------------------------------------------------------------------------------------------------------|

|   | **•** | Insufficient formal documentation to support system usage and maintenance. |
|--------|------------|----------------------------------------------------------------------------|

 

 

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As a result, errors in our financial statements that have not been prevented or detected by our information technology and general computer controls could occur. 

|   | **•** | *Remediation*. In May of 2009, we began to implement controls for managing security and physical access to systems, data and applications that support financial reporting, as well as an access policy and controls that include a periodic review by management of access privileges. |
|--------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | *Timing*. We anticipate completing our remediation efforts during the third quarter of 2010, assuming we can obtain sufficient financing to allow us to implement our plans. |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Inability to demonstrate through testing that our internal control over financial reporting was effective as of December*** ***31, 2009.***We were unable to demonstrate through testing the effectiveness of our remediation efforts with respect to the material weaknesses described above. Our processes with respect to quarterly and annual controls, such as our control processes relating to general ledger close procedures and periodic financial reporting, were not implemented as of the year ended December 31, 2009. 

|   | **•** | *Remediation*. We have dedicated significant internal and external resources to our remediation efforts with respect to material weaknesses in our internal control over financial reporting as noted above. We expect to have a sufficient sampling base to enable us to test the effectiveness of our remediation efforts at future measurement dates and testing periods for our internal control over financial reporting. |
|--------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | *Timing*. Due to lack of financial resources, management was unable to fully implement its remediation efforts nor test the effectiveness of our remediation efforts with respect to the remediation efforts described above. We expect to complete the testing of effectiveness in 2010. |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

The steps described above, including the hiring of additional qualified accounting and finance personnel, are designed to ensure that management’s evaluation of our internal control over financial reporting is thorough and complete and that a timely and appropriate remediation plan is implemented. The effectiveness of the steps we have taken to date and the steps we are still in the process of completing is subject to continued management review, as well the oversight of our board of directors, and we may make additional changes to our internal controls and procedures. Although we have undertaken the foregoing initiatives, in the future we may identify further material weaknesses or significant deficiencies in our internal control over financial reporting that have not previously been identified. 

Management estimates that we will incur additional costs in connection with our remediation efforts including outside advisor fees and incremental personnel costs. Management estimates that these costs will aggregate approximately $25,000 for the year ended December 31, 2010. 

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.

**ITEM 9B. OTHER INFORMATION**

**None.**

 

 

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**PART III**

**ITEM 10. – DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE**

The following table sets forth the names and ages as of March 31, 2010 of each of our executive officers and directors:

 

| **Name**           |   | **Age** |   | **Position**                                                             |
|--------------------|--------|---------|--------|--------------------------------------------------------------------------|
|                    |   |         |   |                                                                          |
| Joseph F. Martinez |   | 60      |   | Chief Executive Officer, Chief Financial Officer, Treasurer and Director |
| John F. Slitz, Jr. |   | 60      |   | Secretary and Chairman of the Board                                      |
| John Daly          |   | 54      |   | Vice President of Broadcast Operations                                   |

Set forth below is biographical information concerning our executive officers and directors.

***Joseph F. Martinez***has served as a member of our board of directors and as our Chief Executive Officer, Chief Financial Officer and Treasurer since April 2009. Mr. Martinez is the principal of Core Venture Partners, LLC, a merchant-banking and financial advisory firm that he founded in 2002 and which provided consulting services to our company from January 2009 until April 2009. From 2006 until 2008, Mr. Martinez served as the Chief Executive Officer of Impart Media Group, Inc., a technology company that provided digital signage solutions. From June 2005 until 2008, he was a director of Impart Media Group, Inc. and from June 2005 until his appointment as Chief Executive Officer, he served as its Chief Financial Officer and the Chairman of the board of directors. From August 2004until June 2005, Mr. Martinez served as the Chief Executive Officer and a director of Impart, Inc., which was acquired by Impart Media Group, Inc. in a reverse merger. From 2002 until 2004, Mr. Martinez, through Core Ventures, provided advisory services to technology companies, including Impart, Inc. Prior to that, Mr. Martinez was the President and Chief Executive Officer of Centaur Partners, a Silicon Valley-based investment bank, from 1998 to 2002. Mr. Martinez has more than 25 years of combined operational and financial experience. He holds graduate degrees from the University of Denver. 

***John F. Slitz, Jr.*** has served as our Chairman of the board of directors since February 2008, the time of our acquisition of World Series of Golf, Inc., the privately held Nevada corporation we acquired on February 1, 2008 (“WSG-NV”), and has served as our Secretary since February 2008. Previously, Mr. Slitz served as the Chairman of WSG-NV since its inception in 2003. From 2003 until 2006, Mr. Slitz served as President and Chief Executive Officer of WSG-NV. From 2005 to 2007, Mr. Slitz was Vice President of Entity Analytic Solutions, at International Business Machines Corp. (IBM), a division of IBM Software. Prior to becoming Vice President of Entity Analytic Solutions at IBM, from 2002 to 2005 Mr. Slitz served as the Chief Executive Officer of Systems Research and Development, a Nevadacorporation engaged in the development and sale of a software product for the identity mining database market. Mr. Slitz also served as the Senior Vice President of Corporate Marketing for Novell, a producer of networking software, from 1997 to 1999 and as the Vice President of IBM Middleware Marketing from 1995 to 1997. Mr. Slitz was a founder of the Object Management Group, Inc., a non-profit software standards organization, and Netwise Inc., a developer of networking software. From 2000 to 2002, Mr. Slitz was a venture partner in Osprey Ventures, which invested in software companies, and was the President of Slitz & Company, which consulted with a range of software companies on market positioning, announcement strategies, downsizing and organization issues.

***John Daly***was appointed our Vice President of Broadcast Operations on October 6, 2009. In this capacity Mr. Daly will oversee our company’s television and internet productions while serving as our on-camera host and narrator. Mr. Daly has over thirty years of experience as a television host, news anchor and journalist. Mr. Daly is currently the producer and the host of the John Daly Golf Show, a golfing blog and website, positions he has held since April 2009. Mr. Daly served as the Vice President of business development for Southern Nevada for BNY Mellon Wealth Management, a firm specializing in estate planning and investment management, from December 2007 until February 2009. Mr. Daly was the host of Real TV, an all video news magazine show, from July 2006 until August 2000. Mr. Daly alsoserved as the host of the House Detective, a nationally televised home inspection show on the HGTV cable channel, from March 2000 until December 2003. Mr. Daly was the main news anchor and newsroom managing editor for KTNV-TV 13 in Las Vegas, Nevada from June 1990 until August 1996. Mr. Daly holds a Bachelor of Arts degree in English from Providence College and has completed graduate coursework in journalism at Columbia University.

 

 

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**Composition of Board of Directors**

Our bylaws authorize no less than one (1) and no more than thirteen (13) directors. We currently have two (2) directors on our board of directors (the “Board”):  Joseph F. Martinez and John F. Slitz.

**Term of Office**

Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by the Board and hold office until removed by the Board.

**Family Relationships**

None.

**Director or Officer Involvement in Certain Legal Proceedings**

Except as otherwise indicated below, to the best of our knowledge, our directors and executive officers were not involved in any legal proceedings as described in Item 401(f) of Regulation S-K. 

In 2007, certain creditors of Impart Media Group, Inc., of which Joseph Martinez then served as President and Chief Executive Officer and a director, filed an involuntary Chapter 11 against the company under the U.S Bankruptcy Code. The case was converted to a Chapter 7 and, in 2008, the company’s assets were sold in a bankruptcy court-approved sale.

**Section 16(a) Beneficial Ownership Reporting Compliance**

Our officers, directors and shareholders owning greater than ten percent (10%) of our shares are not required to file beneficial ownership reports pursuant to Section 16(a) of the Securities and Exchange Act (the “Exchange Act”) because we do not have a class of securities registered under Section 12 of the Exchange Act. 

**Code of Ethics Disclosure**

On April 21, 2009, we adopted a formal code of ethics that applies to our principal executive officer and principal accounting officer, and all other officers, directors and employees. A copy of our code of ethics is attached as Exhibit 14.1 to this Annual Report on Form 10-K.

**Committees of the Board**

We do not currently have a separately-designated nominating or compensation committee. Due to the size of our company and the size of the Board, our Board performs the functions of these committees.

**Audit Committee**

We do not have a separately-designated audit committee. The entire Board performs the functions of an audit committee, but no written charter governs the actions of the Board when performing the functions of what would generally be performed by an audit committee. The Board approves the selection of our independent accountants and meets and interacts with the independent accountants to discuss issues related to financial reporting. In addition, the Board reviews the scope and results of the audit with the independent accountants, reviews with management and the independent accountants our annual operating results, considers the adequacy of our internal accounting procedures and considers other auditing and accounting matters including fees to be paid to the independent auditor and the performance of the independent auditor.

**ITEM 11. – EXECUTIVE COMPENSATION**

The following Summary Compensation Table sets forth certain information concerning the compensation of (ii) our Chief Executive Officer/Chief Financial Officer, (ii) our other two most highly compensated executive officers, and (iii) other personnel required to be disclosed by this Item whose compensation exceeds $100,000, for each of the years ended December 31, 2009 and 2008 (collectively, our “named executive officers”).

 

 

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| **SUMMARY COMPENSATION TABLE**                                                                      |
|-----------------------------------------------------------------------------------------------------|
|                                                                                                     |
| Nameandprincipalposition                                                                            |   | Year |   | Salary($) |   | Bonus($) |   | Stock Awards($) |   | OptionAwards($) |   | Non-EquityIncentive PlanCompensation($) |   | NonqualifiedDeferredCompensationEarnings ($) |   | All OtherCompensation($) |   | Total($) |
|                                                                                                     |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| R. Terry Leiweke (1)Former Chief Executive Officer, Chief Financial Officer, President and Director |   | 20092008 |   | 53,750300,000 |   | 00 |   | 00 |   | 00 |   | 00 |   | 00 |   | 18,300(2)90,500(3) |   | 72,050390,500 |
| Joseph F. Martinez Chief Executive Officer, Chief Financial Officer, Director                       |   | 20092008 |   | 210,000(4)0 |   | 00 |   | 00 |   | 20,200(5)0 |   | 1,500(6)0 |   | 00 |   | 00 |   | 231,7000 |
| John Daly Vice President of Broadcast Operations                                                    |   | 20092008 |   | 30,000(7)0 |   | 00 |   | 00 |   | 833(8)0 |   | 00 |   | 00 |   | 00 |   | 30,8330 |

| (1) | Mr. Leiweke was appointed as a member of our board of directors and as our President, Chief Executive Officer and Chief Financial Officer in February 2008 at the time of our acquisition of World Series of Golf, Inc., the privately held Nevada corporation that we acquired on February 1, 2008 (“WSG-NV”). Mr. Leiweke resigned as Chief Executive Officer and Chief Financial Officer as of April 21, 2009. Compensation paid to Mr. Leiweke in 2008 includes (i) $358,600 paid by us after the acquisition of WSG-NV and (ii) $31,900 paid by WSG-NV prior to the acquisition. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Such amount is comprised of (i) $11,300, paid for corporate housing in Las Vegas, NV, including utilities and furniture rental, (ii) $4,000, paid as a home office allowance, (iii) $2,200, paid for the lease of an automobile, and (iv) $800, paid for automobile insurance. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Such amount is comprised of (i) $47,800, paid for corporate housing in Las Vegas, NV, including utilities and furniture rental, (ii) $34,000, paid as a home office allowance, (iii) $6,200, paid for the lease of an automobile, and (iv) $2,500, paid for automobile insurance. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Mr. Martinez was appointed as a member of our board of directors and as our Chief Executive Officer and Chief Financial Officer in April 2009. Prior to that date, he provided services to our company as a consultant through Core Venture Partners.  Amount represents $160,000 pursuant to our employment agreement with Mr. Martinez and $50,000 pursuant to our agreement with Core Venture Partners. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | Amount is a result of options to purchase 1,000,000 shares of our common stock at an exercise price of $0.09 per share pursuant to his employment agreement. The options vest in 1/36 monthly installments beginning on the first monthly anniversary of the grant date, over a period of three years.  See Note 3 to Notes to Financial Statements for a description regarding the valuation methodology of stock based awards. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | Amount is a result of warrants to purchase 50,000 shares of our common stock at an exercise price of $0.05 which warrants were 100% vested on the date of issuance as additional compensation for services he provided as a consultant before his appointment as an officer of our company. See Note 3 to Notes to Financial Statements for a description regarding the valuation methodology of stock based awards. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (7) | Mr. Daly is entitled to base compensation accrued at a rate of $15,000 monthly pursuant to his employment contract, discussed below. Such amount is deferred. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (8) | Amount is a result of options to purchase 500,000 shares of our common stock at an exercise price of $0.02 per share pursuant to his employment agreement. The options vest monthly in equal installments over a thirty-six (36) month period, beginning on the |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 

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first monthly anniversary of the grant date. See Note 3 to Notes to the Financial Statements for a description regarding the valuation methodology of stock based awards.

**Narrative Disclosure to the Summary Compensation Table**

*Martinez Employment Agreement*

On April 21, 2009, we entered into an employment agreement (the “Martinez Agreement”) with Joseph F. Martinez, pursuant to which Mr. Martinez will serve as our Chief Executive Officer for a term beginning on April 21, 2009 (the “Effective Date”) and ending at any time upon termination by either party. 

Pursuant to the Martinez Agreement, Mr. Martinez will be entitled to annual base compensation of $240,000, with any increase in base compensation to be set by the Board from time to time as determined by the Board. Mr. Martinez is eligible to receive a target annual bonus of $120,000, with the actual amount to be determined by the Board or the Compensation Committee thereof should one be created.

Pursuant to the Martinez Agreement, we granted Mr. Martinez options to purchase up to 1,000,000 shares of common stock, par value $0.001 per share, of our company at an exercise price of $0.09 per share. The options vest monthly in equal installments over a thirty-six (36) month period, beginning the first month after the Effective Date, and expire ten (10) years after the grant date. The grant was made pursuant to the standard form of grant agreement under our 2009 Equity Incentive Plan, which plan is further described below.

In the event that Mr. Martinez’s employment is terminated without cause or Mr. Martinez chooses to terminate his employment for good reason, (i) all options granted to Mr. Martinez pursuant to the Martinez Agreement shall be fully vested and exercisable upon such termination and shall remain exercisable in accordance with the grant agreements and (ii) Mr. Martinez will receive an amount equal to six (6) months of his specified base salary at the rate in effect on the date of termination. In the event that Mr. Martinez’s employment is terminated for cause or Mr. Martinez chooses to terminate his employment other than for good reason, vesting of the options shall cease on the date of termination and any then unvested options shall terminate, however the then-vested options shall remain vested and exercisable in accordance with the grant agreements. 

If Mr. Martinez’s employment is terminated within one year of the change in control, and such termination is without cause or if Mr. Martinez resigns for good reason, (i) Mr. Martinez shall receive an amount equal to six (6) months of his specified base salary at the rate in effect on the date of termination, and (ii) Mr. Martinez shall receive incentive cash compensation in an amount equal to 50% of his specified base salary at the rate in effect on the date of termination. In the event of a change in control of our company, all unvested stock options granted to Mr. Martinez shall immediately vest and shall remain exercisable as specified in the option grant agreements, subject to our right to direct the sale of shares in connection with a change of control. 

Regardless of the nature of his separation from the company, Mr. Martinez will also receive salary, a pro-rated amount of incentive cash compensation for the fiscal year in which the termination occurs, pay for accrued but unused paid time off, and reimbursement of expenses through the date of termination.

In general, Mr. Martinez has agreed not to (i) compete with our company for a period of six (6) months following the end of the employment term, (ii) to solicit partners, vendors or employees of our company for a period of one (1) year following the end of the employment term, and (iii) solicit or accept business from any client of our company, including former clients that were clients within the last year prior to Mr. Martinez’s termination, for a period of one (1) year following the end of the employment term, unless such employment is terminated by us without cause or by Mr. Martinez for good reason. 

*John Daly Employment Agreement*

On October 6, 2009, we entered into an employment agreement (the “Daly Agreement”) with John Daly, pursuant to which Mr. Daly will serve as our Vice President of Broadcast Operations for a term beginning on October 6, 2009 (the “Effective Date”) and ending at any time upon termination by either party.

Pursuant to the Daly Agreement, Mr. Daly will be entitled to annual base compensation of $180,000, with any increase in base compensation to be set by the Board from time to time as determined by the Board. Mr. Daly’s base salary shall accrue monthly, on the first business day of each calendar month, beginning on the Effective Date and payment of all or any portion of base salary shall be deferred by the Company until consummation of our sale of 10% convertible secured promissory notes, convertible into shares of our common stock, par value $0.001 per share, for aggregate proceeds of at least five million dollars ($5,000,000). Mr. Daly is also 

 

 

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eligible to receive a target annual bonus of $50,000, with the actual amount to be determined by the Board or the Compensation Committee thereof should one be created.

Pursuant to the Daly Agreement, we granted Mr. Daly options to purchase up to 500,000 shares of common stock, par value $0.001 per share, of our company at an exercise price of $0.02 per share. The options vest monthly in equal installments over a thirty-six (36) month period, beginning the first month after the Effective Date, and expire ten (10) years after the grant date. The grant was made pursuant to the standard form of grant agreement under our 2009 Equity Incentive Plan. 

In the event that Mr. Daly’s employment is terminated without cause or Mr. Daly chooses to terminate his employment for good reason, (i) all unvested options granted to Mr. Daly pursuant to the Daly Agreement shall terminate and any then-vested options shall remain vested and exercisable in accordance with the grant agreement, and (ii) Mr. Daly will receive an amount equal to six (6) months of his specified base salary at the rate in effect on the date of termination. In the event that Mr. Daly’s employment is terminated due to death or disability (i) vesting of the options shall cease on the date of termination and any then unvested options shall terminate, however the then-vested options shall remain vested and exercisable in accordance with the grant agreement, and (ii) Mr. Daly will receive an amount equal to six (6) months of hisspecified base salary at the rate in effect on the date of termination. In the event that Mr. Daly’s employment is terminated for cause or Mr. Daly chooses to terminate his employment other than for good reason, vesting of the options shall cease on the date of termination and any then unvested options shall terminate, however the then-vested options shall remain vested and exercisable in accordance with the grant agreement.

If Mr. Daly’s employment is terminated within one year of the change in control, and such termination is without cause or if Mr. Daly resigns for good reason, (i) Mr. Daly shall receive an amount equal to six (6) months of his specified base salary at the rate in effect on the date of termination, and (ii) Mr. Daly shall receive incentive cash compensation in an amount equal to 50% of his specified base salary at the rate in effect on the date of termination. In the event of a change in control of our company, all unvested stock options granted to Mr. Daly shall immediately vest and shall remain exercisable as specified in the option grant agreement, subject to our right to direct the sale of shares in connection with a change of control. 

Regardless of the nature of his separation from the company, Mr. Daly will also receive salary, a pro-rated amount of incentive cash compensation for the fiscal year in which the termination occurs, pay for accrued but unused paid time off, and reimbursement of expenses through the date of termination. 

In general, Mr. Daly has agreed not to (i) compete with our company for a period of six (6) months following the end of the employment term, (ii) solicit partners, vendors or employees of our company for a period of one (1) year following the end of the employment term, or (iii) solicit or accept business from any client of our company, including former clients that were clients within the last year prior to Mr. Daly’s termination, for a period of one (1) year following the end of the employment term, unless such employment is terminated by us without cause or by Mr. Daly for good reason.

**Outstanding Equity Awards At Fiscal Year-End**

The following table provides information related to outstanding equity awards for each of the Named Executive Officers as of December 31, 2009:

 

| **OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END** |
|--------------------------------------------------|
| **OPTION AWARDS**                                |   | **STOCK AWARDS** |
|                                                  |   |  |
| Name (a)                                         |   | Number ofSecuritiesUnderlyingUnexercisedOptions (#)Exercisable(b) |   | Number ofSecuritiesUnderlyingUnexercisedOptions (#)Unexercisable(c) |   | EquityIncentivePlan Awards:Number ofSecuritiesUnderlyingUnexercisedUnearnedOptions (#)(d) |   | OptionExercisePrice(e) |   | OptionExpirationDate(f) |   | Number of sharesor Units of StockThat Have NotVested (#)(g) |   | Market Valueof Shares orUnits of StockThat Have NotVested ($)(h) |   | EquityIncentive PlanAwards:Number ofUnearnedShares, Units orOther RightsThat Have NotVested (#)(i) |   | Equity IncentivePlan Awards:Market or PayoutValue ofUnearned Shares,Units or OtherRights That HaveNot Vested ($)(j) |
|                                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Joseph F. Martinez  (1)                          |   | 222,222 |   | 777,778 (1) |   | 0 |   | $0.09 |   | 4/21/19 |   | 0 |   | 0 |   | 0 |   | 0 |
|                                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| John Daly                                        |   | 27,778 |   | 472,222(1) |   | 0 |   | $0.02 |   | 10/6/19 |   | 0 |   | 0 |   | 0 |   | 0 |
|                                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

 

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| (1) | The options vest in 1/36 monthly installments beginning on the first monthly anniversary of the grant date, over a period of three years. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------|

**Director Compensation**

We do not currently provide compensation to our directors for serving on our board of directors.  

*Slitz Consulting Agreement*

On February 6, 2009, we entered into a Consulting Agreement with Mr. Slitz, pursuant to which we engaged Mr. Slitz for the purpose of advising us on business strategy, fund raising, organizational growth and staffing, particularly focusing on our internet business and opportunities. The agreement is effective from January 1, 2009 to December 31, 2011. During the term, Mr. Slitz will be compensated for his services as follows: (i) cash fees of $15,000 per month and (ii) a warrant to purchase 540,000 shares of our common stock at an exercise price of $0.50 per share, with 60,000 shares vesting immediately and 15,000 shares vesting in monthly installments beginning on July 2, 2009. Upon a change of control of our company, all obligations under the agreement become immediately due and payable. 

**Employee Benefit Plans**

As of the fiscal year ended December 31, 2009, we had not made any grants under the 2007 Stock Option Plan. As of April 21, 2009, the Board adopted a resolution terminating the 2007 Stock Option Plan and approving the 2009 Equity Incentive Plan (the “2009 Equity Plan”). 

***2009 Equity Incentive Plan***

We adopted the 2009 Equity Plan for the purpose of providing incentives for officers, directors, employees and consultants to promote the success of our company, to enhance our ability to attract and retain the services of such persons, to encourage them to continue in our employ and to maximize their performance. An aggregate of 4,000,000 shares of common stock are reserved for issuance under the 2009 Equity Plan. Options granted under the 2009 Equity Plan may be either: (i) options intended to qualify as “incentive stock options” under Section 422 of the Internal Revenue Code of 1986, or (ii) non-qualified stock options. Stock options and stock awards may be granted under the 2009 Equity Plan to all of our eligible officers, directors, consultants and employees. The Board, or our compensation committee should one be established, will administer the 2009 Equity Planand has the authority to determine exercise prices applicable to the options, the eligible officers, directors, consultants or employees to whom options may be granted, the number of shares of common stock subject to each option and the extent to which options may be exercisable. In addition, the Board will have the power to interpret the 2009 Equity Plan and any agreement or instrument entered into under the 2009 Equity Plan, to establish, amend or waive rules and regulations for the 2009 Equity Plan administration, and to amend the terms and conditions of any outstanding stock incentives as allowed under the 2009 Equity Plan. Options granted to employees under the 2009 Equity Plan generally vest in equal installments over a three year period from the grant date, and options granted to directors under the 2009 Equity Plan vest in full one year after the grant date. Without approval by the Board, no option is transferable by the optionee other than by will or the laws of descent anddistribution and each option is exercisable, during the lifetime of the optionee, only by such optionee.

Any incentive stock option that is granted under the 2009 Equity Plan may not be granted at a price less than the fair market value of the common stock on the date of grant (or less than 110% of the fair market value in the case of holders of 10% or more of the total combined voting power through all classes of our capital stock or the capital stock of a subsidiary or parent corporation). 

Each incentive stock option, and the majority of nonqualified stock options, under the 2009 Equity Plan is exercisable for a period not to exceed ten years from the date of grant (or five years in the case of a holder of more than 10% of the total combined 

 

 

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power of all classes of our capital stock or the capital stock of a subsidiary or parent corporation) and will lapse upon expiration of such period, or earlier upon termination of the recipient’s employment with us, or as determined by the Board.

***Termination of Employment or Change of Control***

*Corporate Transactions*. Pursuant to the 2009 Equity Plan, in the event of (i) a dissolution or liquidation of our company; (ii) a sale of all or substantially all of our assets; (iii) a merger or consolidation where we are not the surviving corporation; or (iv) a merger or consolidation where we are the surviving corporation but the holders of shares of common stock receive securities of another corporation and/or other property, including cash, the Board has the power to (A) cancel each option outstanding immediately prior to such event (whether or not then exercisable), and, in full consideration of such cancellation, pay to the grantee to whom such option was granted an amount in cash, for each share of common stock subject to such option, respectively, equal to the difference between the current value of the option, as determinedby the Board, and the exercise price; and (B) provide for the exchange of each option outstanding immediately prior to such event (whether or not then exercisable) for an option on or with respect to, as appropriate, some or all of the property which a holder of the number of shares of common stock subject to such option would have received and, incident thereto, make an equitable adjustment as determined by the Board in the exercise price of the option, or the number of shares or amount of property subject to the option or, if appropriate, provide for a cash payment to the grantee to whom such option was granted in partial consideration for the exchange of the option. 

*Termination of Employment*. If a grantee’s employment or service is terminated for cause, any unexercised option shall terminate effective immediately upon such termination of employment or service. If a grantee’s employment or services is terminated without cause, an outstanding option is only exercisable by the grantee if such option (i) was exercisable prior to the date of termination and (ii) is exercised within three (3) months following such termination. Except as otherwise provided by the grant certificate, if a grantee’s employment or service terminates on account of death, then any unexercised option, to the extent exercisable on the date of death, may be exercised, in whole or in part, within the first twelve (12) months after death (but only during the option term) only by the grantee’s executor oradministrator or other duly appointed representative reasonably acceptable to the Board, unless the grantee’s will specifically disposes of such award, in which case such exercise shall be made only by the recipient of such specific disposition. Except as otherwise provided in the grant certificate, if a grantee’s employment or service terminates on account of disability, then any unexercised option, to the extent exercisable on the date of such termination, may be exercised in whole or in part, within the first twelve (12) months after such termination of employment or service (but only during the option term) by the grantee.

*Change of Control.*Except as otherwise provided in the grant certificate, upon the occurrence of a change in control (as defined in the 2009 Equity Plan), (i) any outstanding option becomes immediately exercisable; (ii) the Board may amend the terms of any grant certificate in such manner as it deems appropriate; and (iii) a grantee who incurs a termination of employment for any reason, other than a dismissal for cause, concurrent with or within one year following the change in control may exercise any outstanding option, but only to the extent that the grantee was entitled to exercise the award on the grantee’s termination date, within the first twelve (12) months following the termination of employment or service (but only during the option term).

**ITEM 12. –  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS**

The following table sets forth, as of March 31, 2010, the names, addresses and number of shares of our common stock beneficially owned by (i) all stockholders known to us to be the beneficial owner of more than five percent (5%) of our common stock, (ii) each member of our board of directors, (iii) each of our named executive officers and (iv) all of our directors and executive officers as a group. 

Beneficial ownership of shares is determined under the rules of the Securities and Exchange Commission and generally includes any shares over which a person exercises sole or shared voting or investment power. For purposes of the following table, a person is deemed to have beneficial ownership of any shares of common stock that such person has the right to acquire within 60 days after the date of this Annual Report. For purposes of computing the percentage of outstanding shares of our common stock held by each person, any shares that such person has the right to acquire within 60 days after the date of this Annual Report are deemed to be outstanding, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. Except as otherwise noted, the persons named in the table have sole voting and investment power with respect to all ofthe shares of common stock beneficially owned by them. Unless otherwise indicated, the address of each person listed is c/o World Series of Golf, Inc., 10161 Park Run Drive, Suite 150, Las Vegas, Nevada 89145. 

Percentage ownership in the following table is based on 22,151,161 shares of common stock outstanding on March 31, 2010. 

 

 

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**PRINCIPAL STOCKHOLDER TABLE**

 

| **Title of class** |   | **Name and address of beneficial owner**                |   | **Amount and nature of****beneficial ownership** |   | **Percent of class** |   |
|--------------------|--------|---------------------------------------------------------|--------|--------------------------------------------------|--------|----------------------|--------|
|                    |   |                                                         |   |                                                  |   |                      |   |
| Common             |   | John F. Slitz, Jr.                                      |   | 5,724,128                                        | (1)    | 25.8                 | %      |
| Common             |   | R. Terry Leiweke                                        |   | 1,981,530                                        |   | 9.0                  | %      |
| Common             |   | Joseph F. Martinez                                      |   | 438,889                                          | (2)    | 2.0                  | %      |
|               |   | **All Officers and Directors as a Group**               |   | **8,144,547**                                    |   | **36.8**             | **%**  |
|               |   | **Other 5% owners**                                     |   |                                             |   |                 |   |
| Common             |   | Kenneth Maul 1613 Night Wind Dr.Las Vegas, Nevada 89117 |   | 1,722,030                                        |   | 7.8                  | %      |

| (1) | Includes (i) 2,049,128 shares of common stock held of record, (ii) 2,300,000 shares of common stock issuable upon the conversion of convertible promissory note in the principal amount of $1,150,000 held by the Slitz Family Trust, (iii) 1,150,000 shares of common stock issuable upon the exercise of outstanding warrants at an exercise price of $0.50 per share, and (iv) 225,000 shares of common stock issuable upon the exercise of warrants that vest within 60 days. Excludes 315,000 shares of common stock issuable upon the exercise of warrants that do not vest within 60 days. Mr. Slitz has voting and dispositive control over the shares held by the Slitz Family Trust. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Consists of (i) 50,000 shares of common stock issuable upon the exercise of outstanding warrants at an exercise price of $0.05 per share and (ii) 388,889 shares of common stock issuable upon the exercise of options that vest within 60 days. Excludes 611,111 shares of common stock issuable upon the exercise of options that do not vest within 60 days. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Securities Authorized for Issuance under Equity Compensation Plans**

In May 2008, our stockholders adopted and approved our 2007 Stock Option Plan (the “2007 Plan”). In April 2009, we terminated the 2007 Plan and adopted our 2009 Equity Incentive Plan (“2009 Plan”), which allows for awards of qualified and non-qualified stock options for up to 3,000,000 shares of our common stock. In August 2009, our board of directors approved the adoption of our Amended and Restated 2009 Equity Incentive Plan (the “Amended 2009 Plan”). Our board of directors amended the 2009 Plan to increase the number of shares issuable under the 2009 Plan to 4,000,000 shares of our common stock.

The following table summarizes the number of shares of our common stock authorized for issuance under our equity compensation plans as of December 31, 2009.

 

| **Plan Category**                                          |   | **(a)****Number of****Securities to be****Issued Upon****Exercise of                         Outstanding****Options** |   | **(b)****Weighted-****Average****Exercise Price****of Outstanding****Options** |   | **(c)****Number of****Securities****Remaining****Available****for Future****Issuance Under****Equity****Compensation****Plans (excluding****securities reflected****in column(a))** |      |
|------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------|
|                                                            |   |                                                                                                                       |   |                                                                                |   |                                                                                                                                                                                     |      |
| Equity compensation plans approved by security holders     |   | 2,085,000                                                                                                             |   | $                                                                              | 0.07   |                                                                                                                                                                                | 1,565,000 |   |
| Equity compensation plans not approved by security holders |   | —                                                                                                                |   |                                                                           | — |                                                                                                                                                                                |  0   |   |
|                                                       |   |                                                                                                                       |        |                                                                           |   |                                                                                                                                                                                |           |  |
| Total                                                      |   | 2,085,000                                                                                                             |   | $                                                                              | 0.07   |                                                                                                                                                                                | 1,565,000 |   |
|                                                       |   |                                                                                                                       |        |                                                                           |   |                                                                                                                                                                                |           |  |

 

 

31

 

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**ITEM 13. – CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE**

On May 28, 2009, we entered into an Amended and Restated Convertible Promissory Note in the principal amount of $1,150,000 payable by us to The Slitz Family Trust (the “May 2009 Slitz Note”), of which John F. Slitz, Jr., our Secretary and Chairman of the Board, serves as trustee. The May 2009 Slitz Note is convertible into shares of our common stock at a conversion price of $0.50 per share. The May 2009 Slitz Note bears interest at the rate of 8% per annum and is payable on demand. The May 2009 Slitz Note amends and restates that certain convertible promissory note dated February 1, 2009 in the same principal amount (the “Feb 2009 Slitz Note”). The Feb 2009 Slitz Note replaced a convertible promissory note in the principal amount of $960,687 previously issued to The Slitz Family Trust in exchange for a loan to our company. 

The terms of the May 2009 Slitz Note provide for a grant to The Slitz Family Trust of warrants to purchase 1,150,000 shares of common stock at an exercise price of $0.50 per share, with an expiration date of February 1, 2016. 

The obligations under the May 2009 Slitz Note are secured pursuant to a Security Agreement dated February 1, 2009 (the “Slitz Security Agreement”), which grants to the Slitz Family Trust a security interest in substantially all of our assets. 

On February 6, 2009, we entered into a Consulting Agreement with Mr. Slitz, pursuant to which we engaged Mr. Slitz for the purpose of advising us on business strategy, fund raising, organizational growth and staffing, particularly focusing on our internet business and opportunities. The agreement is effective from January 1, 2009 to December 31, 2011. During the term, Mr. Slitz will be compensated for his services as follows: (i) cash fees of $15,000 per month and (ii) a warrant to purchase 540,000 shares of our common stock at an exercise price of $0.50 per share, with 60,000 shares vesting immediately and 15,000 shares vesting in monthly installments beginning on July 2, 2009. Upon a change of control of our company, all obligations under the agreement become immediately due and payable.   

Joseph F. Martinez, a director and our Chief Executive Officer and Chief Financial Officer, is the principal of Core Venture Partners, LLC, a merchant-banking and financial advisory firm that provided consulting services to our company from January 2009 until his appointment as an executive officer. Pursuant to the terms of a consulting agreement between Mr. Martinez and our company, we are obligated to pay Mr. Martinez aggregate cash consulting fees of $50,000 in consideration for the services he provided to us during the period from January 1, 2009 until his appointment as an officer of our company on April 21, 2009. To date, such amounts remain unpaid. Pursuant to the consulting Agreement, Mr. Martinez was also granted a six-year warrant to purchase 50,000 shares of our common stock at an exercise price of $0.05. 

**ITEM 14. – PRINCIPAL ACCOUNTANT FEES AND SERVICES**

**Audit Fees**

The aggregate fees billed by our auditors for professional services rendered in connection with a review of the financial statements included in our quarterly reports on Form 10-Q and the audit of our annual consolidated financial statements for the fiscal year ended December 31, 2009 was approximately $61,000.

The aggregate fees billed by our auditors for professional services rendered in connection with a review of the financial statements included in our quarterly reports on Form 10-Q and the audit of our annual consolidated financial statements for the fiscal year ended December 31, 2008 was approximately $106,000, consisting of (i) fees billed by our auditors, Peterson Sullivan LLP, in the amount of approximately $94,000, for the audit of our annual consolidated financial statements for the fiscal year ended December 31, 2008 and review of the financial statements included in our quarterly reports, and (ii) fees billed by our auditors, Moore & Associates, Chartered, in the amount of approximately $11,900, for the review of the financial statements included in our quarterly reports.

**Audit-Related Fees**

The aggregate audit related fees billed by our auditors for professional services rendered in connection with audit-related fees, including review of Forms 8-K and consultations related to FINRA matters was approximately $22,000. We were not billed any fees by our auditors for professional services for audit-related services in the fiscal years ended December 31, 2008.

**Tax Fees**

We were not billed any fees by our auditors for professional services for tax compliance, tax advice, and tax planning in the fiscal years ended December 31, 2009 and 2008.

**All Other Fees**

We were not billed any fees by our auditors for all other non-audit services in the fiscal years ended December 31, 2009 and 2008.

 

 

32

 

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**PART IV**

**ITEM 15. – EXHIBITS  AND FINANCIAL STATEMENT SCHEDULES.**

**(a)(1)(2) Financial Statements.**

The financial statements listed in the Index to Financial Statements are filed as part of this Annual Report on Form 10-K. 

**(a)(3) Exhibits.**

The exhibits required by this item are set forth on the Exhibit Index attached hereto. 

 

 

33

 

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**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Board of Directors and Shareholders

World Series of Golf, Inc.

Las Vegas, Nevada

We have audited the accompanying consolidated balance sheets of World Series of Golf, Inc. and Subsidiary (“the Company”) as of December 31, 2009 and 2008, and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financialstatements. 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of World Series of Golf, Inc. and Subsidiary as of December 31, 2009 and 2008, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.

 

 

F-1

 

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The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has an accumulated deficit of approximately $13.1 million at December 31, 2009, has incurred negative cash flows from operations since inception, and expects to incur additional losses in the future. Additionally, the Company has a working capital deficit of approximately $4.1 million at December 31, 2009. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

 

/S/ PETERSON SULLIVAN LLP

 

 

Seattle, Washington

April 15, 2010

 

 

F-2

 

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**WORLD SERIES OF GOLF, INC.**

**CONSOLIDATED BALANCE SHEETS**

 

|                                                                                              |   | **December 31, 2009**                    |     | **December 31, 2008** |   |
|---------------------------------------------------------------------------------------------------|--------|------------------------------------------|----------|-----------------------|--------|
|                                                                                              |   |                                          |     |                       |   |
|                                                                                              |   | **(in thousands, except share amounts)** |     |
| **ASSETS**                                                                                        |   |                                     |     |                  |   |   |   |
| Current assets:                                                                                   |   |                                     |     |                  |   |   |   |
| Cash                                                                                              |   | $                                        | 1        |                  | $      | 121 |   |
| Prepaid expenses and other assets                                                                 |   |                                     | 217      |                  |   | 206 |   |
|                                                                                              |   |                                          |          |                       |        |  |  |
| Total current assets                                                                              |   |                                     | 218      |                  |   | 327 |   |
| Equipment, net of accumulated depreciation of $18 and $10, respectively                           |   |                                     | 22       |                  |   | 27 |   |
|                                                                                              |   |                                          |          |                       |        |  |  |
| Total assets                                                                                      |   | $                                        | 240      |                  | $      | 354 |   |
|                                                                                              |   |                                          |          |                       |        |  |  |
| **LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)**                                           |   |                                     |     |                  |   |   |   |
| Current liabilities:                                                                              |   |                                     |     |                  |   |   |   |
| Accounts payable                                                                                  |   | $                                        | 1,080    |                  | $      | 467 |   |
| Unearned revenue and player deposits                                                              |   |                                     | 37  |                  |   | 54 |   |
| Convertible note and interest payable to related party                                            |   |                                     | 1,234    |                  |   | 1,062 |   |
| Convertible notes payable                                                                         |   |                                     | 235      |                  |   | 235 |   |
| Derivative liability for price adjustable warrants                                                |   |                                     | 10       |                  |   | — |   |
| Due to related parties                                                                            |   |                                     | 1,285    |                  |   | — |   |
| Other current liabilities                                                                         |   |                                     | 467      |                  |   | 424 |   |
|                                                                                              |   |                                          |          |                       |        |  |  |
| Total current liabilities                                                                         |   |                                     | 4,348    |                  |   | 2,242 |   |
|                                                                                              |   |                                          |          |                       |        |  |  |
| Commitments and contingencies                                                                     |   |                                     |     |                  |   |   |   |
| Stockholders’ equity (deficit):                                                              |   |                                     |     |                  |   |   |   |
| Preferred stock, $0.001 par value; 10,000,000 shares authorized: no shares issued and outstanding |   |                                     | —   |                  |   | — |   |
| Common stock and additional paid in capital, $0.001 par value; 90,000,000 shares authorized:      |   |                                     |     |                  |   |   |   |
| 22,151,561 and 22,803,999 shares issued and outstanding, respectively                             |   |                                     | 9,018    |                  |   | 8,890 |   |
| Accumulated deficit                                                                               |   |                                     | (13,126  | )                     |   | (10,778 | ) |
|                                                                                              |   |                                          |          |                       |        |  |  |
| Total stockholders’ equity (deficit)                                                         |   |                                     | (4,108   | )                     |   | (1,888 | ) |
|                                                                                              |   |                                          |          |                       |        |  |  |
| Total liabilities and stockholders’ equity (deficit)                                         |   | $                                        | 240      |                  | $      | 354 |   |
|                                                                                              |   |                                          |          |                       |        |  |  |

See notes to consolidated financial statements

 

 

F-3

 

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**WORLD SERIES OF GOLF, INC.**

**CONSOLIDATED STATEMENTS OF OPERATIONS**

 

|                                                                                                       |   | **Years Ended****December 31,**                        |       |
|------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------|------------|
|                                                                                                       |   |                                                        |       |
|                                                                                                       |   | **2009**                                               |       | **2008** |   |
|                                                                                                       |   |                                                        |       |  |   |
|                                                                                                       |   | **(in thousands, except share and****per share data)** |       |
| Revenue:                                                                                                   |   |                                                   |       |   |   |   |   |
| Sponsorship and advertising                                                                                |   | $                                                      | 699        |   | $ | 964 |   |
| Licensing                                                                                                  |   |                                                   | —     |   |   | 931 |   |
| Player entry fees                                                                                          |   |                                                   | 790        |   |   | 543 |   |
|                                                                                                       |   |                                                        |            |   |  |  |   |
| Total revenue                                                                                              |   |                                                   | 1,489      |   |   | 2,438 |   |
|                                                                                                       |   |                                                        |            |   |  |  |   |
| Operating expenses:                                                                                        |   |                                                   |       |   |   |   |   |
| Cost of revenue                                                                                            |   |                                                   | 1,770      |   |   | 2,715 |   |
| Sales and marketing                                                                                        |   |                                                   | 67         |   |   | 1,300 |   |
| General and administrative                                                                                 |   |                                                   | 1,791      |   |   | 1,633 |   |
|                                                                                                       |   |                                                        |            |   |  |  |   |
| Total operating expenses                                                                                   |   |                                                   | 3,628      |   |   | 5,648 |   |
|                                                                                                       |   |                                                        |            |   |  |  |   |
| Loss from operations                                                                                       |   |                                                   | (2,139     | ) |   | (3,210 | ) |
|                                                                                                       |   |                                                        |            |   |  |  |   |
| Other income (expense):                                                                                    |   |                                                   |       |   |   |   |   |
| Interest expense, including amortization of debt discount of $11 and $1,135 in 2009 and 2008, respectively |   |                                                   | (199       | ) |   | (1,274 | ) |
| Change in fair value of derivative liability for price adjustable warrants                                 |   |                                                   | 92         |   |   | — |   |
|                                                                                                       |   |                                                        |            |   |  |  |   |
| Total other expense, net                                                                                   |   |                                                   | (107       | ) |   | (1,274 | ) |
|                                                                                                       |   |                                                        |            |   |  |  |   |
| Net loss                                                                                                   |   | $                                                      | (2,246     | ) | $ | (4,484 | ) |
|                                                                                                       |   |                                                        |            |   |  |  |   |
| Loss per common share — basic and diluted:                                                            |   |                                                   |       |   |   |   |   |
| Net loss per common share — basic and diluted                                                         |   | $                                                      | (0.10      | ) | $ | (0.21 | ) |
|                                                                                                       |   |                                                        |            |   |  |  |   |
| Shares used in computing net loss per share — basic and diluted                                       |   |                                                   | 22,312,205 |   |   | 20,082,999 |   |
|                                                                                                       |   |                                                        |            |   |  |  |   |

See notes to consolidated financial statements

 

 

F-4

 

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**WORLD SERIES OF GOLF, INC.**

**CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)**

 

|                                                                                      |   | **Common** **Stock** **and** **Additional****Paid-In Capital** |   | **Accumulated****Deficit** |   | **Total****Stockholders’****Equity (Deficit)** |   |
|-------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------|--------|----------------------------|--------|-----------------------------------------------------|--------|
|                                                                                      |   |                                                                               |   |                       |
|                                                                                      |   | **Shares**                                                                    |   | **Amount**                 |   |                                                |
|                                                                                      |   |                                                                               |   |                            |   |                                                     |   |  |   |
|                                                                                      |   | **(In thousands, except share data)**                                         |   |
| **Balance December 31, 2007**                                                             |   | 14,130,000                                                                    |   | $                          | 5,664  |                                                | $      | (6,294 | ) | $ | (630 | ) |
| Recapitalization                                                                          |   | 6,999,999                                                                     |   |                       | — |                                                |   | — |   |   | — |   |
| Issuance of common stock and warrants for cash, net                                       |   | 424,000                                                                       |   |                       | 380    |                                                |   | — |   |   | 380 |   |
| Issuance of warrants for services                                                         |   | —                                                                        |   |                       | 25     |                                                |   | — |   |   | 25 |   |
| Value of beneficial conversion feature and warrants issued with convertible notes payable |   | —                                                                        |   |                       | 1,135  |                                                |   | — |   |   | 1,135 |   |
| Issuance of common stock for services                                                     |   | 350,000                                                                       |   |                       | 786    |                                                |   | — |   |   | 786 |   |
| Issuance of common stock upon conversion of convertible notes payable                     |   | 900,000                                                                       |   |                       | 900    |                                                |   | — |   |   | 900 |   |
| Net loss                                                                                  |   | —                                                                        |   |                       | — |                                                |   | (4,484 | ) |   | (4,484 | ) |
|                                                                                      |   |                                                                               |        |                            |        |                                                     |        |  |  |  |  |  |
| **Balance December** **31, 2008**                                                    |   | 22,803,999                                                                    |   |                       | 8,890  |                                                |   | (10,778 | ) |   | (1,888 | ) |
| Cumulative effect of change in accounting principle                                       |   | —                                                                        |   |                       | — |                                                |   | (102 | ) |   | (102 | ) |
|                                                                                      |   |                                                                               |        |                            |        |                                                     |        |  |  |  |  |  |
| **Balance January 1, 2009**                                                               |   | 22,803,999                                                                    |   | $                          | 8,890  |                                                | $      | (10,880 | ) | $ | (1,990 | ) |
| Warrants issued pursuant to convertible note due to related party                         |   | —                                                                        |   |                       | 11     |                                                |   | — |   |   | 11 |   |
| Shares and warrants issued and issuable for services                                      |   | 250,000                                                                       |   |                       | 18     |                                                |   | — |   |   | 18 |   |
| Issuance of shares in settlement of liability                                             |   | 112,500                                                                       |   |                       | 7      |                                                |   | — |   |   | 7 |   |
| Cancellation of shares previously issued for services                                     |   | (1,364,938                                                                    | )      |                       | — |                                                |   | — |   |   | — |   |
| Compensation related to stock options and warrants                                        |   | —                                                                        |   |                       | 85     |                                                |   | — |   |   | 85 |   |
| Options exercised in exchange for settlement of accounts payable                          |   | 350,000                                                                       |   |                       | 7      |                                                |   | — |   |   | 7 |   |
| Net loss                                                                                  |   | —                                                                        |   |                       | — |                                                |   | (2,246 | ) |   | (2,246 | ) |
|                                                                                      |   |                                                                               |        |                            |        |                                                     |        |  |  |  |  |  |
| **Balance December 31, 2009**                                                             |   | 22,151,561                                                                    |   | $                          | 9,018  |                                                | $      | (13,126 | ) | $ | (4,108 | ) |
|                                                                                      |   |                                                                               |        |                            |        |                                                     |        |  |  |  |  |  |

See notes to consolidated financial statements 

 

 

F-5

 

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**WORLD SERIES OF GOLF, INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

 

|                                                                        |   | **Years Ended****December 31,** |   |
|-----------------------------------------------------------------------------|--------|---------------------------------|--------|
|                                                                        |   |                                 |   |
|                                                                        |   | **2009**                        |   | **2008** |   |
|                                                                        |   |                                 |   |  |   |
|                                                                        |   | **(In thousands)**              |   |
| **Operating activities:**                                                   |   |                            |   |   |   |   |   |
| Net loss                                                                    |   | $                               | (2,246 | ) | $ | (4,484 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: |   |                            |   |   |   |   |   |
| Depreciation                                                                |   |                            | 8      |   |   | 7 |   |
| Amortization of debt discount                                               |   |                            | 11     |   |   | 1,135 |   |
| Share-based payments of consulting and other expenses                       |   |                            | 117    |   |   | 811 |   |
| Change in fair value of derivative liability for price adjustable warrants  |   |                            | (92    | ) |   | — |   |
| Changes in operating assets and liabilities:                                |   |                            |   |   |   |   |   |
| Prepaid expenses and other assets                                           |   |                            | (11    | ) |   | 194 |   |
| Accounts payable                                                            |   |                            | 613    |   |   | 183 |   |
| Unearned revenue and player deposits                                        |   |                            | (17    | ) |   | 2 |   |
| Accrued interest on related party note payable                              |   |                            | 172    |   |   | 101 |   |
| Due to related parties                                                      |   |                            | 370    |   |   | — |   |
| Other current liabilities                                                   |   |                            | 43     |   |   | 424 |   |
|                                                                        |   |                                 |        |  |  |  |  |
| Net cash used in operating activities                                       |   |                            | (1,032 | ) |   | (1,627 | ) |
|                                                                        |   |                                 |        |  |  |  |  |
| **Investing activities:**                                                   |   |                            |   |   |   |   |   |
| Purchases of property and equipment                                         |   |                            | (3     | ) |   | (22 | ) |
|                                                                        |   |                                 |        |  |  |  |  |
| Net cash used in investing activities                                       |   |                            | (3     | ) |   | (22 | ) |
|                                                                        |   |                                 |        |  |  |  |  |
| **Financing activities:**                                                   |   |                            |   |   |   |   |   |
| Proceeds from issuance of convertible notes payable and warrants            |   |                            | — |   |   | 1,135 |   |
| Proceeds from advances from related parties                                 |   |                            | 915    |   |   | — |   |
| Proceeds from sale of common shares and warrants, net                       |   |                            | — |   |   | 380 |   |
|                                                                        |   |                                 |        |  |  |  |  |
| Net cash provided by financing activities                                   |   |                            | 915    |   |   | 1,515 |   |
|                                                                        |   |                                 |        |  |  |  |  |
| Net decrease in cash                                                        |   |                            | (120   | ) |   | (134 | ) |
| Cash — beginning of period                                             |   |                            | 121    |   |   | 255 |   |
|                                                                        |   |                                 |        |  |  |  |  |
| Cash — end of period                                                   |   | $                               | 1      |   | $ | 121 |   |
|                                                                        |   |                                 |        |  |  |  |  |
| Supplemental disclosure:                                                    |   |                            |   |   |   |   |   |
| Cash paid for interest                                                      |   | $                               | — |   | $ | — |   |
|                                                                        |   |                                 |        |  |  |  |  |
| Non-cash investing and financing activities:                                |   |                            |   |   |   |   |   |
| Options exercised in exchange for settlement of accounts payable            |   | $                               | 7      |   | $ | — |   |
|                                                                        |   |                                 |        |  |  |  |  |
| Shares issued in settlement of liability                                    |   | $                               | 7      |   | $ | — |   |
|                                                                        |   |                                 |        |  |  |  |  |

See notes to consolidated financial statements

 

 

F-6

 

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**WORLD SERIES OF GOLF, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 1. Business and Organization**

On January 31, 2008, Innovative Consumer Products, Inc. (“ICP”), a public Nevada shell corporation, acquired all of the outstanding capital stock of World Series of Golf, Inc., a privately-held Nevada corporation (“WSG-NV”) engaged in the sports entertainment industry. 

The acquisition was consummated pursuant to an Agreement and Plan of Merger, dated January 31, 2008, whereby WSG-NV merged with and into Acquisition Sub, a newly formed wholly-owned Nevada subsidiary of ICP. This transaction is commonly referred to as a “reverse acquisition” in which all of the outstanding capital stock of WSG-NV was effectively exchanged for a controlling interest in ICP. This type of transaction is considered to be a recapitalization rather than a business combination. Accordingly, for accounting purposes, no goodwill or other intangible assets were recorded. On February 1, 2008, we merged with Acquisition Sub in a short form merger under Nevada law and changed our name to “World Series of Golf, Inc.” 

We are a sports entertainment company that hosts amateur golf tournaments and events and seeks to create branded products, games, media and entertainment based on our proprietary golf tournament method of play which we call “The World Series of Golf”.  We have held three-day World Series of Golf tournaments in Las Vegas, Nevada during May in 2007, 2008 and 2009. Through our media partners, we broadcast our tournaments on domestic and international television and via other media outlets, as live events or as a produced series. We also sell sponsorships for our live tournaments and television coverage.  

On April 13, 2010, we entered into a securitiespurchase agreement with Green Life Inc. (“Green Life”) pursuant towhich Green Life agreed to purchase 2,000 shares of our Series A convertiblepreferred stock (“PreferredShares”) for an aggregate purchase price of $200,000 and a convertibledebenture in the principal amount of $50,000. The total investment was $250,000and the transaction closed on April 14, 2010.

**Note 2: Going Concern**

We have prepared our consolidated financial statements assuming that we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. As of December 31, 2009, we had an accumulated deficit of approximately $13.1 million, negative cash flows from operations since inception and expect to incur additional losses in the future as we continue to develop and grow our business. We have funded our losses primarily through sales of common stock and warrants in private placements and borrowings from related parties and other investors and revenue provided by our sponsorships and advertising contracts, licensing arrangements and tournaments. The further development of our business will require capital. At December 31, 2009, we had a working capital deficit (current assets less current liabilities) ofapproximately $4.1 million and approximately $1,000 in cash. 

We are dependent on existing cash resources and external sources of financing to meet our working capital needs. Current sources of liquidity are insufficient to provide for budgeted and anticipated working capital requirements. We will therefore be required to seek additional financing to satisfy our working capital requirements. No assurances can be given that such capital will be available to us on acceptable terms, if at all. In addition to equity financing and strategic investments, we may seek additional related party loans. If we are unable to obtain any such additional financing or if such financing cannot be obtained on terms acceptable to us, we may be required to delay or scale back our operations, including the development of our online game, which would adversely affect our ability to generate future revenues and may force us to curtail or cease our operating activities. 

To attain profitable operations, management’s plan is to execute its strategy of (i) increasing the number of tournaments; (ii) leveraging the existing tournament to generate ancillary revenue streams via Internet TV or other venues; (iii) continuing the development of our online game; and (iv) continuing to build sponsorship, advertising and related revenue, including license fees related to the sale of branded merchandise.  We will continue to be dependent on outside capital to fund our operations for the foreseeable future, and continue to be involved in discussions and negotiations with investors in order to raise additional funds to provide sufficient working capital for operations with a near-term goal of generating positive cash flow from operations. Any financing we obtain may further dilute or otherwise impair the ownership interest of our current stockholders. Ifwe fail to generate positive cash flows or fail to obtain additional capital when required, we could modify, delay or abandon some or all of our plans. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

 

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**Note 3. Summary of Critical Accounting Policies and Recently Issued Accounting Standards**

*Use of Estimates*—The preparation of financial statements in conformity with generally accepted accounting principles 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 reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The more significant accounting estimates inherent in preparation of our consolidated financial statements include estimates as to valuation of fair value for goods and services received in barter transactions, valuation of equity related instruments issued, and valuation allowance for deferred income tax assets. 

*Principles of Consolidation*— Our consolidated financial statements include the accounts of World Series of Golf, Inc. and our wholly-owned subsidiary, WSG Online, Inc. Intercompany balances and transactions have been eliminated. 

*Cash*— On occasion, we maintain balances in excess of federal insurance limits. 

*Financial Instruments*—Our financial instruments consist of cash, accounts payable and other current liabilities, due to related parties and convertible notes payable to a related party and certain investors. The fair value of financial instruments other than due to related parties and convertible notes payable to related party approximate the recorded value based on the short-term nature of these financial instruments. The fair value of convertible note and interest payable to related party and due to related parties is presently undeterminable due to the related party nature of the obligations. 

We currently measure and report at fair value the derivative liability for price adjustable warrants. The following table summarizes our financial liabilities measured at fair value on a recurring basis as of December 31, 2009 (in thousands): 

 

|                                               |   | **Balance** **at****December 31,****2009** |   | **Level 1****Quoted prices in****active** **markets** **for****identical assets** |   | **Level 2****Significant** **other****observable****inputs** |   | **Level 3****Significant****unobservable****inputs** |   |
|----------------------------------------------------|--------|-------------------------------------------------|--------|---------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|--------|------------------------------------------------------|--------|
|                                               |   |                                                 |   |                                                                                             |   |                                                                   |   |                                                      |   |
| *Liabilities:***                                   |   |                                            |   |                                                                                        |   |                                                              |   |                                                 |   |   |   |
| Derivative liability for price adjustable warrants |   | $                                               | 10     |                                                                                        | — |                                                              | — |                                                 | $      | 10 |   |
|                                               |   |                                                 |        |                                                                                        |        |                                                              |        |                                                 |        |  |   |
| Total financial liabilities at fair value          |   | $                                               | 10     |                                                                                        | — |                                                              | — |                                                 | $      | 10 |   |
|                                               |   |                                                 |        |                                                                                        |        |                                                              |        |                                                 |        |  |   |

The following table is a roll forward for the year ended December 31, 2009 of the derivative liability of price adjustable warrants, as to which fair value is determined by Level 3 inputs (in thousands): 

  

| Beginning balance at January 1, 2009 |   | $      | 102 |   |
|-------------------------------------------|--------|--------|-----|--------|
| Change in fair value included in net loss |   |   | (92 | )      |
|                                      |   |        |     |   |
| Ending balance at December 31, 2009       |   | $      | 10  |   |
|                                      |   |        |     |   |

*Equipment*— Equipment is stated at cost and depreciated using the straight-line method over estimated useful lives of five years. Expenditures for maintenance and repairs are charged to expense as incurred.

*Concentration of Credit Risk and Significant Customers*— During 2009 and 2008, a significant portion of our revenue was derived from a small number of customers. In 2009, Pocket Kings Ltd. (operator of FullTiltPoker.net) accounted for approximately 25% of total revenue and the Mirage Casino and Hotel accounted for approximately 16% of total revenue. In 2008, the Custom Group (a licensing customer), accounted for approximately 38% of total revenue, Pocket Kings Ltd. accounted for approximately 16% of total revenue and The Mirage Casino and Hotel accounted for approximately 19% of total revenue. We terminated our agreement with the Custom Group effective in the second quarter of 2009.

*Revenue recognition* —Revenue is recognized when there is persuasive evidence that an arrangement exists, delivery has occurred, collectibility is reasonably assured, and fees are fixed or determinable. We derive our revenues from sponsorship and advertising, license agreements and player entry fees. Sponsorship and advertising revenue includes fees obtained for the right to sponsor our tournament events and for advertising in our television programming. 

We recognize revenue from sponsorship and advertising agreements when earned in connection with the applicable tournament as set forth in the sponsorship or advertising agreement either upon completion of the tournament or publication or airing of the advertising. Upfront non-refundable payments, where we are providing continuing services related to the airing of a tournament series, 

 

 

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are deferred and recognized as revenue over the contract period. Revenues and related expenses from barter transactions in which we receive goods or services in exchange for sponsorships of tournaments are recorded at fair value. Barter transactions accounted for $329,000 and $531,000 of total revenue for the years ended December 31, 2009 and 2008, respectively. 

We have had one license agreement pursuant to which we licensed our brand (The World Series of Golf) to the Custom Group in the United Kingdom in exchange for $2.0 million. Due to circumstances with respect to assurance of collectibility, we recognized revenue under this license agreement when cash was received. We recognized approximately $931,000 related to this agreement during 2008. We terminated this agreement effective in the second quarter of 2009 due to the Custom Group’s default.

We recognize revenue related to player entry fees upon the successful completion of a scheduled tournament. We record player entry fees revenue on a net basis, in that we do not record gifted or sponsored buy-ins to player entry fees revenue with an offset to expense. Player entry fees collected prior to a scheduled tournament are deferred and recognized when earned upon the occurrence of the scheduled tournament. 

*Income taxes* — We account for income taxes using an asset and liability method which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to amounts expected to be realized. The provision for income taxes represents the tax payable for the period and change during the periodin net deferred tax assets and liabilities.

We have identified our federal tax return as our “major” tax jurisdiction, as defined. The periods subject to examination for our federal income tax returns are the tax years ended in 2006 and thereafter, since we have net operating loss carryforwards for tax years starting in 2006. We do not believe any reserves for uncertain income tax positions are required. Our policy for recording interest and penalties associated with audits is to record such items as a component of income (loss) before taxes. 

*Net loss per common share* —Basic and diluted net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted loss per share excludes the effect of common stock equivalents (convertible notes, stock options and warrants) since such inclusion in the computation would be anti-dilutive. The following numbers of shares have been excluded (in thousands):  

 

|              |   | **December 31,**  |   |
|-------------------|--------|------------------------|--------|
|              |   |                        |   |
|              |   | **2009**               |   | **2008** |   |
|              |   |                        |   |  |   |
| Convertible notes |   | 2,770                  |   | 2,392 |   |
| Stock options     |   | 2,085                  |   | — |   |
| Warrants          |   | 3,429                  |   | 1,489 |   |
|              |   |                        |   |  |   |
| Total             |   | 8,284                  |   | 3,881 |   |
|              |   |                        |   |  |   |

*Share-Based Payments*—We have granted shares of our common stock and stock options and warrants to purchase shares of our common stock to various parties for services and in connection with financing activities. The fair values of shares issued have been based on closing market prices of our common stock. We use the Black-Scholes option-pricing model as our method of valuation for share-based awards. Share-based compensation expense is based on the value of the portion of the stock-based award that will vest during the period, adjusted for expected forfeitures. Our determination of the fair value of share-based awards on the date of grant using an option pricing model is affected by our stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to,the expected life of the award, expected stock price volatility over the term of the award and historical and projected exercise behaviors.  The estimation of share-based awards that will ultimately vest requires judgment, and to the extent actual or updated results differ from our current estimates, such amounts will be recorded in the period estimates are revised. We use the simplified method for estimating expected term for all of our grants of option awards, as we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. Although the fair value of share-based awards is determined in accordance with authoritative guidance, the Black-Scholes option pricing model requires the input of highly subjective assumptions and other reasonable assumptions could provide differing results. Non-cash compensation expense is recognized on a straight-line basis over the applicable vesting periods of one to three years (deemed the requisiteservice periods), based on the fair value of such share-based awards on the grant date. 

 

 

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*Advertising*—Advertising costs, which are included in sales and marketing expenses, are expensed as they are incurred. For the years ended December 31, 2009 and 2008, advertising costs were approximately $67,000 and $243,000, respectively.

*Recently Issued Accounting Standards*—In October 2009, the Financial Accounting Standards Board issued authoritative guidance on revenue arrangements with multiple deliverables that are outside the scope of the software revenue recognition guidance (which does not have an impact on our accounting). Under the new guidance, when vendor specific objective evidence or third party evidence for deliverables in an arrangement cannot be determined, a best estimate of a selling price is required to separate deliverables and allocate arrangement consideration using the relative selling price method. The new guidance includes new disclosure requirements on how the application of the relative selling price method affects the timing and amount of revenue recognition. We intend to adopt this authoritative guidance on January 1, 2010 and believeadoption of this new guidance will not have a material effect on our consolidated financial statements.

**Note 4.  Convertible Notes**

Convertible notes payable at December 31consist of the following (in thousands): 

 

|                                      |   | **2009** |   | **2008** |   |
|-------------------------------------------|--------|----------|--------|----------|--------|
|                                      |   |          |   |          |   |
| Convertible note payable to related party |   | $        | 1,150  |     | $      | 961 |   |
| Convertible notes payable due others      |   |     | 235    |     |   | 235 |   |
|                                      |   |          |        |     |        |  |   |
| Total                                     |   | $        | 1,385  |     | $      | 1,196 |   |
|                                      |   |          |        |     |        |  |   |

*Convertible Note payable to related party*— In January 2008, the original promissory note due to the chairman of our board of directors in the amount of $985,000 was replaced by a second promissory note issued in the principal amount of $961,000, bearing interest at a rate of 12% per annum, with monthly interest-only payments of $9,606.87 due on the first day of each month beginning February 1, 2008. The second promissory note was due on January 1, 2009. The note (principal and accrued interest) was convertible at the sole option of the holder into common shares at a conversion price of $1.00 per common share, subject to customary adjustments. The conversion price was changed to $0.50 per share in November 2008. Obligations under the second promissory note were collateralized by all of the tangible and intangible assets of ourcompany. During the year ended December 31, 2008, we recorded interest expense of approximately $115,000 related to the second promissory note. 

In    February 2009, as amended May 2009, the existing obligations (principal and    accrued interest) under the second promissory note were replaced by a third    promissory note in the principal amount of $1,150,000. In connection with    the refinancing of the obligations under the second promissory note, we recorded    $78,000 in February 2009 as a financing fee. The new note is payable within    five days after the demand of the holder, and bears interest at 8% per annum.    The note is convertible at the option of the holder, and conversion is at    $0.50 per share. In addition, in connection with the third promissory note,    we issued the holder warrants to purchase 1,150,000 shares of our common    stock at an exercise price of $0.50 per share through February 1, 2015. The    fair value of the warrants of $11,000 was computed using the Black-Scholes    option pricing model with the following assumptions:  expected term of 6    years (contractual term), volatility of 400% (based on historical volatility),    0% dividend rate and interest rate of 2.3%. In the first quarter 2009, we    recorded interest expense of $11,000 to fully amortize the discount on the    convertible notes payable related to the allocation of value to the warrants.     During    the year ended December 31, 2009, we recorded interest expense of approximately    $183,000 related to our obligations under the convertible note payable to    related party. As of December 31, 2009, we have recorded accrued interest    payable of approximately $84,000 related to this convertible note payable    to related party. The obligations under the third promissory note, as amended,    are secured pursuant to a Security Agreement dated February 1, 2009 which    grants to the Slitz Family Trust (of which John Slitz, Jr., our  Secretary    and Chairman of the Board serves as trustee) a security interest in substantially    all of our assets. 

*Convertible notes payable due to certain investors*— In May and June 2008, we issued convertible promissory notes in an aggregate amount of $1,135,000 to certain investors. The notes bear interest at 6% per annum and were repayable on or before October 31, 2008 and are currently past due. The notes and related accrued interest were convertible into shares of our common stock at $1.00 per share at the option of the holder. The convertible promissory notes were issued together with warrants to purchase 1,135,000 shares of our common stock at an original exercise price of $1.05 per share, exercisable for three years. Terms of the convertible notes and warrants provide that the conversion price of the notes and the exercise price of the warrant will be reduced in the event of subsequent financings at an effective price per share lessthan the conversion or exercise price, subject to certain exceptions. The convertible notes when issued included a beneficial conversion feature because they allowed the holders to acquire 

 

 

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common shares of the company at an effective conversion price that was less than their fair value per common share of $2.05 on May 15, 2008 and $1.51 on June 9, 2008. The discount on the convertible notes payable related to the allocation of value of the warrants and the beneficial conversion feature was valued at $635,000 and $500,000 in May and June 2008 based on the effective conversion price of $0.328 and $0.399, respectively.  The fair value of the warrants was computed using the Black-Scholes option pricing model with the following assumptions:  expected term of three years (contractual term), volatility of 400% (based on historical volatility), 0% dividend rate and interest rate of approximately 3%. 

In September 2008, the conversion price of certain of the convertible notes in an aggregate amount of $235,000 was reduced from $1.00 to $0.50. In addition, the conversion price of certain of the warrants to purchase an aggregate of 235,000 shares of our common stock was reduced from $1.05 to $0.50. On September 4, 2008, the fair value of the company’s stock was $0.50, so the beneficial conversion feature was not reset. We recognized interest expense related to the amortization of the beneficial conversion feature of $1,135,000 during the year ended December 31, 2008. In addition, we have recorded accrued interest of approximately $66,000 related to the convertible notes, which remain unpaid, as of December 31, 2009.

In December 2008, $900,000 of the convertible notes were converted into common stock at $1.00 per share.

**Note 5. Stockholders’ Equity (Deficit)**

*Preferred Stock*— Our board of directors has the authority, without action by the stockholders, to designate and issue up to 10,000,000 shares of preferred stock in one or more series and to designate the rights, preferences and privileges of each series, any or all of which may be greater than the rights of our common stock. No shares of preferred stock have been designated or issued.

*Common Stock* — Holders of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the holders of our common stock. Subject to the rights of the holders of any class of our capital stock having any preference or priority over our common stock, the holders of shares of our common stock are entitled to receive dividends that are declared by our board of directors out of legally available funds. In the event of our liquidation, dissolution or winding-up, the holders of common stock are entitled to share ratably in our net assets remaining after payment of liabilities, subject to prior rights of preferred stock, if any, then outstanding. Our common stock has no preemptive rights, conversion rights, redemption rights or sinking fund provisions, and there are no dividends inarrears or default. All shares of our common stock have equal distribution, liquidation and voting rights, and have no preferences or exchange rights.

*Common Stock Issuances* — In February, March and May 2008, we raised net proceeds of approximately $380,000 through the issuance of 304,000 units at $1.25 per unit, with each unit comprised of one share of common stock and one three-year warrant to purchase one share of common stock at an exercise price of $2.00 per share. In addition, in October 2008, we issued 120,000 shares of our common stock to a consultant in connection with the offering. We evaluated the warrants and determined that the warrants do not contain any provisions equivalent to net-cash settlement provisions and accordingly are accounted for as equity. 

In February 2008, we issued 200,000 shares of our common stock to Fusion Consulting for public relations services. The shares were recorded at a fair value of $600,000 based on the price of our common stock in recent stock sales and the value was amortized on a straight line basis over the service period which concluded in 2008. 

In May 2008, we issued 150,000 shares of our common stock to Emerging Growth Advisors for financial advisory services. The shares were recorded at their fair value of $188,000 and the expense was recorded to general and administrative expense during the second quarter 2008. 

During 2007, we issued 2.0 million shares of our common stock for marketing-related services to be provided during 2007 by the Custom Group under an operating agreement. In June 2009, we cancelled 1.2 million shares previously treated as issued to the Custom Group as services were not provided. The value related to the uncancelled shares was $800,000 based on the fair value of our common stock of $1.00 per share as determined by recent stock sales and is recorded as sales and marketing expense in 2007 in the consolidated financial statements, and no value was recorded related to the cancelled shares as no services were performed.

In May 2009, we issued 112,500 shares of our common stock to a consultant in settlement of amounts payable under a disputed contract. The fair value of the shares of $7,000 was included in accrued expenses at December 31, 2008. 

In July 2009 we entered into an agreement with Seahawk Capital Partners, Inc. for investor relations and capital raising services. In connection with this agreement, 50,000 shares of our common stock were issuable at each of July 15, 2009 and August 15, 2009 and 150,000 shares of our common stock were issuable at September 15, 2009. We valued the shares issued to Seahawk Capital Partners, Inc. under the agreement at the closing market prices of our common stock at each of those dates and recorded the 

 

 

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expense as general and administrative expense in the third quarter of 2009. In November 2009, we terminated our agreement with Seahawk Capital Partners, Inc. 

*Stock Incentive Plans* — In May 2008, our stockholders adopted and approved our 2007 Stock Option Plan (the “2007 Plan”). In April 2009, we terminated the 2007 Plan and adopted our 2009 Equity Incentive Plan (“2009 Plan”), which allows for awards of qualified and non-qualified stock options for up to 3,000,000 shares of our common stock. In August 2009, our board of directors approved the adoption of our Amended and Restated 2009 Equity Incentive Plan (the “Amended 2009 Plan”). Our board of directors amended the 2009 Plan to increase the number of shares issuable under the 2009 Plan to 4,000,000 shares of our common stock.

At December 31, 2009, options to purchase up to 2,085,000 shares of our common stock were outstanding and 1,565,000 shares were available for future grants or awards under our Amended 2009 Plan. 

*Stock-based Compensation* — The following table summarizes stock-based compensation expense related to options (in thousands): 

 

|                           |   | **Years** **ended****December 31,** |   |
|--------------------------------|--------|------------------------------------------|--------|
|                           |   |                                          |   |
|                           |   | **2009**                                 |   | **2008** |   |
|                           |   |                                          |   |  |   |
| Stock-based compensation:      |   |                                     |   |   |   |   |   |
| Cost of sales                  |   | $                                        | 12     |   | $ | — |   |
| Sales and marketing            |   |                                     | 5      |   |   | — |   |
| General and administrative     |   |                                     | 63     |   |   | — |   |
|                           |   |                                          |        |   |  |  |   |
| Total stock-based compensation |   | $                                        | 80     |   | $ | — |   |
|                           |   |                                          |        |   |  |  |   |

Certain option and share awards provide for accelerated vesting if there is a change in control (as defined in the applicable plan and certain employment agreements we have with key officers). 

The fair value of stock-based option awards was estimated at the date of grant using the Black-Scholes option valuation model with the following weighted average assumptions for the periods presented as follows: 

 

|                          |   | **Years** **ended****December 31,** |    |
|-------------------------------|--------|------------------------------------------|---------|
|                          |   |                                          |    |
|                          |   | **2009**                                 |    | **2008** |   |
|                          |   |                                          |    |  |   |
| Expected dividend yield       |   |                                     | 0       | % | * |   |
| Risk free interest rate       |   |                                     | 2.6     | % | * |   |
| Expected stock volatility     |   |                                     | 400     | % | * |   |
| Expected option life          |   |                                     | 6 years |   | * |   |
| Fair value of options granted |   | $                                        | 0.07    |   | * |   |

| * | There were no option grants during the year ended December 31, 2008. |
|---|----------------------------------------------------------------------|

*Stock Options*— Stock options to purchase shares of our common stock are granted under our existing stock-based incentive plan to certain employees and consultants, at prices at or above the fair market value on the date of grant. 

Option activity was as follows during the year ended December 31, 2009: 

 

|                             |   | **Options****        |   | **Weighted****Average****Exercise****Price** |   | **Weighted****Average****Remaining****Contractual****Life** |      | **Aggregate****Intrinsic****Value**** |   |
|----------------------------------|--------|----------------------|--------|----------------------------------------------|--------|-------------------------------------------------------------|-----------|---------------------------------------|--------|
|                             |   |                      |   |                                              |   |                                                             |      |                                       |   |
|                             |   | ***(in thousands)*** |   |                                         |   |                                                        |      | ***(in thousands)***                  |   |
| Outstanding December 31, 2008    |   | —               |   | $                                            | — |                                                        |      |                                  |   |   |   |
| Options granted                  |   | 2,765                |   |                                         | 0.07   |                                                        |      |                                  |   |   |   |
| Options exercised                |   | (350                 | )      |                                         | 0.02   |                                                        |      |                                  |   |   |   |
| Options expired                  |   | —               |   |                                         | — |                                                        |      |                                  |   |   |   |
| Options forfeited                |   | (330                 | )      |                                         | 0.08   |                                                        |      |                                  |   |   |   |
| Options cancelled                |   | —               |   |                                         | — |                                                        |      |                                  |   |   |   |
|                             |        |                      |   |                                              |        |                                                        |      |                                  |   |   |   |
| Outstanding at December 31, 2009 |   | 2,085                |   | $                                            | 0.07   |                                                        | 9.3 years |                                  | $      | — |   |
|                             |        |                      |   |                                              |        |                                                        |           |                                  |        |  |  |
| Exercisable at December 31, 2009 |   | 573                  |   | $                                            | 0.08   |                                                        | 9.3 years |                                  | $      | — |   |
|                             |        |                      |   |                                              |        |                                                        |           |                                  |        |  |  |

 

 

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As of December 31, 2009, we had approximately $103,000 of total unrecognized compensation cost related to unvested stock options. Total unrecognized compensation cost will be adjusted for future changes in estimated forfeitures. We expect to recognize this cost over a weighted average period of approximately two and one third years. 

The intrinsic value of stock options outstanding and exercisable at December 31, 2009 is based on the $0.01 closing market price of our common stock on that date, and is calculated by aggregating the difference between $0.01 and the exercise price of each of the outstanding vested and unvested stock options which have an exercise price less than $0.01. The total fair value of options that vested during the year ended December 31, 2009, net of forfeitures, was approximately $75,000. There were no options which vested during the year ended December 31, 2008. The intrinsic value of options exercised during the year ended December 31, 2009 was not material, and there were no options exercised during the year ended December 31, 2008.

*Non-Employee Grants* — In April 2009, we granted non-qualified options under our 2009 Plan to purchase 350,000 shares of our common stock at an exercise price of $0.02 per share to a consultant engaged in providing accounting and advisory services to our company. The options were fully vested on the date of grant and have a ten year term. The options were exercised in July 2009.

*Warrants* — We issued warrants in connection with our 2008 private placements and our convertible notes. In connection with warrants issued together with the convertible notes in 2008, the financial reporting (non-cash) effect of initial adoption of the authoritative guidance related to warrants with down-round protection resulted in a cumulative effect of change in accounting principle of approximately $0.1 million, based on a per share price of $0.09 per share at January 1, 2009, which increased accumulated deficit and recorded a derivative liability for price adjustable warrants. At adoption, January 1, 2009, the weighted average assumptions used in our Black-Scholes calculation were: expected life of 2.4 years, volatility equal to 400%, risk-free rate of 3.0% and dividend rate of 0%. The derivative liability is revaluedquarterly utilizing Black-Scholes valuation model computations with the increase or decrease in fair value being reported in the consolidated statement of operations as other income (expense). At December 31, 2009, the weighted average assumptions used in our Black-Scholes calculation were: expected life of 1.4 years, volatility equal to 400%, risk-free rate of 0.4% and dividend rate of 0%. During the year ended December 31, 2009, the fair value of the derivative liability decreased by approximately $92,000, which was recorded as other income.

As discussed in Note 6, in May 2009, we granted warrants to purchase 50,000 shares of our common stock at an exercise price of $0.05 to our Chief Executive Officer (“CEO”). The warrants expire in May 2014. The warrants were recorded to expense in 2009 at their fair value of $1,500, which was determined using the Black-Scholes model using the following assumptions: stock price of $0.03, volatility of 400%, risk free rate of 2.5%, expected term of five years, dividend yield of 0.0%.

As    discussed in Note 6, pursuant to the terms of his consulting agreement, in    June 2009, we granted warrants to the chairman of our board of directors    to purchase 540,000 shares of our common stock at an exercise price of $0.50    per share, with warrants for 60,000 shares vesting immediately and warrants    for 15,000 shares vesting in monthly installments beginning on the first    month anniversary of the date of the consulting agreement. The warrants expire    on February 6, 2015. During the year ended December 31, 2009, we recorded    expense of approximately $4,000 related to the fair value of the warrants,    which was determined using the Black-Scholes model using the following assumptions:    stock price of $0.03, volatility of 400%, risk free rate of 3.0%, expected    term of three years, dividend yield of 0.0%.

In August 2009, we issued five-year warrants to certain consulting or service providers to purchase an aggregate of 200,000 shares of our common stock at an exercise price of $0.50 per share. The warrants vested immediately. The warrants were recorded to expense in 2009 at their fair value of approximately $10,000, which was determined using the Black-Scholes model using the following assumptions: stock price of $0.05 (closing price on date of board approval), volatility of 400%, risk free rate of 2.3%, expected term of 5.0 years, dividend yield of 0.0%. 

The following summarizes warrant activity during the year ended December 31, 2009 (in thousands): 

 

| Warrants outstanding, December 31, 2008            |   |   | 1,489  |   |
|----------------------------------------------------|--------|--------|--------|--------|
| Warrants issued                                    |   |   | 1,940  |   |
| Warrants exercised                                 |   |   | — |   |
| Warrants expired                                   |   |   | — |   |
|                                               |   |        |        |   |
| Warrants outstanding, December 31, 2009            |   |   | 3,429  |   |
|                                               |   |        |        |   |
| Weighted average exercise price, December 31, 2009 |   | $      | 0.77   |   |
|                                               |   |        |        |   |

 

 

F-13

 

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**Note 6. Related Party Transactions**

As further described in Note 4, in 2007, we borrowed $985,000 from the chairman of our board of directors, pursuant to terms of a promissory note, subsequently replaced in 2008 by a second promissory note in the principal amount of $961,000 and subsequently replaced in 2009 by a third promissory note in the principal amount of $1,150,000.

In February 2009, we entered into a three-year consulting agreement with the chairman of our board of directors, pursuant to which we will pay him monthly cash payments of $15,000, and, as further described in Note 5, in June 2009, we granted warrants to purchase 540,000 shares of our common stock at an exercise price of $0.50 per share, with warrants for 60,000 shares vested immediately and warrants for 15,000 shares vesting in monthly installments beginning on the first monthly anniversary of the date of the consulting agreement. The warrants expire on February 6, 2015. Upon a change of control of our company, all obligations under the consulting agreement become immediately due and payable. The amounts due under the consulting agreement of $180,000 as of December 31, 2009, along with advances made to us by the chairman of our board of directors totaling $915,000 throughDecember 31, 2009, are included in due to related parties on the accompanying consolidated balance sheet. As of February 12, 2010, these advances made to us by the chairman of our board of directors, which totaled $921,000, were replaced by a promissory note in the principal amount of $921,000, with a stated interest rate of 8% per annum. The note is convertible at the option of the holder at a conversion price of $0.02 per share. The note is payable within five (5) days after demand by holder. If the note is not paid upon demand, a default interest rate of 18% per annum applies.

In April 2009, we entered into an employment agreement with our CEO, pursuant to which, among other things, the officer will be entitled to annual base compensation of $240,000. As of December 31, 2009, amounts due under the employment agreement, which total $160,000, remain unpaid and are included in due to related parties on the accompanying consolidated balance sheet. Pursuant to the terms of a consulting agreement with Core Ventures Partners, LLC, a company owned by our CEO, we are obligated to pay aggregate cash consulting fees of $50,000 in consideration for the services our CEO provided to us during the period from January 1, 2009 in his capacity as a consultant until his appointment as an officer of our company on April 21, 2009. As of December 31, 2009, such amounts remain unpaid.. In April 2009, we also issued incentive options under the 2009 Plan to purchase1,000,000 shares of our common stock at an exercise price of $0.09 per share to our CEO pursuant to his employment agreement. The options vest in 1/36 monthly installments beginning on the first monthly anniversary of the grant date, over a period of three years. The options have a term of ten years.

As described in Note 5, in May 2009, we granted warrants to purchase 50,000 shares of our common stock at an exercise price of $0.05 to our CEO as additional compensation for services he provided as a consultant before his appointment as an officer of our company. The warrants expire in May 2014.

In October 2009, we entered into an employment agreement (the “Daly Agreement”) with Mr. John Daly, pursuant to which Mr. Daly will serve as our Vice President of Broadcast Operations for a term beginning on October 6, 2009 (the “Effective Date”) and ending at any time upon termination by either party. Pursuant to the Daly Agreement, Mr. Daly will be entitled to annual base compensation of $180,000. Mr. Daly’s base salary shall accrue monthly, on the first business day of each calendar month, beginning on the Effective Date and payment of all or any portion of base salary shall be deferred by the Company until consummation of our sale of 10% convertible secured promissory notes, convertible into shares of our common stock, par value $0.001 per share, for aggregate proceeds of at least $5,000,000. Mr. Daly is also eligible toreceive a target annual bonus of $50,000, with the actual amount to be determined by our board of directors. As of December 31, 2009, amounts due under the Daly Agreement, which total $30,000, remain unpaid and are included in due to related parties on the accompanying consolidated balance sheet.

**Note 7. Income Taxes**

In connection with the acquisition of WSG-NV by ICP, the tax attributes, including net operating loss carryforwards and basis of assets and liabilities of WSG-NV, carryover to, and are combined with those of ICP, the legal predecessor and tax entity, which tax attributes are also unchanged as a result of the merger. Inasmuch as the consolidated financial statements are presented as if WSG-NV is the acquirer, the tax attributes reported for historic periods relate to WSG-NV, and upon merger ICP tax attributes, including net operating loss carryforwards of approximately $10,000, are added to WSG-NV reported net operating loss carryforwards. As a result, deferred tax assets relating to net operating loss carryforwards increased, with an offsetting increase in the deferred tax asset valuation allowance account. Deferred income taxes represent the net tax effects of temporarydifferences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for income tax purposes.

 

 

F-14

 

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Significant components of our net deferred tax assets and related valuation allowance as of December 31, 2009 and 2008 are as follows (in thousands):

 

|                             |   | **Years Ended December 31,** |   |
|----------------------------------|--------|------------------------------|--------|
|                             |   |                              |   |
|                             |   | **2009**                     |   | **2008** |   |
|                             |   |                              |   |  |   |
| Deferred tax assets:             |   |                         |   |   |   |   |   |
| Net operating loss carryforwards |   | $                            | 3,414  |   | $ | 2,907 |   |
| Other                            |   |                         | 279    |   |   | 23 |   |
|                             |   |                              |        |   |  |  |   |
| Total deferred tax assets        |   |                         | 3,692  |   |   | 2,930 |   |
| Valuation allowance              |   |                         | (3,692 | ) |   | (2,930 | ) |
|                             |   |                              |        |   |  |  |   |
| Net deferred taxes               |   | $                            | — |   | $ | — |   |
|                             |   |                              |        |   |  |  |   |

We continue to record a valuation allowance in the full amount of deferred tax assets since realization of such tax benefits has not been determined by our management to be more likely than not. The valuation allowance increased approximately $762,000 and $1.1 million during 2009 and 2008, respectively. As a result of the valuation allowance, there were no tax benefits or expenses recorded in the accompanying consolidated statements of operations for the years ended December 31, 2009 or 2008.

At December 31, 2009, we had available net operating loss carryforwards for federal income tax reporting purposes of approximately $10.0 million, which are available to offset future taxable income, and expire beginning in 2026 if not otherwise utilized. Our ability to use such net operating losses is dependent on future taxable income and could be subject to an annual limitation due to change of control provisions under Sections 382 and 383 of the Internal Revenue Code. 

**Note 8. Commitments and Contingencies**

*Operating leases*— We lease space for our corporate office in Las Vegas, Nevada on a month-to-month basis. Our rent expense under our operating lease was not material in 2009 or 2008.

*Consulting      Agreements —* As discussed      in Note 6, in February 2009, we entered into a three-year consulting agreement      with the chairman of our board of directors, pursuant to which we will      pay him monthly cash payments of $15,000, and in June 2009, we granted      warrants to purchase 540,000 shares of our common stock at an exercise      price of $0.50 per share, with warrants for 60,000 shares vesting immediately      and warrants for 15,000 shares vesting in monthly installments beginning      on the first month anniversary of the date of the consulting agreement.      The warrants expire on February 6, 2015. Upon a change of control of our      company, all obligations under the consulting agreement become immediately      due and payable. 

*Severance Agreement –*In August 2009, we entered into a severance agreement with our former President, pursuant to which we will pay him severance of $112,500, comprised of a cash payment of $12,500 upon completion of a financing or series of financings totaling at least $1.0 million, additional seven monthly cash payments of $10,000 each, and a final payment on the seventh month of $30,000, after we have consummated a financing or series of financings of at least $2.0 million. We believe it is reasonably possible we will pay the full $112,500, but no amounts have been accrued as of December 31, 2009 given the contingent nature of the payments.

*Contingencies* — We are subject to various legal proceedings and claims that arise in the ordinary course of business. Our management currently believes that resolution of such legal matters will not have a material adverse impact on our consolidated financial position, results of operations or cash flows. 

**Note 9 — Contractual Agreements**

*WGT —* In January 2009, we, through our wholly owned subsidiary, WSG Online, Inc., entered into a Development, Hosting, and License Agreement (the “WGT Agreement”) with World Golf Tour, Inc. (“WGT”). WGT is the developer of an online simulated golf game. Pursuant to the WGT Agreement, WGT will create, host, operate and manage an online version of the World Series of Golf game format using a modified version of WGT’s online simulated golf game (the “WSGO Game”). WSGO will pay WGT an aggregate of $300,000 for its services provided pursuant to the WGT Agreement, and the parties will share revenues generated by the WSGO Game and other products lines related to the WSGO game, including advertising and sponsorship of the WSGO game. The WGT Agreement has an initial term of two years from the date of thelive launch of the WSGO Game, which term will be automatically extended for additional one year terms unless terminated by either party.

 

 

F-15

 

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The WGT Agreement provides that WGT will retain all right, title and interest in and to the intellectual property rights of the online WGT game, the golf course visuals, and any content provided by WGT, all software and technology, derivative works, embellishments, modifications and translations thereof, except for unique aspects, features and functionality created specifically for the WSGO Game. We retain all right, title and interest in and to the intellectual property rights to the World Series of Golf format, WSGO trademarks and content, and the WSGO website URL name. Furthermore, WSGO grants WGT a worldwide, limited, non-exclusive license to use, reproduce, adapt, incorporate, integrate, and display the World Series of Golf format and the WSGO trademarks in connection with the WSGO Game, and to provide links from the WGT website to the WSGO Game. Conversely, WGT grantsWSGO a worldwide, limited, non-exclusive license to use, reproduce, display, and publicly perform the WSGO Game visuals in advertising and in any television broadcasts of live golf tournament events sponsored by WSGO, WGT or their affiliates. The WGT Agreement contemplates that WGT will create a hyperlink directly from its website to the WSGO Game. WSGO will create a hyperlink from its website to the WGT game site. During 2009, there were an aggregate of $25,000 in fees incurred under this agreement, which has been placed on hold due to our funding constraints.

*Compass —* On October 30, 2009, we entered into a letter agreement (the “Compass Agreement”) with Compass Entertainment LLC, a diversified entertainment production company based in Las Vegas, Nevada (“Compass”). Pursuant to the Compass Agreement, we granted to Compass an exclusive, worldwide license to produce and distribute the television content we generate from our annual World Series of Golf amateur golf tournament and from a series of live regional or “satellite” amateur golf tournaments that Compass will organize, promote and produce on our behalf. Compass is required to secure national television broadcasting for the programming content derived from our tournaments. Compass will pay all of the costs incurred to stage the live satellite tournaments and all costs to produce and distribute thetelevision programming derived from each our tournaments. We also granted Compass the right to represent us for ninety days, subject to an additional ninety day extension period, in the promotion and commercialization of previously recorded programming derived from our past annual tournaments. Under the Compass Agreement, Compass will pay us the following amounts in consideration of the rights granted under the agreement: (i) 30% of the net aggregate player entry fees for each tournament staged by Compass, such amount to be calculated after deduction of all production costs and expenses incurred by Compass relating to such tournament, payable once annually following our annual championship tournament and (ii) 15% of all gross advertising and sponsorship revenue received in connection with the tournaments. The Compass Agreement has a term of five years and can be renewed annually by Compass for up to an additional five years. During 2009, there were no payments under thisagreement.

**Note 10 — Subsequent Events**

In February 2010, certain advances from our chairman of the board, which totaled $921,000, were replaced by a promissory note in the principal amount of $921,000, with a stated interest rate of 8% per annum. The note is convertible at the option of the holder at a conversion price of $0.02 per share. The note is payable within five (5) days after demand by holder. If the note is not paid upon demand, a default interest rate of 18% per annum applies.

On April 13, 2010, we entered into a securities purchase agreement with GreenLife Inc. (“Green Life”) pursuant to which Green Life agreed topurchase 2,000 shares of our Series A convertible preferred stock(“Preferred Shares”) for an aggregate purchase price of $200,000 and aconvertible debenture in the principal amount of $50,000. The total investmentwas $250,000 and the transaction closed on April 14, 2010.

In connection with the purchase agreement, we executed a Certificate ofDesignation, Preference and Rights of the Series A Convertible Preferred Stockwhich will be filed with the Secretary of State of Nevada (“Certificate ofDesignation”). Under the Certificate of Designation, at any time afterSeptember 1, 2010, the Preferred Shares are convertible into shares of commonstock at a price equal to the average of the closing “volume weightedaverage price” of our common stock for the five (5) consecutive trading daysprior to conversion. The Certificate of Designation provides that the PreferredShares shall vote together with the common stock and have 51% of the votingpower. It also contains certain approval rights of the holders of the PreferredShares which require us to obtain the consent of at least 75% of the outstandingPreferred Shares before taking certain corporate actions such as a merger,payment of dividends, making certain capital expenditures and the like.

The convertible debenture has a stated interestrate of 8% and is due on April 13, 2011, unless earlier converted. The debenture(principal or interest, any portion thereof) is convertible either at the holder’sor our option at a price equal to 50% of the closing price of our common stockon the date of conversion. The note contains a blocker provision which restrictsGreen Life’s conversion of the note to the extent that the conversion wouldresult in Green Life beneficially owning more than 4.9% of our outstandingcommon stock.

Pursuant to a registration rights agreement withGreen Life also executed on April 13, 2010, we are required to file a registrationstatement with the Securities and Exchange Commission for the resale of our commonstock underlying the convertible Preferred Stock and convertible debenture.

On April 13, 2010, we also entered into an exchange agreement with Green Lifewhereby we agreed to exchange an outstanding convertible promissory note in theprincipal amount of $200,000 previously issued to Green Life for a newconvertible debenture in the same form as the debenture described above. We areobligated to register the conversion shares for resale.

In connection with the transactions above, John F. Slitz, our Secretary andChairman of the Board agreed to sell $1,000,000 of Company indebtedness payableto him to a non-affiliate designee of Green Life in exchange for $10,000.

 

 

F-16

 

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**SIGNATURES**

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, in Las Vegas, Nevada, on the 15th day of April 2010.

 

|   |   | WORLD SERIES OF GOLF, INC. |
|--------|--------|----------------------------|
|        |   | By:                        | /s/ Joseph F. Martinez |
|   |   |                       |  |
|   |   |                       | Joseph F. MartinezChief Executive Officer |

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 

 

| Signature              |   | Title                                                                                                                      |   | Date           |
|------------------------|--------|----------------------------------------------------------------------------------------------------------------------------|--------|----------------|
|                   |   |                                                                                                                       |   |           |
| /s/ Joseph F. Martinez |   | Director, Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal accounting officer) |   | April 15, 2010 |
|                        |
| Joseph F. Martinez     |
|                   |   |                                                                                                                       |   |           |
| /s/ John F. Slitz, Jr. |   | Chairman of the Board                                                                                                      |   | April 15, 2010 |
|                        |
| John F. Slitz, Jr.     |
|                   |   |                                                                                                                       |   |           |

 

**Supplemental Information to be Furnished With Reports Filed Pursuant to Section 15(d) of the Act by Registrants Which Have Not Registered Securities Pursuant to Section 12 of the Act.**

As of the date of filing of this Annual Report on Form 10-K, we have not provided any annual report with respect to our last fiscal year or any proxy materials to our shareholders. We intend to provide proxy materials to our shareholders with respect to our next annual meeting, and if we do so, we shall concurrently furnish such materials to the Securities and Exchange Commission. 

 

 

 

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**Exhibit Index**

 

| Exhibit No. | Description of Exhibit                                                                                                                                                                                                                                                                                                                    |
|-------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                                                                                      |
| 2.1         | Agreement and Plan of Merger, dated January 31, 2008, by and among Innovative Consumer Products, Inc., WSG Acquisition, Inc., and World Series of Golf, Inc., incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on February 1, 2008.                           |
|        |                                                                                                                                                                                                                                                                                                                                      |
| 3.1         | Restated Certificate of Incorporation of World Series of Golf, Inc., filed on May 29, 2009 with the Nevada Secretary of State, incorporated by reference to Exhibit 3.1 to our Annual Report on Form 10-K filed with the Securities and Exchange Commission on June 10, 2009.                                                             |
|        |                                                                                                                                                                                                                                                                                                                                      |
| 3.2         | Amended and Restated Bylaws of World Series of Golf, Inc., incorporated by reference to Exhibit 3.2 to our Annual Report on Form 10-K filed with the Securities and Exchange Commission on June 10, 2009.                                                                                                                                 |
|        |                                                                                                                                                                                                                                                                                                                                      |
| 10.1        | 2009 Equity Incentive Plan, incorporated by reference to Exhibit 10.2 to of our Current Report on Form 8-K filed with the Securities and Exchange Commission on April 24, 2009.                                                                                                                                                           |
|        |                                                                                                                                                                                                                                                                                                                                      |
| 10.2        | Form of Non-Qualified Stock Option Grant Agreement under the 2009 Equity Incentive Plan, incorporated by reference to Exhibit 10.3 of our Current Report on Form 8-K filed with the Securities and Exchange Commission on April 24, 2009.                                                                                                 |
|        |                                                                                                                                                                                                                                                                                                                                      |
| 10.3        | Form of Incentive Stock Option Grant Agreement under the 2009 Equity Incentive Plan, incorporated by reference to Exhibit 10.4 of our Current Report on Form 8-K filed with the Securities and Exchange Commission on April 24, 2009.                                                                                                     |
|        |                                                                                                                                                                                                                                                                                                                                      |
| 10.4        | Employment Agreement, effective as of April 21, 2009, by and between World Series of Golf, Inc. and Joseph F. Martinez, incorporated by reference to Exhibit 10.1 to of our Current Report on Form 8-K filed with the Securities and Exchange Commission on April 24, 2009.                                                               |
|        |                                                                                                                                                                                                                                                                                                                                      |
| 10.5        | Form of Convertible Promissory Note issued by World Series of Golf, Inc. to each of the investors in the private placement of convertible notes and warrants in May and June 2008, incorporated by reference to Exhibit 10.5 of our Annual Report on Form 10-K filed with the Securities and Exchange Commission on June 10, 2009.        |
|        |                                                                                                                                                                                                                                                                                                                                      |
| 10.6        | Form of Stock Purchase Warrant issued by World Series of Golf, Inc. to each of the investors in the private placement of convertible notes and warrants in May and June 2008, incorporated by reference to Exhibit 10.6 of our Annual Report on Form 10-K filed with the Securities and Exchange Commission on June 10, 2009..            |
|        |                                                                                                                                                                                                                                                                                                                                      |
| 10.7        | Form of Stock Purchase Warrant issued by World Series of Golf, Inc. to each of the investors in the private placement of common stock and warrants in February, March and May 2008, incorporated by reference to Exhibit 10.7 of our Annual Report on Form 10-K filed with the Securities and Exchange Commission on June 10, 2009.       |
|        |                                                                                                                                                                                                                                                                                                                                      |
| 10.8        | Form of Registration Rights Agreement between World Series of Golf, Inc. and each of the investors in the private placement of common stock and warrants in February, March and May 2008, incorporated by reference to Exhibit 10.8 of our Annual Report on Form 10-K filed with the Securities and Exchange Commission on June 10, 2009. |
|        |                                                                                                                                                                                                                                                                                                                                      |
| 10.9        | Development, Hosting and License Agreement, dated January 1, 2009, between World Series of Golf Online, Inc. and World Golf Tour, Inc., incorporated by reference to Exhibit 10.9 of our Annual Report on Form 10-K filed with the Securities and Exchange Commission on June 10, 2009. †                                            |

 

 

 

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| 10.10  | Consulting Agreement, dated February 6, 2009, between World Series of Golf, Inc. and John F. Slitz, Jr., incorporated by reference to Exhibit 10.10 of our Annual Report on Form 10-K filed with the Securities and Exchange Commission on June 10, 2009.                                                                     |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                          |
| 10.11  | Warrant dated June 2, 2009 issued by World Series of Golf, Inc. in favor of John F. Slitz, Jr. incorporated by reference to Exhibit 10.11of our Annual Report on Form 10-K filed with the Securities and Exchange Commission on June 10, 2009.                                                                                |
|   |                                                                                                                                                                                                                                                                                                                          |
| 10.12  | Amended and Restated Convertible Promissory Note, dated May 28, 2009, issued by World Series of Golf, Inc. to The Slitz Family Trust in the principal amount of $1,150,000, incorporated by reference to Exhibit 10.12 of our Annual Report on Form 10-K filed with the Securities and Exchange Commission on June 10, 2009.. |
|   |                                                                                                                                                                                                                                                                                                                          |
| 10.13  | Warrant dated June 2, 2009 issued by World Series of Golf, Inc. in favor of The Slitz Family Trust incorporated by reference to Exhibit 10.13 of our Annual Report on Form 10-K filed with the Securities and Exchange Commission on June 10, 2009.                                                                           |
|   |                                                                                                                                                                                                                                                                                                                          |
| 10.14  | Security Agreement, dated February 1, 2009, by and between World Series of Golf, Inc. and the Slitz Family Trust, incorporated by reference to Exhibit 10.14 of our Annual Report on Form 10-K filed with the Securities and Exchange Commission on June 10, 2009..                                                           |
|   |                                                                                                                                                                                                                                                                                                                          |
| 10.15  | Warrant dated June 2, 2009 issued by World Series of Golf, Inc. in favor of Joseph F. Martinez incorporated by reference to Exhibit 10.5 of our Annual Report on Form 10-K filed with the Securities and Exchange Commission on June 10, 2009.                                                                                |
|   |                                                                                                                                                                                                                                                                                                                          |
| 10.16  | Employment Agreement, effective as of October 6, 2009, by and between World Series of Golf, Inc. and John Daly, incorporated by reference to Exhibit 10.1 to of our Current Report on Form 8-K filed with the Securities and Exchange Commission on October 7, 2009.                                                          |
|   |                                                                                                                                                                                                                                                                                                                          |
| 10.17  | Compass Agreement, effective as of October 30, 2009, by and between World Series of Golf, Inc. and Compass Entertainment LLC, incorporated by reference to Exhibit 10.1 to of our Current Report on Form 8-K filed with the Securities and Exchange Commission on November 5, 2009.                                           |
|   |                                                                                                                                                                                                                                                                                                                          |
| 14.1   | Code of Business Conduct and Ethics of the Registrant, incorporated by reference to Exhibit 14.1 of our Annual Report on Form 10-K filed with the Securities and Exchange Commission on June 10, 2009.                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                          |
| 21.1   | Subsidiaries of Registrant:                                                                                                                                                                                                                                                                                                   |
|   | 1. World Series of Golf Online, Inc.                                                                                                                                                                                                                                                                                          |
|   | 2. L.A.X. Innovations, Inc., a Nevada corporation.                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                          |
| 31.1   | Certification of our Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                          |
| 32.1   | Certification of our Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*                                                                                                                                                                                     |

_______________

| * | Filed herewith. |
|---|-----------------|

| † | Certain portions of this Exhibit have been omitted pursuant to our request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 

 

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