Don Anderson started his company 11 years ago as a chance to make money at what he loves best: golf.
But business is a different game. Now Anderson is looking for investors,and a lawyer.
Anderson started GolfGear International, based in Garden Grove, after he developed and patented a new golf club that is cast like most other clubs, but has a forged insert in the front of the club head.
Anderson had been a professional golfer and also had worked in the golf industry for 20 years, designing and developing golf products, when he came up with the forged-insert idea. With the help of John Zebelean, the inventor of the all-metal “wood” club, Anderson developed his idea and went to work to produce his clubs.
But GolfGear has not had a profitable quarter in a couple of years and the future of his company now rests on its ability to raise capital to continue operations.
In the most recent quarter, the company lost $382,000; and in the nine months ended Sept. 30, the company lost about $478,000. In 1999, the company lost $1.4 million. According to the company’s latest quarterly report, since 1997 the company has made ends meet by selling shares, and it now is looking to raise $7.5 million more to keep going.
He is also having a problem with the larger manufacturers that have superior resources.
He holds nine patents for the forged-insert technology but, according to Anderson, there are 4 million clubs that have been sold by other companies that are infringing on his patents. So Anderson is interviewing patent attorneys to put a lawsuit together, which he estimates to be worth about $60 million.
GolfGear already has stopped some smaller golf club manufacturers from infringing on the technology, Anderson said. He would not comment on which companies might be the target of a lawsuit.
But hiring a good law firm is a problem for the cash-short GolfGear, and Anderson said he hopes to get legal help on a contingency basis.
Anderson is confident that if he can raise the money and win the patent suits, GolfGear will be in a position to get some momentum going.
“With the proper capital structure we can really break loose,” Anderson said. The company needs money to ramp up its production, get more aggressive in its marketing campaign and increase its distribution channels, Anderson said.
The company wants to get more serious about its marketing campaign, but it is waiting to get the money to do it. It already spent $500,000 on the production of an infomercial, but does not have the money necessary to broadcast it. And it doesn’t have enough money to pay professional golfers to carry its clubs, like the major golf manufacturers.
“It’s a hard business to buy your way into, because these guys are huge,” Anderson said. But Anderson can brag that both former president George Bush and his son President-elect George W. Bush use his clubs, along with Los Angeles Mayor Richard Riordan. There are 15 golfers on the PGA tour and 11 golfers on the Senior PGA tour that use Golf Gear clubs.
The Guinness world record for longest distance a golf ball was hit was with a GolfGear driver. Jerry James, an OC-based pro, hit a golf ball 473 yards with one of Anderson’s clubs.
GolfGear is small pickings when compared with industry leader Callaway Golf Co. in Carlsbad, which has a market capitalization of more than $1 billion.
In 1999, GolfGear had $2 million in sales and expects to pull in about $3 million this year. But some of that growth is due to acquisitions. Last year it bought Bel Air Co., a junior product line that added about $800,000 to revenue. And in August it acquired Leading Edge, a putter manufacturer.
It has been selling more clubs. It will finish off the year selling about 85,000. Last year it sold 65,000 and about 25,000 the year before. Anderson expects sales to increase 30% in 2001.
The company also has signed a few deals with distributors. It signed distribution deals with Wilson Sporting Goods, MC Corp. of Japan, and Powerbilt Golf, a division of Hillerich and Bradsby.
Golf Gear is a one-product company but it is hoping to make golf apparel and also manufacture golf balls. n
