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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-K

Mark One

(x)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF

1934

For the Fiscal Year Ended December 31, 2001

OR

( )TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

OF 1934

For the Transition period from                  to

Commission File Number 0-18204

AJAY SPORTS, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware_                                                                                                                              644025

(State or other jurisdiction of Incorporation or Organization)             (IRS Employer Identification No.)

32751 Middlebelt Road, Suite B

Farmington Hills, Michigan 48334

(Address of Principal Executive Offices including Zip Code)

248-851-5651

(Registrant’s Telephone Number, including area code)

Securities Registered Pursuant to Section 12(b) of the Act:

NONE

Securities Registered Pursuant to Section 12(g) of the Act:

Common Stock, $.01 par value

Units (each consisting of 5 shares of Common Stock and 2 Warrants)

Common Stock Purchase Warrants

Series C 10% Cumulative Convertible Preferred Stock

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the past 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       

Indicate by checkmark 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 the 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_     

The aggregate market value of the voting stock held by non-­affiliates as of December 1, 2004 was $340,573.   The number of shares outstanding of the Registrant's $.01 par value common stock at December 1, 2004 was 4,257,163.

Documents Incorporated by Reference

NONE

Ajay Sports, Inc.

Index

December 31, 2001

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PART I

Cautionary Statement:

             This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements include, without limitation, those statements relating to development of new products, the financial condition of the Company, the ability to increase distribution of the Company’s products, integration of businesses the Company has acquired, disposition or discontinuation of any current business of the Company its lenders and/or unsecured creditors.   These forward-looking statements are subject to the business and economic risks faced by the Company including the ability of the Company to obtain sufficient working capital for its operations.  The Company’s actual results could differ materially from those anticipated in these forward-looking st atements as a result of the factors described in this report.

Item 1.

Description of Business

General  

Ajay Sports, Inc. (the "Company”) owns Pro Golf of America, Inc., the world’s largest franchiser of  “golf only” retail stores, with over 143 stores in the United States, Canada, and the Phillipines.  The Company also marketed and distributed golf clubs, golf bags, golf gloves, golf accessories, hand-pulled golf carts and casual living furniture, prior to deciding to discontinue those business operations in June 2000.

The Company operates the franchise segment of its business through Pro Golf International, Inc. (“PGI”), a majority-owned subsidiary, which was formed during 1999 and owns 100% of the outstanding stock of Pro Golf of America, Inc. (“PGOA” or “Pro Golf”) and a majority of the stock of ProGolf.com, Inc. (“PG.com”). PGOA is the franchiser of Pro Golf DiscountÒ retail golf stores (“PGD stores”).  ProGolf.com is a company formed to help drive traffic to its franchisee stores and to sell golf equipment and other golf-related and sporting goods products and services over the Internet.  The Company operated and subsequently closed and liquidated the following wholly owned subsidiaries.   Ajay Leisure Products, Inc. ("Ajay") , Leisure Life, Inc. ("Leisure Life"), Palm Springs Golf, Inc. (“Palm Springs”), and Prestige Golf Corp. (“Prestige”) .   In June 2000, the Company’s management elected to discontinue the businesses of Ajay, Leisure Life, Palm Springs, and Prestige due to ongoing operating losses and negative cash flows at these companies. All references to the Company include PGI, PGOA, and PG.com, Ajay, Leisure Life, Palm Springs, and Prestige unless otherwise specified.

PGOA provides services to its franchisees in exchange for initial franchise fees and ongoing royalties based on a percentage of retail sales.  The Company plans to enhance its traditional sales and distribution methods by its recently introduced Internet site, ProGolf.com.

The Company was organized under Delaware law on August 18, 1988.  Its administrative office is located at 32751 Middlebelt Road, Suite B, Farmington Hills, MI 48334, where its telephone number is (248) 851-5651.

Business Strategies

The Company's strategy is to improve its position as the global leader in retail golf sales at its Pro Golf Discount franchised stores.  The Company is also exploring other golf related activities.  The Company believes that the following competitive strengths contribute to its position as a market leader:

Strong Brand Recognition.    Pro Golf Discountâ (“PGD”) is a highly recognized name in the golf industry with more than 143 franchised stores operating in the United States, Canada, and the Phillipines.  Pro Golf of America, Inc. franchises the PGD stores and a significant portion of PGOA’s revenues result from franchise fees and royalties associated with these stores.  

Reputation for Quality.  The Company believes that the services it provides to its franchisees equals or exceeds the performance of its competitors.  Its Pro Golf DiscountÒ franchised stores have an international reputation for quality name brand and private label golf merchandise at the best prices.

Tradition of Innovation.  Throughout PGOA’s history it has tried to maintain a tradition of new product development for its private label golf merchandise lines sold in the Pro Golf DiscountÒ stores.  The products are able to provide the franchisees with quality golf products at competitive prices with higher margins than name brand product lines and help fill out the product mix carried in the stores.

Growth Opportunities

The Company believes that PGD’s strong brand recognition, reputation for quality, and tradition of innovation positions it to take advantage of opportunities for future growth including:

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Adding Value for Franchisees.  The main objective of PGOA is to increase profitability of its PGD stores to ensure the long-term success of its franchisees.  We are intent on strengthening our private label and exclusive products offering to the stores to create improved margins and also work to continually improve the relationships with golf product vendors. Synergies between the stores and the internet will be developed to strengthen the Pro Golf brand and help our stores better service the Pro Golf customers.  Stores will be provided with more profit-making opportunities.  Happy and healthy franchisees will help fuel our expansion, making it easier to sell new stores to new franchisees and also encourage existing storeowners to expand by adding additional stores.

New Business Models.  We are currently developing new products that will broaden the PGOA offerings and create new profit opportunities.  Business models are being developed to: (a) franchise a bigger, more profitable model which includes a golf dome and a retail store; (b) help our franchisees broaden their golf services offered to local corporations, including golf outing management and corporate premiums and ad specialty products; and (c) create overseas distribution for Excalibur, Unique, and Palm Springs, our proprietary private label brands.

Increased Market Penetration.   The Company, through its subsidiaries PGOA and PG.com, has aggressive expansion plans.  The expansion plans will require additional capital in order to be successfully executed.  The plans include: adding 18-24 new franchised stores per year by aggressively recruiting new franchisees, acquiring other independent specialty store chains and converting strong independent competitors into Pro Golf DiscountÒ stores, expanding in additional major markets in the United States, and using the internet to drive more traffic to the PGD stores, helping the PGD stores to better manage and control their inventory, and as a distribution channel to sell golf equipment and golf-related services.

Golf Business

Golf, the primary market for the Company’s businesses, continues to be a popular form of recreation.   According to the National Golf Foundation ("NGF"), a trade association, since 1980 the number of golfers in the U.S. has increased by approximately 68%.  According to NGF market research, the number of U. S. golfers is approximately 26.4 million.   The population of golfers in 2002 was 76.2% male and 23.8% female, with 68% between the ages of 24 and 55.   In addition, favorable demographic trends offer encouraging growth prospects for the retail golf equipment industry both in terms of participation rate and number of rounds.  The NGF reports that the annual average rounds played per golfer increases significantly as golfers age.  However, rounds of golf played decreased in 2002 by 10% versus 2001, primarily due to soft economic conditions in the U.S and caused somewhat by the tragedies of September 11, 2001. One of the Company’s challenges will be to expand its customer base by obtaining more women, juniors, and seniors as customers of its PGD stores.

Marketing and Distribution.  PGOA services its franchisees through its in-house support staff, and its staff routinely attends trade shows and maintains close contact with outside vendors to keep PGD in the forefront of golf and retail innovation and technology.  PGOA’s franchisees spend approximately $7 million annually on local and national advertising, which helps expand recognition of the Pro Golf brand name. PGOA supplemented this advertising with advertising of its own beginning in 2003.  The Company believes that future success in golf retailing will be dependent on being able to provide the customer with exceptional service along with information and product availability at any time and in any way that the customer wants it.  Technology is changing the retail landscape and Pro Golf believes its success will be enhanced by becoming a multi-channel company that is ac cessible to customers on their terms.  This multi-channel philosophy will enhance the way PGOA interacts with its franchisees and also the way the PGD stores interact with customers.  Use of the internet to communicate with the customers of the PGD stores will also enable the storeowners to market more efficiently to their customers at a lower cost that they have historically incurred.

Leisure Furniture Business

The Company’s leisure furniture business ceased operations during 2001 and its operating assets were liquidated at auction on December 6, 2001.

Competition

The market in which the Company does business, while very fragmented, is highly competitive, and is served by a number of well-established companies.  New product introductions and/or price reductions by competitors continue to generate increased market competition.  While the Company believes its franchised stores will continue to be competitive, there can be no assurance that successful marketing efforts by competitors will not negatively impact the Company’s future revenues.  The PGD stores are facing aggressive competition from large sporting goods and big box retailers that are expanding their focus on golf. Additionally, the Company faces competition from internet companies which sell golf equipment and services similar to those PG.com will be offering. At the present time the Company believes that online sales of golf equipment is not a material percentage of total golf sales.

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Patents and Trademarks

The Company owns several patents and trademarks and has proprietary knowledge relating to its product lines.  The loss of any of the Company’s patents or trademarks may have a material adverse effect on its business.  

As of October 14, 2004, the Company had a total of 13 employees, all at its Farmington Hills, Michigan office.  The Company considers its current relations with its employees to be good.

Item 2.

Description of Property

PGOA leases approximately 11,150 square feet of office space in Farmington Hills, Michigan, of which 3,150 square feet was subleased to an affiliated company, under an operating lease with its former owners.  The lease is a month-to-month lease beginning on April 1, 2003.  These facilities adequately meet the Company's administrative requirements.  The Company, on average, utilizes approximately 75% of its facility square footage.

Leisure Life owned its manufacturing, assembly, and warehouse facility in Baxter, Tennessee, which consisted of approximately 40,000 square feet of manufacturing and warehousing space, located on 2.8 acres. The property carried a mortgage in the amount of $162,400, and after Leisure Life ceased operating the holder of the mortgage foreclosed on the building.

Item 3.

Legal Proceedings

The Company is involved in various legal proceedings that are normal to its businesses.   As a result of its tight cash flow, the Company is late on payments due to several of its vendors and is involved in various collection actions against it and may face additional actions of this type.  The Company believes that none of this litigation is likely to have a material adverse effect on its financial condition or operations.  Based on historical experience, the Company believes its liability insurance coverage is adequate.

In January 2004, an employee /officer of the Company who was serving at will, was terminated from employment .. The employee /officer is suing the Company for wrongful termination and is asking for a minimum of $25,000.  Management feels the employee /officer ’s claim is without merit and has filed a counter-suit against the former employee /officer ..  The case is in the discovery state and proceeding.  During the discovery stages, management learned that this former employee/officer was directly or indirectly receiving monetary compensation for using specific vendors.  Management has required that the former employee provide details of all such transactions in order to properly report such transactions.  As a result of this discovery, management has evaluated the benefit of all vendor relationships, no matter how immaterial to the operations, and upon receipt of the facts will properly report its findings.

Item 4.

Submission of Matters to a Vote of Security Holders

There were no matters submitted to a vote of security holders during the fourth quarter.

5

0PART II

Item 5.

Market for Registrant's Common Equity and Related Stockholder Matters

Market Information

The Company's Common Stock is traded on the on the OTC Other – Pink Sheet (the “OTCPK”).  The Company’s Series C 10% cumulative convertible preferred stock also trades on the OTCPK.  No trading information exists for the Company’s warrants.  The following table sets forth the range of high and low ask and bid prices for the last two years. These over-the-counter quotations reflect inter-dealer prices, without retail mark-up, markdown or commission and may not necessarily represent actual transactions.

6

Holders

The number of record holders of the Company's common stock, units, warrants and Series C preferred stock according to the Company’s transfer agent, as of December 31, 2001 are as follows:

Based on a street name shareholder listing, the Company believes that its round lot common shareholders total approximately 900.

Dividends

Holders of shares of Common Stock are entitled to dividends when, and if, declared by the Board of Directors out of funds legally available.  The Company has not paid any dividends on its Common Stock and intends to retain future earnings to finance the development and expansion of its business.  The Company's future dividend policy is subject to the discretion of the Board of Directors and will depend upon a number of factors, including future earnings, capital requirements, bank credit agreement restrictions and the financial condition of the Company. Holders of the Company’s Series B Cumulative Convertible Preferred Stock are entitled to cumulative dividends at an annual rate of 8% based on a stated value of $100 per Series B share, or $8 per Series B share per year.   Due to a shortage of operating funds to run the business, dividends have not been paid since January 1997. &n bsp; Until the Company has cash available for dividends, it does not anticipate declaring or paying dividends on its Series B preferred stock.

Holders of the Company’s Series C Cumulative Convertible Preferred Stock are entitled to cumulative dividends at an annual rate of $1.00 per share.   Due to a shortage of operating funds to run the business, dividends have not been paid since January 1997.   Until the Company has cash available for dividends, it does not anticipate declaring or paying dividends on its Series C preferred stock.

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Item 6.          Selected Financial Data

 The following table presents summary historical consolidated financial data derived from audited financial statements of the Company.  Statement of Operations Data for 1997 – 2000 has been revised to reflect the presentation for discontinued operations; Balance Sheet Data for 1997 – 2000 has not been revised to reflect the discontinued operations.  All amounts in the table below are stated in thousands, except per share amounts.

(1) December 31, 2001 and 2000 summary Balance Sheet Data amounts relate to operating companies only and do not include discontinued operations. Years prior to 2000 do include data from operating companies that were subsequently discontinued.

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Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Results of Continuing Operations

Net Sales

Net sales in 2001 were $3.2 million, compared to sales in 2000 of $4.3 million.  Management believes 2001 was generally affected by softness in the economy and also the terrorism of September 11, 2001.  Additionally, conditions in the golf industry and a shift in attitude of some of the PGOA franchisees resulted in reduced purchases by the PGD stores of PGOA’s licensed product, resulting in reduced licensing fee income to PGOA.  These soft market conditions and a general lack of working capital also hampered PGOA’s efforts to sell new franchises.  The sales reported for 1999 are for the six-month period subsequent to the date PGOA was acquired by the Company.  Management believes annualized sales were comparable in 2000 versus 1999, as historically the better months of the year would occur during the first half, which are the prime months for the golf retail industry.  

Selling, General and Administrative Expenses

SG&A for the year ended December 31, 2001 was $3.1 million compared to $3.3 million for the year ended December 31, 2000.    During the second half of 2001, the Company began a cost reduction program designed to bring costs in line with the reduced sales levels. However, the full effect of these cost reductions will not be seen until 2002, and certain costs – such as business insurance, employee health insurance, and legal fees continued to rise.  

Interest Expense

Interest expense (net) for 2001 was $1,048,000, compared to $1,023,000 for the year ended December 31, 2000.  While PGOA was able to pay down some of the loan principal on its senior secured bank debt, interest expense increased due to the bank increasing the interest rate on the loan while it continued its forbearance.

 Income Taxes

PGI had no income tax liability during the years ended December 31, 2001 and 2000.  The tax loss for these years is expected to offset future taxable income and reduce future income taxes.

Financial Condition of Continuing Operations

At December 31, 2001, PGI had a working capital deficit of $(9,412,000), compared with working capital deficit of ($402,000) at December 31, 2000. This $9,010,000 decrease resulted mainly from a reclassification of $9,340,000 in debt from long term obligations to short term liabilities as a result of the company’s default of its forbearance agreement on May 31, 2002, of which the company has been operating with a formal forbearance agreement until April 30, 2005.  In addition, the current assets decreased by $873,000 due to reduced receivables on royalty income from franchisees caused primarily by a slowing economy and reduced cash as a result of weaker cash flows in the fourth quarter of 2001.  The ratio of current assets to current liabilities at December 31, 2001 and 2000 was from decreased receivables due to reduced royalty income from franchisees caused primarily by a slowing economy and reduced cash a s a result of weaker cash flows in the fourth quarter of 2001. The ratio of current assets to current liabilities at December 31, 2001 and 2000 was 0.14 and .85, respectively.

Inventories at December 31, 2001 were $1,000 compared to $2,000 at December 31, 2000.   The decrease reflects sales of some of the Cadillac golf equipment on hand.  Receivables were $1.0 million at December 31, 2001 compared to $1.9 million at December 31, 2000. The decrease is due to a decrease in royalties receivable from franchisees.

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At December 31, 2001 and 2000, net fixed assets were $79,000 and $13,100,000, respectively.  The decrease reflects the write-off of golf real estate located in Birch Run, Michigan and vacant land in Vero Beach, Florida.  Debt related to these properties was also written-off and the PGI stock that had been issued but held in escrow was cancelled. The land had been listed for sale with commercial real estate brokers during the fourth quarter of 2000, and the Birch Run land was put into foreclosure during October 2001.

Capital Resources

The Company’s plan is to replace its office furniture and equipment as needed; however, expenditures during  2001 were $0 due to its poor cash flow.  Technology upgrades are needed and management began these upgrades in 2004.  Future upgrades will be implemented as cash flow allows.

Liquidity

Cash flow from operations for 2001 was ($58,000) for the Pro Golf operating companies.   The Company expects that cash flow from operations will continue to be sufficient to cover the operating expenses and debt requirements of the franchise operations during 2002 and 2003.   However, as certain liabilities of affiliated companies are also being paid out of the Pro Golf cash flow through inter-company loans, liquidity of the operating companies is expected to be under severe stress until the Company is able to refinance its debt and raise funds for expansion.

The Company's liquidity varies with the seasonality of its business, which, in turn, influences its financing requirements.  The seasonal nature of the Company's royalty revenue creates fluctuating cash flow.  The Company has relied on internally generated cash from operating activities to fund its operations and pay its debt.  The Company has also relied on cash generated from private placements of stock in PGI and PG.com to fund its operations, including the further development of the website and future expansion of Pro Golf.

During late 1999 and into 2000, the Company sold equity in PGI in a private placement offering and entered into an agreement to acquire developed and undeveloped real estate for existing and planned golf-related activities.  During 2000, the Company issued 129,084 shares of PGI stock, which represented 11.4% of the total shares of PGI stock outstanding at December 31, 2000.  Of the new shares issued, $318,000 cash had been received with signed subscription documents, $927,000 was a conversion of subordinated debt and related accrued interest into common stock, and the remaining $6,500,000 was for the acquisition of golf-related real property.  The 108,334 shares issued for the acquisition of the golf-related property were cancelled during the fourth quarter of 2001 when the Birch Run property went into foreclosure due to non-payment of the loans by the lessee/former owner of the propert y.

The Company also began an offering of PG.com common stock during November 2000 to raise up to $12,500,000 in gross offering proceeds.  If the maximum offering were sold, the shares sold in the offering would have represented approximately 33% of the total PG.com common shares outstanding after the offering.  The proceeds from the private placement had been planned to be used for working capital, acquisitions, and growth; however, as only $2,283,000 was raised in the offering for the Company, representing a shortfall of $10,217,000, the proceeds were used to repay debt and acquire a license for internet use of the Pro Golf trademark.

The Company had anticipated significant additional cash flows resulting from the rents and fees to be received from the golf properties during the initial twelve-month period beginning July 1, 2000. Rental income totaling $333,000 was accrued for the period July 1, 2000 through October 31, 2000.  At that time, the real estate was listed for sale with a commercial real estate broker.  The property has since been foreclosed on, and the Company does not expect to receive the rental income it is owed.

The Company’s primary focus for 2004-2005 will be to help its PGD storeowners increase sales, reduce operating costs, and become more profitable.  The Company also plans to expand internationally by negotiating master licensing agreements in foreign countries, to permit others to use its name in various geographic locations, for upfront licensing fees and/or ongoing licensing and royalty payments.  The Company is also planning to open at least one Company-owned retail store as funds become available.

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

The Company holds only one market risk instrument.  This is common stock classified as marketable securities available-for-sale  as an asset of $102,000 as of December 31, 2001.  This stock is subject to equity price risk. The full carrying value represents the market value of 156,719 shares of Williams Controls, Inc. common stock valued at $.65 per share, which is the last reported trade price for 2001. This stock is traded on the OTCBB. The shares were received as part of the restructuring agreement with Williams dated June 30, 1998. These shares have been pledged to Wells Fargo as collateral for the Company’s loans.  High and low closing prices per share for the Williams common stock for 2001 were $1.63 and $0.46, respectively.  Between January 1, 2002 and March 7, 2003 the lowest closing price for these shares was $0.25 per share.

Item 8.

Financial Statements

Financial statements are attached hereto following Item 14.

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

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PART III

Item 10.

Directors and Executive Officers of the registrant

The Registrant’s directors and executive officers as of December 31, 2003 are as follows:

Thomas W. Itin was elected Chairman of the Board and President of the Company in June of 1993, and is the Company’s largest single stockholder.  He was Chairman of the Board and Chief Executive Officer of Williams Controls, Inc., based in Portland, Oregon, from March 1989 until January 2001 and its President and Treasurer from June 1993 until January 2001. Mr. Itin has been a director of Williams Controls, Inc., a publicly held company since its inception in November 1988.  He also served as Chairman of the Board and Chief Executive Officer of Williams from March 1989 until January 2001 and also as President and Treasurer from June 1993 until January 2001.   He has served as Chairman of the Board, Chief Executive Officer and Chief Operating Officer of LBO Capital Corp. since its inception.  Mr. Itin has been Chairman, President and Owner of TWI International, Inc. since he founded the firm in 1967.  TWI International acts as a consultant for mergers, acquisitions, financial structuring, new ventures and asset management.  Mr. Itin also has been Owner and Principal Officer of Acrodyne Corporation since 1962.  In April 2001, Mr. Itin became Chairman of CompuSonics Video Corp., a publicly held company.  In April 2001 Mr. Itin became Chief Executive Officer of Enercorp, Inc., a publicly held company.  He received a Bachelor of Science degree from Cornell University and an MBA from New York University. Mr. Itin serves on the Cornell University Council and is Chairman of the Technology Transfer Committee.

Ronald N. Silberstein has been Chief Financial Officer and Chief Administrative Officer of the Company since August 1999.  He was named Treasurer and Secretary in March 2001.  Mr. Silberstein is a Certified Public Accountant and, prior to joining the Company, was a partner in the CPA firm of Hirsch, Subelsky and Associates, P.C. (formerly Hirsch Silberstein & Subelsky, P.C.), a firm that he co-founded in 1993, where he consulted with public and private companies on accounting, tax, and operational issues.  Mr. Silberstein was the partner in charge of the audit when Hirsch, Subelsky and Associates, P.C. acted as the Company’s independent auditors.  Prior to 1993, Mr. Silberstein was a partner in a local Michigan CPA firm. From 1979 to 1988, he was a staff accountant with various CPA firms in Southeast Michigan, including the Detroit office of Ernst & Young. He received a Bachelor of Business Admin istration degree from the University of Michigan in 1979.

Joseph J. White has been President and Chief Operating Officer and a Director since September 2001.  Mr. White was President of Asobous U.S.A., located in Greenville, South Carolina, from May 2000 until April 2002 and President of the Gary Player Group, located in Palm Beach, Florida, from April 1996 until May 2000.

Charles P. “Chip” Doyle was elected a Director of the Company in April 2002.  Mr. Doyle has been a director of  PGI, PGOA and ProGolf.com since June 1999. Mr. Doyle was the Executive Director of PGI and was responsible for Mergers and Acquisitions and New Business Models.  He was Executive Director of PGOA from 1986 – 2000.  He has 25 years experience in the golf retailing and franchising business.  Prior to joining PGOA, Mr. Doyle spent 10 years as Vice President of Operations for International Golf, a golf retail and franchising company.  Mr. Doyle has a business and accounting degree from Oakland University.

Dr. Jeffery D. Rautio was elected a Director of the Company in April 2002.   As Director of Refractive Services at Beitman Laser Eye Institute since 2000, he manages day-to-day operations of an ophthalmologic LASIK clinic.  From 1999-2000, he served as Director of Optometry at Oculus Laser Vision and Advanced Vision Centers.  In 1998, he founded, designed and implemented an internet-based golf tee time booking service and remains president of WorldWide TeeTime, L.L.C.  As Team Optometrist for the Detroit Lions, Inc. from 1991-1999, he provided all eye care for players, coaches and staff as well as providing advanced training in ocular injuries and managing on-field ocular emergencies.   From 1987-1999, Dr. Rautio was a Senior Staff Optometrist at Henry Ford Hospital in West Bloomfield, Michigan serving as Chairman of two Optometric Continuing Education Programs and managing fiscal responsibilities for the HMO-based practice.  Dr. Rautio has written, presented and published numerous professional papers.  Since 1982, Dr. Rautio has maintained professional memberships in the American Optometric Association and Michigan Optometric Association.  In May 1986, he was awarded the Doctor of Optometry Degree (O.D.) by Ferris State University.

Shirley B. Itin became a Director of the Company in April 2002.    Since 1983 when she founded First Equity Corporation to participate in investment programs, capital leases and real estate, she remains its President.  Since 1974, she has been Executive Vice President of TWI International, Inc. / Acrodyne Corporation.  Experience includes design-build projects for schools and houses including traditional and prefabricated construction for the

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Royal Commission of Jubail & Yanbu, Saudi Arabia, reporting to Parsons and Bechtel, exporting building construction and interior finish materials, and collections from letters of credit.   Earlier, she participated in resort condominium and land development projects in Michigan, Wyoming and the U.S. Virgin Islands.  As Councilman in the City of Orchard Lake Village, Michigan, Ms. Itin will complete a second elected three-year term in November 2003 and six years appointment to the Orchard Lake Nature Sanctuary Advisory Board.   In 2001, she was appointed to the Cornell Council.   Studies were completed at Cornell and U of Maryland-North Africa and, in January 2000, Ms. Itin was awarded a Bachelor of Science degree from Cornell.

Other than the spousal relationship between Thomas W. and Shirley B. Itin, there are no family relationships between any director and executive officer.

Item 11. Executive Compensation

Summary of Cash and Certain Other Compensation

The following table shows, for the years ending December 31, 2001, 2000, and 1999, the cash compensation paid by the Company and its subsidiaries, as well as certain other compensation paid or accrued for those years, to each of the executive officers of the Company who received compensation from all capacities in which they serve:

Summary Compensation Table