Is the game of golf in decline, or is the sport booming? Experts are struggling to decide. While golf participation in the U.S. peaked in 2005 with 30 million players, statistics from the last five years place the number of active golfers at closer to 24 million. The number of active courses has also declined in this period, but some golf professionals point to an “oversupply” in golf courses after a development boom in the early 2000s and call more recent figures a natural market correction. 

Whether recent years’ figures represent a decline or a correction, 2020 has radically increased golf’s popularity. As quarantine restrictions continue, golf is one of the few sports that can be played normally without coming into contact with other individuals. Some golf courses recorded 20% year-over-year growth in May and June. Stock in one major golf brand — Achushnet Holdings, owner of Titleist and FootJoy — has surged 67% in recent months. 

Now, golf professionals are asking what happens next. COVID-19 has welcomed a whole new generation of golfers to the game, but will they remain interested after the pandemic is over? Millennials and those in Gen Z find golf boring and might step away from the course once better opportunities present themselves post-pandemic. Golf has a major opportunity to regain recreational dominance, but the game must become more interesting for young players.

Sol Boards, Inc. is trying to make golf more fun. It’s the maker of GolfBoard, a personal transport vehicle for the golf course that looks like a large, clubs-carrying skateboard. GolfBoarders can “surf” along the fairway, ditching traditional golf carts for a fast and exciting ride that also makes the game more efficient.

Sol Boards has had a long history as a motorized board manufacturer. It initially achieved prominence in 2014 when the GolfBoard was recognized as golf’s “Best New Product” by the Professional Golfers’ Association (PGA). Additional awards and worldwide distribution came next, followed by expansion into additional boarding verticals — ResortBoard was an offroading board meant for exploring trails, and BeachBoard was meant for surfing sandy dunes on the beach. 

After these initial successes, Sol Boards faced declining revenues, mounting debt, and reorganization. The BeachBoard brand was sold in 2019 for just $1 million and additional debt relief. The company’s initial co-founders stepped away from active operations. Only one remains as a board director (no pun intended). Sol Boards seems to tacitly admit that its initial business model was ineffective. Selling boards to individual consumers and golf courses as well as renting boards to courses were seemingly too low-margin to overcome buyers’ resistance to the high sticker price. 

Sol Boards’ financials have also struggled in recent years. The company generated almost $1.8 million in revenue in 2018 but posted a net loss of roughly $642,000. 2019 revenues were lower — less than $1.5 million — though the company achieved profitability with $337,000 in net income. As of the end of 2019, Sol Boards bore over $4.6 million in liabilities. It is currently raising up to $250,000 on StartEngine at a $11 million valuation.

Sol Boards was originally co-founded by Paul Hodge and Star Faraon. Hodge is also the co-founder and current CEO of Laird Superfood, which very recently announced its intention to raise an IPO later this year. Before Laird Superfood, Hodge spent 30 years founding and scaling businesses across industries. Faraon is a product developer who innovated the initial version of the GolfBoard. 

The original co-founders have stepped away from the business, though Faraon remains a director. These days, Sol Boards is led by John Wildman (Chairman and CEO) and Jeff Dowell (President). Wildman is a former executive from Bally Total Fitness, where he spent 25 years rising through the ranks and ultimately served as CMO and COO. Dowel has 35 years of experience in early-stage business development. He previously held senior executive roles in sales, operations, and product development in golf, technology, and digital media. 

GolfBoard’s most important plan is to pivot from a sales- and rentals-focused business model to a revenue share arrangement with golf courses. In this new program, golf courses will receive GolfBoards at no upfront cost and will share 50% of GolfBoard rental revenue with Sol Boards. The company projects that these rental arrangements will generate $375 per month per board in revenue with a conservative estimate of just one rental per day. Sol Boards projects that each board could produce a profit of over $3,000 per year with high-volume revenue share partner courses. 

In the immediate term, GolfBoards is raising capital on StartEngine to expand its fleet of boards, allowing the company to loan out more units for revenue share arrangements. It also plans to use raised capital to pay down high-interest debt, likely both a short- and long-term priority for the company.

After careful consideration of the company’s areas of opportunity and seeming weaknesses, GolfBoard has been ranked as an Underweight deal. Investors should consider one fundamental uncertainty when evaluating this opportunity: 

• Significant debt and reorganization: Sol Boards is in significant debt, and the current round of capital is at least partially devoted to paying down high-interest liabilities. This urgent need for capital is a signal of Sol Board’s broader struggles and resulting reorganization. While the company demonstrated many signals of success in its early years — including prestigious industry awards and wide-ranging global distribution — more recent developments signal significant operational challenges. The company’s original co-founders are no longer involved with day-to-day operations. A core company asset (the BeachBoard brand) was sold for low value. In essence, Sol Boards is clearly a company in transition, and COVID cash-flow challenges are likely making matters worse. 

While Sol Boards is a successful company with long-term traction and an innovative product on the surface, further investigation into the company’s history and finances reveals pressing issues that should concern any prospective investor. The GolfBoard product is indeed addressing an industry need, and the game of golf at large is well-positioned for success given recent COVID popularity. However, suspicion of deep-rooted operational and financial challenges at the company is too significant to allow for a more positive rating. Therefore, this is an Underweight deal.