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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-KSB
Annual report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended: May 31, 1997
Commission File Number 33-96638-A
U S AMATEUR SPORTS, INC.
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(Name of Small Business Issuer as specified in its charter)
Florida 65-0538051
- ------------------------------- --------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
3932 RCA Blvd., Suite 3209
Palm Beach Gardens, Florida 33410
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (561) 622-4395
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
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 ___.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B 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-KSB or any amendment to
this Form 10-KSB. ____
Registrant's revenues for its most recent fiscal year were $48,381.
As of May 31, 1997, no market had been established for the common stock of the
registrant. As of May 31, 1997, there were 6,000,600 shares of the
registrant's $.0001 par value common stock issued and outstanding.
Transitional Small Business Disclosure Format Used (Check one) Yes--- No X
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TABLE OF CONTENTS
PAGE
PART I
Item 1. Business of the Company ------------------------------------ 3
Item 2. Properties ------------------------------------------------- 8
Item 3. Legal Proceedings ------------------------------------------ 8
Item 4. Submission of Matters to a Vote of Security Holders---------- 8
PART II
Item 5. Market for the Company's Common Equity and Related
Shareholder Matters ---------------------------------------- 9
Item 6. Management's Discussion and Analysis of Financial
Condition and Results of Operations and Plan of
Operation --------------------------------------------------- 9
Item 7. Financial Statements --------------------------------------- 13
Item 8. Disagreements on Accounting and Financial Disclosures ------ 14
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons- 15
Item 10. Executive Compensation ------------------------------------- 18
Item 11. Security Ownership of Certain Beneficial Owners and Management 19
Item 12. Certain Relationships and Related Transactions --------------- 20
PART IV
Item 13. Exhibits, Financial Statements and Reports on Form 8-K ------- 22
Additional Information* ------------------------------------- 23
Signatures --------------------------------------------------- 24
* This document incorporates into a single document the requirements of the
Securities and Exchange Commission for the Annual Report to Stockholders and
the Form 10-KSB.
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PART I
ITEM 1. BUSINESS OF THE COMPANY
GENERAL
U S Amateur Sports, Inc. ("the Company") is a development stage sports
entertainment, Internet marketing and sales company which was incorporated on
June 14, 1994 in the State of Florida. Its principal offices are located at
3932 RCA Boulevard, Suite 3209, Palm Beach Gardens, Florida 33410, and its
telephone number is 561-622-4395.
U S Amateur Sports, Inc. has established five business units. Two of
these business units, USA Performance Products and USA SportsNet, have
commenced operations. One business unit, Saf-T-Net, has temporarily suspended
development activities pending additional funding. USA Fitness and Sports
Arena and USA Sportsplex, are strictly conceptual in nature. However, the
Company is creating sports events to be ready for presentation in the planned
sports facilities and for broadcast on television and the Internet. The All
American Bowl, played in Palm Beach Gardens, Florida on July 5, 1997, is the
first event of the Company's National High School Sports Classics series.
(This is a material subsequent event discussed in greater detail below.)
USA PERFORMANCE PRODUCTS (USAPP)
USAPP was established to develop Interaction Sports Fitness Games and
other sports-related products. USAPP has developed and released its first
product, the Viper M1 paintball marker, along with a line of associated parts
and accessories.
On January 5, 1996, the Company entered into an agreement to purchase
certain assets of Performance Paintball Products, Inc. of Riviera Beach,
Florida. The Company acquired assets consisting of inventory, property and
equipment for $101,295. These assets constitute all the equipment and
machinery necessary to conduct the business of manufacturing the Viper Ml
paintball marker (gun) and related accessories. USAS also has exclusive rights
to the related names and technology.
In connection with the asset purchase, the Company executed a note for
$101,295 with an interest rate of 10% per annum. The Company made a payment of
$20,000 at closing on January 5, 1996. Subsequent payments totaling $54,500
reduced the balance to $46,795 as of May 31, 1997. Performance Paintball
Products, Inc. and the Company have agreed to replace the existing note
agreement with a new payment schedule that consists of monthly payments over a
twelve-month period.
Paintball is a sport wherein each contestant attempts to remove the
other contestants from the game by marking them with a capsule from the
paintball marker while at the same time trying to avoid being removed from the
game himself. Paintball was started in 1981 as a part of a survival test. It
has evolved over the years to become a separate game. It is played in over 40
countries today and has its own annual World Cup event. The game can be
played either indoors or outdoors and, except for the paintball marker and a
face mask, it does not require extensive equipment. There are many different
ways to play paintball. In general, a player uses the marker to "shoot" at
other players or at specific targets. Because it involves a game in which
experience is not required and the object is to accrue the most points, but
the end result is improving one's physical condition due to the fast pace of
the game, the Company considers the paintball game to be an Interaction Sports
Fitness Game.
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Although the Company owns the tools and dies to produce the paintball
marker, it has contracted with Micro Tool Engineering, Inc. to manufacture and
assemble the paintball products in Riviera Beach, Florida. The Company
reimburses Micro Tool for its services on a cost plus 15% basis. Management
believes that this arrangement is mutually beneficial to both organizations
and will continue until canceled by either party. The Company continually
reviews and evaluates this arrangement for cost effectiveness. Currently the
Company is offering a lifetime warranty on its Viper M-1 paintball marker to
the original registered purchaser. The warranty work is performed by Micro
Tool at no cost to the Company. If Micro Tool fails to satisfy its warranty
obligations, the Company may incur a liability associated with future warranty
requirements.
The primary existing distribution channel for paintball products is
through independent paintball dealers. Such dealers include retail stores and
paintball field operators. The Company sells to both national and
international dealers. All sales must be either paid in advance or cash on
delivery. The dealers then sell the Viper M-1 Markers to their customers.
Although the Company also markets the Viper M-1 through the Internet on a
factory-direct basis, it is committed to support of the dealer network
concept. USAPP is included on the Company's home page on the World Wide Web.
USA Performance Products concentrates on its dealer program by direct
mail and telephone contact. Management believes that small and medium-sized
dealers comprise important segments of the distribution program. The Company
offers its products based on one dealer price list with incentive discounts
based on volume. In so doing, the small dealer does not have to be concerned
with the Viper M1 being offered for less than they can buy them for as it is
with other competitive paintball markers. Additionally, select or stocking
dealers have an opportunity to share in the Company's direct sales program.
They receive a credit for every product sold by the Company's Internet sales
program, within their zip code. The Company has identified approximately 1000
dealers nationwide, with which it concentrates its efforts. All sales must be
either paid in advance or cash on delivery.
The Company also concentrates on paintball field operators. There are
300 fields that have been targeted for sales. If an agreement with a third
party lease company can be negotiated, the Company will offer this program,
through such leasing company, to field operators. It is contemplated that
leases will be offered for Viper M1 paintball markers in quantities of 10
units for 12, 24 or 36 months. Any third party leasing company may require
that certain leases be guaranteed by the Company. At this time there can be
no assurance that such leases will be entered into.
The Company presently utilizes two customer service representatives
along with the officers of the Company to handle sales calls. It is
anticipated that two additional customer service representatives will be added
in the near future.
After initial production runs, the Viper M1 was redesigned with several
improvements. Management is satisfied with the current design and has ordered
full production to commence in lots of 100 markers each.
USA SPORTSNET
USA SportsNet is a world-wide marketing system for the sale of
sports-related services and products. It will use the Internet to permit the
Company and its clients to sell their goods and services. The Internet
address is <http://www.usas.com>. USA SportsNet Online commenced business on
the Internet in the first week of June 1996. The Company links and lists its
site
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through search engines and resource sites. The search engines with which the
Company has applied for listing include Infoseek, Yahoo, Lycos, Alta Vista and
Excite. There is no charge for the service. The resource sites include Warpig,
which is the oldest and largest paintball industry site, and other sports
memorabilia sites. A new link or listing is obtained by requesting the same
from related companies or companies with which the Company wishes to be
linked. Many links or listings are provided at no charge by other companies,
some companies offer reciprocal links, and the popular sites require payment
for a link. The Company currently has no written agreements with any of the
sites/companies with which it is linked or listed.
The Company uses the Internet to market its concepts both nationally and
internationally. USA SportsNet remains under development at May 31, 1997 and
has been used principally to communicate information regarding the Company's
goals and to promote sales of the Viper M1 paintball marker. Future
development will focus on amateur sports and kids. Games, contests, video
including bloopers and outstanding plays contributed by young athletes, tips
from the pros and other educational information will be added to attract young
sports enthusiasts who want to have fun and learn more about the sport of
their choice.
SPORTS EVENTS
On January 1, 1997, the Company acquired the assets of High School
Football All American Bowl, Inc., of Allentown, Pennsylvania for 100,000
shares of restricted common stock and 20% of the net profit, if any, from the
1997 All American Bowl, a national high school all star football game. The
rights acquired include, but are not limited to, the right to produce and
promote the All American Bowl and the use of all titles, trade names,
trademarks and logos of the event. The Company entered into a consulting and
non compete agreement with the founder of the All American Bowl to serve as
the Company's Executive Director of the event for a three year period for
67,000 shares of restricted common stock and a monthly consulting fee.
The All American Bowl is a national East vs. West all-star football
game played between young men who have graduated from high school, but have
not yet begun their college playing careers. These players are chosen from a
pool of candidates who have been recognized by USA Today, Parade Magazine,
Street & Smith and others as this country's most talented high school football
players.
The Company intends to establish the All American Bowl as an annual
classic, the first event in its National High School Sports Classic series
that will include all-star games and championship team events that showcase
leading high school athletes in a wide range of sports. This series and other
Company-produced sports events will provide content for the growing number of
television sports channels and for USA SportsNet.
(The following paragraph addresses a material subsequent event.)
The 1997 All American Bowl, played in Palm Beach Gardens, Florida on
July 5, 1997, was scheduled for tape-delayed broadcast in over 40 million
households across the nation via the Sunshine Network, Fox Sports regional
affiliates and other local networks. Management is unable to determine the
financial impact of this event as of July 15, 1997, the latest practical date
for which information is available. However, the Company had accrued expenses
of $40,000 on the balance sheet as of May 31, 1997 related to this event.
This amount was recorded in anticipation of a probable loss. Major sponsors
of the 1997 All American Bowl included Coca-Cola, Adidas and Schutt Sports.
Because this event was an artistic success received as an exciting game that
was professionally presented,
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management believes that the 1998 All American Bowl will attract a greater
number of sponsors which will enhance profitability. In addition, after-event
market sales (e.g., of videos, tee shirts and other memorabilia) will provide
a continuing stream of revenues related to this event, the amount of which is
undeterminable as of this writing.
MARKETING STRATEGY
Management believes that the concepts proposed by USAS will position the
Company to serve a large and growing market niche. The following facts are
offered as illustration in America alone, it is estimated that there are over
39 million people participating in amateur softball, over 37 million in
amateur volleyball, 25 million in amateur baseball, 12 million in amateur
football and 10 million in amateur soccer (Source: Balls & Strikes, September
1993.)
USAS has concentrated on providing its customers with sports related
products, services and entertainment. The marketing focus of the Company
includes young athletes in the 6 to 18 age group and their parents; however,
services and fitness options are intended to satisfy the needs of all ages.
The Company believes the family market has considerable potential. As
younger members grow older, marry and have children, the Company anticipates
that they will seek recreational activities in which the entire family can
participate.
Awareness of its products and services will primarily be promoted by the
Company's marketing department and USA SportsNet. Marketing efforts include
use of the World Wide Web on the Internet, use of cable television, the
Company's attendance at sports events, involvement in youth athletic
associations and school programs, use of direct mail solicitation and print
media advertising, and word-of-mouth.
In addition to information, the Internet provides users an easy method
of purchasing products and services offered thereon.
Internet technology is in its early stage of development. USAS is
concentrating on the commercial use of this medium. While there is no
guarantee that this marketing approach will be successful, the Company expects
the Internet to be an important part of its communication system.
COMPETITION
USAPP's first product line is in the paintball industry. Sport
paintball is a relatively young sport. There are approximately 28 paintball
markers (guns) on the market. Also, many markers are custom-made for
competitive players. Most competitive companies are well established and have
more financial resources than USAS. Some of the major competitors are Daisy
Manufacturing, Air Design, Worr Products, Tippman, Kingman and various
imports. The market is presently dominated by these companies. Management
believes it has a superior product in quality, features, durability and price.
The market is growing dramatically.
USA SportsNet has major competition from cable TV shopping clubs,
infomercials, Internet shopping services and local sports stores. There are a
countless number of sports related sites on the Net. They offer everything
from scores, news, schedules, standings, personal interviews with stars,
products, services, handicapping, trading cards, contests and a sundry of
gimmicks to entice visitors. In addition, private online services such as
America Online, Prodigy, CompuServe, Microsoft, etc. are competitive in the
way they attempt to
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hold their customers hostage within their site. The Company cannot do
anything about this; however, once the customer enters the World Wide Web,
there is an opportunity to attract them to its site. A main source of these
connections is through "search engines" with which the Company is registered.
Also, proper links and listings with heavily traveled sites produce visitors.
The Company contracts with a Web specialist to keep abreast of links and site
management. E-mail is utilized for immediate response to customers with
product literature sent by e-mail, fax or regular mail.
The All American Bowl is the only national high school football all-star
game in the country. The only competition for other national high school
sports events known to management is the McDonalds Boys Basketball and Nike
Girls Basketball series. However, there exist a number of regional and state
all-star football games in various parts of the country, some of which are
televised on a local or regional basis.
ITEM 2. PROPERTIES
The Company does not own any real property. It is presently renting
approximately 2800 square feet of office and warehouse space at $8.00 per
square foot in Palm Beach Gardens on a month to month basis. Management
believes that the present office and warehouse facility will be adequate to
satisfy the Company's needs for the foreseeable future.
The Company maintains inventories which consist of merchandise acquired
for sale by USA SportsNet in addition to paintball markers (guns) and
accessories. The Company owns tools, dies and fixtures for the manufacturing
of paintball products.
ITEM 3. LEGAL PROCEEDINGS
The Company is not involved in any legal proceedings or litigation and
the officers and directors are aware of no threatened or pending litigation
which would have a material, adverse effect on the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security holders
through the solicitation of proxies or otherwise during the fiscal year ended
May 31, 1997. The annual stockholders' meeting will be scheduled in the month
of August, 1997. Prior to this, the registrant has had five stockholders'
meetings:
June 18, 1994 - organizational meeting.
April 30, 1995 - increased authorization from 6,000,000 to 50,000,000
shares.
June 26, 1995 - increased to three directors and appointed two
new directors (Bergman and Thomas).
August 24, 1995 - approved filing of SB-1 registration statement.
January 5, 1996 - increased to five directors and appointed two
new directors (Enterline and LaCasse).
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PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS
(a)MARKET FOR COMMON EQUITY
There is currently no market for the Company's stock nor is the
Company's stock listed on any exchange. It is the Company's intention to seek
such a listing on the NASDAQ OTC Bulletin Board System or an exchange after it
is qualified to do so. The Company is in the process of filing for a symbol.
EquiTrade Securities Corporation, 23736 Birtcher Drive, Lake Forest,
California, 92630, is in the process of filing Form 211 to represent the
Company as a market maker.
The inability of the Company to gain approval of the Form 211 by the
NASD would prevent development of a market for the Company's securities, which
would prevent development of a market price of the securities.
(b)SECURITY HOLDERS
(The following paragraph addresses a material subsequent event.)
As of July 15, 1997, the latest practicable date for which
information is available, the Company had approximately 140 shareholders of
record. Of 6,000,600 shares issued and outstanding, 700,600 shares consist of
free-trading stock held by non-affiliates. The remaining 5,300,000 shares are
restricted stock in accordance with Rule 144.
(c) DIVIDENDS
There have been no cash dividends declared or paid since the
inception of the Company, and no cash dividends are contemplated to be paid in
the foreseeable future. The Company may consider a potential dividend in the
future in either common stock or the stock of future operating subsidiaries.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS AND PLAN OF OPERATION
RESULTS OF OPERATIONS - YEARS ENDED MAY 31, 1997 AND 1996
The operational goals achieved during the year ended May 31, 1997
included:
U S A PERFORMANCE PRODUCTS
(1) completion of final design improvements in the Viper M1 paintball
marker;
(2) test marketing of the Viper M1; and
(3) approval of the Viper M1 for full production.
NATIONAL HIGH SCHOOL SPORTS CLASSICS
(1) acquisition of the high school all-star football All American Bowl;
(2) development of production format, player selection process and
relationships with media, television networks and sponsors; and
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(3) presentation and broadcast of the Bowl to achieve national exposure.
USA SPORTSNET
(1) creation of the Company's Internet web site at
<http://www.usas.com>; and
(2) use of the site to market the Viper M1 paintball marker and the All
American Bowl in addition to communication of Company goals and philosophies.
Revenue for the year ended May 31, 1997 was $48,381 compared to $3,448
of revenue recorded during the prior year. This increase is attributable to
sales derived from the test marketing of the Viper M1 paintball marker. A net
loss of $240,018 was posted during the year ended May 31, 1997 compared to a
net loss of $57,112 for the prior year period. Increases were recorded in all
expense categories with the exception of research and development. Of a
total expense increase of $205,080, professional fees accounted for $41,637.
Interest rose $12,792 due to increased borrowing. Depreciation grew $6,877
due to the acquisition of tools and dies for manufacture of the paintball
marker, and amortization increased $6,328 as a result of the acquisition of
the rights to the paintball marker technology. Growth in other expenses was
created by the commencement of the sales and marketing of the paintball
marker, the opening of an office in June, 1996 and the accrual of production
costs related to the 1997 All American Bowl. The increased expenses offset
gross profit which rose from $1,129 for the year ended May 31, 1996 to $23,303
for the current year.
With the final design of the Viper M1 complete and demand for the marker
established, the Company has initiated a plan to increase production over the
new fiscal year from a current production run of 100 markers per month to
1,000 markers per month. Management plans to achieve a comparable growth in
the manufacture of Viper M1 accessories. Research will continue with the goal
of developing a low-priced model.
Having grown from an idea to a $4 billion industry in less than 16
years, paintball is one of the fastest-growing sports in the world. The U.S.
market is projected to grow at over 30% per year.
The Viper M1 is the only U.S.-made paintball marker with a built-in
expansion chamber. The expansion chamber maintains the CO2 at a stable
temperature which allows the marker to maintain a stable velocity and accuracy
and to perform better in extreme temperatures than any of its competitors.
The Viper is light-weight, rugged and easy to disassemble. It is versatile
with over 200 different configurations provided by a complete line of
accessories.
The Viper M1 is poised to claim a large share of the expanding paintball
market with its existing product line. This market can be further penetrated
with the development of additional models of the marker and the addition of
other paintball product lines including safety equipment and protective
clothing.
(The following paragraph addresses a material subsequent event.)
The 1997 All American Bowl, played in Palm Beach Gardens, Florida on
July 5, 1997, is scheduled for tape-delayed broadcast throughout the summer in
over 40 million households across the nation via the Sunshine Network, Fox
Sports regional affiliates and other local networks. Management is unable to
determine the financial impact of this event as of July 15, 1997, the latest
practical date for which information is available. However, the Company had
accrued expenses of $40,000 on the balance sheet as of May 31, 1997 related to
this event. This
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amount was recorded in anticipation of a probable loss. Major sponsors of the
1997 All American Bowl included Coca-Cola, Adidas and Schutt Sports. Because
this event was an artistic success received as an exciting game that was
professionally presented, management believes that the 1998 All American Bowl
will attract a greater number of sponsors which will enhance profitability.
In addition, after-event market sales (e.g., of videos, tee shirts and other
memorabilia) will provide a continuing stream of revenues related to this
event, the amount of which is undeterminable as of this writing. The Company
has already begun its review of possible sites for the 1998 game.
The Company intends to establish the All American Bowl as an annual
classic, the first event in our National High School Sports Classics series
that will include all-star games and championship team events that showcase
leading high school athletes in a wide range of sports. This series and other
Company-produced sports events will provide content for the growing number of
television sports channels and for USA SportsNet.
One of management's goals for the new fiscal year is development of the
USA SportsNet web site into a profit center.
Forrester Research estimates that sales of products on the Internet will
swell from $518 million in 1996 to $6.6 billion by 2000. Sales of
subscription services on the web will grow from $120 million in 1996 to $966
million in 2000, and spending on web advertisements will jump from $312
million in 1996 to $5 billion in 2000.
The potential for growth that results from the combination of the
Internet with the public's interest in sports has not been overlooked. ESPNET
SportsZone and SportsLine USA have been two of the most popular sites on the
web. Fort Lauderdale-based SportsLine USA launched its service on August 16,
1995. On March 5, 1997, it became CBS SportsLine when the network invested
$100 million of on-air promotions and programming in return for 22% of
SportsLine's equity.
USA SportsNet will distinguish itself from these other Internet sports
content companies by its focus on amateur sports and kids. Games, contests,
video including bloopers and outstanding plays contributed by young athletes,
tips from the pros and other educational information will make USA SportsNet a
web site in demand by the kids who want to have fun and learn more about the
sport of their choice. It will then become a high-traffic site equally in
demand by merchants.
LIQUIDITY AND CAPITAL RESOURCES
At May 31, 1997, current assets had declined to $83,820 from a balance
of $113,921 at the prior year end. Accounts and advances receivable declined
$7,481 due primarily to write-off of an advance made to an independent
marketing representative. A drop in inventories of $7,022 consisted of
decreases in stock on hand of the Viper M1 and accessories. All other asset
decreases resulted from normal amortization and depreciation. Accounts
payable increased from a balance of $30,294 to $79,461 during the same time
period. The majority of this increase was related to costs of marketing the
All American Bowl. The remaining liabilities of the Company consisted of
principal and interest accrued on notes payable and loans from stockholders
and other accrued expenses related to the All American Bowl.
The bulk of the capital obtained by the Company to fund operations since
inception has been provided by capital contributions and loans from the
Company's Chief Executive Officer, David J. Panaia, and Treasurer, Gerald V.
Bergman.
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During the year ended May 31, 1997, these individuals contributed to capital a
total of $94,350 which had previously been recorded as loans from
stockholders. The remaining balance in loans from stockholders of $66,000 as
of May 31, 1997 was loaned by a nonaffiliate in return for an unsecured note
bearing interest at the prime rate plus 6% with monthly payments consisting of
interest only and the balance of principal due no later than December 31,
1997.
David J. Panaia and Gerald V. Bergman additionally contributed to
capital a total of $26,036 which had previously been recorded in accounts
payable as amounts due for reimbursable expenses.
In connection with the asset purchase from Performance Paintball
Products, Inc. discussed in Item 1, the Company recorded a note payable in the
initial amount of $101,295. Subsequent payments totaling $54,500 reduced the
balance to $46,795 as of May 31, 1997. Interest is accrued on the unpaid
balance of the note at the rate of 10%. The balance of principal and interest
is due on December 31, 1997. There are no other payment requirements. Rene
LaCasse and Jack Enterline, directors of U S Amateur Sports, Inc., are each
owners of twenty-five percent (25%) of the outstanding stock of Performance
Paintball Products, Inc.
On December 16, 1996 the Company borrowed $2,400 from Amateur Athletes
of America, Inc. The note bears interest at the rate of 12.25% per annum with
the balance of principal and interest due to be paid no later than December
31, 1997. Gerald Bergman is the sole owner of Amateur Athletes of America.
The Company borrowed $10,000 from Wizard Capital Associates on February
20, 1997 and $10,000 from Anthony Fedyna on April 4, 1997. Both notes are
payable upon demand by the holder and bear interest at the rate of 15% per
annum and are personally guaranteed by David Panaia and Gerald V. Bergman.
The Company's initial public offering was made effective on November 21,
1996. The offering was made for up to $9,000,000 and consisted of 30,000
units at a price of $300.00 per unit with no minimum offering requirement.
The Company offered the units through its officers on a "best efforts" basis.
The initial 180-day offering period ended on May 21, 1997, and the Company
elected not to exercise its option to extend the offering period for an
additional ninety days. Only a minimal number of units were sold as a result
of the offering.
The Company is seeking additional outside financing to meet its
operational requirements. Management is negotiating an additional $40,000
loan to fund the increase in production. Management believes that the
revenues generated from the production increase combined with additional loans
from stockholders and capital contributions will be sufficient to fund
operations for the next twelve months.
SHAREHOLDER'S RETURN OF STOCK
At inception, 50,000,000 shares of common stock were authorized, and
6,000,000 shares were issued to David J. Panaia as sole shareholder of the
corporation. Stock subsequently issued from the treasury for services
rendered or value received by the corporation was replaced by an identical
number of shares returned to the treasury by Mr. Panaia to prevent dilution of
the value of stock held by others. As of May 31, 1997, Mr. Panaia had
returned a total of 4,074,000 shares of stock to the treasury.
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PROVISION FOR INCOME TAXES
No provision for income taxes has been provided due to net operating
losses since inception. The Company's net operating loss carry-forwards as of
May 31, 1997 total $402,870.
ITEM 7. FINANCIAL STATEMENTS
The audited balance sheet of the Company for its years ended May 31,
1997 and 1996 and the period from June 14, 1994 (Date of Inception) to May 31,
1997 and related statements of operations, stockholders' equity and cash flows
for the years ended May 31, 1997 and 1996 and the period from June 14, 1994
(Date of Inception) to May 31, 1997 are included following Item 13, in
sequentially numbered pages numbered F-1 through F-6. The page numbers for
the financial statement categories are as follows:
INDEX TO FINANCIAL STATEMENTS
Page
Report of Independent Auditors F-1
Balance Sheets as of May 31, 1997 and 1996 F-2
Statements of Operations for the Years Ended May 31, 1997
and 1996 and the Period from June 14, 1994 (Date of
Inception) to May 31, 1997 F-3
Statement of Stockholders' Equity for the Years Ended May 31,
1997 and 1996 and the Period from June 14, 1994 (Date of
Inception) to May 31, 1997 F-4
Statements of Cash Flows for the Years Ended May 31, 1997 and
1996 and the Period from June 14, 1994 (Date of Inception) to
May 31, 1997 F-5
Notes to Financial Statements F-6
SELECTED FINANCIAL DATA
The following selected financial data should be read in conjunction with
the financial statements of the Company and the notes thereto included
elsewhere herein.
1995 1996 1997
--------- ---------- ---------
Net Revenues $ 0 $ 3,448 $ 48,381
Income/(loss) from Operations $(105,740) $ ( 57,112) $(240,018)
Income/(loss) from Operations Per Share* $ (.018) $ (.010) $ (.040)
Total Assets $ 114,718 $ 233,574 $ 176,933
Total Liabilities $ 51,754 $ 220,122 $ 363,863
Stockholders' Equity (Deficit) $ 62,964 $ 13,452 $(102,580)
___________
* Earnings/(loss) per share was calculated using the weighted average of
common stock issued and outstanding.
12
<PAGE>
ITEM 8. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
There have been no disagreements on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure.
The independent accounting firm of Hafer & Gilmer, Certified Public
Accountants, has audited the financial statements of the Company since
inception.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following sets forth the names and ages of all of the Directors and
Executive Officers of the Company, positions held by such person, length of
service, when first elected or appointed and term of office.
Term of First
Name Age Position With Company Appointed Office
- ----------------- --- --------------------- ------------- -----------
David J. Panaia 58 Chief Executive June 18, 1994 (1), (2)
Officer, President
and a Director
Gerald V. Bergman 50 Treasurer and a June 26, 1995 (1), (2)
Director
Thomas J. Thomas 47 Secretary and a June 26, 1995 (1), (2)
Director
Rene LaCasse 63 Director January 5, 1996 (1), (2)
Jack Enterline 54 Director January 5, 1996 (1), (2)
___________
(1) Officers serve at the pleasure of the Company's Board of Directors.
(2) Each of these Directors was appointed to serve until the next Annual
Meeting of shareholders. The company currently intends to hold its next
annual meeting during August of 1997.
The Company's Board of Directors sets corporate policies which are
implemented by the Company's management. In the event that the Company's
Board of Directors determines that a member faces a conflict of interest, for
any reason, it is expected that the subject director will abstain from voting
on the matter which raised the issue.
The Company's directors and executive officers are:
David J. Panaia, President, Chief Executive Officer and Director, is the
founder of the Company and has served as Director and President since the
Company was incorporated in June 1994. Mr. Panaia previously founded several
other businesses, including Gold Cross Ambulance Service, Inc. and Gold Cross
Medical Services, Inc., and acquired several other companies which were
consolidated into Gold Cross, Inc., which provided ground and air ambulance
service, medical services, equipment and supplies. After operating for over
twenty years, Gold Cross was sold in 1982. Mr. Panaia then founded Biomedics
Corporation, a durable medical equipment dealer, which he operated until its
sale in 1988. Both corporations were privately owned. Since 1988, he has
served as a political and
13
<PAGE>
small business marketing consultant through his own firm, Sunpoint Industries,
Inc. Sunpoint offered political consulting services to political candidates
and medical equipment businesses located in the United States. He served on
the Board of Directors of two private schools. Mr. Panaia is past President
and current Treasurer of the Palm Beach Gardens Youth Athletic Association and
has served as President of the Palm Beach Gardens Little League for several
years. Mr. Panaia has attended various sports conventions and seminars and
has been a member of the Sportsplex Owners and Directors Association (SODA).
He concentrates full time on his duties as the President of the Company.
Gerald V. Bergman has served as Treasurer and Director of the Company
since June 1994. A CPA, Mr. Bergman joined Price Waterhouse & Co. in 1975
where he was an audit manager. In 1980 he was appointed Director of Corporate
Planning and Analysis of the Red Lobster division of General Mills. In 1984
through 1985 he served as Vice President and Controller of J.L. Mason, Inc., a
homebuilder. Mr. Bergman then became the Chief Financial and Administrative
Officer and a Director of Overseas Service Corporation, an international
manufacturers representative. He left Overseas Service Corporation in May
1992 to form DBS Associates, a business consulting firm that replaced a third
party rendering financial and administrative services to Overseas Service
Corporation. In November 1994, Mr. Bergman formed Unisyn Group, Inc., a
company that specializes in managing its corporate clients' outsourcing
programs. Such programs include the provision of marketing, financial,
accounting and human resource services through contracts with outside parties.
Unisyn is still considered an "active" corporation although it has suspended
operations so that Mr. Bergman can concentrate on the development of the
Company. DBS is now an inactive corporation. Mr. Bergman has extensive
experience in support of community and high school sports programs as a fund
raiser and coach. Mr. Bergman also serves as the President and Director of
Amateur Athletes of America, Inc., a corporation that promotes the retention
of fitness and sports programs through fund raisers for America's schools and
municipal youth athletic associations. He concentrates full time on his
duties as Treasurer of the Company.
Thomas J. Thomas has served as Secretary and Director of the Company
since June 1994. Mr. Thomas is an attorney who has been a member of the
Florida Bar Association since 1982. He practices in the areas of business and
corporate law, business and individual income tax planning, estate planning,
probate, qualified pension and deferred compensation, corporate and
partnership law, and trust drafting and administration. He is admitted to
practice before the United States Tax Court and Court of Claims. He serves
part time as needed in his duties as Secretary of the Company.
Jack Enterline has served as a Director of the Company since December
1995, and has been the General Manager of USA Performance Products since its
inception. Mr. Enterline is an engineer with special training in cryogenics
and vacuum technology, and additional training in corporate and business
management. In 1968, Mr. Enterline joined Grumman Aircraft Engineering
Corporation, located at the John F. Kennedy Space Center, as Project Lead
Engineer on the launch team in support of the Apollo Lunar Landing Space
Craft. In 1973, Mr. Enterline founded World Energy Inc., a private
corporation which provided consulting services for in situ technology,
primarily coal gasification, and for which he served as President and
Director. In 1975, he founded Precision Metal Services, Inc. ("PMS"), an
independent engineering firm and fabricator of weldments and structural steel,
where he served as President and Director from 1975 until its dissolution in
1981. In 1980, he founded Cryomed Corporation, a privately-held company
engaged in the business of manufacturing and distributing home health care
liquid oxygen systems utilizing cryogenics and vacuum technology, where he
served as Chairman of the Board of Directors, President and Chief Executive
14
<PAGE>
Officer from August, 1980 to January, 1981 when the business was merged into
Cryo2 Corporation. Mr. Enterline then continued to serve as President, Chief
Executive Officer and a Director of Cryo2 Corporation (which was engaged in
the same business as Cryomed Corporation) from January, 1981 to December, 1988
when the company's assets were purchased by CMT Corporation. In 1989 Mr.
Enterline cofounded Perry Oxygen Systems, Inc. (another privately-held company
engaged in the business of manufacturing and distributing home healthcare
liquid oxygen systems utilizing cryogenics and vacuum technology), and served
as its President and a Director until August 1, 1992, when the company's
assets were purchased by Mobilite Corporation (a wholly-owned subsidiary of
Invacare Corporation), for which Mr. Enterline served as liquid oxygen program
manager and engineer from August, 1992 until December, 1993. In 1994, he
founded Trek Designs, Inc., a private consulting corporation with specialties
in engineering, finance and corporate management, and currently serves as its
President. It is anticipated that Mr. Enterline will continue to pursue
certain of these other endeavors through Trek Designs, Inc. while he serves as
General Manager of USA Performance Products, and that he will only devote as
much time to the affairs of the Company as is deemed necessary by the Board of
Directors. Mr. Enterline is married to Karen Enterline, a 3.3% shareholder of
the Company.
Rene LaCasse has served as a Director of the Company since December
1995. Mr. LaCasse is the founder of Micro Tool Engineering, Inc. located in
Riviera Beach, Florida and has served as its Chairman of the Board, President
and Chief Executive Officer since its inception. Since 1968 Mr. LaCasse has
owned and operated this tool and die production facility. Mr. LaCasse has an
extensive background in tooling, plant management, and mechanical engineering.
Mr. LaCasse is also the founder, developer and General Manager of Performance
Paintball Products, Inc. located in Riviera Beach, Florida and formed in July
1995.
INSURANCE COVERAGE
The Company at this time has no insurance coverage for officers and
directors and has not expended any funds to obtain such insurance policies to
insure or indemnify directors or officers against any liabilities that may
occur in the registration, offering and sale of these securities. Management
reserves the right to obtain such insurance.
FAMILY RELATIONSHIPS
There are no family relationships among directors, executive officers or
persons chosen by the Company to be nominated as a director or appointed as an
executive officer of the Company.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
To the best knowledge and belief of the Company, except as disclosed
below, during the past five years, no present or former director, executive
officer or person nominated as a director or appointed as an executive officer
of the Company has been involved in:
Any bankruptcy petition by or against any business of which such person
was a general partner or executive either at the time of the bankruptcy or
within two years prior to that time;
Any conviction in criminal proceeding or subject to a pending criminal
proceeding (excluding traffic violations and other minor offenses);
15
<PAGE>
Being subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily, barring, suspending, or otherwise limiting his
involvement in any type of business, securities or banking activities; and
Being found by any court of competent jurisdiction (in a civil action),
the Commission or the Commodities Futures Trading Commission to have violated
a federal or state securities or commodities law, and the judgment has not
been reversed, suspended or vacated.
ITEM 10. EXECUTIVE COMPENSATION
1995, 1996, 1997 SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
------------------- ----------------------
Name and Awards Awards LTIP All
Principal Restricted Restricted Pay- Other
Position Salary Bonus Other Stock Options outs Compensation
- ---------------- ------ ----- ----- ---------- ---------- ---- ------------
David J. Panaia,
Chief Executive
Officer 0 0 0 0 0 0 0
Gerald V. Bergman,
Chief Financial
Officer 0 0 0 0 0 0 0
None of the Company's executive officers and directors have employment
agreements or stock option arrangements with the Company. It is intended that
the directors be compensated at the rate of $4,000 per year, plus $100.00 per
meeting attended and reasonable travel expenses if cash flow permits. To
date, none of the officers or directors have received any salaries or other
cash compensation. When cash flow permits, it is anticipated that the
officers will be compensated in accordance with employment contracts yet to be
negotiated.
To date, Mr. Thomas has received $2,500 in fees from the Company in
consideration for legal services rendered. He will not receive any
compensation for his position as Secretary of the Company.
The Company has not appointed a proposed Advisory Committee to make
recommendations to the Board of Directors regarding sports, fitness and
nutrition. It is planned that the membership of this committee will include
sports celebrities and experts in sports, fitness and nutrition. It is also
anticipated that the Board will establish an Audit Committee. The committee
members may be compensated on the same terms as the directors.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of the date of this report, the Company has a total of 50,000,000
Common Shares authorized at a par value of $.0001 and there are 6,000,600
Common Shares outstanding. The following table sets forth information, as of
such date, with respect to the beneficial ownership of the Company's Common
Shares by (a) each person known by the Company to be the beneficial owner of
more than 5% of the Company's outstanding Common Shares, (b) the directors and
officers of the Company, and (c) the directors and officers of the Company as
a group. No directors, officers or affiliates own or control any free-trading
shares.
16
<PAGE>
Number of % of Class
Shares 6,000,600
Name and Address Owned Shares (1)
- --------------------- --------- -----------
David J. Panaia(2)(3)(4)(5)(6)(7)(9) 1,926,000 32.10
10 Wyndham Lane
Palm Beach Gardens, FL
Gerald V. Bergman(3)(4)(6)(7)(8)(9) 500,000 8.33
10692 Hidden Lake Circle
Palm Beach Gardens, FL
Thomas J. Thomas(3)(4)(10) 450,000 7.50
3844 Dogwood Circle
Palm Beach Gardens, FL
Lindley Family Trust 500,000 8.33
411 Lighthouse Drive
Palm Beach Gardens, FL
Rene LaCasse(3)(11) 300,000 4.99
4388 Dawnridge Street
Palm Beach Gardens, FL
Karen Enterline(12) 200,000 3.33
P.O. Box 12788
Fort Pierce, FL
Jack J. Enterline(3) -0- -0-
P.O. Box 12788
Fort Pierce, FL
Linda C. Bergman(8) 460,000 7.67
10692 Hidden Lake Circle
Palm Beach Gardens, FL
All Officers and 4,336,000 72.25
Directors as a Group
___________________________
(1) The percentages reflect holdings after an offering of 600 shares.
(2) Includes 400,000 shares held in the name of the Panaia Family Trust of
which David J. Panaia as trustee is the record holder and the beneficial
owner.
(3) Company's Directors.
(4) Company's Officers.
(5) Record owners of 10% or more of Common Stock.
(6) Beneficial owner of 10% or more of Common Stock.
(7) Company's Promoters.
(8) Mr. Bergman is the beneficial owner of 30,000 shares held in the name of
three Bergman children. Linda C. Bergman is the wife of Gerald V. Bergman.
17
<PAGE>
(9) Business Address: 3932 RCA Boulevard, Suite 3209, Palm Beach Gardens,
Florida 33410.
10) Business Address: Suite 304, 14155 U.S. Highway One, Juno Beach,
Florida 33408.
(11) Business Address: 7575 Central Industrial Drive, Riviera Beach, Florida
33404.
(12) Wife of Jack J. Enterline, Director and General Manager of USA
Performance Products.
ITEM 12.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain transactions to which the Company is a party and certain matters
affecting the Company have or will result in a material benefit to certain of
the Company's directors and executive officers, or may create conflicts of
interest, as follows:
The Company's counsel, attorney Thomas J. Thomas, has provided legal
services to the Company, including, but not limited to, legal advice on this
Offering, formation of the Company, acquisition of certain assets and legal
advice to the Company in general. Mr. Thomas is a Director, Secretary of the
Company and the owner of 450,000 shares of the Company's Common Stock which
were issued in exchange for legal services rendered and an additional $5,000
cash of which $2,500 has been paid. Mr. Thomas has also been reimbursed for
various expenses incurred on behalf of the Company.
Rene LaCasse, a director of the Company, is President, Director and
stockholder of Micro Tool Engineering Inc. which has a manufacturing agreement
with the Company. The terms of the agreement provide that the Company must
reimburse Micro Tool for its services on a cost plus 15% basis. Billing is net
30 days. Management believes that this arrangement is mutually beneficial to
both organizations and will continue until canceled by either party. The
Company plans to continually review and evaluate this arrangement for cost
effectiveness.
From time to time, David J. Panaia, President, Director and shareholder
of the Company and Gerald V. Bergman, Treasurer, Director and shareholder,
have provided bridge financing to the Company. During the year ended May 31,
1997, these individuals contributed to capital a total of $94,350 which had
previously been recorded as loans from stockholders. The remaining balance of
$66,000 in loans from stockholders as of May 31, 1997 was loaned by a
non-affiliate in return for an unsecured note bearing interest at the prime
rate plus 6% with monthly payments consisting of interest only and the balance
of principal due no later than December 31, 1997.
David Panaia and Gerald Bergman additionally contributed to capital a
total of $26,036 which had previously been recorded in accounts payable as
amounts due for reimbursable expenses.
At inception, 50,000,000 shares of common stock were authorized, and
6,000,000 shares were issued to David J. Panaia as sole shareholder of the
corporation. Stock subsequently issued from the treasury for services
rendered or value received by the corporation was replaced by an identical
number of shares returned to the treasury by Mr. Panaia to prevent dilution of
the value of stock held by others. As of May 31, 1997, Mr. Panaia had
returned a total of 4,074,000 shares of stock to the treasury.
18
<PAGE>
Rene LaCasse and Jack Enterline are each owners of twenty-five percent
(25%) of the outstanding stock of Performance Paintball Products, the company
from which USAS purchased the tools and dies and technology necessary to
produce the Viper M-1 paintball marker. Pursuant to the terms of the
transaction, the Company issued a promissory note in favor of Performance
Paintball Products in the amount of $101,295. Subsequent payments have reduced
the balance of the note to $46,795 as of May 31, 1997.
Except as described above, no director, officer or principal security
holder of the Company has or has had a direct or indirect material interest in
any transaction to which the Company is or was a party. The Company believes
that the terms of each of the transactions described above were no less
favorable to the Company than could have been obtained from third parties. In
addition, in the future the Company will not enter into additional
transactions with directors, officers or principal shareholders unless the
terms thereof are no less favorable to the Company than could be obtained from
third parties.
PART IV
ITEM 13.EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K
(a)Index to financial statements and financial statement schedules
The audited balance sheet of the Company for its years ended May 31,
1997 and 1996 and related statements of operations, stockholders' equity and
cash flows for the years ended May 31, 1997 and 1996 and the period from June
14, 1994 (Date of Inception) to May 31, 1997 follow in sequentially numbered
pages numbered F-1 through F-9. The page numbers for the financial statement
categories are as follows:
Page Description
- ---- -----------------------------------------------------------------------
F-1 Report of Independent Auditors - May 31, 1997 and 1996;
F-2 Balance Sheets as of May 31, 1997 and 1996
F-3 Statements of Operations for the Years Ended May 31, 1997 and 1996
and the Period from June 14, 1994 (Date of Inception) to May 31, 1997
F-4 Statement of Stockholders' Equity for the Years Ended May 31, 1997 and
1996 and the Period from June 14, 1994 (Date of Inception) to May 31,
1997
F-5 Statements of Cash Flows for the Years Ended May 31, 1997 and 1996
and the Period from June 14, 1994 (Date of Inception) to May 31, 1997
F-6 Notes to Financial Statements
(b) 8-K Reports
No reports on Form 8-K were filed during the year ended May 31, 1997.
(c) Exhibits:
Exhibit Description
- ------- ------------------------------------------------------------------
1.1 Selected broker/dealer agreement approved by NASD (1)
19
<PAGE>
2.1 Agreement for acquisition of assets of Performance Paintball Products,
Inc. (1)
3.1 Articles of Incorporation and By-Laws (1)
10.1 Agreement for acquisition of rights to All American Bowl
10.2 Personal services agreement with All American Bowl Executive Director
23.1 Auditor's consent (1)
________
(1) Incorporated by Reference to the Company's Original Registration
Statement on Form 10 SB-1, Registration 33-96638-A, Filed on September 6,
1995.
ADDITIONAL INFORMATION
Corporate Headquarters
3932 RCA Blvd., Suite 3209; Palm Beach Gardens, Florida 33410
Telephone Number: (561) 622-4395; Fax Number: (561)625-6123
Internet Address - http:// www.usas.com; E-mail Address - [email protected]
Special Securities Counsel
Krys, Boyle, Freedman, Scott & Sawyer, P.C.
Attorneys at Law
Dominion Plaza, Suite 2700 South Tower
600 Seventeenth Street
Denver, Colorado 80202-5427
Independent Public Accountants
Hafer & Gilmer
Certified Public Accountants
251 Royal Palm Way, Suite 302
Palm Beach, Florida 33480-4310
Transfer Agent
Florida Atlantic Stock Transfer, Inc.
5701 North Pine Island Road, Suite 310B
Tamarac, Florida 33321
Exhibits to the Form 10-KSB will be provided to shareholders of the
Registrant upon written request addressed to Thomas J. Thomas, Secretary, US
Amateur Sports, Inc., 3932 RCA Blvd., Suite 3209, Palm Beach Gardens, FL
33410. Any exhibits furnished are subject to a reasonable photocopying
charge.
The Securities and Exchange Commission has not approved or disapproved
of this Form 10-KSB and Annual Report to Shareholders nor has it passed upon
its accuracy or adequacy.
20
<PAGE>
CONTENTS
Auditors' Report............................................ F-1
Balance Sheets.............................................. F-2
Statements of Operations.................................... F-3
Statement of Stockholders' Equity........................... F-4
Statements of Cash Flows.................................... F-5
Notes To Financial Statements..............................F-6 to F-9
<PAGE>
HAFER & GILMER
Certified Public Accountants
251 Royal Palm Way, Suite 302
Palm Beach, Florida 33480-4310
----------------
Telephone (561) 655-8700
Facsimile (561) 655-6964
Report of Independent Auditors
Board of Directors and
Stockholders of U S Amateur Sports, Inc.
We have audited the balance sheets of U S Amateur Sports, Inc. (a development
stage company) as of May 31, 1997 and 1996, and the related statements of
operations, stockholders' equity, and cash flows for the years then ended and
for the period from June 14, 1994 (inception), to May 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. 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 audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of U S Amateur Sports, Inc. (a
development stage company) as of May 31, 1997 and 1996, and the results of its
operations and its cash flows for the years then ended and from June 14, 1994
(inception), to May 31, 1997, in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial
statements the Company has incurred net losses since its inception and has
experienced liquidity problems. Those conditions raise substantial doubt
about the Company's ability to continue as a going concern. Management's
plans in regard to those matters are described in Note K. The financial
statements do not include any adjustments that might result from the outcome
of this uncertainty.
/s/ Hafer & Gilmer
June 30, 1997
F-1
<PAGE>
U S AMATEUR SPORTS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
MAY 31, 1997 AND 1996
May 31, 1997 May 31, 1996
------------ ------------
ASSETS
Cash $ 810 $ 4,587
Accounts and advances
receivable 3,064 10,545
Inventories 77,946 84,968
Prepaid expense 2,000 13,821
Property and equipment 52,894 67,342
Rights to technology and
associated trademarks 34,800 44,291
Deferred charges 5,419 8,020
TOTAL ASSETS $ 176,933 $ 233,574
LIABILITIES
Accounts payable $ 79,461 $ 30,294
Notes payable 69,195 61,295
Loans from stockholders 66,000 122,500
Accrued expenses 40,000 0
Accrued interest 24,857 6,033
Total liabilities 279,513 220,122
STOCKHOLDERS' EQUITY
Common stock, $.0001 par value,
50,000,000 shares authorized,
6,000,600 shares issued
and outstanding 600 600
Additional paid-in capital 299,690 175,704
Deficit accumulated during the
development stage (402,870) (162,852)
Total stockholders' equity (102,580) 13,452
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 176,933 $ 233,574
See notes to financial statements.
F-2
<PAGE>
U S AMATEUR SPORTS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED MAY 31, 1997 AND 1996
AND THE PERIOD FROM JUNE 14, 1994 (DATE OF INCEPTION) TO MAY 31, 1997
June 14, 1994
Year Ended Year Ended (Inception) to
May 31,1997 May 31,1996 May 31, 1997
----------- ----------- --------------
SALES $ 48,381 $ 3,448 $ 51,829
Cost of goods sold 25,078 2,319 27,397
--------- -------- ---------
Gross profit 23,303 1,129 24,432
EXPENSES
Freight 5,314 0 5,314
Research and development 0 267 17,841
Professional fees 49,445 7,808 66,133
Advertising and promotion 60,125 3,162 64,850
Travel 21,132 10,376 35,204
Rent 9,330 8,640 22,108
Office, telephone, and other
operating expenses 71,325 7,335 98,498
Interest 18,825 6,033 24,858
Depreciation 15,733 8,856 28,923
Amortization 12,092 5,764 63,573
Total expenses 263,321 58,241 427,302
---------- --------- -----------
NET LOSS $ (240,018) $ (57,112) $ (402,870)
See notes to financial statements.
F-3
<PAGE>
U S AMATEUR SPORTS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED MAY 31, 1997 AND 1996
AND THE PERIOD FROM JUNE 14, 1994 (DATE OF INCEPTION) TO MAY 31, 1997
Common Stock
---------------------
Number of
Shares Additional Total
Issued and Paid-in Accumulated Stockholders'
Outstanding Amount Capital Deficit Equity
----------- ------ --------- ----------- ------------
Balance at
inception - $ - $ - $ - $ -
Issuance of
common stock 6,000,000 600 168,104 - 168,704
Net loss, year
ended
May 31, 1995 - - - (105,740) (105,740)
Balance,
May 31, 1995 6,000,000 600 168,104 (105,740) 62,964
Capital
contributions - - 7,600 - 7,600
Return of stock
to treasury (3,060,000) (306) - - -
Issuance of
common stock 3,060,000 306 - - -
Net loss, year
ended
May 31, 1996 - - - (57,112) (57,112)
Balance,
May 31, 1996 6,000,000 600 175,704 (162,852) 13,452
Capital
contributions - - 120,386 - 120,386
Return of stock
to treasury (1,014,000) (101) - - -
Issuance of
common stock 1,014,600 101 3,600 - 3,600
Net loss, year
ended
May 31, 1997 - - - (240,018) (240,018)
Balance May 31, 1997 6,000,600 $600 $ 299,690 $(402,870) $ (102,580)
See notes to financial statements.
F-4
<PAGE>
U S AMATEUR SPORTS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MAY 31, 1997 AND 1996
AND THE PERIOD FROM JUNE 14, 1994 (DATE OF INCEPTION) TO MAY 31, 1997
June 14, 1994
Year Ended Year Ended (Inception) to
May 31,1997 May 31,1996 May 31, 1997
------------ ----------- ------------
Reconciliation of Net Income to
Net Cash Provided by Operating
Activities
Net loss $ (240,018) $ (57,112) $ (402,870)
Reconciling adjustments
Amortization 12,092 5,764 63,573
Depreciation 15,733 8,856 28,923
Decrease (increase) in receivables 7,482 (10,545) (3,063)
Decrease (increase) in inventories 7,022 (8,039) (77,946)
Decrease (increase) in prepaid expenses 11,821 (13,821) 79,461
Increase in accounts payable 49,167 16,540 (2,000)
Increase in accrued expenses 40,000 0 40,000
Increase in accrued interest 18,824 6,033 24,857
Total changes to account balances 162,141 4,788 153,805
Net cash used by operating activities (77,877) (52,324) (249,065)
Cash Flows From Investing Activities
Acquisition of property and equipment (1,286) (50,139) (81,818)
Purchase of technology and trademarks 0 (47,455) (47,455)
Development of proprietary manuals 0 0 (43,333)
Organization costs paid 0 0 (13,004)
Net cash used by investing activities (1,286) (97,594) (185,610)
Cash Flows From Financing Activities
Capital contributions 123,986 7,600 300,290
Notes payable 7,900 61,295 69,195
Loans from stockholders (56,500) 84,500 66,000
Net cash provided by financing activities 75,386 153,395 435,485
Net increase (decrease) in cash (3,777) 3,477 810
Cash balance, beginning of period 4,587 1,110 0
Cash balance, end of period $ 810 $ 4,587 $ 810
See notes to financial statements.
F-5
<PAGE>
U S AMATEUR SPORTS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1997 AND 1996
NOTE A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The Company maintains its accounts on the accrual basis of accounting. 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
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
DEPRECIATION
The cost of property and equipment is depreciated over the estimated useful
lives of the related assets. Depreciation is computed using the straight-line
method for financial reporting purposes and an accelerated method for tax
purposes.
AMORTIZATION
Proprietary manuals which are considered pre-opening costs have been amortized
over a one year period. Rights to technology and associated trademarks are
amortized using the straight-line method over five years. Deferred charges
are amortized using the straight-line method over five years.
INVENTORIES
Inventories are stated at the lower of cost or market. See Note D.
ADJUSTMENTS
These financial statements include all adjustments which in the opinion of
management are necessary in order to make the financial statements not
misleading. All adjustments are of a normal recurring nature.
NOTE B: DEVELOPMENT STAGE OPERATIONS
The company was incorporated on June 14, 1994. It was founded to identify and
develop opportunities within the sports marketing and entertainment business
community.
Activities since inception have included research, feasibility studies,
development of business plans and operating procedures, acquisition analysis,
raising of capital, promotion, identification of key executives and
administrative functions.
During the fiscal year ended May 31, 1996, the Company acquired the assets of
Performance Paintball Products, Inc. As a result of this acquisition, The
Company entered the paintball industry with the anticipation of generating
revenues from the sale of the Viper M1 paintball marker and related
accessories. The Viper marketing program, including use of Internet web
sites, publication of articles in leading paintball industry magazines,
demonstrations at trade
F-6
<PAGE>
U S AMATEUR SPORTS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1997 AND 1996
(Continued)
shows, distribution of manuals, brochures and other marketing materials to
dealers, and establishment of a telemarketing department, created demand for
the Viper M1 marker and accessories that resulted in a backlog of orders that
remained at the end of the fiscal year ended May 31, 1997.
During the fiscal year ended May 31, 1997, the Company acquired the assets of
High School Football All American Bowl, Inc. With this acquisition, the
Company obtained the rights to produce its first major sports event, the All
American Bowl, which is scheduled to be played on July 5, 1997. The All
American Bowl is the inaugural event of the Company's planned National High
School Sports Classic series which will include all star games and
championship team events in a wide range of high school sports.
See NOTE C for additional discussion of these acquisitions.
The Company has established an Internet web site called USA SportsNet. This
site remains under development at May 31, 1997 and has been used principally
to communicate information regarding the Company's goals and to promote sales
of the Viper M1 paintball marker.
An initial public offering of the Company's common stock for up to $9,000,000
was made effective by the Securities and Exchange Commission on November 21,
1996. The offering consisted of 30,000 units of common stock at $300 per
unit, each unit consisting of 50 shares. The offering period of 180 days
concluded on May 21, 1997. Only a minimal number of shares were sold by the
Company's officers on a best efforts basis.
NOTE C: ACQUISITION AGREEMENTS
On January 5, 1996, the Company acquired the assets of Performance Paintball
Products, Inc. of Riviera Beach, Florida in exchange for a note in the amount
of $101,925 (See NOTE H). The assets consist of inventory, property and
equipment necessary to conduct the business of producing the Viper M1
paintball marker and related accessories. Included in the purchase were
exclusive rights to use of the Viper name and related technology. In
conjunction with this purchase, the Company entered into a five year agreement
with Micro Tool Engineering, Inc. to manufacture and assemble the paintball
products. The Company reimburses Micro Tool for its services on a cost plus
15% basis.
On January 1, 1997, the Company acquired the assets of High School Football
All American Bowl, Inc., of Allentown, Pennsylvania for 100,000 shares of
restricted common stock and 20% of the net profit, if any, from the 1997 All
American Bowl, a national high school all star football game. The rights
acquired include, but are not limited to, the right to produce and promote the
All American Bowl and the use of all titles, trade names, trademarks and logos
of the event. The Company entered into a consulting and noncompete agreement
with the founder of the All American Bowl to serve as the Company's Executive
Director of the event for a three year period for 67,000 shares of restricted
common stock and a monthly consulting fee.
F-7
<PAGE>
U S AMATEUR SPORTS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1997 AND 1996
(Continued)
NOTE D: INVENTORIES
Inventories consist of merchandise acquired for sale by the Company's USA
SportsNet business unit in addition to paintball markers and accessories.
Inventories are carried at cost which is considered to be less than market
value.
NOTE E: PROPERTY AND EQUIPMENT
The following is a summary of property and equipment recorded in the financial
statements at cost less depreciation as of May 31, 1997 and 1996:
May 31, 1997 May 31, 1996
------------ ------------
Computer hardware $10,542 $10,542
Computer software 10,564 9,964
Furniture, fixtures and equipment 10,572 9,887
Tools, dies and fixtures 50,140 50,140
Total cost 81,818 80,533
Less: accumulated depreciation (28,924) (13,191)
Total net property and equipment $52,894 $67,342
The useful lives assigned to property and equipment to compute depreciation
are:
Computer hardware 5 years
Computer software 5 years
Furniture, fixtures and equipment 7 years
Tools, dies and fixtures 5 years
NOTE F: DEFERRED CHARGES
Deferred charges consist of organization costs in the amount of $13,004 less
accumulated amortization of $7,585 and $4,984, at May 31, 1997 and 1996,
respectively.
NOTE G: ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable consist of professional fees and miscellaneous trade
payables. Accrued expenses consist of production costs for the 1997 All
American Bowl.
NOTE H: NOTES PAYABLE
In connection with the asset purchase from Performance Paintball Products,
Inc. discussed in NOTES B and C, the Company recorded a note payable in the
initial amount of $101,295. Subsequent payments totaling $54,500 reduced the
balance to $46,795 as of May 31, 1997. Interest is accrued on the unpaid
balance of the note at the rate of 10%. The balance of principal and interest
was initially due on December 31, 1996, but the due date has been extended to
December 31, 1997. There are no other payment requirements. Rene Lacasse and
Jack Enterline, directors of U S Amateur Sports, Inc., are each owners of
twenty five (25%) of the outstanding stock of Performance Paintball Products,
Inc.
F-8
<PAGE>
U S AMATEUR SPORTS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1997 AND 1996
(Continued)
On December 16, 1996 the Company borrowed $2,400 from Amateur Athletes of
America, Inc. The note bears interest at the rate of 12.25% per annum with
the balance of principal and interest due to be paid no later than December
31, 1997. Gerald Bergman, Treasurer, Director and shareholder of the Company,
is the sole owner of Amateur Athletes of America, Inc.
The Company borrowed $10,000 from Wizard Capital Associates on February 20,
1997 and $10,000 from Anthony Fedyna on April 4, 1997. Both notes are payable
upon demand by the holder and bear interest at the rate of 15% per annum and
are personally guaranteed by the chief executive officer and treasurer.
NOTE I: LOANS FROM STOCKHOLDERS
During the year ended May 31, 1997, the Company's Chief Executive Officer,
David J. Panaia, and Treasurer, Gerald V. Bergman, contributed to capital a
total of $94,350 which had previously been recorded as loans from
stockholders. The remaining balance of $66,000 in loans from stockholders as
of May 31,1997 was loaned by Derek Panaia, a non-affiliate who is the son of
David Panaia, in return for an unsecured note bearing interest at the prime
rate plus 6% with monthly payments consisting of interest only and the balance
of principal due no later than December 31, 1997.
David Panaia and Gerald Bergman additionally contributed to capital a total of
$26,036 which had previously been recorded in accounts payable as amounts due
for reimbursable expenses.
NOTE J: RETURN OF STOCK TO TREASURY
At inception, 50,000,000 shares of common stock were authorized, and 6,000,000
shares were issued to David J. Panaia as sole shareholder of the corporation.
Stock subsequently issued from the treasury for services rendered or value
received by the corporation was replaced by an identical number of shares
returned to the treasury by Mr. Panaia to prevent dilution of the value of
stock held by others. As of May 31, 1997, Mr. Panaia had returned a total of
4,074,000 shares of stock to the treasury.
NOTE K: RECOVERABILITY OF ASSETS AND GOING CONCERN
The Company's financial statements have been presented on the basis that it is
a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business.
The Company's continued existence is dependent upon its ability to secure
financing or its ability to generate sufficient cash flows through operations
to meet its operating costs and repay current obligations as they come due.
F-9
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
U S AMATEUR SPORTS, INC.
/s/ David J. Panaia
August 7, 1997 David J. Panaia, Chief Executive Officer
(Principal Executive Officer)
/s/ Gerald V. Bergman
August 7, 1997 Gerald V. Bergman, Treasurer (Principal
Financial and Accounting Officer)
In accordance with 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.
U S AMATEUR SPORTS, INC.
August 7, 1997 /s/ David J. Panaia
David J. Panaia, Chief Executive Officer
(Principal Executive Officer)
/s/ Gerald V. Bergman
August 7, 1997 Gerald V. Bergman, Treasurer (Principal
(Financial and Accounting Officer)
AGREEMENT
This agreement is made and entered into to be effective on the 1st day
of January, 1997, by and between US Amateur Sports, Inc. (USAS) of Palm Beach
Gardens, Florida and High School Football All American Bowl, Inc. (FAAB) of 17
South Halstead Street, Allentown, Pennsylvania 18103.
WHEREAS, FAAB, which established the All American Bowl, which was first
presented in Allentown, Pennsylvania in 1994, and all of its stockholders
desire to sell, assign, convey and grant to USAS the ownership of any and all
rights and titles appertaining thereto, of the corporate name, "High School
Football All American Bowl, Inc.", and its tradename, "All American Bowl".
WHEREAS, USAS desires to obtain the entire rights of exclusive ownership
to the names "High School Football All American Bowl, Inc." and "All American
Bowl."
Therefore, in consideration of the mutual promises contained herein and
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
1)FAAB will sell, assign, convey and grant to USAS any and all
rights of ownership of and titles to its name "High School Football All
American Bowl, Inc." and the "All American Bowl" including the right to
conduct the event, the right to receive any and all revenues from the event,
including any and all revenues derived from promotion and advertising of the
event, the right to determine all disbursements to be made in connection with
the event, and the right to own and use all trade names and logos associated
with the event.
2)USAS will compensate FAAB through the transfer of 100,000 shares
of USAS common stock, such stock to be held in the name of FAAB without any
further distribution to the stockholders of FAAB until the completion of the
second presentation of the "All American Bowl" (i.e. in 1997, with 1994 being
the first presentation). FAAB acknowledges and agrees that such stock shall be
subject to the restrictions set forth in the Securities and Exchange
Commission (SEC) Rule 144. FAAB will execute documents transferring any and
all rights to use of its corporate name, "High School Football All American
Bowl, Inc.", and the "All American Bowl", and other assignment documents which
convey to USAS any and all rights to conduct the bowl events. FAAB shall also
at the closing present an executed copy of an amendment to its Articles of
Incorporation changing its name to any name which may be agreed to by USAS.
3) As additional compensation, FAAB will receive 20% of any "Net
Profits" earned in connection with the second presentation of the 1997 All
American Bowl. For purposes of this agreement, "Net Profits" shall mean all
gross revenues received by USAS from any source arising from the second All
American Bowl, including the promotion and advertising of the second All
American Bow1, gate proceeds from attendance of the event, and income realized
from the use of the 1997 All American Bowl trade name or logo, and concession
revenue, less all expenses incurred by USAS in connection with the foregoing,
as determined by generally accepted accounting principles. Gross revenues
shall include revenues received from any electronic broadcast of the event on
the date of the event, and until one year after the event for re-runs or
delayed broadcasts.
4)If USAS chooses not to present the second edition of the "All
American Bowl", USAS shall be deemed to have abandoned its rights to the "All
American Bowl", In such case, FAAB reserves the right to return on or before
<PAGE>
December 31, 1997 all USAS common stock and reclaim all rights of ownership to
the All American Bowl. At the same time, USAS shall reassign all the rights
previously assigned by FAAB to USAS regarding the names "High School Football
All American Bowl, Inc." and the "All American Bowl".
5)If, at any time, any circumstances beyond the control of USAS,
including actions by the National Collegiate Athletic Association ("NCAA"),
prevent the presentation of the second edition of the All American Bowl in
1997, then USAS reserves the right to transfer the ownership of the Bowl to
FAAB, and the USAS common stock given as compensation for such rights of
ownership shall be returned by FAAB to USAS. At the same time, USAS shall
reassign all the rights previously assigned by FAAB to USAS regarding the
names "High School Football All American Bowl, Inc." and the "All American
Bowl".
6)This agreement may be amended in writing by the mutual agreement
of the parties.
7)The authorized and issued capital stock of FAAB consists solely of
One Hundred Thousand (100,000) total shares of common stock; no other shares
of common stock of FAAB are outstanding. All of the issued and outstanding
shares of common stock owned by the parties listed on Exhibit "A" are validly
authorized and issued and are fully paid and nonassessable. There are no
outstanding rights of any kind to acquire any shares of FAAB common stock or
assets of FAAB. FAAB hereby makes the following representations each of which
are true and correct on the date hereof relating to the title to ownership of
its corporate name "High School Football All American Bowl, Inc," and the "All
American Bowl" and including rights to conduct the event, the right to receive
all revenues derived from promotion and advertising of the event, a right to
determine disbursements made in connection with the event and the rights of
ownership and control of all trade names including its corporate name "High
School Football All American Bowl, Inc." and the tradename "All American Bowl"
and logos associated with the event, and the authority to enter into this
transaction. Each representation and warranty shall survive the closing hereof
and the sale contemplated hereby and each shall be deemed to be independently
material and re1ied upon by USAS regardless of any investigation made by or
information known to USAS.
(a)FAAB is a corporation duly organized, validly existing and
in good standing under the laws of the State of Pennsylvania. FAAB has the
corporate power and authority to own and use its properties and to transact
the business in which it is engaged.
(b)FAAB has full authority to enter into and perform its
obligations under this Agreement and each other agreement to which it will be
a party, and neither the execution, delivery nor performance by FAAB of this
Agreement or any such other agreement will result in a violation or breach of
any term or provision nor constitute a default under any contract or agreement
to which FAAB is a party or by which FAAB is bound, or violate any order,
writ, injunction or decree of any court, administrative agency or governmental
body.
(c)FAAB has the exclusive rights of ownership to its corporate
name "High School Football All American Bowl, Inc." and to the tradename of
"All American Bowl" including the rights to conduct the event, the rights to
receive all revenues derived from promotion and advertising of the event, the
right to determine all disbursements made in connection with the event, and
the right to use any and all trade names including the All American Bowl, and
logos associated with the event, and such property and rights are all free
from all liens, security agreements, encumbrances, claims, demands or charges
of every kind.
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<PAGE>
(d)The execution and delivery of this Agreement has been duly
authorized and approved by Shareholders and the Board of Directors of FAAB by
unanimous consent dated as of November 7, 1996. A certified copy of the
consents giving said authorizations and approval have been made available to
the parties hereto and said authorizations and approvals have not been
altered, amended or revoked. Pursuant to such authorizations and approvals,
FAAB has full power and authority to enter into this agreement and to perform
its obligations hereunder. Neither the execution, delivery nor performance of
this Agreement by FAAB will conflict with any provision of the Articles of
Incorporation or Bylaws of FAAB or violate any order, writ, injunction or
decree of any court, administrative agency or governmental body or the terms
of any agreement, covenant or contract.
(e)FAAB has One Hundred Thousand (100,000) total shares of
common stock with a par value of $.0001 authorized to be issued. The
outstanding capital stock of FAAB consists solely of One Hundred Thousand
(100,000) shares of common stock. No other shares of common stock of FAAB are
outstanding. All of the issued and outstanding shares of common stock are
validly authorized and issued and are fully paid and nonassessable.
8)USAS hereby makes the following representations and warranties,
each of which is true and correct on the date hereof and each of which will
survive the Closing Date and the sales contemplated hereby:
(a)USAS is a corporation duly organized, validly existing and
in good standing under the laws of the State of Florida. USAS has the
corporate power and authority to own and use its properties and to transact
the business in which it is engaged.
(b)The execution and delivery of this Agreement has been duly
authorized and approved by the Board of Directors of USAS by unanimous consent
dated as of November 7, 1996. A certified copy of the consents giving said
authorizations and approval have been made available to the parties hereto and
said authorizations and approvals have not been altered, amended or revoked.
Pursuant to such authorizations and approvals, USAS has full power and
authority to enter into this agreement and to perform its obligations
hereunder. Neither the execution, delivery nor performance of this Agreement
by USAS will conflict with any provision of the Articles of Incorporation or
Bylaws of USAS or violate any order, writ, injunction or decree of any court,
administrative agency or governmental body or the terms of any agreement,
covenant or contract.
(c) USAS has Fifty Million (50,000,000) total shares of common
stock with a par value of $.00001 authorized to be issued. The outstanding
capital stock of USAS consists solely of Six Million (6,000,000) shares of
common stock. No other shares of common stock of USAS are outstanding. All of
the issued and outstanding shares of common stock are validly authorized and
issued and are fully paid and nonassessable. However, USAS has filed a
registration statement with the SEC on its Form SB-l for the initial public
offering of One Million Five Hundred Thousand (1,500,000) shares of its common
stock, with 50 shares per unit, and at a price of $300.00 per unit, which will
cause the total outstanding shares to be not more than 7,500,000 shares.
9)The obligations of FAAB to consummate the transactions provided
for in this Agreement shall be subject to the satisfaction of each of the
following conditions on or before the Closing Date, subject to the right of
FAAB to waive any one or more of such conditions:
(a)USAS has delivered at the Closing Date a Certificate of Good
Standing issued by the Secretary of the State of Florida.
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<PAGE>
(b) The representations and warranties of USAS contained in this
Agreement and in the exhibits and schedules hereto shall be true and correct
in all respects on the date hereof and on the closing Date (except for changes
expressly permitted hereunder).
10)The obligations of USAS to consummate the transactions provided
for in this Agreement shall be subject to the satisfaction of each of the
following conditions on or before the Closing Date, subject to the right of
USAS to waive any one or more of such conditions:
(a)The representations and warranties of FAAB contained ln this
Agreement and in the exhibits and schedules hereof shall be true and correct
in all respects on the date hereof and on the Closing Date (except for changes
expressly permitted hereunder).
(b)FAAB shall have duly performed or complied with all of the
obligations to be performed or complied with by them under the terms of this
Agreement on or prior to the Closing Date.
(c)No suit, action or other proceeding or investigation shall
be threatened or pending before or by any court or governmental agency
concerning this Agreement or the consummation of the transaction contemplated
hereby, or in connection with any material claim against FAAB, not disclosed
by the Exhibits or Schedules hereto. No governmental agency shall have
threatened or directed any request for information concerning this Agreement,
the transaction contemplated hereby or the consequences or implications of
such transaction to FAAB, USAS, or any officer, director, employee or agent of
any of them.
(d)USAS shall receive from FAAB on the Closing Date appropriate
documents, in form acceptable to USAS, conveying to USAS good and valid title
to the assets of FAAB as of the Closing Date.
(e)Dale Dougherty shall have executed and delivered personal
concerting agreements in the form of Exhibit "B" ("Independent contractor
Service Agreement") with USAS and such agreements shall be in full force and
effect as of the Closing Date.
(f) USAS shall have received such further instruments and
documents as may reasonably be required to carry out the transactions
contemplated hereby and to evidence tho fulfillment of the agreements herein
contained and the performance of all conditions to the consummation of such
transactions.
11)Subject to the conditions hereinafter set forth, FAAB shall
indemnify and hold harmless USAS against any loss, actions, assessments,
liabilities, damage or expense (including but not limited to reasonable
attorneys' fees and costs incurred in trial and appellate proceedings,
interest and penalties asserted against or imposed upon or incurred by USAS
and including costs and attorney's fees in any appellate proceedings) caused
by or arising out of (i) any breach of a representation, covenant, warranty or
agreement made by FAAB contained in this Agreement or made ln connection with
the transaction contemplated by this Agreement and all related exhibits or
documents, or (ii) any breach of warranty, including any breach of warranty
made by FAAB herein in any Exhibit or Schedule attached or to be delivered
pursuant hereto or in any certificate or other instrument delivered by or on
behalf of FAAB pursuant hereto. USAS shall have the right of set-off against
any amounts or payments due or to become due under this Agreement or in any
other outside agreements, and USAS shall maintain all rights in law or at
equity for redress in the event of any alleged breach in this Agreement or the
aforementioned agreements.
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<PAGE>
12)USAS's attorney, Thomas J. Thomas, Esq., shall serve as Escrow
Agent ("Escrow Agent"), who shall receive the lO0,000 shares of USAS common
stock from USAS at closing pursuant to Section 4 above. In the event that USAS
chooses not to present the second edition of the All American Bowl and in the
event that FAAB exercises its rights under section 4 above to reclaim
ownership of its corporate name, "High School Football All American Bowl,
Inc.," and its tradename, the "All American Bowl," and to return the 100,000
shares of USAS stock, the E~crow Agent shall upon written notice received from
FAAB return the 100,000 shares of USAS common stock to USAS. Escrow Agent
shall also deliver to FAAB a document transferring the rights of ownership to
its corporate name, "High School Football All American Bowl, Inc." and its
tradename the "All American Bowl" executed by USAS. In the event that USAS is
prevented by circumstances beyond its control to present the second edition of
the 1997 All American Bowl, then Escrow Agent shall deliver to USAS the
lO0,OOO shares of USAS common stock and shall deliver to FAAB a document
retransferring to FAAB the right to use its corporate names of "The High
School Football All American Bowl, Inc." and the "All American Bowl". Upon the
fulfillment by each party of its rights and duties herein and the expiration
of all rights to terminate this Agreement, Escrow Agent shall deliver to FAAB
the l00,000 shares of USAS stock. Escrow Agent shall have no responsibility
except those expressly set forth in this Section 12. FAAB and USAS shall
indemnify the Escrow Agent and save it harmless against any losses, costs,
damages or expenses (including reasonable attorney's fees) suffered in the
performance of its duties under this Agreement, except those losses, costs,
damages, or expenses as a result of Escrow Agent "gross negligence Escrow
Agent may rely upon any certificate, statement, request, consent or agreement
made or signed on behalf of the parties hereto which Escrow Agent believes to
be genuine and to have been made or signed by a proper person or persons.
Escrow Agent shall be entitled to consult with legal counse1 and to rely on
the advice of such counsel.
13)Only USAS has the legal obligation to meet its duties and
obligations set forth herein. No employee, officer, director or shareholder,
including but not limited to David J. Panaia or Gerald V. Rergman, shall have
any personal liability for any of USAS's duties and obligations herein, or any
other document delivered or executed in connection herewith.
14) Regardless of any investigation at any time made by or on behalf
of any party hereto or of any information any party may have in respect
thereof, all representations and warranties of USAS and FAAB made under or
pursuant to this Agreement shall survive the Closing Date hereunder. In the
case of a representation or warranty made by any party hereto which is not
true when made, the period for which any such action against such party must
be asserted shall expire only as provided by law.
15)Nothing contained herein is intended to or shall be construed so
as to limit the remedies which any party may have against any other in the
event of a breach by any party of any representation, warranty or agreement
made under or pursuant to this Agreement, it being intended that any remedies
shall be cumulative and not exclusive.
16)This Agreement shall be binding upon and inure to the benefit of
the parties named herein and to their respective successors and assigns.
Neither this Agreement nor all or any part of USAS's rights, interests or
obligations hereunder may be assigned by USAS without the consent of all other
parties hereto. Neither this Agreement nor any of FAAB's rights, interests or
obligations hereunder may be assigned by FAAB without USAS's prior written
consent. This Agreement, however, shall be binding upon the parties and their
heirs, successors, personal representatives, legatees, and assigns. All
references to the personal representative of any party shall include, if the
context permits
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<PAGE>
or requires, any legatee, transferee, or assignee of such party or such
party's estate, as the case may be, and such heir, assignee, legatee or
transferee in the event of any party's death, shall succeed to the benefit and
be bound by the obligations set forth in this Agreement with respect to such
party or such personal representative. All Exhibits in this Agreement are
incorporated into this Agreement as if fully rewritten herein; all reference
to Exhibits wherein a legal document is contained shall be referenced to such
legal document in substantially the same form and substance under the
Agreement as set forth in such Exhibit.
17) This Agreement shall be construed and interpreted according to the
laws of the State of Florida. The sole venue for any and all actions,
lawsuits, arbitration hearings, and other legal proceedings shall be Palm
Beach County, Florida.
18) FAAB shall pay all fees and expenses of FAAB's respective counsel,
accountants and other experts and all other expenses incurred by such party
incident to the negotiation, preparation and execution of this Agreement and
the consummation of the transaction contemplated hereby. USAS shall pay all
fees and expenses of USAS's respective counsel, accountants and other experts
and all other expenses incurred by USAS incident to the negotiation,
preparation, execution of this Agreement and the consummation of the
transaction contemplated hereby. USAS shall pay any and all sales and transfer
taxes, fees, or documentary stamp taxes which may be levied on USAS by the
State of Florida, or any other governmental agency as a result of the
transactions contemplated by this Agreement.
19) All notices, requests, demands and other communications hereunder
shall be deemed to have been duly given if the same shall be in writing and
shall be delivered personally or sent by registered or certified mail, postage
repaid, and addressed as set forth below
(a) If to USAS: David J. Panaia, President of US Amateur Sports, Inc.
P.O. Box 32044
Palm Beach Gardens, FL 33420
Copy to: Thomas J. Thomas, Esquire
14155 U.6. Highway One, Suite 304
Juno Beach, Florida 33408
(b) If to FAAB: Dale Dougherty, President of High School Football
All American Bowl, Inc.
1 Admirals Court
Palm Beach Gardens, Florida 33418
Any party may change the address to which notices are to be addressed by
giving the other party notice in the manner herein set forth.
20)All publicity and announcements concerning the transaction
contemplated hereby may be made solely in the discretion of USAS.
21) The parties agree that it is impossible to measure a money damage
which will accrue to a party hereto, or to the personal representative of a
deceased party by reason of a failure to perform any of the obligations under
this Agreement. If any party hereof or the personal representative of a
deceased
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party will institute any action or proceeding to enforce the provisions
hereof, any person against whom such action or proceeding is brought hereby
waives the claim or defense therein that such party or such personal
representative has or have an adequate remedy at law.
22)The parties agree that they, their agents or their personal
representatives will do any act or thing or will execute any or all documents
necessary or proper to make effective the provisions of this Agreement, and to
effectuate under the terms of this Agreement the closing and other
requirements of this Agreement.
23)FAAB, its officers, directors, shareholders, employees, or agents,
individually or collectively, will not, at any time while this Agreement is in
effect, nor may FAAB, its officers, directors, shareholders, employees or
agents, for a period of three (3) years after the Closing Date:
(a)directly or indirectly solicit or otherwise attempt to
induce, by combining or conspiring with, or attempt to do so, or in any other
manner, to influence in the first instance any employees, officers, directors,
agents, consultants, representatives, contractors, suppliers, distributors, or
other business contacts of USAS to terminate or modify their position as an
employee, officer, director, agent, consultant, representative, contractor,
supplier, distributor, or business contact with USAS or to compete against
USAS;
(b)directly or indirectly, as owner, officer, director, agent,
lender, broker, consultant or representative of a corporation or as owner of
any interest in, or as an agent, consultant, partner, affiliate or $n any
other capacity whatsoever or representative of any other form of business
association, sole proprietorship or partnership, be otherwise connected in any
manner with the ownership, management, operation or control of or conduct a
business in direct competition with USAS anywhere within the United States of
America or solicit any customers, who are customers of USAS, for and in
connection with a business which is in direct competition with USAS; and
(c)In addition to, and not in limitation of, the other
provisions hereof, FAAB will not in any manner interfere with, disturb,
disrupt, decrease or otherwise jeopardize USAS or give to any person the
benefit or advantage of USAS's methods of operation, advertising, publicity,
training, business customers or accounts, or any other information considered
proprietary by USAS.
The foregoing covenants will not be deemed severable, and the invalidity
of any covenant will not affect the validity or enforceability of any other
covenants. USAS's failure to object to any conduct in violation of this
Section 23 wi11 not be deemed a waiver by USAS, but USAS may, if it wishes,
specifically waive any part or all of those covenants to the extent that such
waiver is set forth in writing and duly authorized by USAS's Board of
Directors.
FAAB acknowledges and confirms that the length of the term and
geographical restrictions contained herein are fair and reasonable and not the
result of overreaching, duress or coercion of any kind. FAAB further
acknowledges and confirms that its full, uninhibited and faithful observance
of each of the covenants contained in this Section 23 will not cause it any
undue hardship, financial or otherwise, and that enforcement of each of the
covenants contained in this Section 23 will not impair its ability to obtain
employment commensurate with its abilities and on terms fully acceptable to
them or otherwise to obtain income required for the comfortable support of
FAAB's shareholders and their families. FAAB acknowledges and confirms that
its special knowledge of USAS would cause USAS serious injury and loss if they
were to use such ability and knowledge to the benefit of a competitor or were
to compete with USAS.
-7-
<PAGE>
In the event that any court holds that the time or territory or any
other provision stated in this Section 23 constitutes an unreasonable
restriction upon FAAB. FAAB expressly agrees that the provisions of this
Agreement will not be rendered void, but will apply as to time and territory
or to such other event as the court may judicially determine or indicate
constitutes a reasonable restriction under the circumstances involved.
FAAB acknowledges that the provisions contained in this Agreement are
required for USAS's reasonable protection. FAAB agrees that in the event of
its violation of any of the provision. of this Agreement, USAS will be
entitled if it so elects, to institute and prosecute proceedings at law or in
equity to obtain damages with respect to the violation or to enforce the
specific performance of this Agreement by FAAB or to enjoin FAAB from engaging
in any activity in violation of this Agreement.
The validity or unenforceability of any provision of this Section 23
will in no way affect the validity or enforceability of any other provision of
this section, or any other provision of this Agreement.
In the event USAS is determined to be the prevailing party in any legal
action or other proceeding for the enforcement of Section 23 of this
Agreement, the time for calculating the Term will not include the period of
time commencing with the filing of legal action or other proceeding to enforce
the terms of this Section 23 through the date of final judgment or final
resolution, including all appeals, if any, of such legal action or other
proceeding.
24)FAAB has received no representations or warranties from USAS, its
employees, agents or attorneys in connection with USAS's common stock, the
valuation, marketability or any other matter in connection with USAS's common
stock, except as set forth in this Agreement.
25)FAAB is acquiring USAS's common stock for FAAB's own account with
the intention of holding the common stock with no present intention of
dividing or allowing others to participate in the acquisition of the common
stock or of reselling or otherwise participating, directly or indirectly, in a
distribution of USAS's common stock, and shall not make any sale, transfer, or
pledge thereof without registration under the Securities Act and any
applicable securities laws of any state or unless any exemption from
registration is available under those laws, FAAB acknowledges that the
certificates for the securities comprising USAS's common stock which FAAB will
receive will contain a legend substantially as follows:
THE SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW
TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, TRANSFERRED, MADE SUBJECT TO A
SECURITY INTEREST, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS AND
UNTIL REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"), AS AMENDED OR
AN OPINION OF COUNSEL FOR THE COMPANY IS RECEIVED THAT REGISTRATION IS NOT
REQUIRED UNDER SUCH ACT.
FAAB further acknowledges that a stop transfer order will be placed upon
the certificates for USAS's common stock in accordance with the Act. FAAB
further acknowledges that USAS is under no obligation to aid FAAB in obtaining
any exemption from registration requirements nor is USAS under any obligation
to register any of its stock with the Securities and Exchange Commission.
FAAB further acknowledges that FAAB has received a preliminary
prospectus dated November 7, l996 of USAS's initial public offering of
1,500,000 shares of its common stock, with fifty (50) shares per unit and at a
price of $300.00 per unit.
-8-
<PAGE>
FAAB has been given the opportunity to ask questions of, and receive answers
from, USAS concerning the terms and conditions of USAS's common stock and to
obtain such additional information, to the extent USAS possesses such
information or can acquire it without unreasonable effort or expense,
necessary to verify the accuracy of same as FAAB reasonably desires in order
to evaluate USAS's common stock.
26)The closing date of this agreement shall be November 12, 1996.
27)USAS agrees not to sell and/or transfer the rights of the High
School Football All-American Bowl event and all necessary aspects (trade
names, trademarks, etc...) for a period of three (3) years. Should USAS sell
and/or transfer the rights of the High School Football All-American Bowl in
less than three (3) years from the date of this Agreement, USAS will
compensate FAAB as broken down in Exhibit "A", with twenty-five percent (25%)
of the gross revenue ant/or benefit generated. Such compensation will be
granted to FAAB by USAS on or before thirty (30) days following the sale or
transfer of said rights. Any sale or transfer of the rights beyond the three
year period, will result in FAAB only being compensated by USAS as dictated in
this Agreement.
28)USAS agrees to purchase the stock of two (2) individuals (Curt
Sannie and John Wittman of Exhibit "A") for the total of five-thousand dollars
($5,000). Each individual will receive twenty-five hundred dollars ($2,500) on
or before August 1, 1997. Following the execution of the transfer of the stock
back to USAS and the issuance of $2,500 to each individual, the individuals
will no longer have any rights whatsoever to any future claim or compensation
from the FAAB, USAS or any other merging entity.
<PAGE>
EXHIBIT "A"
DALE DOUGHERTY 56,000 JOHN WITTMAN 1,000
1 ADMIRALS COURT 395 HILLSIDE DR.
PALM BEACH GARDENS, FL 33418 BLOOMSBURG, PA 17815
(561) 776-0803 (717) 387-5267
DOUGLAS DOUGHERTY 20,000 DAVE YESSEN 1,000
3511 CHERRY CIRCLE 94 OAKWOOD VILLAGE #5
SCHNECKSVILLE, PA 18037 FLANDERS, NJ 07836
(610) 799-3084 (201) 927-0563
DANIEL DOUGHERTY 4,000 JOHN KOCON 500
317 1/2 JEROME STREET 14 S. HALSTEAD STREET
ALLENTOWN, PA 18103 ALLENTOWN, PA 18103
(610) 433-1804 (610) 437-2018
DONALD DOUGHERTY 4,000
17 S. HALSTEAD ST.
ALLENTOWN, PA 18103
(610) 433-2586
JAMES SWOPE 4,000
164 WASHINGTON DR.
WARMINSTER, PA 18974
(215) 675-0540
TYRONE STOFFLET 4,000
2611 SPRING ST.
COPLAY, PA 18037
(610) 799-2793
VINCENT HERMAN 2,000
975 LITTLE LEHIGH DR.
EMMAUS, PA 18049
(610) 967-4920
JEFF HESS 1,500
2031 VIRGINIA ST.
ALLENTOWN, PA 18103
(610) 791-5137
CURT SANNIE 1,000
2628 COLUMBIA ST.
ALLENTOWN, PA 18104
(610) 821-8S88
CHRIS COPE
411 S. 17TH ST.
ALLENTOWN, PA 18104
(610) 820-0970
Executed by the Parties on the date first written above.
HIGH SCHOOL FOOTBALL
ALL AMERICAN BOWL, INC. US AMATEUR SPORTS, INC,
BY: ___________________________ BY:____________________________
BY: Dale Pougherty, President of BY: David J. Panaia,
High School Football All President of
American Bowl, Inc. US Amateur Sports, Inc.
STATE OF FLORIDA )
COUNTY OF ________)
The foregoing instrument was acknowledged before me this ___ day of
________, 199__, by David J. Panaia as President of US Amateur Sports, Inc. a
Florida corporation on behalf of the corporation, who personally appeared
before me, and (check one) ______ who is personally known to me (or, if not
personally known to me) _____ who has produced__________________ as
identification, and who did not take an oath.
NOTARY PUBLIC:
____________________________________
Sign above and Print Name
Here:_______________________________
My commission number, if any, is
____________________________________
STATE OF FLORIDA )
COUNTY OF PALM BEACH )
The foregoing instrument was acknowledged before me this ____ day of
__________, 199__, by Dale Doughtery, President of the High School Football
All American Bowl, Inc. a Pennsylvania corporation on behalf of the
corporation who personally appeared before me, and (check one) ______ who is
personally known to me (or, if not personally known to me)_____ who has
produced ____________________________
as identification, and who did not take an oath.
NOTARY PUBLIC:
___________________________________
Sign above and Print Name
Here:______________________________
My commission number, if any, is
___________________________________
INDEPENDENT CONTRACTOR SERVICES AGREEMENT
This Agreement is made and entered to be effective on the 1st day of
January, 1997, by and between US Amateur Sports, Inc. (USAS) and Dale
Dougherty (Dougherty), an independent contractor.
For the valuable and mutual consideration set forth herein, the receipt
of which is hereby acknowledged by the parties hereto, the parties agree as
follows:
1)Dale Dougherty will provide personal services to USAS in
conjunction with organization and direction of sporting events, including but
not limited to, the All American Bowl. Such services will be provided on a
part time basis. During the period of this agreement Dougherty shall be
permitted to retain his current position as the Director of Recreation of the
city of Lake Park, Florida.
2)Dougherty will serve as Executive Director of the All American
Bow1 in which capacity he wi11 be responsible for all activities necessary to
achieve the successfu1 presentation of the Bowl including, but not limited to,
the game itself, recruitment of players and coaches, coordination of travel
arrangements, direction of the week's activities immediately prior to the
game, related logistics and any events separate from, or associated with the
Bowl.
3)USAS will transfer to Dougherty 67,000 shares of USAS common
stock. Such stock shall be subject to restrictions on transferability, which
are set forth in the Securities and Exchange Commission.
4)USAS shall pay Dougherty $1,675.00 per month for services rendered
on a part-time basis (evenings and weekends). Such payments shall commence on
or before January 31, 1997. Such payments will cease when this Agreement is
canceled or terminated pursuant to the provisions of Section 6 below, upon
either party mailing the written thirty-day {10) notice to the other, upon
which all such payments shall cease.
5)USAS shall provide Dougherty with office space, to include
telephone service and supplies suitable for the performance of his duties.
6)This agreement may be amended in writing by the mutual agreement
of the parties and may be canceled by either party upon thirty (30) days
written notice.
7)Dougherty shall be under the direct supervision of the President
of USAS, and shall comply with any and all reasonable requests made by the
President of USAS. The president of USAS shall also have the right to delegate
this authority of supervision to any other officer or employee of USAS. Said
instructions by the President of USAS need not be in writing.
8)Dougherty is an independent contractor and his relationship under
this agreement is as an independent contractor in providing all services to
USAS. Dougherty is a Stockholder of USAS, but is not an employee, partner or
otherwise with respect to his relationship with USAS under this agreement
except as an independent contractor. Dougherty has the right to determine the
amount of services to be rendered, the time and method of rendering such
services, and shall be in control of his own time and business decisions with
respect to all services rendered under this agreement by Dougherty. USAS is
not obliged to accept any services or advice given to it. Its decision to act
is always within its own volition. USAS is an independent contractor with
respect to Dougherty under this agreement.
<PAGE>
9)Dougherty shall be responsible for the payment of any and all
F.I.C.A. taxes, social security taxes, and federal income tax withholding
payments which any sole proprietor or self-employed person is liable under the
Internal Revenue Code of 1986, amended.
l0)This agreement contains the entire agreement of the parties and no
amendment may be made to this agreement without the consent of the parties.
11)This agreement shall not be subject to assignment by Dougherty and
shall not be subject to assignment by USAS without the consent of the other
party to this Agreement.
12)The execution, interpretation and performance of this Agreement
shall be governed by the laws of the State of Florida.
13)Dougherty, his assigns, personal employees or agents, individually
or collectively, wi11 not, at any time while this Agreement is in effect, nor
may Dougherty, his assigns, personal representative, employees or agents, for
a period of three (3) years after the effective date of this agreement:
(a)directly or indirectly, solicit or otherwise attempt to
induce, by combining or conspiring with, or attempt to do so, or in any other
manner, to influence in the first instance any employees, officers, directors,
agents, consultants, representatives, contractors, suppliers, distributors, or
other business contacts of USAS to terminate or modify their position as an
employee, officer, director, agent, consultant, representative, contractor,
supplier, distributor, or business contact with USAS or to compete against
USAS;
(b)directly or indirectly, as owner, officer, director, agent,
lender, broker, consultant or representative of a corporation or as owner of
any interest in, or as an agent, consultant, partner, affiliate or in any
other capacity whatsoever or representative of any other term of business
association, sole proprietorship or partnership, be otherwise connected in any
manner with the ownership, management, operation or control of or conduct a
business in direct competition with USAS anywhere within the United States of
America or solicit any customers, who are customers of USAS, for and in
connection with a business which is competitive with USAS; and
(c)In addition to, and not in limitation of the other
provisions hereto, Dougherty, will not in any manner interfere with, disturb,
disrupt, decrease or otherwise jeopardize USAS or give to any person the
benefit or advantage of USAS's methods of operation, advertising, publicly,
training, business customers or accounts, or any other information considered
proprietary by uses.
The foregoing covenants will not be deemed severable, and the invalidity
of any covenant will not affect the validity or enforceability of any other
covenants. USAS's failure to object to any conduct in violation of this
Section 13 will not be deemed a waiver by USAS but USAS may, if it wishes,
specifically waive any part or all of those covenants to the extent that such
waiver is set forth in writing and duly authorized by USAS's Board of
Director.
Dougherty acknowledges and confirms that the 1ength of the term and
geographical restrictions contained herein are fair and reasonable and not the
result of overreaching, duress or coercion of any kind. Dougherty further
acknowledges and confirms that its full, uninhibited and faithful observance
of each of the covenants contained in this Section 13 will not cause it any
undue hardship, financial or otherwise, and that enforcement of each of the
covenants
-2-
<PAGE>
contained in this Section 13 will not impair its ability to obtain employment
commensurate with its abilities and on terms fully acceptable to them or
otherwise to obtain income required for the comfortable support of Dougherty's
shareholder and his family. Dougherty acknowledges and confirms that its
special knowledge of USAS would cause USAS serious injury and loss if they
were to use such ability and knowledge to the benefit of a competitor or were
to compete with USAS.
In the event that any court holds that the time or territory or any
other provision stated in this Section 13 constitutes an unreasonable
restriction upon Dougherty, Dougherty expressly agrees that the provisions of
this Agreement will not be rendered void, but will apply as to time and
territory or to such other extent as the court may judicially determine or
indicate constitutes a reasonable restriction under the circumstances
involved.
Dougherty acknowledges that the activity as contained in this Agreement
are required for USAS's reasonable protection. Dougherty agrees that in the
event of their violation of any of the provisions of this Agreement, USAS will
be entitled if it so elects, to institute and prosecute proceedings at law or
in equity to obtain damages with respect to the violation or to enforce the
specific performance of this Agreement by Dougherty or to enjoin Dougherty
from engaging in any activity in violation of this Agreement.
The validity or unenforceability of any provision of this Section 13
will in no way affect the validity or enforceability of any other provision of
this Section, or any other provision of this Agreement.
In the event USAS is determined to bo the prevailing party in any legal
action or other proceeding for the enforcement of Section 13 this Agreement,
the time for calculating the Term wi11 not include the period of time
commencing with the filing of legal action or other proceeding to enforce the
terms of this Section 13 through the date of final judgment or final
resolution, including all appeals, if any, of such legal action or other
proceeding.
14)Dougherty is acquiring the USAS's common stock for his own account
with the intention of holding the common stock with no present intention of
dividing or allowing others to participate in the acquisition of the common
stock or of reselling or otherwise participating, directly or indirectly, in a
distribution of the USAS's common stock, and shall not make any sale,
transfer, or pledge thereof without registration under the Securities Act and
any applicable securities laws of any State or unless any exemption from
registration is available under those laws. Dougherty acknowledges that the
certificates for the securities comprising USAS's common stock which Dougherty
will receive will contain a legend substantially as follows:
THE SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND NOT WITH A WITH
TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, TRANSFERRED, MADE SUBJECT TO A
SECURITY INTEREST/ PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS AND
UNTIL REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"), AS AMENDED OR
AN OPINION OF COUNSEL FOR THE COMPANY IS RECEIVED THAT REGISTRATION IS NOT
REQUIRED UNDER SUCH ACT.
Dougherty further acknowledges that a stop transfer order vill be placed
upon the certificates for the USAS's common stock in accordance with the Act.
Dougherty further acknowledges that the USAS is under no obligation to aid
Dougherty in obtaining any exemption from registration requirement's or is
USAS under any obligation to register any of its stock with the Securities and
Exchange Commission.
-3-
<PAGE>
Dougherty further acknowledges that he has received a preliminary
prospectus dated November _ , 1996 of the initial public offering of one
million five hundred (1,000,00O) shares common stock of USAS, with fifty (50)
shares per unit, and at a price of three hundred dollars ($300.00) per unit.
Dougherty has been given the opportunity to ask questions of and receive
answers from, USAS concerning the terms and conditions of the USAS's common
stock and to obtain such additional information, to the extent USAS possesses
such information or can acquire it without unreasonable effort or expense,
necessary to verify the accuracy of same as Dougherty reasonably desires in
order to evaluate the USAS's common stock.
IN WITNESS WHEREOF, this agreement has been entered into on the date
above written having been duly authorized by the Board of Director of USAS.
DALE DOUGHERTY US AMATEUR SPORTS, INC.
INDEPENDENT CONTRACTOR
BY:
BY: David J. Panaia, President
of US Amateur Sports, Inc.
- -4-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheets and consolidated statements of operations found on
pages F-2 and F-3 of the Company's Form 10-KSB for the fiscal year ended May
31, 1997, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-END> MAY-31-1997
<CASH> 810
<SECURITIES> 0
<RECEIVABLES> 3,064
<ALLOWANCES> 0
<INVENTORY> 77,946
<CURRENT-ASSETS> 0
<PP&E> 52,894
<DEPRECIATION> 0
<TOTAL-ASSETS> 176,933
<CURRENT-LIABILITIES> 79,461
<BONDS> 0
0
0
<COMMON> 6,000,600
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 176,933
<SALES> 48,381
<TOTAL-REVENUES> 48,381
<CGS> 25,078
<TOTAL-COSTS> 263,321
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,825
<INCOME-PRETAX> (240,018)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (240,018)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
