U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 1997.
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from _______________ to _______________
Commission file number: 000-21585
Worldwide Entertainment & Sports Corp.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 22-3393152
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
29 Northfield Avenue, West Orange, New Jersey 07052
(Address of Principal Executive Offices)
(201) 325-3244
(Issuer's Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes __X____ No ______
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.
Yes ______ No ______
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Common Stock, $.01par value - 5,153,255 shares
Transitional Small Business Disclosure Format (check one): Yes ___ No ___
<PAGE>
PART I.
Item 1. Financial Statements
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, 1997 December 31,
(Unaudited) 1996
-------------- ------------
CURRENT ASSETS
Cash and certificates of deposit $ 371,628 $ 1,091,505
Marketable securities (at fair
market value) 2,571,401 3,098,760
Accounts receivable, net of allowance
for doubtful accounts of $600 38,163 12,396
Prepaid consulting fees 40,000 40,000
Due from boxes and other related parties,
net of reserve of $172,989 and $38,853 134,988 92,458
Deposit - 43,150
Other current assets 34,569 12,275
----------- -----------
Total Current Assets $ 3,190,749 $ 4,390,544
PROPERTY AND EQUIPMENT-AT COST, net
of accumulated depreciation 24,055 56,195
OTHER ASSETS
Due from related party, net of reserve of
$30,710 - 30,711
Cash surrender value of life insurance 4,861 4,861
Deferred consulting expense 140,000 150,000
Other Assets 20,950 20,950
----------- -----------
165,811 206,522
----------- -----------
Total Assets $ 3,380,615 $ 4,653,261
See notes to Unaudited Condensed Consolidated Financial Statements.
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES
March 31, 1997
(Unaudited) December 31, 1996
-------------- -----------------
CURRENT LIABILITIES:
Current portion of long-term
debt $ - $ 25,515
Accrued expenses 153,845 245,539
Compensation and related items 39,522 227,585
Escrow funds payable 149,156 149,156
Advance on letter of credit - 70,000
Due to Officer 68,826 168,826
Deferred income - 14,536
Income taxes payable 450 450
------- -------
Total Current Liabilities 411,799 901,607
STOCKHOLDERS' EQUITY
Common stock, $.01 par value,
authorized 20,000,000shares;
5,153,255 shares issued 51,533 51,533
Additional paid-in capital 6,764,061 6,763,651
Accumulated deficit (3,834,428) (3,060,307)
Demand note receivable on private
issuance of Common Stock (12,350) (12,350)
Unrealized gain on securities
available for sale - 9,217
--------- ---------
2,968,816 3,751,654
--------- ---------
Total Liabilities and
Stockholders' Equity $ 3,380,615 $ 4,653,261
========= =========
See notes to Unaudited Condensed Consolidated Financial Statements.
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended March 31, 1997 and 1996
(Unaudited)
1997 1996
------------ ------------
Purse income $ 21,750 $ 25,988
Commission income 10,797
Endorsement income 15,000
Ticket revenues 11,995
Agency fees 25,825 -
Merchandise revenues 1,008
--------- ---------
Total Revenues 62,575 49,788
--------- ---------
Training and related expenses 29,051 39,727
Promotion and other operating expenses 780,640 350,160
--------- ---------
809,691 389,887
--------- ---------
Loss from Operations (747,116) (340,099)
Other income and expenses:
Interest and dividend income 33,355 438
Interest expense - ( 32,245)
Other ( 6,279) -
--------- ---------
27,076 ( 31,807)
--------- ---------
Loss before income taxes (720,040) (371,906)
Income taxes 4,320 100
--------- ---------
Net Loss $ (724,360) $ (372,006)
--------- ---------
Loss per share $ (.14) $ (.10)
--------- ---------
Weighted average common shares
outstanding 5,153,255 3,719,921
--------- ---------
See notes to Unaudited Condensed Consolidated Financial Statements.
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1997 and 1996
(Unaudited)
1997 1996
----------- -----------
Cash Flows from Operating Activities $ (194,018) $ (822,583)
Cash Flows from Investing Activities (527,359) (34,551)
Cash Flows from Financing Activities 1,500 352,302
--------- --------
Net Increase (Decrease) in Cash (719,877) (504,832)
Cash and Certificates of Deposit at
Beginning of Period 1,091,505 547,136
--------- --------
Cash and Certificates of Deposit at
End of Period $ 371,628 $ 42,304
========= ========
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Year for:
Income Taxes $ 4,320 $ 100
========= ========
Interest $ - $ 2,552
========= ========
See notes to Unaudited Condensed Consolidated Financial Statements.
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - NATURE OF ORGANIZATION AND BASIS OF PRESENTATION:
1. Nature of Organization:
Worldwide Entertainment & Sports Corp. (the "Company") was incorporated in
Delaware on August 15, 1995, for the purpose of providing management, agency,
and marketing services to professional athletes, artists and entertainers,
principally to boxers, football and basketball players.
2. Basis of Presentation:
The Condensed Financial Statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations.
The Condensed Financial Statements included herein reflect, in the opinion of
management, all adjustments (consisting primarily only of normal recurring
adjustments) necessary to present fairly the results for the interim periods.
The results of operations for the three months ended March 31, 1997, are not
necessarily indicative of results to be expected for the entire year ending
December 31, 1997.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1. The condensed consolidated financial statements include the accounts of
the company and all of its subsidiaries, all of which are wholly-owned,
except for Worldwide Basketball Management, Inc., which company is 80% owned.
2. Purse revenue is recognized upon completion of a fight, as a percentage of
the boxer's purse. Commission and endorsement income is recognized upon the
completion of the contracted event. Ticket revenues are recognized upon the
commencement of a scheduled fight. Agency fee revenue is recognized ratably
over the various athletic seasons.
3. Net loss per share is computed by dividing net loss by the weighted
average number of shares of Common Stock outstanding during the period.
Common Stock equivalents have not been included in this computation since the
effect would be anti-dilutive.
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE C: SALE OF COMMON STOCK
On October 22, 1996, the Company sold 1,400,000 Units, each comprising one
share of its common stock, $.01 par value ("Common Stock"), and one
redeemable common stock purchase warrant ("Redeemable Warrants")in an initial
public offering. Each Redeemable Warrant entitles the holder to purchase one
share of Common Stock at $7.20 commencing October 22, 1997 until October 21,
2001. The proceeds from this transaction (approximately $ 7.5 million) were
used, in part, to repay outstanding indebtedness of approximately $2,150,000
and costs and expenses of the offering. The remainder for future operating
purposes, has been invested in short-term securities.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
General
Worldwide Entertainment & Sports Corp. was organized in August 1995, and since
such date has succeeded to the business operations of various entities
engaged in the management of professional boxers, each previously controlled
by the Company's Chief Executive Officer. In addition, in January 1996, the
Company formed Worldwide Team Sports, Inc. ("WWTS") and hired a registered
NFL contract advisor. In August 1996, for the purpose of providing agency,
marketing and management services to professional basketball players, the
Company formed Worldwide Basketball Management, Inc. ("WWBM"), a corporation
80% owned by the Company and 20% owned by WWBM's President and Executive Vice
President, respectively. In March 1997, the Company established Worldwide
Sports Promotions, Inc. for the purpose of promoting sporting events. This
subsidiary has had limited operations to date. Through WWBM and WWTS, the
Company has expanded into the field of player agency and contract advisory
services. The Company has only limited experience in the negotiation of
player contracts, and consequently may seek to hire additional contract
advisors or to retain the services of other registered contract advisors on
an independent contractor or consultancy basis and share a portion of fees
generated therefrom with such persons. To date, the Company has generated
limited revenues from contract advisory services to professional football
and basketball players.
Establishing and maintaining a presence in each of the Company's areas of
concentration, (i.e., boxing management and team sports player agency)
require significant expenditures. Each sports specific division must develop
a roster of clients, establish relationships within their prospective sports
and develop support services to provide to the athletes. Only a portion of
such expenses incurred by the Company will result in the engagement by a
client of the Company's services, and it is often uncertain the extent to
which, even if retained, a target client will generate significant revenues
to the Company. In addition, the Company incurs significant training
expenses for the boxers under the Company's management, not all of which are
directly reimbursed pursuant to bout agreements for such boxers. In the
development of a boxer, particularly a young amateur boxer, into a
professional boxer who can command significant purses, such expenses can be
incurred over a period of years and constitute hundreds of thousands of
dollars or more. The Company must continuously incur such expenses in
contemplation of future revenues, the receipt of which is uncertain.
The Company's revenues are directly related to the earnings of its clients.
The Company derives revenues based upon a percentage, currently ranging from
15% to 27-1/2%, of the boxers' purses from professional bouts. The Company
also derives revenues based upon a percentage of salaries and other income
received from contracts, endorsement arrangements and other income producing
activities of athletes for whom the Company or its management acts as agent
or representative. These percentages currently range from 4% for
professional basketball and football player contracts (although occasionally
lower percentages are agreed upon) to 10% or 20% for endorsement and
marketing revenues.
The timing of receipt of revenues by the Company is subject to seasonal
variations with respect to revenues generated from the negotiation of player
contracts and subject to irregular patterns in the
<PAGE>
case of boxing purse revenues as a result of the irregular occurrence of the
bouts. In addition, the magnitude of the Company's revenues can be expected
to experience wide fluctuations based upon the success or failure of the
Company's boxers or the negotiation of player contracts with significant
bonus provisions. The Company's WWTS and WWBM subsidiaries can be expected
to incur significant expenditures during the first eight months of each
calendar year (particularly March through July) for recruitment and related
expenses, and to receive their revenues during the last four and first three
months of the year during the NFL and NBA seasons. If the Company were to
expand into the representation of baseball players (or other professional
athletes with a spring/summer season), of which there can be no assurance,
the effects of such seasonality would be diminished.
Three months ended March 31, 1997 Compared with Three months ended
March 31, 1996
Net revenues for the three months ended March 31, 1997 were $62,575, as
compared to $49,788 for the three months ended March 31, 1996. Purse income
decreased to $21,750 for the 1997 period, as compared to $25,988 for 1996
period. The decrease is a result of a decrease in the aggregate sizes of
the purses. In addition, during the quarter ended March 31, 1997, the
Company recognized endorsement and agency fee income from representation of
team sports athletes, aggregating $40,828. No such revenues were received by
the Company during the comparable period in 1996. During the three months
ended March 31, 1996, the Company purchased tickets to bouts and then resold
the tickets to aid in the distribution of tickets. Such practice was not for
the purpose of generating gain on the sale of the tickets, and such practice
was suspended in the third quarter of 1996. Accordingly, ticket revenues for
the three months ended March 31, 1996 were $11,995. Such revenues are
largely offset by a corresponding expense for ticket costs. Therefore, this
change does not result in a significant impact on the Company's net income
or loss.
Total expenses increased for the three months ended March 31, 1997 to $809,691
from $389,887 for the three months ended March 31, 1996. Promotion and other
operating expenses increased to $780,640 for the 1997 period as compared to
$350,160 for the corresponding 1996 period as a result of (i) $67,034 of
travel and entertainment expenses and telephone expenses in excess of 1996
comparable amounts, incurred in connection with the recruitment of
professional athletes and agents and in connection with bouts for the
Company's four boxers, and (ii) $198,254 in payroll expenses over the
comparable 1996 period as a result of the hiring of professional NFL agents,
the compensation of the Chief Executive and Chief Financial Officers (not
paid prior to January 1, 1996) and additional staff personnel, and (iii)
additional professional and consulting fees of $50,000 due to the public
status of the Company in 1997. In addition, there were approximately
$46,000 of expenses for promotional materials and other public relations
expenses for 1997 in excess of the same 1996 period. The three month period
ended March 31, 1996 also included $32,245 of interest expense attributable
to the 10% promissory notes issued in connection with the Company's private
placement which originated in September 1995. Such debt was repaid through
the proceeds of the public offering in October 1996. Accordingly, the
Company's net loss for the three months ended March 31, 1997 increased to
$724,360 from $372,006 for the corresponding 1996 period.
<PAGE>
Liquidity and Capital Resources
Historically, the Company's principal source of operating capital has been
provided by loans and capital contributions from the Company's stockholders
as well as private sales of the Company's debt securities. On October 22,
1996, the Company sold 1,400,000 Units , each comprising one share of common
stock and one redeemable common stock purchase warrant, in an initial public
offering. Net proceeds to the Company was approximately $7.5 million. The
proceeds were used to repay approximately $2,150,000 of debt and $550,000 of
costs associated with the offering. At March 31, 1997, the Company had
approximately $2,779,000 of working capital, of which $2,943,029 was cash
and short-term investments.
The Company may relocate its boxing facility. It is anticipated that the
Company would incur expenditures of $150,000 in connection therewith.
Management salaries (aggregating approximately $650,000 per annum) and
anticipated training expenses (estimated at approximately $475,000, depending
upon the number of bouts) represent the expected significant uses of working
capital during the next twelve months, as well as recruitment expenses
(estimated to approximate $650,000, subject to variations depending upon
player availability and recruiting success) and rent (approximately $108,000
per annum). Prior to January 1, 1996, no officer of the Company was paid a
salary nor were there any salaries accrued therefor.
Although the Company believes that the proceeds of its October 1996 initial
public offering will be sufficient to fund its operations over the next twelve
months or longer, there can be no assurance that the Company will have
sufficient revenues after such time to fund its operating requirements.
Accordingly, the Company may be required to seek additional financing through
bank borrowings, debt or equity financings or otherwise. There can be no
assurance that any such financing will be available to the Company on
favorable terms, if at all.
<PAGE>
PART II.
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities
(a) None
(b) None
(c) None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
None
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Worldwide Entertainment & Sports Corp.
(Registrant)
/s/Marc Roberts
Date May 14, 1997 --------------------------------------
Marc Roberts, President
/s/Roy Roberts
Date May 14, 1997 --------------------------------------
Roy Roberts, Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 371628
<SECURITIES> 2571401
<RECEIVABLES> 38763
<ALLOWANCES> 600
<INVENTORY> 0
<CURRENT-ASSETS> 209557
<PP&E> 63566
<DEPRECIATION> 39511
<TOTAL-ASSETS> 3380615
<CURRENT-LIABILITIES> 411799
<BONDS> 0
0
0
<COMMON> 51533
<OTHER-SE> 2917283
<TOTAL-LIABILITY-AND-EQUITY> 3380615
<SALES> 0
<TOTAL-REVENUES> 62575
<CGS> 0
<TOTAL-COSTS> 809691
<OTHER-EXPENSES> 6279
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (720040)
<INCOME-TAX> 4320
<INCOME-CONTINUING> (724360)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (724360)
<EPS-PRIMARY> (.14)
<EPS-DILUTED> 0
</TABLE>
