U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Fiscal Year Ended December 31, 1997
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT TO 1934
For the transition period from ___ to___
Commission File Number 0-21585
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
(Name of Small Business Issuer in its charter)
Delaware 22-3393152
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
29 Northfield Avenue, West Orange, NJ 07052
(Address of Principal Executive Offices) (Zip Code)
(973) 325-3244
Issuer's Telephone Number, Including Area Code
Securities registered pursuant to Section 12(b) of the Exchange Act:
(none)
Securities registered pursuant to Section 12(g) of the Exchange Act:
Title of Each class
Common Stock, $ .01 par value
Redeemable Warrants
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
Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or
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information statements incorporated by reference in Part III of this form 10-KSB
or any amendment to this Form 10-KSB. (X)
State issuer's revenues for its most recent fiscal year. $590,227
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the last 60
days. $13,363,339, based upon a closing price of $2.75 on March 31, 1998
APPLICABLE ONLY TO CORPORATE REGISTRANTS
State the number of shares outstanding of each issuer's classes of common
equity, as of the latest practicable date. 6,922,197 shares as of March 27, 1998
Transitional Small Business Disclosure Format (check one):
Yes No X
DOCUMENTS INCORPORATED BY REFERENCE
None.
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PART I
Item 1. Description of Business
Organization
The Company was organized in August 1995 for the purposes of succeeding
to the boxing management operations conducted by various entities controlled by
Marc Roberts and to engage in management of, and to provide agency services to,
athletes in other sports and entertainers. In November 1995, the Company entered
into a management agreement with heavyweight prospect Shannon Briggs, and
acquired all of the assets and assumed all of the liabilities of Shannon Briggs
I, L.P., an entity controlled by Marc Roberts which had previously managed Mr.
Briggs. In 1995, the Company acquired Marc Roberts Boxing, Inc., Merciless
Management, Inc. and The Natural Management, Inc., entities owned by Marc
Roberts through which he managed Tracy Patterson, Ray Mercer and Charles Murray,
respectively. Such corporations, together with Marc Roberts Inc. and SB Champion
Management Inc., corporations also owned by Mr. Roberts, were subsequently
merged into the Company, and the Company entered into new management agreements
with these boxers. The business of managing the boxers is conducted through the
Boxing Division of the Company.
In January 1996, the Company established its Team Sports Division
through the formation of Worldwide Team Sports, Inc. ("WWTS"), initially
concentrating in the business of representing professional football players, and
employed a registered NFL contract advisor in connection therewith. 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 its Vice President. In March 1997, the Company
established Worldwide Football Management, Inc. ("WWFM"), as a separate
subsidiary to continue to provide agency, marketing and management services to
professional football players and hired an additional registered contract
advisor to serve as its president. WWFM is 80% owned by the Company and 20%
owned by its President. The Company intends to establish additional divisions
within its Team Sports Division or create separate wholly-owned subsidiaries for
each additional team sport into which the Company expands its operations. The
Company established two additional divisions of WWTS -- the Worldwide
Memorabilia Division, in March 1998 for the purpose of the procuring, developing
and consuming commercial transactions involving sports and entertainment
memorabilia, and the Worldwide Marketing Division ("WWMD"), in 1997, for the
purpose of developing commercial and marketing opportunities for athletes and
entertainers, including the Company's clients. Also in 1997, the Company
established Worldwide Sports Promotions, Inc. for the purpose of promoting
sporting events; however, it is not expected that the operations of this
subsidiary will be significant in the future.
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The Boxing Division
The Company's boxing division is under the direct supervision of Marc
Roberts, the Company's President. Mr. Roberts has over 18 years experience in
the management of professional boxers. The Company's five boxers have engaged in
over 90 professional bouts while under Mr. Roberts' management (including time
periods prior to the formation of WWES). In addition to the management of the
boxers identified below, the Company continually seeks to selectively identify
promising young boxers to solicit management opportunities.
Professional Boxing
The sport of boxing is overseen primarily by four organizations - the
World Boxing Association ("WBA"), the World Boxing Council ("WBC"), the
International Boxing Federation ("IBF") and the World Boxing Organization
("WBO") - which have established rules and regulations governing conduct in the
ring. Each of such entities, which are comprised of various foreign national
boxing commissions and certain state bodies, set their own rules, establish
their own medical and safety standards, create their own rankings and designate
their own "world champions." Each sanctions particular championship and official
title-elimination bouts. To hold a title in any of such organizations, a boxer
must compete in places, against opponents and under conditions specified by the
sanctioning body, one or more of which may sanction a particular bout.
Professional boxers are divided into 17 weight classes ranging from the
"heavyweight" division (190 lbs. and over) to the "strawweight" division (108
lbs. and under). Boxers are ranked within their weight class and predominantly
box opponents of the same or reasonably similar weight. Champions are crowned in
each division as well. Bouts can be as long as 12 rounds, usually reserved for
championship bouts, or as short as four rounds for bouts between young, untested
boxers.
Boxing matches are judged by three judges under the rules dictated by
the state boxing authority of the state in which the bout is located. Unless
decided by a knockout or disqualification, bouts are won or lost according to a
system of points awarded to the boxer who landed the most, and most effective
punches during a bout. A referee presides over a match as the third party in the
ring, insuring that the boxers box in accordance with the rules. While the
judgment of the referees and the judges is generally not subject to further
review, the nature of bout judging is largely subjective. Therefore, it is
impossible to predict the outcome of a bout or, in turn, the professional
success of a boxer. A decision against a boxer can seriously set back his
development into a contender and thus his ability to earn substantial purses.
In addition to the boxers, judges and referees, the business of
professional boxing is driven by promoters and managers. Promoters are
responsible for contracting boxers to bout agreements with designated opponents,
arranging sites, negotiating broadcast rights contracts and establishing and
paying the gross purses to the boxers. Promoters generally are also authorized
to sell tickets for the matches they promote and to exploit and market all
ancillary rights to the bout, including without limitation, the broadcasting,
telecasting, recording or filming of such contests for exhibition on a live or
delayed basis in any and all media.
The role of a manager, such as the Company, is to advise its boxers on
career development, training and business planning matters, to solicit the
arrangement of matches with potential opponents, to advise the boxers regarding
participation in bouts requested by others, and to negotiate the terms thereof,
including purse payments, and the selection of opponents with promoters of
bouts. A manager's success is dependent
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upon, among other factors, its boxers participating in bouts with increasingly
higher purses, which is directly related to such factors as the continued
success of the boxers and the ability of the manager to arrange contests and
exhibitions of sufficient interest to the public to warrant substantially
greater purses. The Company believes that unless and until a boxer attains
championship or, in the case of a heavyweight, top contender status, his purses
will not be at a level which will generate sufficient revenues for the Company
to offset its costs and advances.
The recruitment and development of young professional boxers is a major
expense of boxer management. A would-be manager faces stiff competition from
other entities in pursuit of quality boxers. There are a limited number of
potential participants for bouts with significant purses and a limited number of
promoters to organize such bouts. The securing of a boxer as a client requires a
great deal of attention and a demonstration of a willingness and ability to
understand and appropriately handle the professional and personal needs and
aspirations of the athlete. The process can be time consuming and costly. Early
in a boxer's career, when revenues from his matches are too low to cover his
expenses and cost of living, a manager must advance the costs for the boxer's
professional and often personal needs, including, but not limited to, training
expenses, personal services, cost of food, clothing, shelter and medical costs.
It usually takes several years of boxing before a boxer reaches a level of
professional success whereupon the revenue from his boxing is sufficient to
support his career and to pay off his manager's advances. There can be no
assurance that any boxer who may be managed by the Company in the future, will
ever generate sufficient revenues to allow the Company to recoup its
expenditures.
The Boxers
The Company currently manages the following six professional boxers
pursuant to exclusive management contracts:
Tracy Harris Patterson is the former World Champion in two different weight
classes: WBC Super Bantamweight Champion and IBF Junior Lightweight Champion.
During 1996, Mr. Patterson won three bouts against Jose Figouera, Harold Warren
and Jose Aponte. In 1997, Mr. Patterson lost a title fight with Arturo Gatti.
Charles "The Natural" Murray has been boxing professionally since March
1989. Mr. Murray formerly held the North American Boxing Federation (a lesser
sanctioning body) Junior Welterweight Championship and until 1997, was ranked in
the top ten by each of the WBC, IBF and WBA. Mr. Murray previously held the IBF
Junior Welterweight World Championship. Mr. Murray was unsuccessful in his two
1997 bouts.
Raymond "Merciless Ray" Mercer was the 1988 Olympic heavyweight gold
medalist and has been boxing professionally since February 1989. Mr. Mercer was
formerly the WBO Heavyweight World Champion and the IBF Intercontinental
Champion. Mr. Mercer lost to Lennox Lewis in May 1996, and won in October 1996
against Tim Whitherspoon. Mr. Mercer did not engage in any bouts in 1997 as a
result of a neck injury and subsequent recovery from corrective surgery. Mr.
Mercer resumed his boxing schedule in 1998.
Shannon Briggs has been boxing professionally since July 1992. Mr. Briggs
fought three times during 1996. He was victorious against Tim Ray and Eric
French, and lost to Darroll Wilson. Mr. Briggs fought four times in 1997,
winning all four matches. Mr. Briggs won by knockout against Eric French and
Melton
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Bowen in February and April, respectively. In June, Mr. Briggs won with a TKO
over Jorge Valdes. In November of 1997, Mr. Briggs won a 12 round majority
decision against George Foreman. In March 1998, Mr. Briggs lost a title bout
with Lennox Lewis, the WBC Heavyweight Champion. In April 1998, Mr. Briggs
renewed his management agreement for a five year term.
Danell Nicholson was a heavyweight on the 1992 U.S.A. Olympic team. Mr.
Nicholson lost a decision to the gold medalist Felix Savogne at the 1992
Olympics. After the 1992 Olympics Mr. Nicholson turned professional and has
since amassed a record of 28 wins, with 22 by knockout, and 3 losses. Mr.
Nicholson has won 5 consecutive bouts, the most recent victory a third round TKO
of Everett Mayo on January 31, 1998 coming under the Company's management. The
Company's management agreement with Mr. Nicholson, signed in December 1997,
expires in December 1999, at which time the Company has the exclusive
irrevocable option, but not the obligation, to extend the term of the management
agreement for an additional 24 month period.
Each of these boxers has entered into a management agreement with the
Company pursuant to which the Company will supervise and direct the boxer's
training activities, negotiate business opportunities on behalf of the boxer and
oversee all marketing and promotional activities regarding the boxer. The
Company negotiates with promoters on behalf of its boxers to determine which
bouts each boxer will engage in and the terms of the purses to be paid for such
bouts. In exchange for providing such services, the Company retains a percentage
of the purses from all professional boxing contests and exhibitions and all
fees, honoraria or other compensation payable to the boxer for product
endorsements, speaking engagements, personal appearances or other commercial
performances. An amount equal to --up to 10% each of the purses as well as all
fees, honoraria or other compensation payable to the boxer is generally paid by
the boxer to his trainer. The balance of the purse is retained by the boxer.
Unless otherwise stated, the initial term of each of the management
contracts is five years expiring in 2001 or late 2000. Although the Company's
management contracts are not subject to cancellation by the boxers, there can be
no assurance that such individuals will honor their contractual obligations.
In April 1997, the Company entered into a promotional contract with
Alex Trujillo. Mr Trujillo turned professional in 1996. Mr. Trujillo is a
lightweight, with a record of 12-0, who competed in 8 bouts in 1997.
Mr. Trujillo's promotional contract expires in 2001.
The Company has entered into an agreement with Jesse Ferguson and his
manager, pursuant to which the Company has the right to receive a fixed
percentage of the gross purse of any bout in which Mr. Ferguson engages. The
underlying contract between Mr. Ferguson and his manager expires in October
2000, with the manager having the ability to renew the contract, at his sole
discretion, for two successive 12 month periods.
For the year ended December 31, 1997, the Company recognized revenues
of $168,224 attributable to the Company's share of its boxers' purses. The
Company has recognized limited revenues relating to product endorsements,
speaking engagements, personal appearances or other commercial performances from
its boxers. Historically, boxers have not been actively solicited for such
opportunities, and therefore the generation of significant revenue in this
regard is uncertain. The Company nevertheless intends to seek to maximize these
opportunities for its boxers through marketing opportunities. There can be no
guaranty of success in these efforts.
Boxing Regulation
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The management of professional boxers and other athletes is subject to
licensing and regulation by state athletic commissions and agencies. The
Company's President, Marc Roberts, has obtained licenses to act as a manager
from the governing agencies in New Jersey, New York and Nevada. Management
licenses were obtained in the other host states immediately prior to the bouts
held therein, and the Company, or its employees or representatives, as
applicable, will seek the appropriate licenses from other states as warranted.
The various state athletic commissions have their own rules and regulations
which govern boxing contests and events taking place in their states and have
promulgated their own standards for boxer-management contracts, including
maximum permissible duration and management fees. In some instances, such
provisions conflict with the legislation and rules and regulations of other
states, as well as with the terms of the Company's management agreements. To
date, the terms of the Company's management agreements have not restricted the
Company's boxers from engaging in bouts in other states. The Company's
management agreements provide, however, that in the event any provision of such
agreements is held invalid or unenforceable by a host state, such provision
shall be deleted or construed in accordance with the rules of the host state.
Difficulties or failure in obtaining or maintaining required licenses or
approvals from state athletic commissions or agencies or otherwise complying
with their rules or regulations could prevent the Company from enforcing its
rights under its management contracts or placing its boxers in contests or
exhibitions in certain states. To date, there have been no such difficulties
with the Company's management agreements.
Personal Injury Liability
The use of the Company's boxing training facility by professional
boxers and others entails a risk of liability claims for injuries sustained
while training or using equipment. The Company maintains liability insurance
coverage in the amount of $1,000,000 per occurrence and $2,000,000 in the
aggregate. In the event of a successful suit against the Company, lack or
insufficiency of insurance coverage could have a material adverse effect on the
Company.
Team Sports Division
Worldwide Team Sports, Inc. ("WWTS") was originally formed for the
purpose of engaging in the business of providing contract negotiation, marketing
and advisory services to, and on behalf of, professional team sport athletes.
The Company intends to operate through sport-specific divisions employing
professionals with experience as agents and contract advisors ("Agents") in
their respective sports until such time, as in the case of basketball and
football, that the level of the Company's operations warrants the establishment
of a separate subsidiary in which the division would operate. The Company
intends to continue to seek to hire or engage additional consultants who are
established professionals with rosters of athletes in various professional
sports. Since the establishment of WWFM and WWBM as separate entities, the Team
Sports Division has been comprised of its Marketing Division and Memorabilia
Division. There can be no assurance that any additional divisions will be
successfully created or that acquisitions of established sports agency practices
will be successfully completed. The Company will seek to integrate the
operations of WWTS with its other divisions so as to provide its clients with
professional and commercial services intended to enable athletes to maximize
their earning potential during their playing careers and to capitalize on the
recognizability, popularity and marketability of professional athletes in
today's media saturated sports environment.
Agents conduct compensation negotiations on behalf of individual
players and also provide advice and counsel in all other areas of the players'
professional careers, including career management decisions (e.g.,
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free agency options), the development and execution of marketing strategies and
endorsement opportunities. In addition to establishing a relationship with the
athletes, a knowledge of the league, team personnel, the league collective
bargaining agreements and the mechanics of the league's salary cap structure,
which limits the aggregate amount of salaries a team can pay its players, is
material to fulfilling the Agent's function. Agents must be able to assist their
clients in all stages of their careers. They must be familiar with the personnel
needs of the teams in the league to appropriately market and arrange showcases
for their rookie clients, and also must be familiar with each team's salary cap
limitations to best position veteran free agents to sign with a particular team.
In exchange for such services, an Agent generally receives 2% to 4% of his
player's team salary each season (which includes the player's base salary,
signing bonus and any performance bonus actually received by the player), during
the length of the contract which the Agent negotiated for his client with the
team. That revenue stream continues for so long as the player is paid pursuant
to such contract, even if the client changes Agents during that span. Once that
contract is completed, a player is free to use another Agent with no obligation
to his former Agent. An Agent's success therefore depends as much on his ability
to maintain a long term relationship with his players and his ability to attract
new valuable veteran and rookie talent as on his ability to negotiate favorable
contracts for his players. Revenues generated by the renegotiation of a contract
originally negotiated by another Agent are based solely on the incremental
salary increase, if any, resulting from such renegotiation.
Worldwide Football Management Inc.
In January 1996, the Company established its involvement in the
representation of professional football players through WWTS and employed a
registered NFL contract advisor in connection therewith. In March 1997 the
Company hired a second registered contract advisor and established WWFM as a
separate, wholly-owned subsidiary for the purpose of continuing to provide
player agent services to professional football players, including, but not
limited to, contract negotiation, professional and personal advisory services,
and the identification and exploitation of endorsement and marketing
opportunities. WWFM intends to seek to identify and establish relationships
primarily with those athletes whose athletic abilities and personal attributes
make them, in the opinion of WWFM's management, most likely to realize the
maximum financial benefit from their athletic careers under WWFM's direction.
During the 1997-1998 NFL Season, the Company represented 20 NFL players,
including, among others, Antonio Freeman, Antonio London, O.J. McDuffie and
Rickey Dudley. The Company expects that its Agents will sign to player
representation contracts several players projected to be National Football
League draft picks.
The Company intends to further develop its football player agency
business through additions to WWFM's existing professional football player
clientele and through the hiring of additional Agents with existing football
agency businesses. The Company's success in the football agency arena will
depend on its ability to acquire existing sports agency practices, attract and
retain the services of football industry professionals, and in turn, on the
ability of those professionals to undertake the representation of successful
professional athletes and to maintain such relationships for a substantial
period of time. The NFL Collective Bargaining Agreement prohibits an
organization from serving as a player's Agent, and therefore the Company's
football agency business growth will be dependent upon its ability to retain and
maintain the services, as employees or consultants, of Agents who are willing to
assign the commissions generated thereby to the Company in exchange for a
salary, stock and other compensation.
WWFM is owned 80% by the Company and 20% by its President, Mr. Segal.
The Company entered into an employment agreement with Mr. Segal, effective as of
April 16, 1997, pursuant to which Mr. Segal assigned the rights and interests to
the revenue generated by any individual with whom Mr. Segal signs to a
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valid representation agreement, or with whom material discussions regarding
entering a representation agreement are had by Mr. Segal, the Company or its
employees or affiliates.
Worldwide Basketball Management Inc.
In August 1996, the Company formed WWBM for the purpose of providing
player agent services to professional basketball players, including, but not
limited to, contract negotiation, professional and personal advisory services,
and the identification and exploitation of endorsement and marketing
opportunities. WWBM intends to seek to identify and establish relationships
primarily with those athletes whose athletic abilities and personal attributes
make them, in the opinion of WWBM's management, most likely to realize the
maximum financial benefit from their athletic careers under WWBM's direction.
The Company currently exclusively represents five National Basketball
Association ("NBA") players.
NBA player agents are certified by the National Basketball Players
Association ("NBPA") and are regulated by the terms of the Regulations Governing
Player Agents which were adopted by the NBPA pursuant to the authority and duty
conferred upon the NBPA as the exclusive bargaining representative of NBA
players pursuant to Section 9(a) of the National Labor Relations Act. By
regulation, a player agent must be an individual and not a corporation or other
entity. Although the maximum fees which an Agent can charge or collect is 4% of
a player's compensation from the team, if an Agent negotiates a contract where
the player receives only the minimum season's compensation under the Collective
Bargaining Agreement, the Agent is entitled to only a $2,000 fee for such
season. An Agent may also receive a greater percentage, often 15% to 20%, of a
player's compensation from endorsements and other sources of income. Pursuant to
the NBPA Regulations, the salaries earned by NBA rookies is fixed depending upon
the position the player is selected in the draft. As a result, agency fees
earned for negotiating rookie contracts are often limited to a small percentage.
WWBM is owned 80% by the Company and 20% by its President and Vice
President. In connection with the formation of WWBM, each officer signed five
year employment agreements with WWBM, effective September 1, 1996, pursuant to
which they assigned their respective rights and interests in the revenues
generated by players signed before 1996 and any players they sign to valid
player's representation agreements during their employment by WWBM.
Worldwide Marketing Division
The WWTS marketing division caters to the development of commercial and
marketing opportunities for athletes and entertainers, including the Company's
clients. The Marketing Division seeks to generate opportunities for non-sport
exploitation of all of the Company's clients' names and personalities by
focusing on the lucrative merchandising, endorsement, public appearance and
licensing opportunities available to today's better known athletes. For these
efforts, the Company receives a percentage of any revenues generated by these
opportunities as a commission, customarily ranging from 10% and 20%. The
Marketing Division also endeavors to arrange marketing opportunities and public
appearances for the athletes of other agencies, in which event the Company
customarily shares up to 50% of the commission generated. The Marketing Division
currently represents, in addition to the Company's clients, on an exclusive
basis, the marketing rights to LAR Motorsports and Kevin and Brian Delaney,
professional snowboarders.
Worldwide Memorabilia Division
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In March 1998, for the purpose of promoting and marketing sports and
entertainment memorabilia the Company established the Worldwide Memorabilia
Division of WWTS. The Company has exclusive rights to market a sports
memorabilia catalog owned by the division's president, pursuant to which the
Company receives a fixed commission on sales. In addition, the Company is
seeking to accumulate a catalog of professional football, baseball, basketball
and Hockey memorabilia. The catalog includes autographed athletic attire, sport
trading cards and sports paraphernalia used by prominent athletes. The Company
will seek to sell these catalog items and other acquired memorabilia through
various mediums including, trade shows, mail order and retail sales. To date,
revenues from operations have been limited.
Competition
The Company faces intense competition from an increasingly crowded
field of sports agents. As professional athletes' salaries continue to grow, and
the opportunities for additional revenues from commercial exploitation and
endorsements expand, more agents enter into this field, which has limited
barriers to entry. In spite of the growing number of agents, each major
professional sport is dominated by one or two major agencies, representing a
substantial number of players, including those who generate the highest
salaries. This concentration of the recognized revenue generating athletes in
the hands of a few agents presents a potential barrier which could prevent WWFM
and WWBM from realizing their growth objectives.
The Marketing Division also faces competition from more established and
experienced agencies such as Nike Sports Management, Steiner Sport Marketing,
The Marquee Group, Inc., and Advantage International, which currently provide
endorsement opportunities to athletes. There are no barriers to entry in this
industry and success is dependent upon successfully establishing and maintaining
relationships with persons and entities capable of providing endorsement
opportunities and identifying trends and issues to capitalize on fleeting
popular currents.
The boxers managed by the Company face intense competition from
numerous professional boxers in their respective weight classes both in the
boxing ring as well as for participation in bouts and press coverage. Such
individuals also compete for access to the services of promoters who have
sufficient resources to arrange bouts with large purses. Many boxers have
long-term arrangements with promoters, potentially providing such boxers with an
advantage in arranging such bouts. There can be no assurance that the
individuals managed by the Company will be able to compete successfully on any
of these levels. Further, the Company will be competing with numerous other
managers and promoters, including Don King Productions, Top Rank, Shelly Finkel
Management, Cedric Kushner and Main Events, many of which may have greater
financial resources or recognition in the industry than the Company, in the
recruitment of new boxing talent.
Employees
At December 31, 1997, the Company had 15 employees. Three of such
persons perform executive functions, three are Agents, two are marketing
executives and four perform clerical or administrative functions. The Company
believes the number of persons currently employed is adequate to conduct the
Company's current level of business operations. Because of the service nature of
the sports management industry, the Company intends to continue to seek to add
new management personnel to expand into additional sports and to add to the
number of players represented by the Company.
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Item 2. Description of Properties
The Company's principal executive offices are currently located in West
Orange, New Jersey on a month-to-month rental basis. The Company currently
occupies approximately 1,500 square feet of space, for which the Company pays a
monthly base rental of approximately $1,650. The Company leases its boxing
training facility, comprising approximately 2,000 square feet, on a
month-to-month basis, at a base monthly rental of $1,400. The Company intends to
relocate its training facility because the Company does not believe these
facilities are adequate for its present and projected needs. The Company
believes it will be able to locate suitable space at base rental amounts similar
to those currently paid by the Company.
Item 3. Legal Proceedings
The Company did not engage in any material legal proceeding during the
year ended December 31, 1997.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
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PART II
Item 5. Market for Common Equity and Related Shareholder Matters
The Common Stock and Redeemable Warrants are traded on the Nasdaq
SmallCap Market System under the, symbols "WWES" and "WWESW", respectively.
Until February 20, 1997, Units consisting of one share of Common Stock and one
Redeemable Warrant were also traded on such market. The following reported high
and low closing sales prices of the Company's Common Stock and Redeemable
Warrants for each quarter since the Company initial public offering in October
1996 were as follows:
Common Stock Warrants
High Low High Low
1996
Fourth Quarter 7 4-3/4 1-1/4 11/16
1997
First Quarter 5-3/8 1-3/4 1-1/4 3/8
Second Quarter 3-1/16 1 1-3/16 3/8
Third Quarter 3-1/4 1-5/32 5/8 3/16
Fourth Quarter 4 1-1/2 25/32 9/32
As of December 31, 1997, the approximate number of holders of record of
shares of the Company's Common Stock was 130.
The Company has not paid a cash dividend on the Common Stock since its
public offering in October 1996. The Company intends to retain future earnings
for use in its operations and, accordingly, does not intend to pay cash
dividends in the foreseeable future.
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN 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 controlled by the
Company's Chief Executive Officer. In January 1996, the Company established its
Teams Sports Division through the formation of Worldwide Team Sports, Inc.
("WWTS"). 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 Vice President. In March 1997, the
Company established Worldwide Football Management, Inc. ("WWFM"), a corporation
80% owned by WWES and 20% owned by its President, as a separate entity to
continue its agency, marketing and management services to professional football
players. While the Company has succeeded to the operations of these businesses,
the prior operating results of such separate businesses should not be viewed as
representative of the future results
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of operations of the Company. The Company has only limited experience in the
field of player agency and contract advisory services.
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 2% to 4% for professional
basketball and football player contracts (although occasionally lower
percentages are agreed upon, as in the case of NBA rookies with fixed contract
terms) 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 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, WWBM and WWFM
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 its revenues during the last
four and first four 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.
Year Ended December 31, 1997 Compared with the Year Ended December 31, 1996
Revenues for the year ended December 31, 1997 were $590,227, as compared to
$322,378 for the year ended December 31, 1996. Purse income in the 1997 fiscal
year decreased to $168,224 from $232,437 for the 1996 fiscal year as a result of
a decrease in the number of bouts with substantial purses. This decrease was due
in part to a scheduled opponent of Ray Mercer's canceling a fight due to an
injury to such opponent and Mr. Mercer's failure to schedule any bouts during
the remainder of 1997 because he underwent surgery to correct a chronic neck
injury and his subsequent recovery period. This decrease was offset by an
increase in contract agency fees to $208,009 in fiscal 1997, as compared to
$30,424 in fiscal 1996, as a result of the hiring of an additional registered
contract advisor by the Company's WWFM subsidiary and the increase in the number
of NBA and NFL players represented by the Company. In addition, during 1997, the
Company recognized television
<PAGE>
income in the amount of $87,500, resulting from a televised fight on USA Network
and, further, for the fiscal year ended December 31, 1997 endorsement and
marketing fee income increased to $93,404, as compared to $23,080 for the 1996
fiscal period, as a result of increased activities by the Marketing Division of
WWTS.
Total expenses for the year ended December 31, 1997 increased to
$3,879,442, as compared to $2,368,763. Training and related expenses decreased
to $74,830 for the 1997 fiscal year from $199,725 for the 1996 fiscal year, as a
result in the decrease in a number of bouts. Promotion and other operating
expenses increased to $3,804,612 for the 1997 fiscal year as compared to
$2,069,038 for the 1996 fiscal year, as a result in the increase in total
salaries as a result of the hiring of additional contract advisors and marketing
personnel, as well as increased promotional and recruiting expenses in
conjunction with the Company's increased level of activities in the player
agency and marketing areas. In addition, the Company incurred additional
expenses in 1997 in connection with several potential business acquisitions
which were ultimately not consummated.
As a result of the foregoing, net loss for the fiscal year ended
December 31, 1997 increased to $3,184,957 as compared to $2,156,198 for the
December 31, 1996 fiscal year.
Year Ended December 31, 1996 Compared with the Year Ended December 31, 1995
Net revenues for the year ended December 31, 1996, were $322,378, as
compared to $241,621, for the year ended December 31, 1995. During 1996, the
Company was actively engaged in the management of its four boxers, as compared
to 1995, during much of which the Company was actively managing only one boxer,
Mr. Briggs. Purse income increased to $232,437 for 1996 compared to $75,794 in
1995 as a result of an increase in the number of bouts and an increase in the
level of the purses. In addition, during 1996, the Company first recognized
endorsement and agency revenue representation of team sports athletes,
aggregating $53,504. No such revenues were received by the Company for 1995.
During the year ended December 31, 1995, 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.
Accordingly, ticket revenues for the year ended December 31, 1996 were $12,636,
compared to $144,227 for 1995. 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 results of operations.
Total expenses increased for the year ended December 31, 1996,
increased to $2,368,763, from $1,077,037, for 1995. Promotion and other
operating expenses increased to $2,069,039, for 1996, as compared to $645,124
for 1995 as a result of (1) $315,730 of travel and entertainment expenses
incurred in connection with the recruitment of professional football players and
Agents for Team Sports and in connection with bouts for the Company's four
boxers, and (2) $676,746, in payroll expenses as a result of the hiring of the
registered NFL Agent for the WWTS subsidiary and additional staff personnel. In
addition, there were approximately $324,389 of expenses for promotional
materials and other public relations expenses for the year. The year ended
December 31, 1996, also included $ 141,340, of interest expense attributable to
the 10% promissory notes issued in connection with the Company's private
placement which originated in September 1995, as well as $100,000 paid in
connection with the termination of an agreement with a trainer for one of the
Company's boxers. Accordingly, the Company's net loss for the year ended
December 31, 1996, increased to $2,156,198, from $869,303, for 1995.
<PAGE>
Liquidity and Capital Resources
The Company's principal source of operating capital has been provided
by public and private sales of the Company's equity securities, as supplemented
by revenues from operations. At December 31, 1997, the Company had working
capital of $2,126,717, which amount was primarily the remaining net proceeds
from the Company's initial public offering in October 1996 as supplemented by
proceeds of a private placement in the fourth quarter of 1997.
The Company's material commitments for capital expenditure are
management salaries, anticipated training expenses and recruitment expenses.
Management salaries are approximately $825,000 per annum, which could increase
if the Company develops a need for additional executive management. Training
expenses for the year are estimated at approximately $200,000, depending upon
the number of bouts as well. Recruitment and promotional expenses are estimated
to approximate $1,000,000, subject to variations depending upon player
availability and recruiting success. The foregoing represents the expected
significant uses of working capital during the next twelve months.
Although the Company believes that its current cash and cash
equivalents will be sufficient to fund its operations over the next 12 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, private or
public debt or equity financing or otherwise. There can be no assurance that any
such financing will be available to the Company on favorable terms, if at all.
From January 1, 1998 through March 27, 1998, the Company issued 660,000
restricted shares of Common Stock in connection with several private placement
transactions for an aggregate amount of $1,485,000. The costs for the issuance
of these shares were approximately $60,000 in cash commission and legal fees,
and 50,000 restricted shares which will be issued by the Company in lieu of
commissions.
Item 7. Financial Statements
See Financial Statements annexed.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
On December 16, 1997, the appointment of Rosenberg Rich Baker Berman &
Company as independent auditors for the Company was terminated by the Board of
Directors of the Company and Friedman Alpren & Green LLP was engaged as
independent auditors. Rosenberg Rich Baker Berman & Company's report on the
financial statements for either of past two years did not contain an adverse
opinion or disclaimer of opinion and was not modified as to uncertainty, audit
scope, or accounting principles.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act
<PAGE>
The directors and executive officers of the Company are as follows:
Name Age Position
Marc Roberts 38 President, Chief Executive Officer,
President of Worldwide Team
Sports, Inc. and Director
Roy Roberts 59 Chief Financial Officer, Director
Allan Cohen, M.D. 56 Director
Dan Drykerman 50 Director
Herbert F. Kozlov 44 Director, Secretary
Harvey Silverman 57 Director
Mike Goodson 31 President, Worldwide Basketball
Management, Inc.
Erik Rudolph 35 Chief Executive Officer, Worldwide
Basketball
Management, Inc.
Joel Segal 34 President, Worldwide Football
Management, Inc.
Marc Roberts has been President and Chief Executive Officer of the
Company since its inception in August 1995. Since 1992, Mr. Roberts has been
engaged in the management of the Company's boxers through the Company's
corporate predecessors. Mr. Roberts is involved in various real estate,
restaurant and business ventures as a passive investor, none of which occupies a
significant portion of his business time.
Roy Roberts has been Chief Financial Officer of the Company since its
inception and as a director of the Company since July 1996. Mr. Roberts devotes
his full time and attention to the Company. Since 1991, Mr. Roberts has served
as the President of Sparkle Industries, a commercial maintenance company in New
Jersey. He also served, until 1995, as the Chairman and Chief Operating Office
of Palisades Entertainment, Inc., a motion picture film distributor specializing
in special interest, rock and roll and animation films. Mr.
Roberts is Marc Roberts' father.
Allan Cohen, M.D. has been a director of the Company since July 1996.
Dr. Cohen is engaged in the practice of medicine, specializing in
gastroenterology, and has been President of Gastroenterology Associates,
a professional corporation, since 1974 and is President of the Medical Staff
at Muhlenburg Hospital in Plainfield, New Jersey. Dr. Cohen is Marc Robert's
uncle.
Dan Drykerman has been a director of the Company since July 1996. Mr.
Drykerman has been the Operating Partner of Drykerman Investment Group, an
investment partnership (f/k/a Drykerman Enterprises) since 1976.
Herbert F. Kozlov has served as general counsel to the Company since
its inception, and as a director of the Company since July 1996. Mr. Kozlov has
been a practicing attorney for more than the past 20 years and is currently a
partner in the firm of Parker Duryee Rosoff & Haft A Professional Corporation.
Mr. Kozlov is also a member of the Board of Directors of HMG Worldwide
Corporation and certain privately held companies.
Harvey Silverman has been a director of the Company since July 1996.
Mr. Silverman is a Senior Managing Director of Spear Leeds & Kellogg in New
York, where he has been employed since 1963. Mr.Silverman is a Governor on the
American Stock Exchange and a director of Intermarket Clearing Corp.
<PAGE>
Erik Rudolph has served as Chief Executive Officer of WWBM since its
inception. Mr. Rudolph was an attorney in private practice for more than the
past five years prior to September, 1996, and has been a certified NBA Agent
since 1995. From January 1995 through August 1996 Mr. Rudolph was a principal of
Impact Sports Management Group, L.L.C.
Michael Goodson has been the President of WWBM since its inception. Mr.
Goodson was a professional basketball player for three years, having played in
the CBA, USBL and also as a member of the San Antonio Spurs and the Philadelphia
76ers of the NBA. Since his retirement as a player, Mr. Goodson has worked as a
personal manager and advisor for professional basketball players in
collaboration with other NBA Agents and, most recently, worked in such capacity
with Erik Rudolph from January 1995 through August 1996 as co-founder of Impact
Sports Management Group, LLC.
Joel Segal has been President of WWFM since April 1997. Mr. Segal has
been a registered NFL contract advisor for more than the past five years. Prior
to joining WWFM, Mr. Segal engaged in such business as a sole proprietor. Mr.
Segal is an attorney admitted to practice in the states of New York and
Connecticut.
To the Company's knowledge, based upon a review of Forms 4 and 5 and
any amendments thereto, submitted to the Company, all Directors, Officers, and
Beneficial Owners of more than 10% of the Common Stock of the Company have filed
all reports required to be filed pursuant to Section 16(a) of the Securities
Exchange Act of 1934.
<PAGE>
Item 10. Executive Compensation
The following table sets forth the aggregatte compensation paid by the
Company for services rendered to the Company by such persons during the year
ended December 31, 1997 to the Chief Executive Officer and President, and
certain other executive officers of the Company:
<TABLE>
<CAPTION>
<S><C> <C> <C> <C>
Salary Bonus Options/SARs
Name and Principal Position ($) ($) (#)
--------------------------- ----- ----- ----
---------------
Marc Roberts
Chief Executive Officer, President $215,000 - 140,000
Roy Roberts
Chief Financial Officer $120,000 - 40,000
Michael Goodson
President, Worldwide Basketball $130,000 - -
Management, Inc.
Eric Rudolph
Chief Executive Officer, Worldwide $130,000 - -
Basketball Management, Inc.
Joel Segal
President, Worldwide Football $94,230 $75,000 -
Management, Inc.
</TABLE>
(1) The Company did not make any restricted stock awards, grant any stock
appreciation rights or make any long-term incentive plan payments to the named
executive officers during 1997. (2) Other compensation in the form of
perquisites and other personal benefits has been omitted where the aggregate
amount of such perquisites and other personal benefits constituted the lesser of
$50,000 or 10% of the total annual salary and bonus of the Officer for the year.
Compensation of Directors
The Company has no standard arrangements, pursuant to which the
directors of the Company are compensated.
Employment Agreements
Marc Roberts has entered into a five-year employment agreement with the
Company commencing January 1, 1996 which provides for a base annual salary of
$190,000 with annual minimum guaranteed increases of $25,000. Mr. Roberts shall
also be paid an annual bonus of an amount equal to a minimum of 10% of the
pretax operating income of the Company before income taxes, depreciation and
amortization. Bonuses in excess of that amount shall be determined by the
Company's Board of Directors or its executive compensation committee, if any.
Mr. Roberts shall also be entitled to participate in the Company's incentive
<PAGE>
stock option plan and shall be granted a minimum of 30% of the stock options to
be issued by the plan at an exercise price of 110% of the fair value of the
stock, as determined by the Board of Directors, on the date of grant. The
agreement provides that upon termination of Mr. Roberts' employment without
cause or upon certain changes in control of the Company resulting in Mr.
Roberts' termination, he will be entitled to receive any accrued but unpaid
amounts due him under the agreement from the period prior to his termination. In
addition, the Company is obligated to pay Mr. Roberts (i) within five (5) days
of notice of termination, an amount equal to sixty percent (60%) of the present
value of the sum of (x) all salary which would have been earned but for such
termination for a period of 2.99 years commencing on the date of such
termination based on Mr. Roberts' then current salary, plus (y) the present
value of an amount determined by multiplying the amount of incentive
compensation earned by Mr. Roberts for the last fiscal year of the Company
preceding termination by 2.99 ("Severance Compensation"). The remaining forty
percent (40%) of the Severance Compensation shall be paid to Mr. Roberts in
twelve (12) equal monthly installments commencing on the first month after the
month in which he was terminated. In the event of Mr. Roberts' termination for
cause, or if Mr. Roberts voluntarily terminates the agreement within its first
two years, the Company is under no obligation to pay him his compensation beyond
the date of termination. If Mr. Roberts voluntarily resigns from the Company
after the second anniversary of his agreement, he shall be entitled to receive
all of the compensation and benefits he would be afforded if he had been
terminated without cause. Mr. Roberts' agreement provides that Mr. Roberts will
not compete with the Company for a one (1) year period after the termination of
his employment. The Company has obtained a $2,000,000 key person life insurance
policy on Mr. Roberts' life naming the Company as beneficiary.
In connection with the formation of WWBM, Messrs. Rudolph and Goodson
signed five year employment agreements with WWBM, effective September 1, 1996,
pursuant to which Messrs. Rudolph and Goodson assigned their respective rights
and interests in the revenues generated by (i) Samaki Walker, Jason Osborne and
Shawnelle Scott, and (ii) any players Messrs. Rudolph and Goodson sign to valid
player's representation agreements during their employment by WWBM. Messrs.
Rudolph and Goodson shall each receive a salary of $130,000 per annum, and each
also received a signing bonus of $50,000 in October 1996. Messrs. Goodson and
Rudolph shall also be entitled to divide, as annual bonus compensation, 10% of
the annual net revenues of WWBM up to $250,000 and 17% of the annual net
revenues of WWBM above $250,000. The Company is committed to fund up to $700,000
of operating expenses of WWBM which will increase to up to $1,000,000 if WWBM
achieves certain performance goals tied to the successful recruitment of NBA
players. The Company has the right to terminate the agreements if WWBM's
aggregate costs of operations exceeds the above stated funding obligations. In
the event of the non-renewal of the employment agreements, or their termination
for any reason, Messrs. Goodson and Rudolph will (i) be reassigned the rights to
the revenues from Mr. Walker's contract, and any revenues to be derived from Mr.
Osborne, who currently does not have a professional basketball contract, and
(ii) pay WWBM (a) 50% of the revenues from all other players signed during the
terms of their employment (including Mr. Scott) until the Company recoups all of
the amounts funded by the Company, and (b) 30% of such revenues thereafter. In
the event Messrs. Goodson and Rudolph voluntarily terminate their employment
without cause, however, the revenues derived from Messrs. Walker and Osborne
shall not be reassigned and the revenue generated thereby will be treated like
the other players.
In connection with the formation of WWFM as a separate entity, the
Company entered into an employment agreement with Joel Segal, effective as of
April 16, 1997, pursuant to which Mr. Segal assigned the rights and interests to
the revenue generated by any individual with whom Mr. Segal signs to a valid
representation agreement, or with whom material discussions regarding entering a
representation agreement
<PAGE>
are had by Mr. Segal, the Company or its employees or affiliates. Mr. Segal's
base salary shall be $140,000 during the term of the employment agreement, with
a signing bonus of $75,000.
Stock Option Grants
In September 1997, the Company granted to each of its directors options
under the Company's Stock Option Plan, exercisable over a ten year period, at an
exercise price of $2.875 per share. Messrs. Drykerman, Silverman and Cohen
received an option to purchase 45,000 shares of Common Stock of the Company. Mr.
Kozlov received an option to purchase 98,000 shares of common stock of the
Company. These grants were made in conjunction with the cancellation of options
granted in December 1996 to each of its four non-employee Directors to purchase
15,000 shares of Common Stock at an exercise price of $5.00 per share. Mr. Roy
Roberts and Mr. Marc Roberts received options to purchase 40,000 and 25,000
shares of common stock of the Company, respectively. Mr. Marc Roberts also
received, outside the Company's Stock Option Plan, an option to purchase 115,000
shares of Common Stock of the Company, also exercisable over a ten year period,
at an exercise price of $2.875 per share.
Item 11. Security Ownership and Certain Beneficial Owners and Management
The following table sets forth certain information concerning stock
ownership of all persons known by the Company to own beneficially 5% or more of
the outstanding shares of the Company's Common Stock, each director, and all
officers and directors of the Company as a group as of March 31, 1998.
<PAGE>
Number Percentage of Common Stock
Name and Address(1) of Shares Beneficially Owned
Marc Roberts 1,744,966(2) 25.2%
Roy Roberts 183,334(3) 2.7%
Allan Cohen, M.D. 136,667(4) 2.0%
Dan Drykerman 135,000(5) 2.0%
Herbert F. Kozlov 424,000(6) 6.1%
Harvey Silverman 172,334(7) 2.5%
All officers and directors as a group
(6 persons)(8) 2,796,301 40.4%
- - - --------
1The address of all of the beneficial owners is that of the Company's
principal executive office.
2Includes 160,000 shares which may beacquired upon the exercise of
currently exercisable options and warrants.
3Includes 100,000 shares which may be acquired upon the exercise of
currently exercisable options and warrants.
4Includes 120,000 shares which may be acquired upon the exercise of
currently exercisable options and warrants.
5Includes 132,500 shares which may be acquired upon the exercise of
currently exercisable options and warrants.
6Does not include shares and warrants to acquire additional shares held by
members of a law firm of which Mr. Kozlov is a member. Mr. Kozlov disclaims
beneficial ownership of such shares. Includes 8,000 shares held under the NYUGMA
for the benefit of his minor children and 133,000 shares which may be acquired
upon the exercise of currently exercisable options.
7Includes 80,000 shares which may be acquired upon the exercise of
currently exercisable options.
8Includes 644,500 options which may be acquired upon the exercise of
currently exercisable options.
Stock Option Plan
On July 1, 1996, the Company adopted the 1996 Stock Option Plan (the
"SOP") covering 500,000 shares of the Company's Common Stock, $.01 par value,
pursuant to which officers, directors and key employees of the Company are
eligible to receive incentive and/or non-qualified stock options. The SOP is
administered by the Board of Directors or a committee designated by the Board of
Directors. The selection of participants, allotment of shares, determination of
price and other conditions of purchase of options is determined by the Board or
committee at its sole discretion. The purpose of the SOP is to attract and
retain persons instrumental to the success of the Company. Incentive stock
options granted under the SOP are exercisable for a period of up to 10 years
from the date of grant at an exercise price which is not less than the fair
market value of the Common Stock on the date of the grant, except that the term
of an incentive stock option granted under the SOP to a stockholder owning more
than 10% of the outstanding Common Stock may not exceed five years and its
exercise price may not be less than 110% of the fair market value of the Common
Stock on the date of the grant. At December 31, 1997, options to purchase up to
435,000 shares have been granted under the SOP.
<PAGE>
Item 12. Certain Relationships and Related Transactions
Commencing in September 1995 and ending in June 1996, the Company
privately sold an aggregate of 39.8 units ("Units"), resulting in net proceeds
to the Company of $1,990,000, each consisting of (a) a $50,000 promissory note
bearing interest at a rate of 10% per annum payable in full upon the earlier of
(i) the Company's receipt of at least $3,000,000 from an underwritten public
offering of the Company's securities (the "Initial Public Offering") or (ii) 18
months after the date of the closing of the unit investment (the "Placement
Closing Date") and (b) a warrant to purchase 25,000 shares of the Company's
Common Stock exercisable for a period of five years from the Placement Closing
Date, provided that an Initial Public Offering is consummated during such five
year exercise period, at an exercise price per share equal to 120% of the price
per share in the Initial Public Offering. Messrs. Drykerman and Cohen purchased
1.5 and 1 Unit, respectively, through such private placement.
In December 1995, the Company issued 184,966 shares to Marc Roberts in
exchange for all of the outstanding shares of Merciless Management Inc., The
Natural Management, Inc., S.B. Championship Management, Inc., Marc Roberts Inc.
and Marc Roberts Boxing Inc. Subsequent thereto, each of the management
agreements between such corporations and Ray Mercer, Charles Murray and Tracy
Patterson were terminated and such boxers executed new management agreements
with the Company. In July 1996, each of those corporations was merged into the
Company.
From time to time Marc Roberts has made loans and advances to the Company
and the Company has advanced funds to Mr. Roberts. In June 1996, Mr. Roberts
repaid $200,000 of amounts due to the Company, thereby eliminating the balance
due from Mr. Roberts. Subsequent to June 1996, Mr. Roberts made additional loans
to the Company. At December 31, 1996, $169,000 was due to Mr. Roberts. Mr.
Roberts has agreed to forego repayment of such amounts until the Company has
generated operating revenue in excess of such amount. In 1997, the Company
repaid the remaining amount due on such note held by Mr. Roberts.
The Company believes the terms and conditions of the foregoing
transactions are no less favorable to the Company than those available from
unaffiliated parties. Future transactions between the Company and any affiliate
will be on terms and conditions approved by this Board of Directors.
Pursuant to a Shareholders Agreement among Messrs. Goodson and Rudolph
and the Company, upon the occurrence of certain events, including the
termination of the employment of Messrs. Rudolph and Goodson, the shares of WWBM
held by Messrs. Rudolph and Goodson (representing 20% of the outstanding shares
of WWBM) will be exchanged for up to an aggregate of 300,000 shares of Common
Stock of the Company, depending upon the time of such exchange and the financial
condition of WWBM as of the time of such exchange.
Pursuant to a Shareholders Agreement among Mr. Segal, WWFM and the
Company, if upon or after December 31, 1998, Segal is a licensed NFL Player's
Agent in good standing with the NFL Player's Association and employed by the
Company and if Segal meets certain productivity incentives, then either Segal or
the Company can elect to effectuate an exchange of the shares of WWFM held by
Mr. Segal representing 20% of the outstanding shares of WWFM for 200,000 shares
of Common Stock of the Company.
<PAGE>
Item 13. Exhibits List and Reports on Form 8-K
Exhibit
Number Description of Exhibit
3.1(a)* Certificate of Incorporation of the Registrant 3.1(b)* Certificate of
Amendment filed August 21, 1995 3.1(c)* Certificate of Amendment filed July
18, 1996 3.1(d)* Certificate of Ownership and Merger among the Registrant,
Merciless Management, Inc.,
The Natural Management, Inc., Marc Roberts Inc.,
S.B. Champion Management, Inc. and
Marc Roberts Boxing, Inc. filed July 19, 1996
3.2* Amended By-Laws of the Registrant
4.1* Form Certificate representing the Common Stock, par value $.01
per share
4.2* Form of Redeemable Warrant
4.3* Form of Warrant issued in private placement
10.1* 1996 Stock Option Plan
10.2* Employment Agreement between the Company and Marc Roberts
10.3* Employment Agreement between the Company and Ryan Schinman
10.4* Management Agreement between the Company and Shannon Briggs
10.5* Management Agreement between the Company and Tracy Patterson
10.6* Management Agreement between the Company and Charles Murray
10.7* Management Agreement between the Company and Ray Mercer
10.8* Form of Subscription Agreement between the Company and
Private Placement Investors
10.9* Asset Purchase Agreement between the Company and Shannon
Briggs I, L.P.
10.10* Employment Agreement between the Company and Erik Rudolph
10.11* Employment Agreement between the Company and Michael Goodson
10.12* Shareholders Agreement among the Company, Erik Rudolph and
Michael Goodson
10.13 (omitted)
10.14** Employment Agreement between the Company and Joel Segal
10.15** Shareholders Agreement among the Company, Joel Segal and WWFM
21.1 Subsidiaries of the Company
27.1 Financial Data Schedule
* Incorporated by reference to the Registration Statement on Form SB-2,
File No. 333-08855, declared effective October 22, 1996
** To be filed by amendment
Current Reports on 8-K Filed by the Company for the year ended December 31,
1997:
Date Event
12/19/97 Change in Independent Public Accountants
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) 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.
By: /s/ Marc Roberts
Marc Roberts, President (Chief Executive Officer)
Date: April 9, 1998
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the Registrant and in the capacities and
on the dates indicated.
By: /s/ Roy Roberts
Roy Roberts, Chief Financial Officer
(Principal Financial and Accounting Officer)
Date: April 9, 1998
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
We have audited the accompanying consolidated balance sheet of
WORLDWIDE ENTERTAINMENT & SPORTS CORP. AND SUBSIDIARIES as of December 31, 1997,
and the related consolidated statements of operations, cash flows and changes in
stockholders' equity for the year then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated 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 consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated 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 consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
WORLDWIDE ENTERTAINMENT & SPORTS CORP. AND SUBSIDIARIES as of December 31, 1997,
and the results of their operations and their cash flows for the year then ended
in conformity with generally accepted accounting principles.
Friedman Alpren & Green LLP
New York, New York
February 19, 1998, except for
Note 11, as to which the date
is March 27, 1998
<PAGE>
Rosenberg Rich
Baker Berman
& C O M P A N Y
A PROFESSIONAL ASSOCIATION OF
CERTIFIED PUBLIC ACCOUNTANTS
195 Maplewood Avenue o Maplewood, NJ 07040
201-763-6363 o FAX: 201-763-4430
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and
Stockholders of Worldwide Entertainment
& Sports Corp. and Subsidiaries
29 Northfield Avenue
West Orange, NJ 07052
We have audited the accompanying balance sheet of Worldwide Entertainment &
Sports Corp. and Subsidiaries as of December 31, 1996 and the related statements
of operations, stockholders' equity and cash flows for the year then ended.
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 Worldwide Entertainment &
Sports Corp. and Subsidiaries as of December 31, 1996 and the results of its
operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.
ROSENBERG RICH BAKER BERMAN & COMPANY
Maplewood, New Jersey
February 18, 1997
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997 AND 1996
ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
1997 1996
------------- --------
Current assets
Cash and cash equivalents, including restricted cash of
$120,000 in 1996 $ 745,137 $ 791,505
Certificates of deposit 1,060,049 300,000
Marketable securities - 3,098,760
Accounts and loans receivable, less allowance for doubtful
accounts of $15,000 and $600 295,765 12,396
Prepaid expenses and other current assets 21,890 57,136
Due from boxers, less allowance of $141,121 and $38,853 377,184 92,458
Deposit - 43,150
------------- -------------
Total current assets 2,500,025 4,395,405
Property and equipment - at cost, less accumulated depreciation 21,029 56,195
Other assets
Deferred consulting expense - 150,000
Due from related party, less allowance of $46,559 and $30,710 46,559 30,711
Security deposits 6,950 5,950
Other - 15,000
------------- -------------
$ 2,574,563 $ 4,653,261
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 217,964 $ 488,110
Note payable, bank - 25,515
Escrow payable 155,344 149,156
Due to related party - 168,826
Advance on letter of credit - 70,000
------------- -------------
Total current liabilities 373,308 901,607
------------- -------------
Stockholders' equity
Preferred stock, $.01 par value; 5,000 shares authorized,
none issued - -
Common stock, $.01 par value; 20,000,000 shares authorized,
6,262,197 and 5,153,255 shares issued 62,622 51,533
Additional paid-in capital 8,396,247 6,763,561
Accumulated deficit (6,245,264) (3,060,307)
Demand note receivable for common stock ( 12,350) ( 12,350)
Unrealized gain on marketable securities - 9,217
------------- -------------
2,201,255 3,751,654
------------- -------------
$ 2,574,563 $ 4,653,261
============= =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
<S><C> <C> <C>
1997 1996
--------------- ----------
Revenues
Purses $168,224 $232,437
Contract and agency fees 208,009 30,424
Endorsements and marketing fees 93,404 23,080
Television income 87,500 -
Commissions - 22,793
Ticket revenues 33,090 12,636
Merchandise revenues - 1,008
--------------- ---------------
590,227 322,378
--------------- ---------------
Expenses
Training and related expenses 74,830 199,725
Promotion and other operating expenses 3,804,612 2,069,038
Other - 100,000
--------------- ---------------
3,879,442 2,368,763
--------------- ------
Loss from operations ( 3,289,215) ( 2,046,385)
--------------- ---------------
Other income (expenses)
Interest and dividend income 103,240 21,941
Interest expense - ( 141,340)
Other 6,807 10,916
--------------- ---------------
110,047 ( 108,483)
--------------- ---------------
Loss before income taxes ( 3,179,168) ( 2,154,868)
Income taxes 5,789 1,330
--------------- ---------------
Net loss ( 3,184,957) ( 2,156,198)
Accumulated deficit, beginning of year ( 3,060,307) ( 904,109)
--------------- ---------------
Accumulated deficit, end of year $( 6,245,264) $( 3,060,307)
=============== ===============
Weighted average of common shares outstanding 5,369,127 4,116,096
=============== ===============
Basic loss per share $( .59) $(.52)
============== =====
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
<S><C> <C> <C>
1997 1996
-------------- ---------
Cash flows from operating activities
Net loss $ (3,184,957) $ (2,156,198)
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation and amortization 7,226 24,014
Provision for doubtful accounts 126,788 -
Common stock issued for consulting and other services 284,470 -
Stock-based compensation 26,338 -
Realized gain on marketable securities ( 9,217) -
Gain on sale of transportation equipment ( 6,289) -
Changes in assets and liabilities -
Accounts receivable ( 406,437) ( 12,396)
Due from or to boxers ( 288,446) 58,900
Prepaid expenses and other assets 242,396 ( 73,373)
Escrow payable 6,188 126,250
Due to related party ( 168,826) -
Accounts payable and accrued expenses ( 270,146) 107,949
Advance on letter of credit ( 70,000) 70,000
-------------- --------------
Net cash used in operating activities ( 3,710,912) ( 1,854,854)
-------------- --------------
Cash flows from investing activities
Purchase of certificates of deposit ( 760,049) -
Proceeds (purchases) of marketable securities 3,098,760 ( 3,389,543)
Acquisition of property and equipment - ( 39,045)
Advances to stockholder - 131,956
Proceeds from sale of transportation equipment 34,229 -
Due from related party ( 15,848) -
-------------- -----------
Net cash provided by (used in) investing activities 2,357,092 ( 3,296,632)
-------------- --------------
Cash flows from financing activities
Issuance of common stock 1,332,967 6,499,092
Deferred costs in connection with proposed public offering - 47,148
Proceeds from notes payable and debt - 31,000
Repayment of notes payable and debt ( 25,515) ( 1,181,385)
-------------- --------------
Net cash provided by financing activities 1,307,452 5,395,855
-------------- --------------
Net increase (decrease) in cash and cash equivalents ( 46,368) 244,369
Cash and cash equivalents, beginning of year 791,505 547,136
-------------- --------------
Cash and cash equivalents, end of year $ 745,137 $ 791,505
============== ==============
Supplemental cash flow disclosures
Interest paid $ - $ 141,340
Income taxes paid 26,338 -
Noncash financing activities
Issuance of common stock for consulting and other services 284,470 -
Stock-based compensation charged to expense 6,489 880
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
<S><C> <C> <C> <C> <C> <C>
Demand Note Unrealized
Additional Receivable Gain on
Common Stock Paid-in Accumulated for Common Marketable
Shares Amount Capital Deficit Stock Securities
Balance, January 1, 1996 3,719,921 $ 37,200 $ 78,803 $ (904,109) $ (12,350) $ -
Issuance of common stock 33,334 333 199,667 - - -
Proceeds from stock offering 1,400,000 14,000 6,485,091 - - -
Net loss - - - (2,156,198) - -
Unrealized gain on
securities available for sale - - - - - 9,217
Balance, December 31, 1996 5,153,255 51,533 6,763,561 (3,060,307) (12,350) 9,217
Issuance of common stock
Claim settlement 11,000 110 6,620 - - -
Consulting services 325,000 3,250 262,250 - - -
Trainer's services 8,500 85 12,155 - - -
Private placement 764,442 7,644 1,612,350 - - -
Net loss - - - (3,184,957) - -
Change in unrealized gain on marketable
securities - - - - - (9,217)
Stock-based compensation - options - - 26,338 - - -
Cost of private placement - - ( 287,027) - - -
Balance, December 31, 1997 6,262,197 $ 62,622 $ 8,396,247 $( 6,245,264) $ (12,350) $ -0-
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1 - ORGANIZATION
Descriptions of companies included in the accompanying consolidated
financial statements are as follows:
Worldwide Entertainment & Sports Corp. ("WWES"), which was
incorporated in Delaware on August 15, 1995 to provide management, agency
and marketing services to professional athletes and entertainers,
principally boxers.
Worldwide Team Sports, Inc. ("WWTS"), a wholly owned subsidiary which
was incorporated in Delaware on January 23, 1996 to provide management,
agency and marketing services to professional athletes, principally
football players.
Worldwide Basketball Management, Inc. ("WWBM"), which was incorporated
in Delaware on August 1, 1996 to provide management, agency and marketing
services to basketball players. WWBM is owned 80% by WWES, and the
remaining 20% is owned by two principals formerly associated with Impact
Sports Management, LLC ("Impact").
Worldwide Football Management, Inc. ("WWFM"), which was incorporated
in Delaware on March 10, 1997 to provide management, agency and marketing
services to football players. WWFM is owned 80% by WWES, and the remaining
20% is owned by an individual who is a certified player's agent listed with
the National Football League Players Association. WWFM was inactive in
1997.
Worldwide Sports Promotion, Inc. ("WWSP"), a wholly owned subsidiary which
was incorporated in Delaware on March 4, 1997 to provide marketing and
promotional services to professional athletes, principally boxers.
Worldwide Bobcats Football, Inc. ("WWBF"), a wholly owned subsidiary which
was incorporated in Delaware on October 17, 1997 to purchase the Florida Bobcats
arena football team. Management has since decided not to purchase the team.
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of WWES,
its wholly owned subsidiaries and its 80% owned subsidiaries (collectively,
the "Company"). All significant intercompany balances and transactions have
been eliminated.
As discussed in Note 1, WWES has an 80% ownership interest in WWBM;
the remaining 20% interest is owned by the two officers of WWBM. Net losses
of WWBM for the years ended December 31, 1997 and 1996 were approximately
$308,000 and $553,000, respectively. The accumulated deficit of the
minority interest exceeded the minority interest in the equity capital of
WWBM as of December 31, 1997 and 1996 by approximately $172,000 and
$111,000, respectively. Such excesses were charged against WWES, the
majority interest, and was reflected in the statement of operations for the
years ended December 31, 1997 and 1996.
Marketable Securities
Marketable securities at December 31, 1996 consisted of debt
securities which were classified as available-for-sale in accordance with
the provisions of Statement of Financial Accounting Standards ("SFAS") No.
115, "Accounting for Certain Investments in Debt and Equity Securities",
and are reported at their fair value of $3,098,760. Unrealized gains and
losses were reflected as a separate component of stockholders' equity.
Due from Athletes
The Company makes unsecured interest-free loans to boxers and other
athletes. Repayments by boxers are made from authorized deductions from
fight purses.
Property and Equipment
Property and equipment are stated at cost. Depreciation is computed
using primarily accelerated methods over the estimated useful lives of the
assets, which range from 5 to 7 years.
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
New Accounting Pronouncement
In February 1997, SFAS No. 128, "Earnings per Share", was issued. It
establishes standards for computing and presenting earnings per share
("EPS"), replaces the presentation of primary EPS with a presentation of
basic EPS, and requires dual presentation, where applicable, of basic and
diluted EPS on the face of the consolidated statement of operations. SFAS
No. 128 was effective for financial statements issued for periods ending
after December 15, 1997. The adoption of SFAS No. 128 did not affect the
Company's EPS data for the years ended December 31, 1997 and 1996.
Basic Loss Per Share
Basic loss per share is computed by dividing net loss by the weighted
average number of shares of common stock outstanding during the year.
Diluted EPS has not been presented because its effect would have been
anti-dilutive.
Revenue Recognition
Purse revenue represents a percentage of a boxer's purse, and is
recognized upon completion of a fight. Ticket and commission revenues are
recognized at the time of the fight. Contract and agency fee revenues are
recognized during the various athletic seasons on a pro rata basis. Such
revenues are therefore recognized from the period November 1 through May 1
for basketball, and September 1 through January 1 for football.
Use of Estimates
Management uses estimates and assumptions in preparing financial
statements. Those estimates and assumptions affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and
liabilities, and the reported revenues and expenses.
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes
WWES and its subsidiaries file a consolidated Federal income tax
return.
The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes", determining deferred tax assets and
liabilities using the liability method. Deferred taxes are recognized on
net operating loss carryforwards and differences between financial
reporting and income tax bases of assets and liabilities, using enacted
income tax rates.
Stock-Based Compensation
In 1996, WWES adopted the provisions of SFAS No. 123, "Accounting for
Stock-Based Compensation", which prescribes accounting and reporting
standards for all stock-based compensation plans, including employee stock
options, restricted stock, and stock appreciation rights. In accordance
with SFAS No. 123, the Company recognizes expense for stock-based awards
based on the estimated fair value on the date of the grant (see Note 7).
Cash and Cash Equivalents
For purposes of the statement of cash flows, all highly liquid
investments with original maturities of three months or less are considered
to be cash equivalents.
The Company maintains cash balances in several financial institutions,
which are insured by the Federal Deposit Insurance Corporation for up to
$100,000 at each institution. At December 31, 1997, the Company's uninsured
cash balances were approximately $1,128,000, including certificates of
deposit.
Reclassifications
Certain reclassifications have been made to the prior year financial
statements to conform to the current year presentation.
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3 - PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
1997 1996
----------- --------
Gym equipment and furniture $ 56,575 $ 56,450
Transportation equipment - 31,000
Leasehold improvements 7,116 7,116
----------- -----------
63,691 94,566
Less - Accumulated depreciation
and amortization 42,662 38,371
----------- -----------
$ 21,029 $ 56,195
=========== ===========
Depreciation expense was $7,226 and $11,027 for the years ended December
31, 1997 and 1996, respectively.
4 - ESCROW PAYABLE
The Company is holding funds in escrow on behalf of two boxers until
release is requested.
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5 - INCOME TAXES AND DEFERRED INCOME TAXES
Income taxes and components of deferred tax assets are as follows:
December 31,
1997 1996
Income taxes
State income taxes $ 5,789 $1,330
================ ======
Deferred tax assets
Net operating loss carryforwards $ 2,103,258 $786,977
Stock-based compensation 8,955 -
---------------- ------------
2,112,213 786,977
Less - Valuation allowance (2,112,213) (786,977)
---------------- ------------
Net deferred tax asset $-0- $-0-
=========== ====
The Company has available net operating loss carryforwards of
approximately $6,245,000, which may be utilized to reduce any Federal
taxable income through 2012.
6 - COMMON STOCK
On October 22, 1996, WWES, in its initial public offering, sold
1,400,000 units (the "Units"). Net proceeds were $6,499,091. Each Unit
consisted of one share of common stock, $.01 par value, of WWES, and one
redeemable common stock purchase warrant to purchase one share of common
stock at $7.20 during the period October 22, 1996 to March 21, 2001.
Additional shares have been sold or issued by WWES as follows:
On July 15, 1997, sold 100,000 shares of restricted common stock
in a private offering for $125,000.
On August 19, 1997, issued 250,000 shares of restricted common
stock, with a fair value of $157,500, for consulting services
rendered by a consulting firm.
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6 - COMMON STOCK (Continued)
On September 16, 1997, issued a total of 83,500 shares of
restricted common stock, with a fair value of $120,240, to seven
individuals for consulting and other services.
In November and December 1997, sold 664,442 shares of restricted
common stock in a private offering at $2.25 a share, for a total
of $1,494,994.
7 - STOCK OPTION PLAN
On July 1, 1996, WWES adopted the 1996 Stock Option Plan (the "Plan"),
which provides that certain options granted thereunder are intended to
qualify as "incentive stock options" under Section 422A of the Internal
Revenue Code. Nonqualified options may also be granted under the Plan. The
Plan authorizes the issuance of qualifying options to purchase 500,000
shares. The option price per share for the incentive stock option will be
determined at the time of grant, but will not be less than the fair market
value of the common stock on such date or, in the case of a 10%
stockholder, no less than 110% of the fair market value of the stock on the
grant date.
On September 16, 1997, 435,000 qualifying options were granted, with
an exercise price of $2.875, and 11,000 options were granted outside the
Plan with an exercise price of $2.875, all for a term of 10 years.
On December 9, 1997, the Board of Directors of WWES granted 50,000 and
115,000 nonqualifying options exercisable at $2.00 and $2.875 a share,
respectively, with a 5-year term, and 147,500 nonqualifying options
exercisable at $2.875 with a 10-year term.
On January 28, 1998, the Board of Directors of WWES authorized the
issuance of 320,000 nonqualifying options, exercisable at $1.50 a share,
with a 10-year term.
WWES accounts for stock options under the fair value method, pursuant
to SFAS No. 123 (see Note 2). The fair value of these options was
calculated at the date of grant using a Black-Scholes option pricing model
assuming a risk-free interest rate of 5.47% and a volatility factor of
expected market price of WWES's common stock of 130%. Under the provisions
of SFAS No. 123, WWES's compensation expense arising from the grant of
stock options for the year ended December 31, 1997 was $26,338. The related
deferred tax asset of $8,955 was recorded based on a 34% tax rate for the
resulting temporary difference.
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8 - LIFE INSURANCE POLICIES
WWES is the owner and beneficiary of $950,000 in life insurance
policies on the lives of boxers, and is also the owner and beneficiary of a
$2,000,000 life insurance policy on the life of its chief executive
officer.
9 - RELATED PARTY TRANSACTIONS
WWES made payments of $31,696 and $61,421 on behalf of Impact during
the years ended December 31, 1997 and 1996, respectively. The receivable
from the related party is noninterest-bearing and unsecured.
Boxing tickets purchased in 1996 at a cost of $28,453 from a company
owned by the principal officer were used for promotional purposes and
reflected in other operating expenses in 1996. There were no similar
purchases in 1997.
10 - COMMITMENTS AND OTHER MATTERS
Management Contracts
The Company has entered into long-term management contracts with a
number of professional boxers, football players and basketball players. The
Company generally receives between 15% and 27-1/2% of purses from boxing
matches and approximately 20% of the fees from endorsements, public
appearances and commercials. Football and basketball player contracts are
for the term of their player contracts. The Company generally receives up
to 4% of players' compensation and 10% to 20% of fees earned for
endorsements and marketing.
Settlement Agreements
In August 1997, WWES settled disputes with consultants, issuing 11,000
shares of unregistered common stock for services rendered having a fair
value of $6,749.
On August 29, 1996, a settlement was reached with a trainer for a
boxer which provided for the termination of a contract with the trainer.
Total payments of $100,000 were made on this settlement.
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10 - COMMITMENTS AND OTHER MATTERS (Continued)
Letter of Credit
At December 31, 1997, WWES has a $100,000 open letter of credit
collateralized by its $100,000 certificate of deposit.
Consulting and Advisory Agreement
On December 5, 1997, WWES entered into a consulting and advisory
arrangement with respect to a $3,000,000 private placement of equity
securities. The consulting fee will be 8% of any equity capital raised. In
addition, if WWES closes on at least $1,000,000 of the private placement,
the consultant will be entitled to purchase 100,000 shares of WWES common
stock at $2.75 a share at any time from the date of closing through
November 30, 2002.
Employment Agreements
WWES has entered into a five-year employment agreement with a key
executive commencing January 1, 1996, which provides for a base annual
salary of $190,000 and annual minimum guaranteed increases of $25,000. The
agreement also provides for an annual bonus based on WWES income, as
defined, and includes a termination provision. The executive is entitled to
participate in WWES's incentive stock option plan and will be granted a
minimum of 30% of the stock options to be issued by the plan at an exercise
price of 110% of the fair value of the stock. WWES has obtained a
$2,000,000 key person life insurance policy on this executive's life, with
WWES as beneficiary.
In connection with its formation, WWBM entered into five-year
employment agreements with two key executives, effective September 1, 1996.
The agreements provide each executive with an annual salary of $130,000, a
bonus of $50,000 and additional bonuses based on net revenues of WWBM. WWES
is committed to fund up to $700,000 of operating expenses of WWBM, which
will increase to $1,000,000 if WWBM achieves certain performance goals tied
to the successful recruitment of NBA players. WWES has the right to
terminate the agreement if WWBM's aggregate costs of operations exceed
these funding obligations.
In connection with its formation, WWFM signed a five-year employment
agreement with a key executive, effective April 16, 1997, which provides
for annual compensation of $140,000, a signing bonus of $75,000, and an
automobile allowance of $1,000 a month.
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10 - COMMITMENTS AND OTHER MATTERS (Continued)
Stockholder Agreements
The minority stockholders of WWBM, who are also officers of WWBM,
entered into a stockholder agreement with WWES, providing that, in the
event WWES desires to sell all of its shares of WWBM common stock to an
unrelated third party, and the purchaser demands to purchase all of the
outstanding shares, then the minority stockholders are required to sell all
of their shares to the purchaser or effectuate a share exchange. In the
event of termination of employment, they may elect to effectuate a
share-for-share exchange of shares with the common stock of WWES, based on
exchange rates, as defined. These stockholders may elect the share exchange
if either a minimum player threshold is met or WWBM has achieved after-tax
earnings of $6,000,000.
The minority stockholder of WWFM, who is also an officer of WWFM,
entered into a stockholder agreement with WWES, providing that, in the
event WWES desires to sell all of its shares of common stock to an
unrelated third party and the purchaser demands to purchase all of the
outstanding shares, then the minority stockholder will be required to sell
all of his shares to the purchaser or elect to effectuate a share exchange
for shares of WWES in accordance with provisions of the agreement.
Lease Agreement
On February 10, 1997, WWES entered into a limousine lease. Future
annual minimum lease payments required under the noncancelable operating
lease are as follows:
Year Ending
December 31,
1998 $ 25,000
1999 25,000
2000 25,000
2001 20,000
-----------
$ 95,000
-16-
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11 - SUBSEQUENT EVENTS
From January 1, 1998 through March 27, 1998, the Company issued 660,000
restricted shares of Common Stock in connection with several private placement
transactions for an aggregate amount of $1,485,000. The costs for the issuance
of these shares were approximately $60,000 in cash commission and legal fees,
and 50,000 restricted shares which will be issued by the Company in lieu of
commissions.
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of April 16, 1997, between WORLDWIDE FOOTBALL
MANAGEMENT, INC. a Delaware corporation having its principal offices at 29
Northfield Avenue, West Orange, New Jersey 07052 (the "Corporation"), and JOEL
SEGAL ("Employee") residing at 330 East 75th Street, New York, New York 10021.
W I T N E S S E T H:
WHEREAS, the Corporation is a subsidiary of Worldwide Entertainment &
Sports Corp. ("WW");
WHEREAS, the Corporation engages in the business of providing career
management, professional representation, contract negotiation, the
identification and procurement of endorsements and personal appearances,
business management and related services as well as the development of
non-professional football related opportunities for professional football
players (the "Corporation's Business");
WHEREAS, the Employee has significant experience in the Corporation's
Business and the Corporation wishes to assure itself of the continued
availability of the advice and services of Employee in connection with the
Corporation's Business; and
WHEREAS, Employee wishes to be employed by the Corporation;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements set forth herein, the parties hereto agree as follows:
1. Employment and Term. Subject to the terms and conditions of this
Agreement, the Corporation shall employ Employee, and Employee hereby accepts
employment by the Corporation, for a period of five (5) years.
2. Employee's Duties; Employee's Representations and Warranties.
(a) Employee shall serve the Corporation as its President and
as a Director and in such other executive capacities as may be determined by
either the Chairman of the Board of Directors of the Corporation or the Chief
Executive Officer and President of WW and as are consistent with the performance
of his duties hereunder. Employee shall perform and be responsible for the
provision of such executive, administrative, client development, client
managerial, marketing and other services and duties (including, without
limitation, the preparation of periodic reports regarding the business and
affairs of the Corporation), as are required by or incidental to the positions
he holds or as may, from time to time, be requested by the Chairman of the Board
of Directors of the Corporation, the Board of Directors of WW, or the Chief
Executive Officer or President of WW, and the Employee shall report directly to
such persons. During the term of this Agreement, Employee shall devote his
entire business time, attention and energies, on a full-time basis, to the
Corporation's
<PAGE>
Business and he shall not be required by the Corporation to relocate his
permanent residence from New York City for the performance of his duties
hereunder. The foregoing notwithstanding, the Employee shall be permitted to
dedicate up to 5 hours per week toward serving as a law professor at Hofstra Law
School. The income Employee derives from teaching at Hofstra shall not be
subjected to the terms of this Agreement.
(b) As of the date hereof, the Employee represents and warrants to the
Corporation as follows:
(i) Employee is currently listed by the National
Football League Players Association ("NFLPA") as being a duly
certified player agent. Except as set forth in Schedule A to
the disclosure letter of the Employee dated the date hereof
(the "Disclosure Letter"); (A) the Employee is in good
standing in accordance with his role as exclusive bargaining
agent for NFL players; (B) Employee is duly registered, or
within sixty (60) days of the date hereof, shall be registered
and in good standing with all amateur and professional sports
agencies and organizations, and all state and local
governmental or regulatory agencies necessary for the
performance of the Employee's duties hereunder; (C) Employee
is not aware of any facts or circumstances which could result
in the revocation or suspension of any of the foregoing; and
(D) Employee has not been, nor is he currently, the subject of
any formal or informal inquiry or investigation with respect
to violation of any regulatory organization, nor has the
Employee been found or alleged to have been in violation of,
or entered into any consent decree or other settlement of any
allegations of, any governmental, academic or self regulatory
organization or agency, including without limitation any
securities regulation or self-regulatory organization rules or
regulations relating to securities.
(ii) Schedule B to the Disclosure Letter is a
complete and accurate schedule as of the date hereof of: (A)
the individuals that Employee represents as a duly certified
player's agent listed with the NFLPA; (B) the current annual
compensation amounts of each individual (including revenues
from endorsement income broken out and so identified); (C) the
number of years remaining on each player's existing contract
and the salary and guaranteed bonus and other payments due to
the player thereunder, and; (D) the percentage of the
respective annual compensation amounts of the listed
individuals that Employee has contracted to receive as
commission (cumulatively, "Employee's Client Business")
pursuant to signed and valid agent agreements, which to his
best knowledge have not been or are not being or threatened to
be terminated or breached by any party thereto. There are no
unpaid fees due to the Employee as of the date hereof from any
such individuals, or any individuals for whom the Employee has
acted as a certified player's agent since January 1, 1994,
which have not been paid in full.
(iii) Except as set forth in the Disclosure Letter,
neither the execution and delivery of this Agreement by the
Employee, the engagement by the Corporation of
<PAGE>
the Employee nor the performance of the activities to be
conducted by the Employee contemplated hereby violates, or
contradicts, the provisions of any agreement or other
instrument or restriction, or any judgment, order or decree of
any governmental, academic or self regulatory organization or
agency, to which the Employee is a party or which is binding
upon the Employee.
(iv) The Employee hereby represents that he has not
and will not have at any time in the future any direct or
indirect financial interest in or with any individual or
entity conducting business with the Corporation or any
affiliate of WW unless disclosed in advance in writing to, and
with the consent of, the President of WW. Nothing herein shall
be construed, however, to prevent the Employee from owning not
more than 5% of the outstanding securities of any entity that
is listed on a national securities exchange or traded in the
over-the-counter market.
3. Client List Assignment. By executing this Agreement, and as more
fully set forth in Exhibit A hereof, Employee hereby assigns the rights and
interests to the revenue generated by any individuals or entities signed to a
valid representation agreement, or with whom material discussions regarding
entering a representation agreement were had by the Employee, the Corporation or
any of its employees or affiliates during the period commencing with the start
of Employee's employment, and continuing for the term of this Agreement and any
extensions hereof (the "Corporation's Clients"). Employee hereby also assigns to
the Corporation all other revenues generated by the performance of any of his
duties hereunder during the term of this Agreement.
4. Employee Certification. Employee covenants to maintain his listing
with the NFLPA and with all necessary governmental and self-regulatory agencies
and organizations. In addition, Employee agrees to apply for any additional
certifications as from time to time may be deemed necessary by the Chairman of
the Board of WW for the development of the Corporation's Business.
5. Corporation's Budget.
Attached as Schedule C to the Disclosure Letter is a projected
one year budget which the Employee has prepared and which the Employee believes
reasonably and accurately estimates the income from, expenses associated with,
and capital needed for, the operation of the Corporation and the development of
the Corporation's Business. Employee, in his capacity as President of the
Corporation, covenants to cause the Corporation to adhere, within a range of
15%, to the projected expense budget as set forth on such Schedule C and as
administered or modified by the Employee in such manner as approved by the Board
of Directors of WW.
6. Compensation.
(a) Salary. During the term of this Agreement, the Corporation
shall pay to Employee a base salary at the rate of $190,000 per annum in
accordance with the Corporation's regular payroll practice, but in no event less
than two times a month.
<PAGE>
(b) Cash Bonus. Concurrently with the execution of this
Agreement, the Corporation shall pay to the Employee, as signing bonus, a lump
sum of $75,000 (less withholding taxes and other applicable payroll deductions).
It is understood, however, that if before December 31, 1998 this Agreement is
either (A) terminated by the Company "for cause" (as defined in Paragraph 9
hereof and adjudicated by court of competent jurisdiction) or (B) the Employee
resigns, other than as a result of a breach of this Agreement by the
Corporation, the Employee shall repay such bonus to the Corporation. The Board
of Directors will review, on a quarterly basis, the contribution, if any, of the
Employee to the business operations of WW outside of the Corporation. Based upon
such review, Employee may receive cash or other bonuses as determined at the
discretion of the Chairman of the Board of the Corporation.
(c) Stock Option Plan. Employee shall be eligible to receive
options to purchase shares of the Common Stock of WW ("Options") under the WW
Stock Option Plan, pursuant to the terms and conditions set forth therein, as
applicable to employees of WW's subsidiaries, subject to the discretion of the
WW Board of Directors or any committee thereof. Such grants, if any, shall be
commensurate with the Employee's role in WW, on a consolidated basis.
(d) Travel and Entertainment Reimbursement.
(i) Each month during the Term of this Agreement,
Employee shall submit to the Corporation an employee expense
reimbursement form with respect to all reasonable expenses
incurred by Employee in connection with the performance of his
duties hereunder, including without limitation expenses
incurred in connection with local travel expenses set forth in
Paragraph (e), below. Employee acknowledges that he shall
obtain the prior written approval of WW before incurring any
commitment, expense or other expenditure in excess of $3,000.
Each reimbursement form shall be accompanied by copies of
appropriate receipts and/or invoices and shall be in a form
and in sufficient detail so as to facilitate compliance with
applicable Internal Revenue Service guidelines and
regulations. The Corporation shall reimburse Employee for such
reasonable expenses within fifteen (15) days of the date of
the submission of Employee's monthly reimbursement form.
(ii) Employee shall be given a corporate credit card or
access to other corporate credit facilities, in accordance
with the policies established from time to time by the
Corporation, coincidental with their establishment by WW or
the Corporation for use in Corporation matters.
(e) Automobile Credits. Employee shall be reimbursed for up to
$1,000 per month during the term of this Agreement for local travel expenses
incurred, including, in his discretion, for the rental, leasing, purchase or
other procurement, parking, maintenance and operation of an automobile. Employee
shall submit to the Corporation appropriate expense reimbursement forms to
receive such reimbursement.
<PAGE>
(f) Disability Compensation. If the Employee becomes unable to
substantially perform his duties hereunder due to physical or mental disability
or incapacity (is "Disabled") he shall be allowed to continue to receive payment
of his salary, at his base salary rate set forth in 6(a) above, for a period of
time totaling either: (i) three (3) consecutive months; or (ii) an aggregate of
six (6) months during the Term of this Agreement ("Disability Compensation").
Non-consecutive periods of absence for Disability taken during the Term shall be
aggregated and counted against such six (6) month period. The amount of
Disability Compensation payable to Employee shall be reduced by the aggregate
amount of all income disability benefits which for such period he may receive or
to which he may be entitled by reason of (i) any group health insurance plan
which is intended to function as a salary replacement plan, (ii) any applicable
compulsory state disability law, (iii) the Federal Social Security Act, (iv) any
applicable workmen's compensation law or similar law, (v) any plan towards which
the Corporation or any parent, subsidiary or affiliate of the Corporation has
contributed or for which it has made payroll deductions, such as group accident
or health policies, other than those which reimburse for actual medical
expenses, and (vi) any income Employee may receive from third parties for his
performance of any services.
(g) Medical Insurance; Life Insurance. Employee shall be
provided Medical Insurance benefits commensurate, in amount and scope of
coverage, with those benefits generally provided by WW to its key employees
consistent with the policies and practices established from time-to-time by WW's
Board of Directors. The Corporation shall purchase a term life insurance policy
for the benefit of the Employee with an annual premium payout obligation not to
exceed $750.
7. GAAP Accounting to be Used. Except as otherwise specifically stated
herein, all calculations made by either party for any purpose set forth in this
Agreement shall be made in accordance with GAAP.
8. Termination on Disability or Death. In the event that Employee is
Disabled for: (a) a period of three (3) or more consecutive months; or (b) six
(6) months in the aggregate during the Term of this Agreement, either the
Corporation or the Employee shall have the right to terminate this Agreement,
and Employee's employment hereunder, upon thirty (30) days' prior written
notice. In the event that Employee is able to render, and recommences rendering,
services and performing his duties hereunder to the satisfaction of WW's Board
of Directors within such thirty (30) day notice period, Employee shall be
reinstated. If Employee dies during the term of this Agreement, this Agreement
shall terminate immediately upon his death, any benefits unvested as of such
date shall lapse unless otherwise specifically made to vest by other written
agreement, and all of Employee's assignments hereunder shall become irrevocable.
9. Termination; Termination for Certain Causes.
(a) The Corporation may terminate this Agreement at any time
"for cause." As used herein, "for cause" shall mean the Employee's gross
negligence, misfeasance, malfeasance in the performance of his services
hereunder, conviction of any fraud or felony, the commission of acts which in
the reasonable determination of the Board of Directors may be damaging to the
business or
<PAGE>
reputation of the Corporation or WW, the material breach by the Employee of any
provision hereof, or the Employee's misappropriation of funds.
(b) From and after December 31, 1998 either the Corporation or
the Employee may, but neither is obligated to, terminate this Agreement on sixty
(60) days' prior written notice to the other.
(c) In the event of a termination of this Agreement by the
Corporation pursuant to Paragraph 9(b) hereof, or in the event of the
non-renewal of this Agreement at the end of the Term hereof, then (i) the
Corporation shall, within ten (10) business days after receipt thereof, pay to
the Employee 50% of the revenues to be derived from the Corporation's Clients,
after deduction of direct expenses applicable to the Corporation's Clients, and
(ii) the Employee shall, within ten (10) business days after receipt thereof,
pay to the Corporation 50% of the revenues to be derived from the Corporation's
Clients, after deduction of direct expenses applicable to the Corporation's
Clients, received by Employee or his future employers, affiliates,
representatives, or those acting in concert therewith. It is understood,
however, that in the event of the termination of this Agreement as a result of
(i) the termination by the Corporation of the Employee's employment "for cause";
or (ii) the voluntary termination of this Agreement by the Employee at any time
during the Term hereof, then (A) the Corporation shall, within ten (10) business
days after receipt thereof, pay to the Employee 40% of the revenue to be derived
from the Corporation's Clients after deduction of direct expenses applicable
thereto, and (B) the Employee shall, within ten (10) business days after receipt
thereof, pay to the Corporation 60% of the revenues to be derived from the
Corporation's Clients, after deduction of direct expenses applicable to the
Corporation's Clients, received by Employee or his future employers, affiliates,
representatives, or those acting in concert therewith. The payments under this
Paragraph 9(c) shall be in lieu of any other claims for damages as a result of
such termination.
10. Confidentiality.
(a) Employee understands and acknowledges that as a result of
Employee's involvement with the Corporation's Business he is or shall
necessarily become informed of, and have access to, confidential information of
the Corporation, WW and their respective affiliates, clients, licensees,
franchises, subsidiaries and joint ventures (collectively the "Worldwide
Network"), including without limitation, trade secrets, know-how, plans,
specifications and the identity of clients. The Employee understands and
acknowledges that such information, to the extent it is not directly related to
the Employee's Client Business or the Corporation's Clients for whom the
Employee acts as exclusive player's agent, even though it may have been or may
be developed or otherwise acquired by Employee during his employment with the
Corporation, is the exclusive property of the Worldwide Network to be held by
Employee in trust and solely for the Worldwide Network's benefit and Employee
shall not at any time, either during or subsequent to his employment hereunder,
reveal, report, publish, transfer or otherwise disclose to any person,
corporation or other entity, or use, any of the Worldwide Network's confidential
information not directly related to the Employee's Client Business or the
Corporation's Clients for whom he acts as exclusive Player's Agent, without the
written consent of the Corporation's or WW's Board of Directors, except for use
on behalf of the Corporation in connection with the Corporation's Business, and
except for such information (i)
<PAGE>
known to the Employee on the date hereof and (ii) which legally and legitimately
is or becomes disclosed by authorized sources other than Employee.
(b) Upon the termination of his employment with the
Corporation for any reason, Employee shall promptly deliver to the Corporation
all manuals, letters, notes, notebooks, reports and copies thereof and all other
materials, including, without limitation, those of a secret or confidential
nature, relating to the Corporation's Business which are in Employee's
possession or control.
11. Non-Competition.
(a) During his employment with the Corporation, Employee shall
refer to WW all opportunities within the scope of business of the Worldwide
Network presented to Employee, and Employee shall not, anywhere in the United
States of America, or elsewhere in the world (or for such lesser area as may be
determined by a court of competent jurisdiction to be a reasonable limitation on
the competitive activity of the Employee), directly or indirectly:
(i) engage in any activities directly or indirectly
competitive with the Corporation's Business or with the
interests of the Worldwide Network or any of them;
(ii) otherwise divert or attempt to divert any business
whatsoever from the Worldwide Network; solicit or attempt to
solicit, for any non-Corporation business endeavor, any
employee of the Worldwide Network or any of them; or
(iii) interfere in any material respect with any
business relationship between any of the Worldwide Network and
any other person.
12. Remedies and Survival. Because the Corporation does not have an
adequate remedy at law to protect its business from Employee's competition or to
protect its interest in its trade secrets, privileged, proprietary or
confidential information and similar commercial assets, the Corporation shall be
entitled to injunctive relief, in addition to such other remedies and relief
that would, in the event of a breach of the provisions of Paragraphs 10 and 11,
be available to the Corporation. The provisions of Paragraphs 3 (subject to
paragraph 9), 9 and 10, and this Paragraph 12, shall survive any termination of
Employee's employment with the Corporation.
13. Entire Agreement. This Agreement sets forth the entire
understanding of the parties hereto with respect to its subject matter, merges
and supersedes any prior or contemporaneous understanding with respect to its
subject matter, and shall not be modified or terminated except by another
agreement in writing executed by the Corporation and Employee. Failure of a
party to enforce one or more of the provisions of this Agreement or to require
at any time performance of any of the obligations hereof shall not be construed
to be a waiver of such provisions by such party nor to in any way affect the
validity of this Agreement or such party's right thereafter to enforce any
provision of this Agreement, nor to preclude such party from taking any other
action at any time which it would legally be entitled to take.
<PAGE>
14. Severability. If any provision of this Agreement is held to be
invalid or unenforceable by any court or tribunal of competent jurisdiction, the
remainder of this Agreement shall not be affected by such judgment, and such
provision shall be carried out as nearly as possible according to its original
terms and intent to eliminate such invalidity or unenforceability.
15. Successors and Assigns. Neither party shall have the right to
assign this personal agreement, or any rights or obligations hereunder, without
the consent of the other party; provided, however, that upon the sale of all or
substantially all of the assets and business of the Corporation to another party
under the control of Marc Roberts, or upon the merger or consolidation of the
Corporation with another corporation under the control of Marc Roberts, this
Agreement shall inure to the benefit of, and be binding upon, both Employee and
such party purchasing such assets, business and goodwill, or surviving such
merger or consolidation, as the case may be, in the same manner and to the same
extent as though such other party were the Corporation. Subject to the
foregoing, this Agreement shall inure to the benefit of, and bind, the parties
hereto and their legal representatives, heirs, successors and assigns. For the
purpose of this paragraph, "control" means the ownership of at least a numerical
majority of the equity ownership of the Corporation.
16. Communications. All notices and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given at the
time when mailed in any United States post office enclosed in a registered or
certified postage-paid envelope and addressed as set forth at the beginning of
this Agreement, or to such other address as any party may specify by notice to
the other parties, or delivered by Federal Express or a similar overnight
courier to such address; provided, however, that any notice of change of address
shall be effective only upon receipt.
17. Construction; Counterparts. The headings contained in this
Agreement are for convenience only and shall in no way restrict or otherwise
affect the construction of the provisions hereof. References in this Agreement
to Paragraphs are to the sections of this Agreement. This Agreement may be
executed in multiple counterparts, each of which shall be an original and all of
which together shall constitute one and the same instrument.
18. Governing Law Jurisdiction. This Agreement and the exhibits hereto
shall be construed in accordance with and governed by the laws of the State of
New York without giving effect to that State's conflict of laws principles. By
executing this Agreement, the Corporation and the Employee consent to the
exclusive personal jurisdiction and venue of the State and Federal courts
sitting in New York County for any action or proceedings arising out of this
Agreement or the subject matter hereof and the Corporation and the Employee
irrevocably waive any defense or claims in any such actions or proceedings based
on lack of personal jurisdiction, improper venue, forum non conveniens or any
similar basis, to the maximum extent permitted by law.
19. No Third Party Beneficiary. No provision in this Agreement shall
constitute any person or entity a third party beneficiary. Without limiting the
foregoing, in no event shall any person, other than the parties hereto and their
successors or assigns have any claims for breach of this Agreement.
<PAGE>
20. Product of Negotiation. The terms of this Agreement are the product
of mutual negotiation and compromise between Employee and the Corporation. The
meaning, effect and terms of this Agreement have been discussed by both parties
with their respective counsel and are fully understood and agreed upon by the
parties hereto. In the event of an ambiguity in the interpretation of this
Agreement and its Exhibits, neither party shall be deemed to have been the
draftsman thereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first set forth above.
/s/ Joel Segal
WORLDWIDE FOOTBALL MANAGEMENT,INC.
By: /s/ Marc Roberts, Chairman of the Board
WORLDWIDE FOOTBALL MANAGEMENT, INC.
SHAREHOLDERS AGREEMENT
AGREEMENT, dated as of the 16th day of April, 1997, by and
among WORLDWIDE FOOTBALL MANAGEMENT, INC., a Delaware corporation with its
principal address at 29 Northfield Avenue, West Orange, New Jersey 07052 (the
"Corporation"), JOEL SEGAL, residing at 330 East 75th Street, New York, New York
10021 ("Segal"), and WORLDWIDE ENTERTAINMENT & SPORTS CORP., a Delaware
corporation with its principal address at 29 Northfield Avenue, West Orange, New
Jersey 07052 ("Worldwide").
Segal and Worldwide (collectively, the "Shareholders") have
caused the Corporation to be formed under the corporate laws of the State of
Delaware for the purpose of engaging in the management and representation of
professional football players. Segal has contributed certain assets to the
Corporation, including certain existing contractual rights, and Worldwide has
contributed certain assets, including cash and certain existing contractual
rights, to the Corporation.
The authorized capital stock of the Corporation consists of
three thousand shares of common stock, par value $.01 per share (the "Shares").
By extension of this Agreement, Segal owns 20 Shares, which constitutes 20% of
the outstanding Shares, and Worldwide owns 80 Shares, which constitutes 80% of
the outstanding Shares.
The parties believe it to be in the best interest of the
Corporation and the Shareholders to set forth certain understandings with
respect to certain matters.
In consideration of the foregoing and of the mutual promises
and agreements hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
1. Assignment.
(A) Segal. By executing this Agreement, and as more fully set forth on
Exhibit A hereof, Segal hereby assigns to the Corporation, subject to the terms
of Paragraph 5 hereof, all of Segal's rights and interests in and to the revenue
generated by his services as a Player's Contract Advisor for the professional
athletes listed on Exhibit A ("Segal's Assignment"). Exhibit A is a complete and
accurate list, as of the date hereof of , (i) the individuals that Segal
represents as a duly certified player's agent listed with the NFLPA; (ii) the
current annual compensation amounts of each individual (including revenues from
endorsement income broken out and so identified); (iii) the number of years
remaining on each player's existing contract and the salary and guaranteed bonus
and other payments due to the player thereunder, and; (iv) the percentage of the
respective annual
<PAGE>
compensation amounts of the listed individuals that Segal has contracted to
receive as commission (cumulatively, "Segal's Client Business") pursuant to
signed and valid agent agreements, which to his best knowledge have not been or
are not being or threatened to be terminated or breached by any party thereto.
There are no unpaid fees due to Segal as of the date hereof from any such
individuals, or any individuals for whom the Segal has acted as a certified
player's agent since January 1, 1994, which have not been paid in full.
(B) Worldwide. In executing this Agreement, Worldwide hereby
assigns all of its rights and interests in and to the revenues it receives from
the professional athletes listed on Exhibit B ("Worldwide's Assignment") which
is a complete and accurate list of all of the players currently under contract
with Worldwide; the number of years remaining on each contract; and the amounts
of revenue expected by Worldwide from each such player contract.
2. Management and Internal Affairs.
(A) Directors. The number of directors constituting the entire Board of
Directors of the Corporation shall be three. The Shareholders agree, subject to
the provisions of this Agreement, to nominate and to vote their Shares for the
election as directors of the Corporation of two persons designated by Worldwide
and one person designated by Segal. The By-Laws of the Corporation are hereby
deemed amended so as to conform with this Section.
The foregoing notwithstanding, Segal shall have the right to
designate one person for nomination and election to the board only so long as he
continues to own the Shares held by him or he continues to be employed by the
Corporation. In the event that he is neither the holder of Shares nor an
employee of the Corporation, the Shareholders shall be free to nominate and vote
for election as a director, in place of the person previously designated by
Segal, as the case may be, any person without restriction.
(B) Officers. The Shareholders agree to use their best efforts to secure
the election and continuation in office, and to cause their nominees serving as
Directors to vote for the following persons as officers as follows:
Chairman of the Board Marc Roberts
President Joel Segal
Secretary Roy Roberts
3. General Issue and Transfer Restrictions.
(A) Prohibition of Issuance or Transfer. The Corporation shall not
hereafter issue any Shares and neither the Corporation nor any Shareholder shall
sell, assign, pledge,
<PAGE>
hypothecate or otherwise alienate, encumber or otherwise dispose of, in any
manner (including, without limitation, by will or intestacy), whether or not for
consideration (hereinafter referred to as a "Transfer"), any Shares except as
expressly permitted by the terms of this Agreement. Any attempted issue or
Transfer of Shares of other securities of the Corporation in violation of this
Agreement shall not be recognized and shall be deemed void ab initio.
(B) General Conditions Upon Waiver of Prohibition. In addition to and not
in limitation of any of the other restrictions and conditions, but except as
otherwise herein provided, no Shares shall hereafter be issued without the
consent of all Shareholders and no Shares shall be transferred unless each of
the following conditions is met with respect to such an issue or Transfer:
(1) the transferee agrees in writing to be
bound by all of the provisions of this Agreement to
the same extent as if he were a party to this
Agreement and a Shareholder, and a copy of such
written agreement is given to the Corporation;
(2) the transferee executes and delivers to
the Corporation an investment letter in form and
substance satisfactory to the Corporation and its
counsel, the terms of which shall include an
appropriate investment representation; and
(3) the Transfer or issue is made pursuant
to (a) an effective registration statement under the
Securities Act of 1933 and applicable state
securities laws, or (b) an appropriate exemption
therefrom, in which event the transferee, if any,
shall furnish to the Corporation an opinion of
counsel, reasonably satisfactory to the Corporation
and its counsel, that the Transfer is exempt from
such registration requirements.
(C) Restrictive Legend. Any certificate issued at any time
representing Shares shall have the following endorsement written, printed or
stamped upon the face thereof:
"NOTICE: the securities represented by this
Certificate have not been registered under the
Securities Act of 1933 and applicable state
securities law, and are subject to the terms,
conditions and restrictions of a Shareholders
Agreement among the Corporation and its Shareholders,
dated as of April 7, 1997, a copy of which is on file
with the Secretary of the Corporation, and which
includes, without limitation, certain provisions for
the election of specific directors and officers named
therein and for the issuance of securities of the
Corporation. Said securities may not be offered for
sale, sold, assigned, pledged or otherwise
transferred, encumbered or disposed of, except as
expressly provided in the Shareholders Agreement."
<PAGE>
(D) First Refusal. If a Shareholder at any time, or from time to time
receives a bona fide offer from a person or entity not a party to this Agreement
to purchase any Shares (the "Third Party Offer"), prior to the acceptance
thereof, such Shareholder (the "Offering Shareholder") shall give notice thereof
to the other parties hereto. Such notice (the "Offering Notice") shall contain a
detailed description of the Third Party Offer, including, but not limited to,
the name and address of the offeror and the price at which and terms upon which
such Shares (the "Offered Shares") are proposed to be transferred. The Offering
Notice shall be deemed to be an offer by the Offering Shareholder to sell all
Offered Shares to the other parties hereto, who shall have the following options
to accept such offer in accordance with the terms of the Offering Notice:
(1) The Offering Shareholder shall first
offer the Offered Shares to the Corporation, which
shall have sixty days in which to accept all of the
Offered Shares at the purchase price and other terms
and conditions set forth in the Third Party Offer.
(2) If the Offered Shares offered pursuant
to the foregoing offer is not accepted, the Offered
Shares shall be offered to the other Shareholders,
who shall have sixty days in which to accept, pro
rata in accordance with the relative share holdings
of those Shareholders so electing, all of such
Offered Shares at the purchase price and other terms
and conditions set forth in the Third Party Offer.
(3) All acceptances of Offered Shares shall
be effected by notice (the "Acceptance Notice") given
to the Offering Shareholder within the applicable
time limits hereinabove specified.
(4) If all of the Offered Shares are not
accepted pursuant to the foregoing clauses 1 and 2 of
this subsection (A), then all, but not less than all,
of the Offered Shares may be transferred by the
Offering Shareholder, at any time within thirty days
after the last Acceptance Notice was permitted to
have been given, to the proposed offeree named in the
Offering Notice at the price and upon the other terms
and conditions set forth in the Offering Notice;
provided, however, that the Offering Shareholder is
able to certify and certifies to the other parties
hereto that the transfer of the Offered Shares is to
the proposed offeree named in the Offering Notice and
pursuant to the terms and conditions set forth in the
Offering Notice.
(5) Contemporaneously with the giving of an
Offering Notice, the Offering Shareholder shall seek
to assure that such notice is actually received by
the non-Offering Shareholders by making a good faith
attempt to orally notify the non-Offering
Shareholders or their respective agents of the
Offering Notice at whatever place the non-Offering
Shareholders are thought by the Offering Shareholder.
<PAGE>
(6) The offer made in any Offering Notice
shall be deemed to be a firm non-withdrawable offer
for the applicable periods hereinabove provided.
(7) Any Shareholder transferring all of his
Shares, other than pursuant to Section 3 hereof, if
an officer, director or employee of the Corporation,
shall tender his resignation from all such positions
simultaneously with the closing of the transfer of
his Shares, and the other parties hereto shall
forthwith do all acts necessary to modify all
applicable documents filed by the Corporation with
various regulatory authorities.
(8) During any period beginning on the
giving of an Offering Notice and ending upon the
closing of the Transfer of the Shares offered
thereunder, such Shares shall not be voted and the
holder thereof shall not exercise any of the rights
attendant to ownership thereof.
(E) Drag-Along and Come-Along Requirements. If at any time
Worldwide desires to sell all of its shares of Common Stock to an unrelated
third-party purchaser, and the purchaser of such Common Stock requires, as a
condition of such sale, that such purchaser acquire all of the shares of Common
Stock of all Management Shareholders, then Segal shall be required to (i) sell
all of his shares of Common Stock to such purchaser on the same price and other
terms and conditions as those offered to Worldwide, or (ii) effect the Share
Exchange set forth in Section 3 hereof. If at any time Worldwide desires to sell
all of its shares of Common Stock to an unrelated third-party purchaser,
Worldwide shall not consummate such purchase and sale transaction unless such
purchaser also offers to purchase all of the shares of Common Stock owned by
Segal, on the same price and other terms and conditions as those offered to
Worldwide, if Segal so demands.
(F) Bankruptcy, Incapacity or Death of a Shareholder. Anything
in this Agreement to the contrary notwithstanding, if any Shareholder dies or
becomes bankrupt or incapacitated (which incapacity results in the appointment
by the Court of a guardian to act on behalf of such Shareholder), then neither
such Shareholder nor his executor, heir, guardian, trustee or receiver (a "Legal
Substitute") shall be entitled thereafter to be offered or to purchase any
Shares pursuant to any of the provisions of this Agreement, and such
Shareholder's interests shall be disregarded for all such purposes hereof;
provided, however, that such Shareholder or his Legal Substitute, in such an
event, shall be bound, with respect to his Shares, to all of the restrictions
and obligations imposed under this Agreement. Notice of the death, bankruptcy or
incapacity of the affected Shareholder shall be given promptly after its
occurrence (which shall be within thirty days after the qualification of a
decedent or incompetent Shareholder's Legal Substitute in the event of a
Shareholder's death or incompetency or within ten days of any event constituting
bankruptcy) by the affected Shareholder to the Corporation and to the other
Shareholders. Such notice shall be deemed to be a notice of election to
effectuate a Share Exchange in accordance with the provisions of Section 4 of
this Agreement.
<PAGE>
4. Exchange of Shares.
If on or after December 31, 1998, (i) Segal is a licensed NFL Player's
Agent in good standing with the NFLPA and has no outstanding, pending or
threatened claims, suits or proceedings of any kind which, if resolved against
Segal, could prevent him from acting in such capacity; (ii) Segal is still
employed by the Corporation; and (iii) Segal is listed with the NFLPA as a
Player's Contract Advisor on at least ten valid and enforceable Player
Agreements, the revenue from which has been assigned to the Corporation, then
either Segal or the Company may, upon 15 days written notice, elect to
effectuate a share-for-share exchange of the Shares held by Segal for shares of
Common Stock of Worldwide (the "Share Exchange"). The exchange ratio shall be
10,000 shares of Worldwide Common Stock (subject to adjustment in the event of
any stock split, reverse stock split, stock dividend or any other such equity
reconfiguration occurring after the date of this Agreement) for each Share held
by Segal. Worldwide agrees to reserve shares of its Common Stock for issuance
upon the effectuation of a Share Exchange.
5. Reassignment & Tender.
In the event Segal ever ceases to be an employee of the Corporation during
the term of his Employment Agreement for any reason then, as of the date he
ceases to be so employed, Segal's Assignment shall immediately lapse and be of
no further force or effect and all such revenues to be so derived from contracts
assigned to the Corporation by the Segal Assignment which come due after such
cessation of employment, after deduction of applicable direct expenses, shall
revert to Segal. In addition, if such cessation of employment occurs after the
Share Exchange set forth in Section 4 hereof, Segal shall be deemed to have
irrevocably offered to resell to the Company or its designees, that number of
shares of Worldwide Common Stock equal to the product of (A) 3,333.334 and (B)
the number of months (or portions thereof) remaining from such date until April
7, 2002 at a price of $.001 per share. If, however, the cessation of employment
occurs prior to the Share Exchange contemplated by Section 4 hereof, Segal shall
be deemed to have irrevocably tendered his Shares to Worldwide in exchange for
that number of shares of Worldwide Common Stock derived by multiplying (x)
3,333.334 by (y) the number of months during which Segal was employed by the
Corporation. Any fractional number of Shares derived by applying the formulae
set forth in this Section 5 will be rounded up to the next whole number.
6. Registration Rights.
(A) Demand Registration. After the Share Exchange date, Worldwide, upon
Segal's written demand (the "Demand Notice"), agrees to register on one
occasion, up to 70,000 of Segal's shares of Common Stock of Worldwide (the
"Registrable Securities"). On such occasion, Worldwide shall file a Registration
Statement covering the Registrable Securities within thirty (30) days after
receipt of the Demand Notice and shall use its best efforts to have such
registration statement declared effective promptly thereafter.
<PAGE>
(B) "Piggy-Back" Registration. In addition to the demand right of
registration, Segal shall have the right for a period of three years after the
date of Share Exchange, to include shares of Common Stock of Worldwide as part
of any other registration of securities filed by Worldwide (other than in
connection with a transaction contemplated by Rule 145(a) promulgated under the
Act or pursuant to Form S-4 or Form S-8) provided, however, that the Chief
Executive Officer of Worldwide participates in such registration of shares. In
the event of such a proposed registration, Worldwide shall furnish Segal with
not less than twenty days' written notice prior to the proposed date of filing
of such registration statement. The holders of the Registrable Securities shall
exercise the "piggyback" rights provided for herein by giving written notice,
within ten days after the receipt of Worldwide's notice of its intention to file
a registration statement. Segal shall not be entitled to register pursuant to
piggyback registration rights in any twelve month period in excess of 10% of the
shares of Common Stock of Worldwide held by him unless another executive officer
of the Corporation is entitled to register a greater percentage of his shares.
(C) Terms. Worldwide shall bear all fees and expenses attendant to
registering the Registrable Securities, but Segal shall pay any and all
underwriting commissions and the expenses of any legal counsel selected by Segal
to represent him in connection with the sale of the Registrable Securities and
any applicable transfer taxes. Worldwide agrees to use its prompt best efforts
to cause the filing required herein to become effective and to qualify or
register the Registrable Securities in such states as are reasonably requested
by Segal; provided, however, that in no event shall Worldwide be required to
register the Registrable Securities in a state in which such registration would
cause (i) Worldwide to be obligated to qualify to do business as a foreign
corporation in such State or to pay income, franchise or other similar taxes
solely as a result of such registration or to be subject to service of general
process, or (ii) the principal stockholders of Worldwide to be obligated to
escrow their shares of capital stock of Worldwide. Worldwide shall cause any
such registration statement to remain effective for a period of at least nine
consecutive months after the effective date of such registration statement.
(D) Indemnification. Worldwide shall indemnify Segal against all loss,
claim, damage, expense or liability (including all reasonable attorneys' fees
and other expenses reasonably incurred in investigating, preparing or defending
against any claim whatsoever) to which any of them may become subject under the
Act, the Exchange Act or otherwise, arising from such registration statement
other than to the extent claims arise from information relating to Segal. Segal
shall indemnify Worldwide against all loss, claim, damage, expense or liability
(including all reasonable attorneys' fees and other expenses reasonably incurred
in investigating, preparing or defending against any claim whatsoever) to which
they may become subject under the Act, the Exchange Act or otherwise, arising
from information furnished by or on behalf of Segal in writing, for specific
inclusion in such registration statement.
<PAGE>
7. Books of Account.
Books and records of account of the Corporation shall be maintained at its
principal office, and true and accurate entries of all transactions had by and
on behalf of the Corporation shall be set down therein. Such books and records,
accounts and all other documents of the Corporation, at all times during normal
business hours, shall be open to the inspection of the Shareholders and their
authorized designees, who shall be entitled to make copies therefrom and to take
extracts thereof. Notwithstanding whether any of the parties hereto remains a
Shareholder, all such records and books of account, together with all files and
documents prepared on behalf of the Corporation, shall remain in the exclusive
possession of the Corporation.
8. Obligations of the Corporation; Conflict with By-Laws.
The parties hereto agree that all of the terms, covenants and
conditions of this Agreement shall supplement the By-Laws of the Corporation,
and, in the event of conflict therewith, shall prevail. The Corporation shall
not be deemed a party to, nor be directly obligated with respect to, any of the
voting, consent or approval provisions hereof; provided, however, that nothing
in this Section 8 or elsewhere set forth shall affect the rights and obligations
of the Shareholders among themselves under any of the provisions of this
Agreement. Wherever in any section of this Agreement reference is made to any
action to be taken or not be taken by the Corporation or otherwise or in
accordance with specified procedures, such reference shall be deemed to mean
that the Shareholders shall cast their votes and take such other action as
reasonably may be necessary or desirable or otherwise appropriate to cause the
Corporation to take or not to take such action or otherwise to effectuate such
provisions and in accordance with the procedures therein specified.
9. Binding Agreement; Assignment; Survival.
Except to the extent otherwise expressly provided herein, this Agreement
shall be binding upon the present and future parties hereto, their respective
successors, assigns, heirs, legatees and Legal Substitutes and all persons and
other entities who otherwise may derive any rights or interests hereunder from
or through any of the parties hereto, regardless, in any event, of whether any
certificate representing Shares bears the legend provided for in section 3(C)
hereof. Except to the extent otherwise expressly provided herein, this Agreement
shall inure to the benefit of the present and future parties hereto, their
respective heirs and legatees and, to the extent that a transfer of their Shares
is effected pursuant to the provisions of this Agreement, their assigns. All
agreements, covenants, representations, and warranties made herein shall survive
the execution and delivery of this Agreement and the agreements made pursuant
hereto or referred to herein.
10. Communications.
All notices, demands, requests, offers, approvals, consents, acceptances,
waivers, reports and other communications required or permitted hereunder shall
be in writing and
<PAGE>
shall be deemed to have been duly given, received and dated when delivered
personally or, if sent by overnight courier, one day after being deposited with
such courier addressed to the parties at their addresses respectively set forth
above or at such other address as any party may give by notice. Any party may
change its address by sending notice thereof to the other parties in the manner
prescribed above, except that notice of change of address shall not be effective
until actually received.
11. Construction; Headings; Word Meanings.
This Agreement, and all related agreements, instruments and documents,
shall be construed and enforced in accordance with the laws of the State of New
York without giving effect to the principles of conflict of laws. Headings and
titles are for convenience of reference only and shall not control the
construction or interpretation of any provision hereof.
12. No Third Party Beneficiaries.
Nothing in this Agreement shall be construed as conferring upon any person
or other entity, other than the parties hereto and their Legal Substitutes (to
the extent provided herein), any right, remedy or claim under or by reason of
this Agreement.
13. Entire Agreement; Modification; Consents; Waivers.
This Agreement and the agreements and instruments referred to herein
represent the entire agreement of the parties with respect to the subject matter
hereof and no interpretation, change, termination or waiver of or extension of
time for performance under, any provision of the Agreement shall be binding upon
any party unless in writing and signed by the party intended to be bound
thereby. Any provision of this Agreement can be modified if consented to by all
of the parties hereto. Receipt by any party of money or other consideration due
under this Agreement, with or without knowledge of breach, shall not constitute
a waiver of such breach or of any provision of this Agreement. Except as
otherwise provided herein, no waiver of or other failure to exercise any right
under, or default or extension of time for performance under, any of the
provisions of this Agreement shall affect the right of any party to exercise any
subsequent right under or otherwise enforce said provision or any other
provision hereof or to exercise any right or remedy in the event of any other
default, whether or not similar. Without limitation to the generality of the
foregoing and except as otherwise provided herein, the failure of any party to
exercise any right of first refusal or any Put or Call hereunder (hereinafter
collectively referred to as "share rights") shall not in any way constitute a
waiver of or otherwise affect such party's right to exercise any of the other
share rights or to exercise any subsequent said rights to which such party may
otherwise be entitled hereunder.
<PAGE>
14. Severability.
The invalidity or unenforceability of any particular provision of this
Agreement shall not affect any of the other provisions hereof and this Agreement
shall be construed in all respects as if such invalid or unenforceable provision
were omitted.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and date first set forth above.
WORLDWIDE FOOTBALL MANAGEMENT, INC.
By: /s/Marc Roberts, Chairman of the Board
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
By:/s/ Marc Roberts, President
/s/ Joel Segal
Subsidiaries of the Registrant
Following is a list of the Registrant's subsidiaries:
Worldwide Team Sports, Inc.*
Worldwide Basketball Management, Inc.*
Worldwide Football Management, Inc.*
Worldwide Sports Promotion, Inc.*
Worldwide Bobcats Football, Inc.*
- - - -------------------------------------------------
* incorporated in the State of Delaware
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of Worldwide Entertainment & Sports Corp. and Subsidiaries
as contained in the Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 745,137
<SECURITIES> 1,060,049
<RECEIVABLES> 295,765
<ALLOWANCES> 15,000
<INVENTORY> 0
<CURRENT-ASSETS> 2,500,025
<PP&E> 21,029
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,574,563
<CURRENT-LIABILITIES> 217,964
<BONDS> 373,308
0
0
<COMMON> 62,622
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2,574,563
<SALES> 0
<TOTAL-REVENUES> 590,227
<CGS> 0
<TOTAL-COSTS> 3,879,442
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,807
<INCOME-PRETAX> (3,179,168)
<INCOME-TAX> 5,789
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,184,957)
<EPS-PRIMARY> (.59)
<EPS-DILUTED> 0
</TABLE>
