<PAGE>
<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 20, 1998
REGISTRATION NO. 333-65631
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
DELAWARE 7941 22-3393152
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
29 NORTHFIELD AVENUE
SUITE 200
WEST ORANGE, NEW JERSEY 07052
(973) 325-3244
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES AND PLACE OF
BUSINESS)
------------------------
MARC ROBERTS, PRESIDENT
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
29 NORTHFIELD AVENUE
SUITE 200
WEST ORANGE, NEW JERSEY 07052
(973) 325-3244
FAX: (973) 325-2215
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
------------------------
COPIES TO:
CRAIG S. LIBSON, ESQ.
PARKER DURYEE ROSOFF & HAFT
529 FIFTH AVENUE
NEW YORK, NEW YORK 10017
(212) 599-0500
FAX: (212) 972-9487
------------------------
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
________________________________________________________________________________
<PAGE>
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, NOVEMBER 20, 1998
PROSPECTUS
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
PUBLIC OFFERING OF A MINIMUM OF 2,400,000 AND
A MAXIMUM OF 3,466,667 SHARES OF COMMON STOCK
Worldwide Entertainment & Sports Corp. (the 'Company') is offering (the
'Offering') for sale shares of common stock, par value $.01 ('Common Stock') to
raise gross proceeds of a minimum of $4,500,000 (the 'Minimum Amount') and a
maximum of $6,500,000 (the 'Maximum Amount'). The number of shares of Common
Stock being offered (the 'Shares') and the Offering price per Share will be
determined based upon the prevailing market price of the Common Stock.
The Common Stock is quoted on The Nasdaq SmallCap Market under the symbol
'WWES.' On November 11, 1998, the closing bid price of the Common Stock as
reported by The Nasdaq SmallCap Market was $1.875 per share. It is anticipated
that the Offering price will be at or near the prevailing market price of the
Common Stock on the date of the Offering. Based upon such Offering price, the
number of Shares offered to achieve the Minimum Amount would be 2,400,000 and
the number of Shares offered to achieve the Maximum Amount would be 3,466,667.
The actual number of Shares offered will change depending on the fluctuation of
the per share price of the Common Stock. There can be no assurance that the
market for the Common Stock will continue to exist after the completion of this
Offering. For additional information regarding the factors considered in
determining the Offering price of the Shares, see 'Risk Factors' and
'Underwriting.'
We are offering the Shares on a 'best efforts, all or none' basis with
respect to the minimum number of Shares being offered hereby, and on a 'best
efforts' basis with respect to sales of additional Shares up to the maximum
number of Shares. The Underwriter will deposit the proceeds of this Offering in
a non-interest bearing escrow account maintained at Liberty Bank of New York
pending completion or termination of the Offering. The Underwriter, with the
consent of the Company, may elect to complete the Offering at any time after the
Underwriter shall have received and accepted subscriptions for the Minimum
Amount or it may terminate the Offering within the forty-five day period after
the date of this Prospectus. The Underwriter may also extend such date of
termination (the 'Termination Date') by an additional forty-five days. During
the escrow period, subscribers may not have their subscription deposits
returned. Unless at least the Minimum Amount is raised prior to the Termination
Date, the Company shall return all proceeds promptly to subscribers without
deductions for commissions or expenses and without interest thereon. Officers,
directors and stockholders of the Company are entitled to purchase an unlimited
number of Shares in the Offering, including a number equivalent to the entire
Minimum Amount. All Shares are being offered subject to prior sale, withdrawal
or cancellation of the Offering at any time. See 'Description of Securities' and
'Underwriting.'
------------------------
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE PAGE 7 FOR 'RISK FACTORS.'
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED
UPON THE ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE UNDERWRITING PROCEEDS TO
TO PUBLIC DISCOUNTS(1) COMPANY(2)
<S> <C> <C> <C>
Per Share...................................................... $ $ $
Total Minimum.................................................. $4,500,000 $450,000 $4,050,000
Total Maximum.................................................. $6,500,000 $650,000 $5,850,000
</TABLE>
(1) Does not reflect additional compensation to the Underwriter in the form of
(i) a non-accountable expense allowance of up to $135,000 if the Minimum
Amount is subscribed and $195,000 if the Maximum Amount is subscribed; (ii)
Warrants, exercisable over a period of four years commencing one year from
the date of this Prospectus to purchase up to 240,000 shares of Common Stock
if the Minimum Amount is subscribed and 346,667 shares of Common Stock if
the Maximum Amount is subscribed, each at 165% of the per share price of the
Common Stock in this Offering and (iii) a consulting fee of $90,000 pursuant
to a three year Consulting and Merger and Acquisition Agreement all of
which is payable at the Closing of the Offering. In addition, the Company
has agreed to indemnify the Underwriter against certain civil liabilities,
including liabilities under the Security Act of 1933, as amended. See
'Underwriting.'
(2) Before deducting expenses of the Offering payable by the Company estimated
at approximately $570,000 including the Underwriter's non-accountable
expense allowance and consulting fee.
------------------------
BELL INVESTMENT GROUP INC.
------------------------
THE DATE OF THIS PROSPECTUS IS NOVEMBER , 1998.
<PAGE>
<PAGE>
[ARTWORK]
The Company is currently a reporting company under the Securities Exchange
Act of 1934, as amended (the 'Exchange Act'), and furnishes its stockholders
with annual reports containing audited financial statements after the close of
each fiscal year.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING BY ENTERING STABILIZING BIDS OR EFFECTING A SYNDICATE COVERING
TRANSACTIONS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE 'UNDERWRITING.'
2
<PAGE>
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial data, including the notes related thereto, appearing
elsewhere in this Prospectus. All share and per share data in this Prospectus
assume that all options and warrants outstanding on the date of this Prospectus
will not be exercised.
THE COMPANY
Worldwide Entertainment & Sports Corp. (the 'Company') was established in
1995 to engage in the business of providing management and agency services to
professional athletes and entertainers. The Company, either directly or through
its subsidiaries, provides such services principally to professional boxers,
football players and basketball players. The Company also offers marketing and
commercial endorsement agency services to professional athletes in all sports
and it markets and sells sports memorabilia as well.
In 1995 the Company succeeded to the business operations of entities
previously operated by Marc Roberts, the Company's Chief Executive Officer. Mr.
Roberts has managed professional boxers for over 19 years. The Company currently
is a party to exclusive management contracts with four boxers -- Ray Mercer,
Charles Murray, Shannon Briggs and Danell Nicholson -- pursuant to which the
Company retains a percentage, ranging from 15% to 27 1/2%, of the boxers' purses
from all professional boxing contests and exhibitions during the term of the
contracts. Pursuant to those contracts, the Company is also entitled to receive
10% to 20% of all fees, honoraria or other compensation payable to the boxers
for product endorsements, speaking engagements, personal appearances or other
commercial performances. In July 1998, the Company entered into a Management
Agreement by which it is entitled to 16 2/3% of the proceeds of the fight purses
earned by heavyweight Grant Cudjoe through July 2003. The Company has also
entered into an exclusive promoter's agreement with Alex Trujillo to act as
promoter for the fighter's bouts and has entered into a management participation
agreement with heavyweight Jesse Ferguson entitling the Company to a fixed
percentage of Mr. Ferguson's purses. For the year ended December 31, 1997 and
the nine months ended September 30, 1998, the Company recognized revenues of
$168,224 and $604,512, respectively, 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. The Company's success will depend in part on the
ability of its boxers to attain and sustain championship or top contender status
and consequently engage in matches with significant purses.
The Company formed its Worldwide Team Sports, Inc. ('WWTS') subsidiary in
January 1996 to employ, or enter into consulting arrangements with, agents and
contract advisors registered with professional sports governing organizations to
represent athletes in professional team sports. Since the establishment of the
Company's Worldwide Football Management Inc. ('WWFM') and Worldwide Basketball
Management, Inc. ('WWBM') subsidiaries in March 1997 and August 1996,
respectively, however, WWTS has been comprised of the Company's Marketing
Division and its sports Memorabilia Division. The Marketing Division seeks to
generate opportunities for non-sport exploitation of the names and likenesses of
the Company's athletes and other professional athletes as well. For these
efforts, the Company receives a percentage of any revenues generated by such
opportunities as a commission (typically ranging between 10% and 20% of the
athletes' fee). From its Memorabilia Division, which the Company founded in
March 1998, the Company generates revenues from sales of professional football,
baseball, basketball and hockey memorabilia owned by the Company. The Company is
seeking additional opportunities in the areas of marketing and memorabilia
sales, but no assurances as to its success can be given. For the year ended
December 31, 1997 and the nine months ended September 30, 1998, the Company
recognized revenues of $93,404 and $225,464, respectively, from the Marketing
Division. For the nine month period ending September 30, 1998, the Company
recognized revenue of $226,086 from the Memorabilia Division.
In March 1997, the Company created its WWFM subsidiary to house its
football agency business. WWFM provides player agent services to professional
football players, including contract negotiation
3
<PAGE>
<PAGE>
and professional and personal advisory services. Currently, WWFM lists over 20
active NFL players among its client base. NFL Players Association regulations
forbid corporations from acting directly as player representatives. As a result,
the Company's three registered NFL agents assign to the Company the revenue
(usually 2-3% of a player's annual salary) they earn from the players they
represent. For the year ended December 31, 1997 and the nine months ended
September 30, 1998, the Company recognized revenues of $175,248 and $240,005,
respectively, from its football agency business.
In August 1996, the Company formed WWBM for the purpose of providing player
agent services to professional basketball players. Initially the Company hired
an NBA player representative to serve as the president of WWBM and to operate
the basketball agency business. Since a corporation is prohibited from acting as
a player's agent under NBA Player Association regulations, WWBM's agent agreed
to assign to the Company all of the agent's commissions generated by the
negotiation of contracts for any athlete for which he has or will contract to
provide services. In the 1996 NBA Draft, WWBM's agent represented the player
selected ninth overall. In the 1997 NBA Draft, WWBM's agent represented two
players selected in the first round and one player chosen in the second round.
WWBM's agent represented no players chosen in the 1998 NBA Draft. Two of the
players previously signed with WWBM have terminated their agreements with the
Company and WWBM has signed agreements with two veteran NBA players. In August
1998, the Company and its WWBM's agent severed their relationship. No other
employees of the Company are registered NBA agents, although two of the
Company's registered NFL agents are in the process of obtaining registration as
NBA player agents. There can be no assurance such individuals will obtain such
registration or be successful in attracting professional basketball players as
clients. For the year ended December 31, 1997 and the nine months ended
September 30, 1998 the Company recognized revenues of $32,763 and $5,000,
respectively, from WWBM.
The Company's success in professional team sport athlete management will
depend on its ability to acquire existing sports agency practices, attract and
retain the services of industry professionals and in turn on the ability of
those professionals to undertake the representation of successful athletes and
to maintain those relationships for a substantial period of time.
Worldwide Entertainment & Sports Corp., organized under the laws of the
State of Delaware on August 15, 1995, is located at 29 Northfield Avenue, Suite
200, West Orange, New Jersey 07052, and its telephone number is (973) 325-3244.
4
<PAGE>
<PAGE>
THE OFFERING
The information set forth below and elsewhere in this Prospectus regarding
the Offering price per Share and the number of Shares being offered is based
upon the $1.875 closing price of the Common Stock as reported by Nasdaq on
November 11, 1998. The actual number of Shares and per Share Offering price, in
order to raise gross proceeds of a minimum of $4,500,000 and a maximum of
$6,500,000, will depend upon the prevailing price of the Common Stock as quoted
on the Nasdaq SmallCap Market.
<TABLE>
<S> <C>
Securities Offered........................... A minimum of 2,400,000 and a maximum of 3,466,667 Shares of Common
Stock.
Offering Price............................... $1.875
Common Stock Outstanding Before Offering..... 7,337,197
Common Stock Outstanding After Offering
Minimum................................. 9,737,197
Maximum................................. 10,803,864
Use of Proceeds.............................. Possible acquisition by the Company of one or more businesses, the
development of new sports management divisions, the acquisition of
new and additional clients and funding working capital and other
general corporate activities. See 'USE OF PROCEEDS.'
Risk Factors................................. The Common Stock offered hereby involves a high degree of risk.
See 'RISK FACTORS' beginning on page 7.
Nasdaq SmallCap Trading Symbol............... WWES
</TABLE>
5
<PAGE>
<PAGE>
SUMMARY FINANCIAL DATA
The summary financial data should be read in conjunction with the
consolidated financial statements, including the notes thereto, appearing
elsewhere in this Prospectus and 'Management's Discussion and Analysis of
Financial Condition and Results of Operations.'
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------- --------------------------
1996 1997 1997 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Total Income.......................................... $ 332,378 $ 590,227 $ 321,407 $ 1,349,130
Total Expenses........................................ 2,368,763 3,879,442 2,754,242 3,754,192
Loss from Operations.................................. (2,046,385) (3,289,215) (2,432,835) (2,405,062)
Net Loss.............................................. (2,156,198) (3,184,957) (2,366,594) (2,340,022)
</TABLE>
<TABLE>
<CAPTION>
AS AT SEPTEMBER 30, 1998
--------------------------------------
AS AT DECEMBER 31, AS ADJUSTED(1)
------------------------ ------------------------
1996 1997 ACTUAL MINIMUM MAXIMUM
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Current Assets............................. $4,395,405 $2,500,025 $1,776,261 $5,256,261 $7,056,261
Total Assets............................... 4,653,261 2,574,563 1,907,074 5,387,074 7,187,074
Current Liabilities........................ 901,607 373,308 267,190 267,190 267,190
Total Liabilities.......................... 901,607 373,308 267,190 267,190 267,190
Stockholder's Equity....................... 3,751,654 2,201,255 1,639,884 5,119,884 6,919,884
</TABLE>
- ------------
(1) Adjusted to reflect the anticipated application of the net proceeds from the
sale of the Minimum Amount and Maximum Amount, respectively, of Common Stock
offered hereby. Does not reflect the issuance of 200,000 shares to the
President of WWFM on October 9, 1998 in exchange for his 20% interest
in WWFM.
6
<PAGE>
<PAGE>
RISK FACTORS
An investment in the Common Stock offered hereby is speculative and
involves a high degree of risk and should only be purchased by investors who can
afford to lose their entire investment. You should carefully consider the
following risks and speculative factors, as well as other information set forth
elsewhere in this Prospectus and the attachments hereto, prior to making an
investment in the Common Stock. This Prospectus contains, in addition to
historical information, forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially. Factors
that could cause or contribute to such difference include, but are not limited
to, those discussed below as well as those discussed elsewhere in this
Prospectus.
OPERATING LOSSES TO DATE
The Company incurred operating losses of approximately $3.2 million and
$2.1 million for the years ended December 31, 1997 and December 31, 1996,
respectively. As of December 31, 1997, the Company had an accumulated deficit of
approximately $6.2 million. For the nine months ended September 30, 1998, the
Company incurred an operating loss of approximately $2.4 million. Although the
Company continues to expanded its client base, there can be no assurance that
the Company's future operations will be profitable. See 'Selected Financial
Information,' 'Management's Discussion and Analysis of Financial Condition and
Results of Operations' and the Company's Consolidated Financial Statements and
the notes thereto.
NEED FOR ADDITIONAL CAPITAL
The Company's capital requirements have been and will continue to be
significant. At September 30, 1998, the Company had stockholder's equity of
$1,639,884. The Company has been dependent primarily on sales of equity
securities to supplement revenues from operations in order to fund its capital
requirements to date. The Company is dependent on and intends to use a
significant portion of the proceeds of this Offering to conduct its ongoing
operations. The net proceeds of this Offering are expected to continue to fund
the Company's projected operations only through December 1999 and the Company
may thereafter be required to seek additional equity or debt financing to fund
the costs of its operations. If the Minimum Amount is not sold in this Offering,
or if the Company is unable to obtain additional financing when needed, it will
likely be required to curtail its operations. Any additional equity financing
may involve substantial dilution to the Company's then-existing stockholders.
See 'Use of Proceeds.'
NEED FOR ADDITIONAL AGENTS AND CLIENTS; AMOUNT OF EXPERIENCE OF PERSONNEL
The success of the Company will depend on the ability of the Company to
attract and develop promising new boxing talent and to expand its WWTS, WWFM,
and WWBM operations so as to represent both a substantially greater number of
athletes and a larger percentage of athletes and companies with significantly
greater earning and marketing potential. Each of the Company's businesses are in
their development stages and will require additional capital to reach profitable
levels. The Company's boxing business relies predominantly on four fighters,
three of whom are at least 30 years old. One of those fighters, Ray Mercer, has
recently been diagnosed with Hepatitis B and there can be no assurance of his
ability to resume boxing in the near future. The athletic careers of
professional fighters tend to be short and the Company must look to augment its
stable of fighters in the near future to increase revenues from boxing. The
management of WWTS, on the whole, has less experience in operating a sports
marketing company than many of its competitors, and the success of the business
will depend in large part on its ability to establish WWTS as an effective
sports marketing company. If such development fails to materialize or to
generate sufficient revenue, the Company may have to seek additional employees
for WWTS with more substantial experience. Likewise, the Company anticipates
that in order to attract an adequate number and caliber of professional
athletes, and to augment the agents currently working for WWFM and WWBM, the
Company will need to enter into employment or consulting agreements with
additional registered agents who have existing representation agreements with
professional athletes and who have experience negotiating such agreements. In
August 1998, the
7
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<PAGE>
Company and its only registered NBA agent severed their relationship and,
accordingly, the Company will need to supplement its WWBM subsidiary with other
registered NBA agents or face a reduction or cessation in its basketball agency
business. There can be no assurance that the Company will be able to attract the
quantity or caliber of agents and/or professional athletes necessary to achieve
and sustain profitable operations. In addition, there can be no assurance that
professional athletes who are currently, or who may in the future be, under
management or representation contracts with the Company, will continue to engage
in professional sports through the term of their contracts or will renew such
contracts upon their expiration. The Company will need to incur significant
promotional, marketing, travel and entertainment expenses in the recruitment of
professional team sports athletes without any guarantee that the targeted
athletes will enter into representation agreements with the Company. See
'Business.'
DEPENDENCE UPON ATHLETES
Because the Company's revenues are derived from a specified percentage of
the income generated by the Company's clients and events, both the amount of the
Company's revenues and the likelihood that the Company will continue to receive
revenues is dependent upon the professional success of athletes, and the
continued popularity of professional sports. The income levels of the Company's
potential clients, both boxers and team sports athletes, and therefore the
revenues of the Company, can be subject to wide fluctuations, in most cases due
to circumstances beyond the control of the Company. If any such athlete were to
become incapable of performing for an extended period of time, as is currently
the case with Ray Mercer who has contracted Hepatitis B, it could negatively
affect the revenues of the Company. See 'Business.'
DEPENDENCE UPON CHIEF EXECUTIVE OFFICER AND OTHERS
The Company is highly dependent on Marc Roberts, the Company's President
and Chief Executive Officer. Mr. Roberts is the only executive officer of the
Company who has had prior experience in managing professional boxers. Due to the
personal nature of boxer-management relationships, there is a limit on the
number of boxers who can be effectively managed by Mr. Roberts. The number of
boxers which Mr. Roberts can effectively manage may vary, depending upon the
stage of the boxers' careers, their level of bout frequency and their success.
Although the Company has entered into a five-year employment agreement with Mr.
Roberts, and has obtained a $2,000,000 key person life insurance policy on Mr.
Roberts' life, the loss of the services of Mr. Roberts would likely have a
material adverse effect on the Company's business. Because a corporation cannot
be a signatory as a player's representative in either NFL or NBA player
representation agreements, the Company is expected to be dependent upon
retaining its relationships with the registered agents employed by the Company
to sustain the Company's relationships with the team sports athletes. The
Employment Agreements between the Company and each of its current and former
registered player agents provide for a sharing of agency fees generated by them
in the event of a termination of their employment. There can be no assurance
that the loss of the services of any of the Company's registered player's
agents, as has happened with the Company's NBA player's agent, will not hamper
the Company's business efforts in a given sport. See 'Business' and
'Management -- Employment Agreements.'
COMPETITION
The Company's various businesses each face significant competition in
obtaining and maintaining management relationships with athletes. While the
sports agency market is comprised of numerous registered agents and business
managers, the industry is dominated by a small number of agencies which manage
the more successful and marketable athletes. A great many of these agencies have
significantly greater financial and personnel resources and recognition in the
industry than the Company. There can be no assurance that the Company will be
able to compete effectively in these markets. Since the Company's October 1996
initial public offering, additional companies such as SFX Entertainment, Inc.
have become public companies and have contributed to a consolidation of sports
management and marketing agencies. In addition, the Company's clients face
intense competition in achieving success and
8
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<PAGE>
recognition in their respective sports. There can be no assurance that any of
the Company's clients will achieve or sustain success or realize the financial
rewards thereof. See 'Business -- Competition.'
CONTROL BY OFFICERS AND DIRECTORS
The Company's executive officers and directors beneficially own
approximately 39.5% of the Common Stock. Consequently, the Company's executive
officers and directors have substantial influence on the outcome of any matters
submitted to the Company's stockholders for approval, including the election of
directors. See 'Management' and 'Description of Securities.'
LIMITATION OF DIRECTOR LIABILITY
The Company's Certificate of Incorporation provides that a director of the
Company will not be personally liable to the Company or its stockholders for
monetary damages for breach of the fiduciary duty of care as a director,
including breaches which constitute gross negligence, subject to certain
limitations imposed by the Delaware General Corporation Law. Thus, under certain
circumstances, neither the Company nor the stockholders will be able to recover
damages even if directors take actions which harm the Company. See 'Management -
Directors and Executive Officers.'
NO DIVIDENDS AND NONE ANTICIPATED
The Company has not paid dividends on the Common Stock since its inception.
The Company intends to reinvest any earnings in its business to finance future
growth. Accordingly, the Board of Directors does not anticipate declaring any
cash dividends in the foreseeable future. See 'Dividend Policy.'
POTENTIAL ADVERSE EFFECT OF FUTURE ISSUANCES OF PREFERRED STOCK
The Company is authorized to issue up to 5,000 shares of preferred stock,
par value $.01 per share. The preferred stock may be issued in one or more
series, the terms of which may be determined at the time of issuance by the
Board of Directors, without further action by stockholders, and may include
voting rights (including the right to vote as a series on particular matters),
preferences as to dividends and liquidation, conversion and redemption rights
and sinking fund provisions. No preferred stock is currently outstanding and the
Company has no present plans for the issuance thereof. However, the issuance of
any such preferred stock could affect the rights of the holders of Common Stock,
and therefore reduce the value of the Common Stock. In particular, specific
rights granted to future holders of preferred stock could be used to restrict
the Company's ability to merge with or sell its assets to a third party, thereby
preserving control of the Company by present owners. See 'Description of
Securities.'
BROAD DISCRETION IN APPLICATION OF PROCEEDS
The proceeds of this Offering will be applied to working capital, and shall
be used for general corporate purposes, including future acquisitions.
Accordingly, the Company will have broad discretion as to the application of
such proceeds. See 'Use of Proceeds.'
VOLATILITY OF MARKET PRICE OF COMMON STOCK
The average daily trading volume of the Common Stock has generally been
low, which the Company believes has had a significant effect on the historical
market price of the Common Stock which has fluctuated between $7 and $1 per
share. As a result, such market price has been highly volatile and may not be
indicative of the market price in a more liquid market. The market price of the
Common Stock could be subject to significant fluctuations in response to a
number of factors, including the depth and liquidity of the market for the
Common Stock, investor perception of the Company and general economic and other
conditions, which may or may not relate to the Company's performance. See
'Description of Securities.'
9
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<PAGE>
EFFECT OF OUTSTANDING EXERCISABLE SECURITIES; DILUTION
As of September 30, 1998, the Company had currently exercisable outstanding
options to purchase an aggregate of 1,935,000 shares of Common Stock at exercise
prices from $1.50 to $2.875 per share and warrants to purchase up to an
aggregate of 995,000 shares of Common Stock at $7.20 per share, and warrants to
purchase 31,000 shares and 25,000 shares at $2.25 per share and $6.00 per share,
respectively. This includes options and warrants granted to various directors,
officers, employees and consultants.
During the respective terms of the Company's outstanding securities, the
holders thereof may be able to purchase shares of Common Stock at prices
substantially below the then-current market price of the Company's Common Stock
with a resultant dilution in the interests of the existing stockholders. In
addition, the exercise of outstanding derivative securities and the subsequent
public sales of Common Stock by holders of such securities pursuant to a
registration statement effected at their demand, under Rule 144 or otherwise,
could have an adverse effect upon the market for and price of the Company's
securities. See 'Description of Securities.'
SECURITIES MARKET FACTORS
In recent years, the securities markets have experienced a high level of
volume volatility and market prices for many companies, particularly small and
emerging growth companies, have been subject to wide fluctuations in response to
quarterly variations in operating results. The securities of many of these
companies have experienced wide price fluctuations, which in many cases were
unrelated to the operating performance of, or announcements concerning, the
issuers of the affected stock. Factors such as announcements by the Company or
its competitors concerning innovations, new clients or procedures, government
regulations and developments or disputes relating to proprietary rights may have
a significant impact on the market for the Company's securities. General market
price declines or market volatility in the future could adversely affect the
future price of the Company's securities.
ESCROW OF INVESTORS' FUNDS MINIMUM -- MAXIMUM BEST EFFORTS OFFERING
Under the terms of this Offering, the Company is offering the Minimum
Amount worth of Shares on an 'all or none,' 'best efforts' basis, and if the
Minimum Amount is attained, additional Shares will be offered on a 'best
efforts' basis until the Maximum Amount is reached or the offering period ends,
which first occurs, unless the Offering is terminated earlier by the Company. No
commitment exists by anyone to purchase all or any part of the Shares.
Consequently, there is no assurance that the Minimum Amount will be attained,
and subscribers' funds may be escrowed for as long as 100 days (the 45 day
Offering Period, which may be extended by an additional 45 days, plus an
additional 10 business days to permit clearance of funds in escrow) and then
returned without interest thereon, in the event the Minimum Amount is not
attained within the Offering period. Accordingly, investors will not have the
use of their subscription funds during this period. In the event the Company is
unable to reach the Minimum Amount within the Offering period, the Offering will
be terminated. See 'Underwriting.'
NO ASSURANCE OF CONTINUED NASDAQ QUOTATION
The Board of Governors of the National Association of Securities Dealers,
Inc. has established certain standards for the initial quotation and continued
quotation of a security on Nasdaq. The standards for initial quotation require,
among other things, that an issuer have total assets of $4,000,000 and capital
surplus of at least $2,000,000; that the minimum bid price for the listed
securities be $3.00 per share; that the minimum market value of the public float
(the shares held by non-insiders) be at least $2,000,000, and that there be at
least two market makers for the issuer's securities. While the Company has been
approved for listing on Nasdaq, the Company's securities may be delisted for a
variety of reasons. Nasdaq may delist the Common Stock of the Company if it
finds it is in the public interest or if the Company fails to meet maintenance
standards. The maintenance standards require, among other things, that an issuer
have total assets of at least $2,000,000 and the capital and surplus of at least
$1,000,000; that the minimum bid price for the listed securities be $2.00 per
share; that the minimum market value of the 'public float' be at least
$1,000,000 and that there be at least two
10
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<PAGE>
market-makers for the issuer's securities. A deficiency in either the market
value of the public float or the bid price maintenance standard will be deemed
to exist if the issuer fails the individual stated requirement for ten
consecutive trading days. If an issuer falls below the bid price maintenance
standard, it may remain on Nasdaq if the market value of the public float is at
least $1,000,000 and the issuer has $2,000,000 in equity. The Securities and
Exchange Commission has approved new maintenance requirements which were
proposed by Nasdaq. These rules require the Company to have either $2,000,000
net tangible assets or market capitalization of $35,000,000 or $500,000 net
revenue in two of its last fiscal years. In addition the Company would have to
have a public float of at least 500,000 shares. There can be no assurance that
the Company will continue to satisfy the requirements for maintaining a Nasdaq
quotation. In addition, recent proposals which would impose more strict
compliance standards if enacted would make it more difficult to maintain Nasdaq
quotation for the Company's Common Stock. If the Company's Common Stock were to
be excluded from Nasdaq, it would adversely affect the prices of such securities
and the ability of holders to sell them, and the Company would be required to
comply with the initial listing requirements to be relisted on Nasdaq.
If the Company is unable to satisfy Nasdaq's maintenance requirements,
then, unless the Company satisfies certain net asset tests, the Company's
securities would become subject to certain penny stock rules promulgated by the
Securities and Exchange Commission (the 'Commission'). The penny stock rules
require a broker-dealer, prior to a transaction in a penny stock not otherwise
exempt from the rules, to deliver a standardized risk disclosure document
prepared by the Commission that provides information about penny stocks and the
nature and level of risks in the penny stock market. The broker-dealer also must
provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its sales person in the transaction
and monthly account statements showing the market value of each penny stock held
in the customer's account. In addition, the penny stock rules require that prior
to a transaction in a penny stock held in the customer's account. In addition,
the penny stock rules require that prior to a transaction in a penny stock not
otherwise exempt from such rules, the broker-dealer must make a special written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. These
disclosure requirements may have the effect of reducing the level of trading
activity in the secondary market for a stock that becomes subject to the penny
stock rules. If the Company's Common Stock becomes subject to the penny stock
rules, investors in the Offering may find it more difficult to sell their
Shares.
UNDERWRITER'S POTENTIAL INFLUENCE ON THE MARKET
A significant number of the Securities offered hereby may be sold to
customers of the Underwriter. Such customers subsequently may engage in
transactions for the sale or purchase of such Securities through or with the
Underwriter. Although it has no obligations to do so, the Underwriter intends to
make a market in the Securities and may otherwise effect transactions in such
Securities. If it participates in such market, the Underwriter may influence the
market, if one develops, for the Securities. Such market-making activity may be
discontinued at any time. The prices and liquidity of the Securities may be
significantly affected by the degree, if any, of the Underwriter's participation
in such market. See 'Underwriting.'
LIMITED EXPERIENCE OF UNDERWRITER
This Offering is the first offering for which the Underwriter has acted as
an underwriter in connection with a public offering of securities. The
Underwriter has likewise never acted as a co-manager in connection with a public
offering of securities. No assurance can be given that Bell Investment Group
Inc.'s limited public offering experience will not affect the ability to raise
the Minimum Amount to complete the Offering or will not affect subsequent
development of a trading market. Investors should consider this lack of public
offering experience in making an investment decision. See 'Underwriting.'
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<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Common Stock in this
Offering are estimated to be approximately $3,480,000 if the Minimum Amount is
raised and $5,280,000 if the Maximum Amount is raised, after deducting the
estimated underwriting discounts and commissions and other offering expenses
payable by the Company. The Company intends to use the estimated net proceeds as
follows:
<TABLE>
<CAPTION>
MINIMUM MAXIMUM
---------- ----------
<S> <C> <C> <C> <C>
Use of Proceeds:
Acquisition of one or more businesses........................ $1,200,000 34.5% $2,500,000 47.4%
Development of new divisions -- additional clients........... 400,000 11.5 400,000 7.6
Working Capital and general corporate purposes, including the
continued upgrade of the Company's computer hardware and
software systems........................................... 1,880,000 54.0 2,380,000 45.0
---------- ----- ---------- -----
Total Use of Proceeds................................... $3,480,000 100.0% $5,280,000 100.0%
---------- ----- ---------- -----
---------- ----- ---------- -----
</TABLE>
The foregoing represents the Company's present intentions for the use of
the proceeds of this Offering based on its currently contemplated operations,
business plan and currently prevailing economic and industry conditions. The
Company's business plan contemplates that the Company may acquire businesses or
introduce additional divisions and for the development of additional clients.
Although the Company has had and will continue to have discussions with
potential acquisition candidates it does not have any present agreements or
understandings with respect to any significant acquisitions. Changes in the
proposed expenditures may be made in response to, among other things, the
ability of the Company to complete a strategic acquisition, and changes in the
Company's plans, future revenues and expenditures, as well as changes in general
industry conditions.
The Company believes that the net proceeds of this Offering and cash flow
from operations will be sufficient to meet its immediate cash needs and finance
its plans for expansion for not less than twenty-four months from the date of
this Prospectus. This belief is based upon certain assumptions regarding the
Company's business and cash flow as well as prevailing industry and economic
conditions. The Company's funding requirements may vary significantly, depending
on how rapidly management seeks to expand the business and the expansion
strategies elected. Accordingly, the Company may, in the future, require
additional financing to continue to expand its business. There is no assurance
that the Company will be successful in obtaining additional financing, if
required, on favorable terms, or at all. If the Company were unable to obtain
additional financing, its ability to meet its current plan for expansion could
be materially and adversely affected. See 'Capitalization' and 'Management's
Discussion and Analysis of Financial Condition and Results of Operations.'
12
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<PAGE>
PRICE RANGE OF COMMON STOCK
The Common Stock is traded on the Nasdaq SmallCap Market System under the
symbol 'WWES'. The following are the reported high and low closing sales prices
of the Company's Common Stock for each quarter since the Company initial public
offering in October 1996:
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1996
Fourth Quarter............................................................. 7 43/4
1997
First Quarter.............................................................. 53/8 13/4
Second Quarter............................................................. 31/16 1
Third Quarter.............................................................. 31/4 15/32
Fourth Quarter............................................................. 4 11/2
1998
First Quarter.............................................................. 21/8 17/16
Second Quarter............................................................. 31/8 15/8
Third Quarter.............................................................. 25/8 11/8
</TABLE>
On November 11, 1998, the closing sale price of the Common Stock reported
by NASDAQ was $1.875 per share. As of the date of this Prospectus, there were
approximately 142 registered holders of Common Stock of the Company.
DIVIDEND POLICY
The Company has not paid dividends on its Common Stock since its inception
and does not intend to pay any dividends to the stockholders in the foreseeable
future. The Company currently intends to reinvest earnings, if any, in the
development and expansion of its business. The Board of Directors has discretion
over the declaration and payment of cash dividends by the Company in the future
and in such capacity will look to such factors as future earnings, operations,
funding requirements, the general financial condition of the Company and such
other factors that the Board may deem relevant in making such determination.
13
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<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company (i) as of
September 30, 1998 and (ii) as adjusted to reflect the sale by the Company of
the Common Stock offered hereby and the application of the estimated net
proceeds therefrom. This table should be read in conjunction with the financial
statements of the Company, 'Management's Discussion and Analysis of Financial
Condition and Results of Operations' and 'Description of Capital Stock' included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
---------------------------------------------
AS ADJUSTED(1)
----------------------------
ACTUAL MINIMUM MAXIMUM
----------- ----------- -----------
<S> <C> <C> <C>
Stockholders' equity:
Common Stock, par value $0.01 per share, 20,000,000
authorized 7,137,197 shares outstanding actual,
9,537,197 shares outstanding as adjusted minimum,
10,603,864 shares outstanding as adjusted maximum...... $ 71,372 $ 95,372 $ 106,039
Additional paid-in capital............................... $10,166,349 $13,622,349 $15,411,682
Accumulated deficit...................................... $(8,597,837)(2) $(8,597,837)(2) $(8,597,837)(2)
Total stockholders' equity.......................... $ 1,639,884 $ 5,119,884 $ 6,919,884
Total capitalization................................ $ 1,907,074 $ 5,387,074 $ 7,187,074
</TABLE>
- ------------
(1) Adjusted to reflect the anticipated application of the net proceeds from the
sale of Shares equivalent to the Minimum Amount and the Maximum Amount,
respectively, offered hereby. Does not reflect the issuance of 200,000
shares to the President of WWFM on October 9, 1998 in exchange for his
20% interest in WWFM.
(2) Includes amount of a Demand Note receivable on private issuance of Common
Stock in the amount of $12,350.
14
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<PAGE>
SELECTED FINANCIAL DATA
The financial statements of the Company are the source for the selected
financial data as of and for the periods below. Rosenberg Rich Baker Berman &
Company PA audited the financial statements of the Company as of and for the
fiscal year ended December 31, 1996. Its report thereon is included elsewhere
herein. Friedman Alpren & Green LLP audited the Company's financial statements
as of and for the fiscal year ended December 31, 1997 and its report thereon is
included elsewhere herein. The selected financial data should be read in
conjunction with the financial statements, including the respective notes
thereto, appearing elsewhere in this Prospectus and 'Management's Discussion and
Analysis of Financial Condition and Results of Operations.'
STATEMENT OF OPERATIONS DATA:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED NINE MONTHS
DECEMBER 31, ENDED
-------------------------- SEPTEMBER 30,
1996 1997 1998
----------- ----------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Purse Income........................................................ $ 232,437 $ 168,224 $ 604,512
Contract and Agency Income.......................................... 30,424 208,009 245,005
Endorsements and Marketing Income................................... 23,080 93,404 225,464
Total Income........................................................ 322,378 590,227 1,349,130
Boxing, Training and related expenses............................... 232,549 228,088 472,371
Promotion and other operating expenses.............................. 2,036,214 3,651,354 3,100,903
Total Expenses...................................................... 2,368,763 3,879,442 3,754,192
Loss from Operations................................................ (2,046,385) (3,289,215) (2,405,062)
Net Loss............................................................ (2,156,198) (3,184,957) (2,340,022)
Loss Per Share...................................................... (0.52) (0.59) (0.34)
</TABLE>
BALANCE SHEET DATA:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------- SEPTEMBER 30,
1996 1997 1998
----------- ----------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Cash................................................................ $ 791,505 $ 745,137 $ 27,670
Due from Boxers (less allowances) and Related Parties............... 92,458 377,184 346,438
Total Current Assets................................................ 4,395,405 2,500,025 1,776,261
Total Current Liabilities........................................... 901,607 373,308 267,190
Common Stock........................................................ 51,533 62,622 71,372
Additional Paid-in Capital.......................................... 6,763,561 8,396,247 10,166,349
Accumulated (deficit)............................................... (3,060,307) (6,245,264) (8,585,487)
Demand Note Receivable on Private Issuance of Common Stock.......... (12,350) (12,350) (12,350)
Stockholder's Equity................................................ 3,751,654 2,201,255 (1,639,884)
</TABLE>
15
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
GENERAL
Worldwide Entertainment & Sports Corp. (the 'Company') 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'). In March 1997,
the Company established Worldwide Football Management Inc. ('WWFM'), as a
separate entity to continue its agency, marketing and management services to
professional football players. Due to the nature of these business operations
and the potential effect of the consolidation of such business within the
Company, the prior operating results of such separate businesses may not
necessarily be representative of the future results of operations of the
Company. The Company has only limited experience in the field of player agency
and contract advisory services.
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 pursuant to which the Company receives a fixed commission on
sales. In addition, the Company has accumulated a catalog of professional and
amateur 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 media including,
trade shows, mail order and retail sales. The Company has limited experience
with sports memorabilia sales.
Establishing and maintaining a presence in each of the Company's areas of
concentration, (i.e., boxing management and team sports player agency) requires
significant expenditures. Each sports specific division must retain the services
of qualified agents, 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 up to 3% or 4%,
respectively, for professional football and basketball player contracts
(although often lower percentages are agreed upon) to 10% or 20% for endorsement
and marketing revenues.
The timing of receipt of revenues by the Company is subject to seasonal
variations with respect to revenues generated from the negotiation of player
contracts and subject to irregular patterns in the case of boxing purse revenues
as a result of the irregular occurrence of bouts. In addition, the size of the
Company's revenues can change based upon the success or failure of the Company's
boxers or the negotiation of player contracts with significant bonus provisions.
The Company's WWBM and WWFM subsidiaries can be expected to spend significantly
during the first eight months of each calendar year
16
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<PAGE>
(particularly March through July) for recruitment and related expenses, and to
receive their revenues during the last four and first three months of the year
during the NBA and NFL 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. In August 1998, the Company severed its
relationship with its only NBA player's agent. Two of the Company's NFL player's
representatives are seeking to also become registered with the NBA as agents.
Accordingly, revenue and expenses attributable to WWBM are uncertain during the
ensuing twelve months.
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 and Mr. Mercer's failure to schedule any bouts during the remainder of
1997 because he underwent surgery to correct a chronic neck injury. 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. The
contract agency fees in the 1997 fiscal year include approximately $175,000 and
$33,000 generated by the Company's football and basketball operations,
respectively, as compared to revenues of approximately $22,000 and $8,000
generated by its football and basketball operations, respectively, in the 1996
fiscal year. In addition, during 1997, the Company recognized television 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 in fiscal year 1996. Boxing, training and
related expenses decreased slightly to $228,088 for the 1997 fiscal year from
$232,549 for the 1996 fiscal year. Although training expenses for the 1997
fiscal year decreased significantly as a result in the decrease in
the number of bouts, the 1997 fiscal year also included approximately
$83,000 of expenses relating to the promotion by the Company of a boxing
event in 1997. Promotion and other operating expenses increased to
$3,651,354 for the 1997 fiscal year as compared to $2,036,214 for the
1996 fiscal year. Such increase is primarily as a result of the increase
in total salaries from approximately $685,000 in fiscal 1996 to approximately
$1,266,000, due to the hiring of additional contract advisors and marketing
personnel for the football and team sports divisions, which increased
such salaries from approximately $109,000 in 1996 to $300,000 in 1997 thereby
accounting for approximately $181,000 of such increase, additional salary
expense in the Company's basketball operations as a result of a full year of
operations in 1997, which increased such salaries from approximately $186,000
in 1996 to $284,000 in 1997 thereby accounting for approximately $98,000 of such
increase, as well as increased administrative salaries in 1997 from
approximately $200,000 in 1996 to $445,000 in 1997 thereby accounting for
approximately $245,000 of such increase. In addition, promotional and recruiting
expenses, consisting largely of travel and entertainment expenses, increased
from approximately $316,000 in fiscal 1996 to approximately $540,000 in fiscal
1997 in conjunction with the Company's increased level of activities in the
player agency and marketing areas. Of such increase, approximately 48% is
attributable to the Company's basketball operations which increased from
approximately $47,000 in 1996 to $157,000 in 1997; approximately 38% is
attributable to its football and marketing operations which increased from
approximately $67,000 in 1996 to $152,000 in 1997; and the balance is
attributable to its boxing operations which increased from approximately
$202,000 in 1996 to $225,000 in 1997. In addition, professional and consulting
fees in 1997 aggregated approximately $796,000, as compared to approximately
$162,000 in 1996, as a result of the Company's increased legal and financial
consulting fees incurred as a public company and as a result of incurring
additional expenses in 1997 in connection with pursuing several potential
acquisitions and business transactions which ultimately were not consummated. In
addition, in 1997, the Company increased its use of outside consultants in
connection with its increased level of activity in the areas of player agency
and marketing. General and Administrative expenses represent the final
significant component of other operating expenses, which similarly increased as
a result of an increase in overall operations.
17
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<PAGE>
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 $2,069,038, 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.
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED WITH NINE MONTHS ENDED SEPTEMBER
30, 1997
Net revenues for the nine months ended September 30, 1998 were $1,349,130,
as compared to $321,407 for the nine months ended September 30, 1997. Purse
income increased to $604,512 for the 1998 period, as compared to $39,295 for the
1997 period, as a result of the size of the purse for a Shannon Briggs
heavyweight championship fight. In addition, during the nine months ended
September 30, 1998, the Company recognized merchandise revenues from the sale of
memorabilia amounting to $226,086, which operation was started in March 1998.
The nine months ended September 30, 1998 reflect an increase in contract agency
fees to $245,005, as compared to $82,496 in the comparable 1997 period, as a
result of the receipt in 1998 of additional revenues from players signed in 1997
by the Company's WWFM and WWBM subsidiaries. The contract agency fees in the
1998 period include approximately $240,000 and $5,000 generated by the Company's
football and basketball operations, respectively, as compared to revenues of
approximately $68,000 and $13,000 generated by its football and basketball
operations, respectively, in the 1996 period. In addition, during the 1998
period, marketing fee income increased to $225,000, as compared to $81,000 for
the 1996 period, as a result of increased activities by the Marketing Division
of WWTS. Television revenue of $87,500 in the 1997 period was from the receipts
from a televised boxing card promoted and managed by the Company. No such
revenue was received during the 1998 period, as the Company ceased its boxing
promotion activities.
Total expenses for the nine months ended September 30, 1998 increased to
$3,754,192, as compared to $2,754,242. Boxing, training and related expenses
amounted to $472,371 for the nine months ended September 30, 1998 compared to
$192,251 for the 1997 period. The principal reason for the increase was
preparation for the Briggs championship fight. Promotion and other operating
expenses increased to
18
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<PAGE>
$3,100,903 for the 1998 nine-month period as compared to $2,561,991 for the
corresponding 1997 nine-month period. Such increase was contributed to by the
increase in total salaries from approximately $941,000 during the 1997 period to
approximately $973,500 during the 1998 period, due to the hiring of additional
marketing personnel for the team sports divisions, which increased such
division's salaries from approximately $155,000 to $194,000, as well as
increased administrative salaries in 1998 from approximately $240,000 in 1997 to
$288,000 in 1998. Included in the expenses for the nine months ended September
30, 1998 is $181,000 of costs of products sold relating to sports memorabilia
sold by the Company during this period. No sales of memorabilia were made during
the 1997 period. In addition, promotional and recruiting expenses, consisting
largely of travel and entertainment expenses, increased from approximately
$386,083 in the 1997 nine-month period to approximately $830,559 in the 1998
nine-month period in conjunction with the Company's increased level of
activities in the player agency and marketing areas. Of such increase,
approximately $37,000 is attributable to the Company's basketball operations
which increased from approximately $172,000 in 1997 to $209,000 in 1998;
approximately $101,000 is attributable to its football operations which
increased from approximately $22,000 in 1997 to $128,000 in 1998; and
approximately $121,000 is attributable to its boxing operations which increased
from approximately $322,000 in 1997 to $443,000 in 1998. In addition,
professional and consulting fees in 1998 aggregated approximately $521,000, as
compared to approximately $355,000 in 1997, as a result of the Company's
increased legal and financial consulting fees incurred in 1998 due to incurring
additional expenses in connection with pursuing several business transactions
which ultimately were not consummated. In addition, in 1998, the Company
continued its use of outside consultants in connection with its increased level
of activity in the areas of player agency and marketing.
As a result of the foregoing, net loss for the nine months ended September
30, 1998 decreased to $2,340,022 as compared to $2,366,594 for the comparable
September 30, 1997 period.
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 September 30, 1998, the Company had working
capital of $1,590,071, which amount was primarily the remaining net proceeds
from the Company's private placements in the fourth quarter of 1997 and first
quarter of 1998.
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 $600,000, depending upon
the number of bouts. 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. The Company believes that its
current cash and cash equivalents, and cash flow from anticipated operations,
will be sufficient to fund its operations over the next six months or longer.
However, there can be no assurance that the Company will have sufficient
revenues after such time to fund its operating requirements. Accordingly, unless
this Offering is consummated, the Company will 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.
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BUSINESS
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 as well as to 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. 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'). 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. 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 divisions of WWTS: (i) the Worldwide Memorabilia Division, in
March 1998, for the purpose of procuring, developing and consummating commercial
transactions involving sports and entertainment memorabilia, and; (ii) the
Worldwide Marketing Division, in 1997, for the purpose of developing commercial
and marketing opportunities for athletes and entertainers, including the
Company's clients.
THE BOXING DIVISION
The Company's boxing division is under the direct supervision of Marc
Roberts, the Company's President. Mr. Roberts has over 19 years experience in
the management of professional boxers. The Company's 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
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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 fight 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 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
With the recent retirement of Tracy Patterson from professional boxing in
1998, the Company currently manages the following four professional boxers
pursuant to exclusive management contracts:
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, and is
currently ranked number 2 by the WBC, number 3 by the WBA and number 4 by
the IBF in their respective heavyweight divisions. Mr. Mercer was recently
diagnosed as having Hepatitis B. There can be no assurance that Mr. Mercer
will be able to resume fighting in the near future.
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
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Eric French and Melton Bowen in February and April, respectively. In June,
Mr. Briggs won with a technical knock out ('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 29 wins, with 23 by knockout, and 3
losses. Mr. Nicholson has won 6 consecutive bouts, the most recent victory,
a first round KO in Madison Square Garden in September 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.
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
won his most recent bout on October 1st, 1998.
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 at various dates 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 eight bouts in 1997. Mr.
Trujillo's promotional contract expires in 2001.
In July 1998, the Company entered into a Management Agreement to act as
Co-Manager for young heavyweight Grant Cudjoe. Pursuant to such agreement the
Company is entitled to receive 16 2/3% of all purse income generated by Mr.
Cudjoe's professional fights through 2003. Mr. Cudjoe won his first professional
fight in September 1998.
The Company has recently 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, and the nine months ended September
30, 1998, the Company recognized revenues of $168,224 and $604,512,
respectively, 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.
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BOXING REGULATION
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 any 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 consultants who are established
professionals with rosters of athletes in various professional sports. 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. Since the establishment of WWFM and WWBM as separate entities, the
Team Sports Division has been comprised of its Marketing Division and its
Memorabilia Division. The Company will seek to integrate these 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.
TEAM SPORTS AGENCY
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., free agency
options), the development and execution of marketing strategies and endorsement
opportunities. In addition to establishing a relationship with 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 salary a team can pay its players, are 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
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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
between 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 a 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. In July 1998 the Company hired a third NFL players agent to
service its expanding roster of players, and to facilitate new relationships
with other athletes as well. WWFM seeks to 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. WWFM's
registered agents currently represent over 20 active NFL players, including,
among others, Antonio Freeman, Bobby Engram, Antonio London, O.J. McDuffie,
Rickey Dudley and Tyrone Wheatley.
For the fiscal year ended December 31, 1997 and the nine month period
ending September 30, 1998, the Company's football agency business generated
revenues of $175,248 and $240,005, respectively.
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.
WORLDWIDE BASKETBALL MANAGEMENT, INC.
In August 1996, the Company hired a registered NBA player's agent and a
former NBA athlete with experience recruiting and handling athletes to manage
the Company's basketball business in connection with the formation of WWBM.
Through WWBM, the Company provides 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. In the 1996 NBA Draft, WWBM's agent
represented the player selected ninth overall. In the 1997 NBA draft, WWBM's
agent represented two players selected in the first round and one selected in
the second round. The Company represented no players selected in the 1998 NBA
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Draft. Two of the players formerly signed to management contracts with WWBM have
since terminated their agreements with the Company. The Company has signed
representation agreements with two additional NBA veteran players.
For the fiscal year ended December 31, 1997 and the nine month period
ending September 30, 1998, WWBM generated revenues of $32,763 and $5,000,
respectively.
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.
In August 1998, the Company, the NBA agent and the former NBA player hired
in connection with the formation of WWBM severed their relationship. None of the
Company's other employees are NBA agents, however, two of the Company's other
employees, each a registered NFL agent, are seeking registration with the NBA as
agents. There can be no assurance such employees will obtain such registration
or be successful in attracting professional basketball players as clients. If
such employees fail to obtain such registration or the Company cannot retain the
services of another NBA registered agent, there can be no assurance that the
Company will be able to maintain its basketball agency business.
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 between 10% and 20%. The
Marketing Division also arranges marketing opportunities and public appearances
for athletes of other agencies, in which event the Company customarily shares up
to 50% of the commission generated. The Marketing Division exclusively
represents the Company's athletes, the NASCAR racing teams of LAR Motorsports
and Brewco Motorsports, and Kevin and Brian Delaney, professional snowboarders.
For the fiscal year ended December 31, 1997 and the nine month period ended
September 30, 1998, the Marketing Division generated revenues of $93,404 and
$225,464, respectively.
WORLDWIDE MEMORABILIA DIVISION
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 an employee of the Division, pursuant to which the
Company receives a fixed commission on sales. In addition, the Company markets
its own catalog of professional and amateur 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 such items and other acquired memorabilia through various
mediums including, trade shows, mail order and retail sales. For the nine month
period ending September 30, 1998 the Memorabilia Division generated $226,086 in
revenues.
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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 establishing and maintaining
relationships with persons and entities capable of providing endorsement
opportunities and identifying trends and issues to capitalize on fleeting
popular currents. Since the Company's October 1996 initial public offering,
additional companies such as SFX Entertainment, Inc. and Magicworks
Entertainment Incorporated have become public companies and have contributed to
a consolidation of sports management and marketing agencies.
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.
EMPLOYEES
At November 15, 1998, the Company and its subsidiaries in the aggregate had
19 employees. Three of such persons perform executive functions, three are
Agents, three are marketing executives and ten 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. See 'Management.'
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.
LEGAL PROCEEDINGS
There are no material legal proceedings to which the Company is a party.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------ --- ------------------------------------------------------------------
<S> <C> <C>
Marc Roberts.................. 39 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............. 45 Director, Secretary
Harvey Silverman.............. 57 Director
Joel Segal.................... 34 President, Worldwide Football Management Inc.
</TABLE>
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 Boards of Directors of HMG Worldwide Corporation,
Alpha Hospitality Corporation, and a number of 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.
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.
Directors serve until the next annual meeting or until their successors are
elected and qualified. Officers serve at the discretion of the Board of
Directors, subject to rights, if any, under contracts of employment. Directors
will receive no cash compensation for their services to the Company as
directors, but will be reimbursed for expenses actually incurred in connection
with attending meetings of the Board of Directors and are eligible to
participate in the Company's Stock Option Plan.
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<PAGE>
The General Corporation Law of Delaware permits a corporation through its
Certificate of Incorporation to eliminate the personal liability of its
directors to the corporation or its stockholders for monetary damages for breach
of fiduciary duty of loyalty and care as a director, with certain exceptions.
Exceptions include a breach of the director's duty of loyalty, acts or omissions
not in good faith or which involve intentional misconduct or knowing violation
of law, improper declarations of dividends, and transactions from which the
directors derived an improper personal benefit. The Company's Certificate of
Incorporation exonerates its directors from monetary liability to the fullest
extent permitted by this statutory provision.
The Company has been advised that it is the position of the Securities and
Exchange Commission that insofar as the foregoing provision may be invoked to
disclaim liability for damages arising under the Act, that provision is against
public policy as expressed in the Act and is therefore unenforceable.
KEY EMPLOYEE
The Company has executed a five year employment agreement with Ryan
Schinman, a registered contract advisor with the NFL. In addition to acting as
contract advisor for athletes, Mr. Schinman devotes a significant portion of his
time and attention to developing marketing opportunities for the Company and its
clientele. Mr. Schinman is 26 years old and, prior to joining the Company in
January 1996, was employed for three years by Athletes and Artists Ltd., a
sports and entertainment management agency. Pursuant to his employment
agreement, Mr. Schinman receives a salary of $100,000 per annum plus bonuses in
the discretion of the board of directors.
EXECUTIVE COMPENSATION
The following table sets forth the aggregate compensation paid by the
Company to the Chief Executive Officer and President, and certain other
executive officers of the Company for services rendered to the Company by such
persons during the year ended December 31, 1997.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1)(2)
----------------------------------------
NAME AND PRINCIPAL POSITION SALARY($) BONUS($) OPTIONS/SARS(#)
- ------------------------------------------------------------------------- --------- -------- ---------------
<S> <C> <C> <C>
Marc Roberts
Chief Executive Officer, President..................................... $ 215,000 -- 140,000
Roy Roberts
Chief Financial Officer................................................ $ 120,000 -- 40,000
Michael Goodson(3)
President, Worldwide Basketball Management, Inc........................ $ 130,000 -- --
Erik Rudolph(3)
Chief Executive Officer, Worldwide Basketball Management, Inc.......... $ 130,000 -- --
Joel Segal
President, Worldwide Football Management, Inc.......................... $ 94,230 $ 75,000 --
</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.
(3) The Company has terminated its employment agreements with Messrs. Goodson
and Rudolph in August 1998.
COMPENSATION OF DIRECTORS
The Company has no standard arrangements, pursuant to which the directors
of the Company are compensated.
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<PAGE>
EMPLOYMENT AGREEMENTS
Marc Roberts 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
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, Erik Rudolph, a registered NBA
player's agent, and Michael Goodson, a former NBA player active in player
relations and recruiting, 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 signed to valid player's representation agreements during
their employment by WWBM. Messrs. Rudolph and Goodson were each to receive a
salary of $130,000 per annum during the term of their contracts, and each also
received a signing bonus of $50,000 in October 1996. In addition, they were to
share certain bonus compensation based on WWBM's annual revenue. WWBM's
agreements with each of Messrs. Goodson and Rudolph were terminated in August
1998. As stated in those employment agreements, in the event of the non-renewal
of the employment agreements, or their termination for any reason, Messrs.
Goodson and Rudolph would (i) be reassigned the rights to the revenues from Mr.
Walker's contract payable after such termination, 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. Mr. Goodson has agreed to forego any compensation that may
have been due to him from his contract with WWBM, and the Company and Mr.
Rudolph are currently in negotiations on an appropriate settlement.
In connection with the formation of WWFM as a separate entity, the Company
entered into an employment agreement with Joel Segal, a registered NFL player's
agent, 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 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
29
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<PAGE>
signing bonus of $75,000. Mr. Segal was issued a 20% interest in WWFM upon
his joining the Company. As was contemplated in the shareholders agreement
between WWES and Mr. Segal, on October 9, 1998 Mr. Segal exchanged his 20%
interest in WWFM for 200,000 shares of the Company's Common Stock in a share
for share exchange. As a result of this share exchange, WWFM became a
wholly-owned subsidiary of the Company.
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.
PRINCIPAL STOCKHOLDERS
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 November 15, 1998.
<TABLE>
<CAPTION>
PERCENTAGE OF
COMMON STOCK
PERCENTAGE OF BENEFICIALLY OWNED
COMMON STOCK AFTER THE OFFERING
NUMBER BENEFICIALLY OWNED ------------------
NAME AND ADDRESS(1) OF SHARES BEFORE THE OFFERING MINIMUM MAXIMUM
- ----------------------------------------------- --------- ------------------- ------- -------
<S> <C> <C> <C> <C>
Marc Roberts................................... 1,718,966(2) 20.7% 16.1% 14.6%
Roy Roberts.................................... 248,334(3) 3.0% 2.3% 2.1%
Allan Cohen, M.D............................... 176,667(4) 2.1% 1.6% 1.5%
Dan Drykerman.................................. 175,000(5) 2.1% 1.6% 1.5%
Herbert F. Kozlov.............................. 464,000(6) 5.6% 4.3% 3.9%
Harvey Silverman............................... 212,334(7) 2.6% 2.0% 1.8%
All officers and directors as a group (7
persons)..................................... 3,275,301(8) 39.5% 30.6% 27.8%
</TABLE>
- ------------
(1) The address of all of the beneficial owners is that of the Company's
principal executive office.
(2) Includes 200,000 shares which may be acquired upon the exercise of currently
exercisable options and warrants.
(3) Includes 165,000 shares which may be acquired upon the exercise of currently
exercisable options and warrants.
(4) Includes 160,000 shares which may be acquired upon the exercise of currently
exercisable options and warrants.
(5) Includes 172,500 shares which may be acquired upon the exercise of currently
exercisable options and warrants.
(6) Does 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 173,000 shares which may be
acquired upon the exercise of currently exercisable options.
(7) Includes 120,000 shares which may be acquired upon the exercise of currently
exercisable options.
(8) Includes 959,500 options which may be acquired upon the exercise of
currently exercisable options.
30
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<PAGE>
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.
CERTAIN TRANSACTIONS
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.
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. The Shareholders Agreement
was terminated effective August 1998 and Mr. Goodson has agreed to forego any
compensation to which he was entitled to receive thereunder and he has
surrendered his shares of WWBM Common Stock to the Company. The Company and Mr.
Rudolph are currently negotiating an appropriate settlement.
Pursuant to a Shareholders Agreement among Joel 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 could have elected to effectuate a merger of WWFM and the Company
which would have resulted in 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. On October 9, 1998, in accordance with the
Shareholders Agreement, the Company and Mr. Segal consummated a share exchange
in which Mr. Segal received 200,000 shares of the Company's Common Stock for his
20% stake in WWFM in lieu of effectuating the merger, thereby making WWFM a
wholly-owned subsidiary of the Company.
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 the Board of Directors.
31
<PAGE>
<PAGE>
DESCRIPTION OF SECURITIES
COMMON STOCK
GENERAL
The Company is authorized to issue 20,000,000 shares of Common Stock, $.01
par value per share, of which 7,337,197 shares are currently outstanding and
held of record by approximately 142 holders of record as of November 11, 1998.
Holders of the Common Stock are entitled to one vote for each share held of
record on all matters to be voted on by stockholders. There are no preemptive,
subscription, conversion or redemption rights pertaining to the Common Stock.
Holders of Common Stock are entitled to receive dividends when, as and if
declared by the Board of Directors from funds legally available therefor and to
share ratably in the assets of the Company available upon liquidation,
dissolution or winding up. The holders of Common Stock do not have cumulative
voting rights for the election of directors and, accordingly, the holders or
more than 50% of the Common Stock voting for the election of directors are able
to elect all directors. All of the outstanding Common Stock is duly authorized,
validly issued, fully paid and non-assessable, and the Common Stock issuable
upon exercise of the Company's outstanding warrants and options, has been duly
authorized and reserved for issuance upon the exercise of the Company's
outstanding warrants and options and, upon issuance, will be validly issued,
fully paid and non-assessable.
DIVIDENDS
The Company has not paid or declared any cash dividends since its formation
and intends to retain earnings, if any, for the operation and expansion of its
business. The payment by the Company of dividends, in the future, rests within
the discretion of its Board of Directors and will depend on, among other things,
the Company's earnings, its capital requirements and its financial condition.
WARRANTS
In connection with a private placement commenced in September 1995 through
July 1996 of an aggregate of $1,990,000 of promissory notes, the Company issued
warrants to purchase up to 995,000 shares of Common Stock at an exercise price
of $7.20 at any time commencing on October 22, 1996 and prior to the fifth
anniversary of their issuance. The Warrants provide for adjustment of the
exercise and for a change in the number of shares issuable upon exercise to
protect holders against dilution in the event of a stock dividend, stock split,
combination or reclassification of the Common Stock. The Warrants do not confer
upon the Warrant holder any voting or other rights of a stockholder of the
Company. The holders of these warrants were not granted any registration rights
relating to the warrants or the shares underlying such warrants.
On May 13, 1998, the Board of Directors of WWES authorized the issuance of
31,000 warrants to purchase common stock of the Company, exercisable at $2.25
per share, with a 5-year term.
REDEEMABLE WARRANTS
In connection with the Company's public offering on October 22, 1996, and
pursuant to a warrant agreement (the 'Warrant Agreement') among the Company,
William Scott & Company L.L.C. as underwriter ('William Scott') and the
Company's transfer agent and warrant agent, the Company issued 1,400,000
Redeemable Warrants each to purchase one share of the Company's Common Stock at
$7.20 per share at any time after October 22, 1997 and before the close of
business on October 22, 2002.
The Redeemable Warrants are redeemable by the Company on 30 days' prior
notice at any time subsequent to October 22, 1997 at a redemption price of $.05
per Redeemable Warrant provided the last sale price of the Common Stock for any
20 consecutive trading days ending within 15 days of the notice of redemption
averages in excess of $9.00 per share.
32
<PAGE>
<PAGE>
UNIT PURCHASE OPTION
Pursuant to an Underwriting Agreement between the Company and William Scott
entered into in connection with the public offering of the Company's Common
Stock in October 1996, the Company has agreed to sell to William Scott or its
designees, for nominal consideration, a Unit Purchase Option to purchase up to
140,000 Units each consisting of one share of the Company's Common Stock and one
Redeemable Warrant convertible into one share of the Company's Common Stock at
the same terms and condition set forth above, except that the Redeemable
Warrants issued pursuant to the Unit Purchase Option are not subject to
redemption by the Company. The Unit Purchase Option will be exercisable during
the four-year period commencing October 22, 1997 at an exercise price of $9.90
per Unit, subject to adjustment in certain events to protect against dilution,
and were not transferable until October 22,1997 except to officers of William
Scott. The Company has agreed to register, during the four-year period
commencing October 22, 1997, on one occasion upon request of the holder(s) of a
majority of the Unit Purchase Option, the securities issuable upon exercise
thereof under the Securities Act, such registration to be at the Company's
expense. The Company has also granted certain 'piggyback' registration rights to
holders of the Unit Purchase Option.
OPTIONS
On July 1, 1996, the Company 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 option to purchase 500,000 shares. The
option price per share for the incentive stock option will be determined at the
time of grant.
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 ten years.
On December 9, 1997, the Board of Directors of the Company 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 a share, with a ten year term.
On January 28, 1998, the Board of Directors of the Company authorized the
issuance of 320,000 nonqualifying options, exercisable at $1.50 a share, with a
ten year term.
In September 1998, the Board of Directors of the Company authorized the
issuance of 1,083,000 nonqualifying options ranging in price from $1.44 through
$2.875 per share.
TRANSFER AGENT AND WARRANT AGENT
American Stock Transfer & Trust Company, New York, New York serves as
transfer agent for the Common Stock and Warrant Agent for the Redeemable
Warrants.
PREFERRED STOCK
The Certificate of Incorporation of the Company authorizes the issuance of
5,000 shares of preferred stock. The Board of Directors, within the limitations
and restrictions contained in the Certificate of Incorporation and without
further action by the Company's stockholders, has the authority to issue shares
of preferred stock from time to time in one or more series and to fix the number
of shares and the relative rights, conversion rights, voting rights, and terms
of redemption, liquidation preferences and any other preferences, special rights
and qualifications of any such series. Any issuance of preferred stock could,
under certain circumstances, have the effect of delaying or preventing a change
in control of the Company and may adversely affect the rights of holder, of
Common Stock. The Company has no present plans to issue any shares of preferred
stock.
33
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<PAGE>
DELAWARE ANTI-TAKEOVER STATUTE
The Company is subject to Section 203 of the Delaware General Corporation
Law ('Section 203') which, subject to certain exceptions, prohibits a Delaware
corporation from engaging in any 'business combination' with any 'interested
stockholder' for a period of three years following the date that such
stockholder became an interested stockholder, unless: (i) prior to such date,
the Board of Directors of the corporation, approved either the business
combination or the transaction which resulted in the stockholder becoming an
interested stockholder; (ii) upon consummation of the transaction which resulted
in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding for purposes of
determining the number of shares outstanding those shares owned by persons who
are directors and also officers and by employee stock plans in which employee
participants do not have the right to determine confidentially whether shares
held subject to the plan will be tendered in a tender or exchange offer; or
(iii) on or subsequent to such date, the business combination is approved by the
Board of Directors and authorized at an annual or special meeting of
stockholders, and not by written consent, by the affirmative vote of at least
66 2/3% of the outstanding voting stock which is not owned by the interested
stockholder. Under Section 203, the restrictions described above also do not
apply to certain business combinations proposed by an interested stockholder
following the announcement or notification of one of certain extraordinary
transactions involving the corporation and a person who had not been an
interested stockholder during the previous three years or who became an
interested stockholder with the approval of a majority of the corporation's
directors and which transaction is approved or not opposed by the majority of
the board of directors then in office.
Section 203 generally defines a business combination to include: (i) any
merger or consolidation involving the corporation and the interested
stockholders; (ii) any sale, transfer, pledge or other disposition of 10% or
more of the assets of the corporation to the interested stockholder; (iii)
subject to certain exceptions, any transaction which results in the issuance or
transfer by the corporation of any stock of the corporation to the interested
stockholder; (iv) any transaction involving the corporation which has the effect
of increasing the proportionate share of the stock of any class or series of the
corporation beneficially owned by the interested stockholder; or (v) the receipt
by the interested stockholder of the benefit of any loans, advances, guarantees,
pledges or other financial benefits provided by or through the corporation. In
general, Section 203 defines an interested stockholder as any entity or person
beneficially owning 15% or more of the outstanding voting stock of the
corporation and any entity or person affiliated with or controlling or
controlled by such entity or person.
UNDERWRITING
The Company has entered into an Underwriting Agreement with Bell Investment
Group Inc. (the 'Underwriter'). Pursuant to the terms of the Underwriting
Agreement, the Underwriter has agreed to attempt to sell the Minimum Amount of
the Shares on a 'best efforts all or none basis' and, once the Minimum Amount
has been subscribed for, the Underwriter shall attempt to sell up to the Maximum
Amount of the Shares on a 'best efforts' basis until the Offering is either
terminated or completed, which ever is sooner. This Offering is the
Underwriter's first as the managing underwriter for a public offering.
The Shares will be offered for a period of forty-five (45) days from the
date of this Prospectus, which period may be extended for an additional
forty-five (45) days upon mutual agreement between the Company and the
Underwriter (the 'Offering Period'). The Company intends to extend the Offering
beyond forty-five (45) days if the Minimum Amount is not raised during the
initial forty-five (45) days. Any purchase of Shares made by persons affiliated
with the Company for the explicit purpose of meeting the Minimum Amount will be
made for investment purposes only and not with a view toward distribution. If
the Underwriter is unable to raise the Minimum Amount within the Offering
period, this Offering will terminate and all funds will be returned to
subscribers in full, without interest or deduction for commissions or other
expenses relating to the Offering. All funds received by the Underwriter will be
transmitted promptly to an escrow account maintained by Liberty Bank of New
York, pursuant to the terms of an escrow agreement. Purchasers of the Shares
will not receive Shares unless and until the funds are released from escrow
pursuant to the terms of the escrow agreement.
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<PAGE>
Officers and directors of the Company may purchase Shares in the Offering.
However, officers and directors who acquire Shares will not be allowed to
transfer such securities for one year without the consent of the Underwriter.
Subject to attaining the Minimum Amount in this Offering, the Company has
agreed to pay the Underwriter a sales commission of ten percent (10%) of the
aggregate offering price of the Shares (the 'Underwriter Sales Commission'), and
a nonaccountable expense allowance of 3% of the gross proceeds of the Offering.
The Company has also agreed to sell to the Underwriter warrants to purchase the
Company's Common Stock in an amount equal to ten percent (10%) of the Common
Stock sold by the Underwriter (or participating underwriters or broker-dealers)
in the Offering, which Warrants may be exercised during a four (4) year period
commencing on that date which is twelve (12) months after the date of this
Prospectus. The exercise price of the Underwriter's Warrant shall be an amount
equal to 165% above the purchase price for the Common Stock in this Offering.
The Underwriter has the right to engage other broker-dealers which are
members of the National Association of Securities Dealers, Inc. (the
'Participating Dealers') to assist in the offer and sale of the Shares, and may
allow such Participating Dealers up to 100% of the Underwriter Sales Commission
and the nonaccountable expense allowance. In this regard, the Underwriter will
enter into a Participating Dealer Agreement with each Participating Dealer (a
copy of which is filed as an exhibit to the Registration Statement of which this
Prospectus is a part). The Underwriter may purchase Shares for accounts over
which it has discretionary authority, however, at this time the Underwriter has
no intention to do so.
In connection with the Offering, the Company has entered into an agreement
whereby it agrees to employ the Underwriter as its Management and Financial
Consultant for a three year period commencing with the date of the Closing at a
fee equal to $2,500 per month payable in one lump sum of $90,000 at Closing.
The Company has also agreed that it will, for a period of two years, engage
a designee of the Underwriter as an advisor to its Board of Directors to attend
all meetings of the Company's Board of Directors. In lieu of the appointment of
such Advisor, however, the Underwriter, in its sole discretion, shall have the
right to designate one person for election as a Director of the Company. The
Company has agreed to compensate such Advisor or Underwriter's Nominee Director
to the same extent the Company compensates its non-employee Directors for
out-of-pocket expenses incurred in attending Board Meetings and otherwise
discharging the duties of a Director of the Company.
In the Underwriting Agreement, the Company has agreed to indemnify the
Underwriter against certain liabilities, including liabilities under the federal
securities laws, or to contribute to payments which the Underwriter may be
required to make in respect thereof. The Company has been advised by the U.S.
Securities and Exchange Commission that, in the opinion of the Commission, such
indemnification for liabilities arising under the federal securities laws is
against public policy as expressed in the Securities Act of 1933, and is,
therefore, unenforceable.
Marc Roberts, the President and Chief Executive Officer of the Company has
agreed not to sell, transfer or assign any of his shares of Common Stock for a
period of 12 months from the date of this Prospectus without the prior written
consent of the Underwriter. The remaining officers and directors of the Company
have agreed to refrain from selling, transferring or assigning their shares of
the Company's Common Stock for a period of 9 months from the date of this
Prospectus without the prior written consent of the Underwriter. All of the
Company's officers and directors, including Mr. Roberts, have agreed not to
sell, transfer or assign any shares of Common Stock they may acquire by
exercising their currently existing options to acquire Common Stock of the
Company for a period of 12 months from the date of this Prospectus.
Certain persons participating in the Offering may overallot or effect
transactions which stabilize, maintain or otherwise affect the market price of
the Common Stock at levels above those which might otherwise prevail in the open
market industry by entering stabilizing bids or effecting syndicate covering
transactions. A stabilizing bid means the placing of any bid or effecting of any
purchase for the purpose of pegging, fixing or maintaining the price of the
Common Stock. A syndicate covering transaction means the placing of any bid on
behalf of the underwriting syndicate or the effecting of any purchase to
35
<PAGE>
<PAGE>
reduce a short position created in connection with the Offering. Such
transaction may be effected on The Nasdaq Stock Market, in the over-the-counter
market, or otherwise. Such stabilizing, if commenced, may be discontinued at any
time.
LEGAL MATTERS
Certain legal matters relating to the securities offered hereby will be
passed upon for the Company by Parker Duryee Rosoff & Haft A Professional
Corporation, New York, New York. Herbert F. Kozlov, a member of Parker Duryee
Rosoff & Haft, beneficially owns 283,000 shares of Common Stock and holds
options to acquire an additional 173,000 shares. Mr. Kozlov also serves as
Secretary and as a director of the Company. Parker Duryee Rosoff & Haft, as a
firm, owns 65,000 shares of Common Stock of the Company. Other individual
members of such firm own shares of Common Stock, as well as five year warrants
to purchase an additional 25,000 shares of Common Stock at an exercise price of
$6.00 per share.
EXPERTS
The financial statements (except as they apply to unaudited periods) and
schedules of the Company included in this Prospectus and Registration Statement
have been audited for Fiscal Year 1997 by Friedman Alpren & Green LLP,
independent certified public accountants, as stated in their report appearing
elsewhere herein and therein and are included in reliance upon such reports
given upon the authority of that firm as experts in accounting and auditing.
Financial Statements for Fiscal Year 1996 were audited by Rosenberg Rich Baker &
Berman, a Professional Association.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission,
Washington, D.C., a Registration Statement on Form SB-2 under the Act, covering
the securities offered by this Prospectus. For further information with respect
to the Company and the securities offered, reference is made to the Registration
Statement and the exhibits filed as part thereof, which may be examined without
charge and copies of such material can be obtained at prescribed rates from the
Public Reference Section maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, Statements contained in this Prospectus as to the
contents of any contract or other document referred to are not necessarily
complete. In each instance reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference.
36
<PAGE>
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Independent Auditors' Report......................................................................... F-2, F-3
Consolidated Balance Sheet as of December 31, 1997 and 1996.......................................... F-4
Consolidated Statement of Operations Years Ended December 31, 1997 and 1996.......................... F-5
Consolidated Statement of Cash Flows Years Ended December 31, 1997 and 1996.......................... F-6
Consolidated Statement of Changes in Stockholders' Equity............................................ F-7
Notes to Consolidated Financial Statements........................................................... F-8 - F-13
Unaudited Condensed Consolidated Balance Sheet As of September 30, 1998............................. F-14
Unaudited Condensed Interim Consolidated Statements of Operations For the Nine Months Ended September
30, 1998 and 1997.................................................................................. F-15
Unaudited Condensed Consolidated Statements of Cash Flows For the Nine Months Ended September 30,
1998 and 1997...................................................................................... F-16
Notes to Unaudited Consolidated Financial Statements................................................. F-17 - F-18
</TABLE>
F-1
<PAGE>
<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 Notes 11 and 12,
as to which the dates are March 27, 1998
and November 17, 1998, respectively
F-2
<PAGE>
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of
WORLDWIDE ENTERTAINMENT & SPORTS CORP. AND SUBSIDIARIES
29 Northfield Avenue
West Orange, New Jersey 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 flow for the year then ended in conformity with
generally accepted accounting principals.
ROSENBERG RICH BAKER BERMAN & COMPANY, PA
Maplewood, New Jersey
February 18, 1997
F-3
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
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.
F-4
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1997 1996
----------- -----------
<S> <C> <C>
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 (Reclassified)
Boxing, training and related expenses.......................................... 228,088 232,549
Promotion and other operating expenses......................................... 3,651,354 2,036,214
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.
F-5
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1997 1996
----------- -----------
<S> <C> <C>
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.
F-6
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
Demand Note Unrealized
Additional Receivable Gain on
Common Stock Paid-in Accumulated for Common Marketable
Shares Amount Capital Deficit Stock Securities
<S> <C> <C> <C> <C> <C>
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.
F-7
<PAGE>
<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.
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.
F-8
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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.
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.
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).
F-9
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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.
3 -- PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
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
------- -------
------- -------
</TABLE>
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.
5 -- INCOME TAXES AND DEFERRED INCOME TAXES
Income taxes and components of deferred tax assets are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1997 1996
----------- ---------
<S> <C> <C>
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
----------- ---------
----------- ---------
</TABLE>
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.
F-10
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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.
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.
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.
F-11
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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.
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
F-12
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
$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.
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:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
- ------------
<S> <C>
1998 ........................................................................... $25,000
1999 ........................................................................... 25,000
2000 ........................................................................... 25,000
2001 ........................................................................... 20,000
-------
$95,000
-------
-------
</TABLE>
11 -- SUBSEQUENT EVENTS
Between January 1, 1998 and March 27, 1998, the Company sold 660,000
restricted shares of common stock in connection with several private placement
transactions for an aggregate amount of $1,485,000. Commission costs of
approximately $25,000 were incurred and, in addition, 50,000 restricted shares
of common stock were issued to an agent in connection with the sales.
12 -- RECLASSIFICATIONS
The Company has reclassified certain expenses presented in the
Consolidated Statement of Operations for the years ended December 31, 1997
and 1996. Such reclassifications of expense were made to more closely
reflect the nature of the Company's operations and did not result in any
changes to the reported net loss for each year.
F-13
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1998
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents..................................................................... $ 27,670
Certificates of deposit....................................................................... 532,813
Accounts receivable, less allowances for doubtful accounts of $77,400......................... 576,239
Prepaid expenses and other current assets..................................................... 30,031
Due from boxers and other related parties, net of allowances of $225,581...................... 346,438
Inventory of memorabilia...................................................................... 263,070
-----------
Total current assets..................................................................... 1,776,261
Property and equipment-at cost, net of accumulated depreciation.................................... 58,299
Other assets:
Due from related party........................................................................ 58,564
Security deposit and other assets............................................................. 13,950
-----------
Total assets............................................................................. $ 1,907,074
-----------
-----------
LIABILITIES
Current liabilities:
Accounts payable.............................................................................. $ 22,682
Accrued expenses.............................................................................. 108,457
Escrow funds and amounts due boxers........................................................... 135,451
Income taxes payable.......................................................................... 600
-----------
Total current liabilities................................................................ 267,190
Stockholders' equity:
Common stock, $.01 par value; authorized 20,000,000 shares; issued 7,137,197 shares........... 71,372
Additional paid-in capital.................................................................... 10,166,349
Accumulated deficit........................................................................... (8,585,487)
Demand note receivable on private issuance of common stock.................................... (12,350)
-----------
1,639,884
-----------
Total liabilities and stockholders' equity............................................... $ 1,907,074
-----------
-----------
</TABLE>
See notes to Unaudited Condensed Consolidated Financial Statements.
F-14
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------------
1998 1997
------------- -------------
(UNAUDITED)
<S> <C> <C>
Purse income.................................................................... $ 604,512 $ 39,295
Commission income............................................................... 48,063 --
Contract agency fees............................................................ 245,005 82,496
Marketing fees.................................................................. 225,464 80,763
Television income............................................................... -- 87,500
Ticket revenues................................................................. -- 31,353
Merchandise revenues............................................................ 226,086 --
------------- -------------
1,349,130 321,407
------------- -------------
Costs of products sold.......................................................... 180,918 --
Boxing, Training and related expenses........................................... 472,371 192,251
Promotion and other operating expenses.......................................... 3,100,903 2,561,991
------------- -------------
3,754,192 2,754,242
------------- -------------
Loss from operations............................................................ (2,405,062) (2,432,835)
------------- -------------
Other income and (expenses):
Interest and dividend income............................................... 63,793 83,591
Other...................................................................... 4,221 (10,862)
------------- -------------
68,014 72,729
------------- -------------
Loss before income taxes........................................................ (2,337,048) (2,360,106)
Income taxes (credit)........................................................... 2,974 6,488
------------- -------------
Net loss................................................................... $(2,340,022) $(2,366,594)
------------- -------------
------------- -------------
Loss per share.................................................................. $(0.34) $(0.45)
------------- -------------
------------- -------------
Weighted average common shares outstanding...................................... 6,827,435 5,206,970
------------- -------------
------------- -------------
</TABLE>
See notes to Unaudited Condensed Consolidated Financial Statements.
F-15
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
----------- -----------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities................................................ $(2,931,477) $(2,372,994)
Cash flows from investing activities................................................ 479,815 1,404,479
Cash flows from financing activities................................................ 1,734,194 216,750
----------- -----------
Net increase (decrease) in cash..................................................... (717,468) (751,765)
Cash and cash equivalents at beginning of period.................................... 745,138 1,091,505
----------- -----------
Cash and cash equivalents at end of period.......................................... $ 27,670 $ 339,740
----------- -----------
----------- -----------
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Income taxes.............................................................. $ 1,703 $ 6,489
----------- -----------
----------- -----------
</TABLE>
See notes to Unaudited Condensed Consolidated Financial Statements.
F-16
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE A -- NATURE OF ORGANIZATION AND BASIS OF PRESENTATION
1. NATURE OF ORGANIZATION
Worldwide Entertainment & Sports Corp. (the 'Company') was incorporated in
Delaware on August 15, 1995, for the purpose of providing management, agency,
and marketing services to professional athletes, artists and entertainers,
principally to boxers, football and basketball players.
2. BASIS OF PRESENTATION
The Condensed Financial Statements included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations.
The Condensed Financial Statements included herein reflect, in the opinion
of management, all adjustments (consisting primarily only of normal recurring
adjustments) necessary to present fairly the results for the interim periods.
The results of operations for the nine months ended September 30, 1998, are not
necessarily indicative of results to be expected for the entire year ending
December 31, 1998.
NOTE B -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. The condensed consolidated financial statements include the accounts of
the Company and all of its subsidiaries, all of which are wholly owned, except
for Worldwide Basketball Management, Inc. and Worldwide Football Management,
Inc., which companies are 80% owned. The excess of the accumulated deficits of
these 80% owned subsidiaries over the equity capital thereof has been included
in the operations of the Parent Company (WWES). In October 1998, WWFM became a
wholly-owned subsidiary of the Company, as a result of the exchange of the 20%
minority interest previously held by WWFM's President for 200,000 shares of
Common Stock.
2. Purse revenue is recognized upon completion of a fight, as a percentage
of the boxer's purse. Ticket and commission revenues are recognized at the time
of the fight. Contract and agency fee revenues are recognized ratably over the
various athletic seasons. Merchandise revenue is recognized upon the sale of
memorabilia merchandise.
3. Basic net 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 be anti-dilutive.
4. The Company files a consolidated federal income tax return and has net
operating loss carryforwards for Federal income tax purposes, expiring in 2018,
amounting to approximately $8,600,000, and other differences for tax purposes
amounting to approximately $20,000. No deferred tax asset is shown on the
accompanying condensed consolidated balance sheet due to a related valuation
allowance equal to the balance of the deferred tax asset.
5. 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. Cash balances are maintained in several financial
institutions insured by the Federal Deposit Insurance Corporation up to $100,000
for each bank. At September 30, 1998, the Company's uninsured cash balances
amounted to approximately $142,500.
6. Inventory is stated at cost or market, whichever is lower. Cost is
determined by the first-in, first-out method.
7. Certain reclassifications have been made to the prior period financial
statements to conform to the current period presentation.
F-17
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE C -- SALES OF COMMON STOCK
On October 22, 1996, the Company 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.
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 at $2.25 a share, for a total of $1,494,994.
During the first quarter of 1998, the Company sold 660,000 restricted
shares of common stock in connection with several private placement
transactions for an aggregate amount of $1,485,000. The costs in connection
with these sales amounted to approximately $50,000.
During the second quarter of 1998, the Company issued 215,000
restricted shares of common stock with a fair value of $194,000, in
connection with legal, consulting and other services rendered on behalf of
the Company.
NOTE D -- STOCK OPTION PLAN
On July 1, 1996, WWES adopted the 1966 Stock Option Plan (the Plan), which
provides for the issuance of qualifying options to purchase 500,000 shares.
Nonqualified options may also be granted. At December 31, 1997, there were
435,000 qualifying options outstanding at prices ranging from $2.00 to $2.875,
per share. Nonqualifying options outstanding amounted to 423,500 shares at
$2.875, per share.
On January 28, 1998, the Board of Directors of WWES authorized the issuance
of 320,000 nonqualifying options, exercisable at $1.50 a share.
On September 10, 1998, the Board of Directors of WWES approved the issuance
of 1,083,000 nonqualifying options, exercisable at $1.438 to $2.875, a share. In
addition, warrants to purchase 225,000 shares of Common Stock were issued at a
price of $2.00, a share.
NOTE E -- COMMITMENTS AND OTHER MATTERS
The Company has entered into long-term management contracts with a number
of professional boxers, football players and basketball players. The Company
receives varying rates of purses, contracts, public appearances and
compensation, depending upon the sport and applicable rules of the professional
sports associations.
The Company has entered into employment agreements with key executives
which are for five year terms from inception, and include, among other things,
signing bonuses, automobile allowances and additional bonuses based upon agreed
upon circumstances.
The minority stockholders of WWBM and WWFM have entered into stockholder
agreements with WWES, providing that, in the event WWES desires to sell all of
its shares in these subsidiaries to an unrelated third party, then the minority
stockholders are required to sell all of their shares to the purchaser to
effectuate a share exchange. Other provisions are included in the agreements
governing termination of employment and loans and exchanges with the minority
stockholders.
F-18
<PAGE>
<PAGE>
_____________________________ _____________________________
NO UNDERWRITER, DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED
IN THIS PROSPECTUS. YOU SHOULD NOT RELY ON SUCH INFORMATION OR REPRESENTATIONS
AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITER. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHOULD, UNDER ANY
CIRCUMSTANCES, BE DEEMED TO BE A REPRESENTATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER
OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary......................................................................................... 3
Risk Factors............................................................................................... 7
Use of Proceeds............................................................................................ 12
Price Range of Common Stock................................................................................ 13
Dividend Policy............................................................................................ 13
Capitalization............................................................................................. 14
Selected Financial Data.................................................................................... 15
Management's Discussion and Analysis of Financial Condition and Plan of Operation.......................... 16
Business................................................................................................... 20
Management................................................................................................. 27
Principal Stockholders..................................................................................... 30
Certain Transactions....................................................................................... 31
Description of Securities.................................................................................. 32
Underwriting............................................................................................... 34
Legal Matters.............................................................................................. 36
Experts.................................................................................................... 36
Additional Information..................................................................................... 36
Index to Financial Statements.............................................................................. F-1
</TABLE>
WORLDWIDE
ENTERTAINMENT &
SPORTS CORP.
MINIMUM OF 2,400,000 SHARES AND A
MAXIMUM OF 3,466,667 SHARES
OF COMMON STOCK
-------------------------
PROSPECTUS
-------------------------
BELL INVESTMENT
GROUP INC.
NOVEMBER , 1998
_____________________________ _____________________________
<PAGE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The following states the general effect of all statutes, charter
provisions, by-laws, contracts or other arrangement under which any controlling
person, director or officer of the Company is insured or indemnified in any
manner against liability which he may incur in his capacity as such:
Article SIXTH of the Certificate of Incorporation of the Company
provides, in pertinent part:
(5) The Corporation shall, to the full extent permitted by Section
145 of the Delaware General Corporation Law, as amended, from time to
time, indemnify all persons whom it may indemnify pursuant thereto.
(6) A director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
the directors duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware Law, or (iv) for any transaction from which
the director derived an improper personal benefit.
(7) Each person who was or is made a party or is threatened to be
made a party to or is involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative (hereinafter a
'proceeding'), by reason of the fact that he or she, or a person of whom
he or she is the legal representative, is or was a director or officer,
of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
Corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans,
whether the basis of such proceeding is alleged action in an official
capacity as a director, officer, employee or agent or in any other
capacity while serving as a director, officer, employee or agent, shall
be indemnified and held harmless by the Corporation to the fullest
extent authorized by the Delaware General Corporation Law, as the same
exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment), against
all expense, liability and loss (including attorneys fees, judgments,
fines, ERISA excise taxes or penalties and amounts paid or to be paid in
settlement) reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a person who has
ceased to be a director, officer, employee or agent and provided,
however, that, except as provided in paragraph (7) hereof, the
Corporation shall indemnify any such person seeking indemnification in
connection with a proceeding (or part thereof) initiated by such person
only if such proceeding (or part thereof) was authorized by the board of
directors of the Corporation. The right to indemnification conferred in
this Article SIXTH shall be a contract right and shall include the right
to be paid by the Corporation the expenses incurred in defending any
such proceeding in advance of its final disposition; provided, however,
that if the Delaware General Corporation Law requires, the payment of
such expenses incurred by a director or officer in his or her capacity
as a director or officer (and not in any other capacity in which service
was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in
advance of the final disposition of a proceeding, shall be made only
upon delivery to the Corporation of an undertaking, by or on behalf of
such director or officer to repay all amounts so advanced if it shall
ultimately be determined that such director or officer is not entitled
to be indemnified under this Article SIXTH or otherwise. The Corporation
may, by action of its Board of Directors, provide indemnification to
employees and agents of the Corporation with the same scope and effect
as the foregoing indemnification of directors and officers.
(8) If a claim under paragraph (6) of the Article SIXTH is not paid
in full by the Corporation within thirty days after a written claim has
been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid
II-1
<PAGE>
<PAGE>
amount of the claim and, if successful in whole or in part, the claimant
shall be entitled to be paid also the expenses of prosecuting such
claim. It shall be a defense to any such action (other than an action
brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the Corporation)
that the claimant has not met the standards of conduct which make it
permissible under the Delaware General Corporation Law for the
Corporation to indemnify the claimant for the amount claimed, but the
burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because
he or she has met the applicable standard of conduct set forth in the
Delaware General Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent legal
counsel, or its stockholders) that the claimant has not met such
applicable standard or conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable
standard of conduct.
(9) The right to indemnification and the payment of expenses
incurred in defending a proceeding in advance of its final disposition
conferred in this Article SIXTH shall not be exclusive or any other
right which any person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, by-law; agreement, vote
of stockholders or disinterested directors or otherwise.
(10) The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the
Corporation or another Corporation, partnership, joint venture, trust or
other enterprise against any such expense, liability or loss, whether or
not the Corporation would have the power to indemnify such person
against such expense, liability or loss under the Delaware General
Corporation Law.
The Company's amended and restated By-Laws provides, in pertinent part:
Article IV. Indemnification. Each director or officer who the
Corporation is empowered to indemnify pursuant to the General Corporation
Law (or any applicable law at the time in effect) shall be indemnified by
the Corporation to the full extent permitted thereby. The foregoing right
of indemnification shall not be deemed to be exclusive of any other such
rights to which those directors and officers seeking indemnification from
the Corporation may be entitled, including, but not limited to, any rights
of indemnification to which they may be entitled pursuant to any agreement,
insurance policy, other by-law or charter provision, vote of shareholders
or directors, or otherwise. No repeal of amendment of this Article IV shall
adversely affect any rights of any person pursuant to this Article IV which
existed at the time of such repeal or amendment with respect to acts or
omissions occurring prior to such repeal or amendment.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the Company's estimates of the expenses to
be incurred by it in connection with the issuance and distribution of the
securities being registered, other than underwriting discounts and commissions:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............................... $ 2,148
NASD registration fee............................................................. 1,278
NASDAQ listing fee................................................................ 7,500
Printing registration statement and other documents............................... 75,000
Fees and expenses of Registrant's counsel......................................... 150,000
Underwriter's expense allowance................................................... 195,000
Underwriter's consulting fee...................................................... 90,000
Accounting fees and expenses...................................................... 20,000
Blue Sky expenses................................................................. 20,000
Miscellaneous..................................................................... 9,074
--------
Total........................................................................ $570,000
--------
--------
</TABLE>
II-2
<PAGE>
<PAGE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
Described below is information regarding all securities that have been
issued by the Company over the past three years without registering the
securities under the Securities Act.
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 November 1995, the Company entered into an Asset Acquisition Agreement
with Shannon Briggs Boxing I, L.P. (the 'Briggs Partnership') to acquire all of
the assets of the Briggs Partnership. Marc Roberts is the sole shareholder of
the general partner of the Briggs Partnership, S.B. Champion Management, Inc. In
accordance with the terms of the Asset Acquisition Agreement, the existing
management agreement with Shannon Briggs was terminated, and a new management
agreement was entered into between the Company and Shannon Briggs. Pursuant to
the Asset Acquisition Agreement, the Company was authorized to issue to the
Briggs Partnership 500,000 shares of Common Stock.
In December 1995, Marc Roberts assigned all of his shares in Merciless
Management Inc., The Natural Management Inc. Marc Roberts Inc., S.B. Champion
Management, Inc. and Marc Roberts Boxing, Inc., to the Company in exchange for
an additional 239,164 shares of Common Stock. Each of those companies was
subsequently merged into the Company.
In May 1996, the Company agreed to issue 33,334 shares of its Common Stock
to Summit Management Group in connection with the execution of a Consulting
Agreement between the Company and Summit Management Group.
On July 15, 1997, the Company sold 100,000 shares of restricted common
stock in a private offering for $125,000.
On August 19, 1997, the Company issued 250,000 shares of restricted common
stock, with a fair value of $157,500, for consulting services rendered by a
consulting firm.
On September 16, 1997, the Company 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, pursuant to Rule 506 of Regulation D
promulgated under the Act, the Company sold 664,442 shares of restricted common
stock in a private placement at $2.25 a share, for a total of $1,494,994.
During the first quarter of 1998, the Company sold 660,000 restricted
shares of common stock in connection with several private placement transactions
pursuant to Rule 506 of Regulation D, promulgated under the Act, for an
aggregate amount of $1,485,000. The costs in connection with these sales
amounted to approximately $50,000.
During the second quarter of 1998, the Company issued 215,000 restricted
shares of common stock, with a fair value of $194,000, in connection with legal,
consulting and other services rendered on behalf of the Company.
Except as otherwise indicated above, the above transactions were private
transactions not involving a public offering and were exempt from the
registration provisions of the Securities Act of 1933, as amended, pursuant to
Section 4(2) thereof. No underwriter was engaged in connection with the
foregoing sales of securities.
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<PAGE>
ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------------ -----------------------------------------------------------------------------------------------------
<C> <S>
1.1* -- Form of Underwriting Agreement.
1.2* -- Form of Selected Dealers Agreement.
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, Merciles 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.
4.4* -- Form of Underwriter's Share Purchase Warrant.
4.5* -- Escrow Agreement among the Underwriter, the Company and Liberty Bank of New York.
5.1+ -- Opinion of Parker Duryee Rosoff & Haft A Professional Corporation.
10.1** -- 1996 Stock Option Plan.
10.2** -- Employment Agreement between Registrant and Marc Roberts.
10.3** -- Employment Agreement between Registrant and Ryan Schinman.
10.4** -- Management Agreement between the Registrant and Shannon Briggs.
10.5** -- Management Agreement between the Registrant and Tracy Patterson.
10.6** -- Management Agreement between Registrant and Charles Murray.
10.7** -- Management Agreement between Registrant and Ray Mercer.
10.8** -- Form of Subscription Agreement between Registrant and Private Placement Investors.
10.9** -- Asset Purchase Agreement between Registrant and Shannon Briggs I, L.P., as amended.
10.10** -- Asset Purchase Agreement between the Company and Erik Rudolph.
10.11** -- Asset Purchase Agreement between the Company and Michael Goodson.
10.12** -- Shareholder's Agreement among the Company, Erik Rudolph and Michael Goodson.
10.13** -- Omitted.
10.14*** -- Employment Agreement between the Company and Joel Segal.
10.15*** -- Shareholder's Agreement among the Company, Joel Segal and WWFM.
21.01*** -- Subsidiaries of the Registrant.
23.01 -- Consent of Friedman Alpren & Green LLP.
23.02 -- Consent of Rosenberg Rich Baker Berman & Company AP.
23.03+ -- Consent of PDRH (included in Exhibit 5.1).
24.01 -- Power of Attorney (contained on signature page).
</TABLE>
- ------------
* Previously filed.
** Incorporated by reference to the Company's Registration Statement on Form
SB-2, File No. 333-08855 deemed effective by the Securities and Exchange
Commission on October 22, 1996.
*** Incorporated by reference to the Company's filing on Form 10-K for the
fiscal year 1997 filed with the Securities and Exchange Commission on April
9, 1997.
+ To be filed by amendment.
ITEM 28. UNDERTAKINGS.
The Company hereby undertakes to file, during any period in which offers or
sales are being made, a post-effective amendment to this Registration Statement
(i) to include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933; (ii) to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement;
notwithstanding the foregoing, any increase or decrease in volume of
II-4
<PAGE>
<PAGE>
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the 'Calculation of Registration Fee'
table in the effective registration statement; and (iii) to include any material
information with respect to the plan of distribution not previously disclosed in
the registration statement or any material change to such information in the
registration statement.
The Company hereby undertakes that, for the purpose of determining any
liability under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
The Company hereby undertakes to remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
The Company hereby undertakes to provide to the Underwriters at the closing
specified in the Underwriting Agreement, certificates in such denominations and
registered in such names as required by the Underwriters to permit prompt
delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
Company, the Company has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Company
of expenses incurred or paid by a director, officer or controlling person of the
Company in the successful defense of any action suit or proceeding) is asserted
by such director, officer or controlling person in connection with the
securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
For purposes of determining any liability under the Securities Act of 1933,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-5
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
hereby certifies that it has reasonable grounds to believe that it meets all of
the requirements of filing on Form SB-2 and authorizes this Amendment to this
registration statement to be signed on its behalf by the undersigned, in the
City of New York, State of New York, on November 19, 1998.
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
By: /s/ MARC ROBERTS
....................................
MARC ROBERTS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to this registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------------------- -------------------
<C> <S> <C>
/s/ MARC ROBERTS Director, President and Chief Executive November 19, 1998
......................................... Officer (Principal executive officer)
(MARC ROBERTS)
/s/ ROY ROBERTS Director (Principal accounting November 19, 1998
......................................... and financial officer)
(ROY ROBERTS)
* Director November 19, 1998
.........................................
(ALLAN COHEN)
* Director November 19, 1998
.........................................
(DAN DRYKERMAN)
/s/ (HERBERT KOZLOV) Director November 19, 1998
.........................................
(HERBERT KOZLOV)
* Director November 19, 1998
.........................................
(HARVEY SILVERMAN)
/s/ MARC ROBERTS
.............................................
* By Marc Roberts Attorney-in-Fact
</TABLE>
II-6
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
__________ shares of Common Stock
SELECTED DEALERS AGREEMENT
__________, 1998
Dear Sirs:
Bell Investment Group, Inc. ("Bell") is the Underwriter named in the
Prospectus dated November __, 1998. The Underwriter has agreed to sell, on a
"best efforts" basis, and subject to the terms and conditions set forth in the
Underwriting Agreement referred to in the Prospectus, a minimum of _________ and
a maximum of __________ shares of common stock (the "Common Stock") so as to
generate gross proceeds to Worldwide Entertainment & Sports Corp. (the
"Company") of between $4,500,000 and $6,500,000. The Common Stock, and the terms
upon which they are to be offered for sale by the Underwriter, are more
particularly described in the Prospectus.
1. The Common Stock is to be offered to the public by the Underwriter at a
price of $ ___ per share of Common Stock (herein called the "Public
Offering Price") and in accordance with the terms of the offering set
forth in the Prospectus.
2. The Underwriter is offering, subject to the terms and conditions hereof,
a portion of the Common Stock for sale to certain dealers which are
members of the National Association of Securities Dealers, Inc. ("NASD")
and agree to comply with the provisions of NASD Conduct Rule 2740 of
such Association and to foreign dealers or institutions ineligible for
membership in said Association which agree (a) not to resell Securities
(i) to purchasers located in, or to persons who are nationals of, the
United States of America or (ii) when there is a public demand for the
Securities to persons specified as those to whom members of said
Association participating in a distribution may not sell and (b) to
comply, as though such foreign dealer or institution were a member of
such Association, with Rules 2730, 2740, 2420 (to the extent applicable
to foreign nonmember brokers or dealers) and Rule 2750 of such Rules
(such dealers and institutions agreeing to purchase Common Stock and/or
Warrants hereunder being hereinafter referred to as "Selected Dealers")
at the Public Offering Price less a selling concession of $ ___ per
share of Common Stock, payable as hereinafter provided, out of which
concession an amount not exceeding $ ___ per share of Common Stock may
be reallowed by Selected Dealers to members of the National Association
of Securities Dealers, Inc. or to foreign dealers or institutions
ineligible for membership therein which agree as aforesaid. The
Underwriters may be included among the Selected Dealers.
<PAGE>
<PAGE>
3. The Underwriter shall act as your representative under this Agreement
and shall have full authority to take such action as the Underwriter may
deem advisable in respect to all matters pertaining to the public
offering of the Common Stock.
4. If you desire to purchase any of the Common Stock, your application
should reach us promptly by telephone or facsimile at the office of the
Underwriter, and we will use our best efforts to fill the same. We
reserve the right to reject all subscriptions in whole or in part, to
make allotments and to close the subscription books at any time without
notice. The shares of Common Stock allotted to you will be confirmed,
subject to the terms and conditions of this Agreement.
5. The privilege of purchasing the shares of Common Stock is extended to
you by the Representative only if they may lawfully sell the Common
Stock to dealers in your state.
6. Any of the shares of Common Stock purchased by you under the terms of
this Agreement may be immediately reoffered to the public in accordance
with the terms of the offering set forth herein and in the Prospectus,
subject to the securities laws of the various states. Neither you nor
any other person is or has been authorized to give any information or to
make any representations in connection with the sale of the Common Stock
other than as contained in the Prospectus.
7. This Agreement will terminate when we shall have determined that the
public offering of the Common Stock has been completed and upon
telegraphic notice to you of such termination, but, if not previously
terminated, this Agreement will terminate at the close of business on
the 20th full business day after the date hereof; provided, however,
that we shall have the right to extend this Agreement for an additional
period or periods not exceeding 20 full business days in the aggregate
upon telegraphic notice to you. Promptly after the termination of this
Agreement there shall become payable to you the selling concession on
all shares of Common Stock which you shall have sold hereunder and which
shall not have been sold or contracted for (including certificates
issued upon transfer) by us, in the open market or otherwise (except
pursuant to Section 10 hereof), during the terms of this Agreement for
the account of the Underwriter.
8. For the purpose of stabilizing the market in the Common Stock of the
Company, we have been authorized to make purchases and sales thereof, in
the open market or otherwise.
9. You agree to advise us from time to time, upon request, prior to the
termination of this Agreement, of the number of Common Stock sold by you
hereunder and remaining unsold at the time of such request, and, if in
our opinion any such Common Stock shall be needed to make delivery of
the Common Stock sold for the account of the Underwriter, you will,
forthwith upon our request, grant to us, or such party as we determine
for, our account the right, exercisable promptly after receipt of notice
from you that such right has been granted, to purchase, at the Public
Offering Price less the selling concession as we shall determine,
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<PAGE>
such number of shares of Common Stock owned by you as shall have been
specified in our request.
10. On becoming a Selected Dealer and in offering and selling the Common
Stock, you agree to comply with all applicable requirements of the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934
and the NASD Conduct Rules.
11. Upon application, you will be informed as to the jurisdictions in which
we have been advised that the Common Stock have been qualified for sale
under the respective securities or blue sky laws of such jurisdictions,
but we assume no obligation or responsibility as to the right of any
Selected Dealer to sell the Common Stock in any jurisdiction or as to
any sale therein.
12. Additional copies of the Prospectus will be supplied to you in
reasonable quantities upon request.
13. It is expected that public advertisement of the Common Stock will be
made on the first day after the effective date of the Registration
Statement. Twenty-four (24) hours after such advertisement shall have
appeared but not before, you will be free to advertise at your own
expense, over your own name, subject to any restrictions of local laws,
but your advertisement must conform in all respects to the requirements
of the Securities Act of 1933, as amended, and we will not be under any
obligation or liability in respect of your advertisement.
14. No Selected Dealer is authorized to act as our agent or to make any
representation as to the existence of an agency relationship otherwise
to act on our behalf in offering or selling the Common Stock to the
public or otherwise.
15. We shall not be under any liability for or in respect of the value,
validity or form of the certificates for the shares of Common Stock,
or delivery of the certificates for the Common Stock, or the
performance by anyone of any agreement on his part, or the
qualification of the Common Stock for sale under the laws of any
jurisdiction, or for or in respect of any matter connected with this
Agreement, except for lack of good faith and for obligations expressly
assumed by us in this Agreement. The foregoing provisions shall be
deemed a waiver of any liability imposed under the Securities Act
of 1933.
16. Payment for the Common Stock sold to you hereunder is to be made at the
Public Offering Price, less the above mentioned selling concession at
such time and date as we may advise, at the office of
________________________, by certified or official bank check payable to
the order of Bell Investment Group, Inc. in current New York Clearing
House funds at such place as we shall specify on one day's notice to you
against delivery of certificates for the Common Stock.
3
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17. Notice to us should be addressed to us at the office of Bell Investment
Group, Inc, 75 Maiden Lane - 10th Floor, New York, NY 10038. Notices to
you shall be deemed to have been duly given if faxed or mailed to you at
the address to which this letter is addressed.
18. If you desire to purchase any of the Common Stock, please confirm your
application by signing and returning to us your confirmation on the
duplicate copy of this letter enclosed herewith even though you have
previously advised us thereof by telephone or facsimile.
Dated: __________, 1998
Bell Investment Group, Inc.
By: _________________________________
Accepted and agreed:
this ____ day of , 1998.
By: __________________________________
4
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<PAGE>
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE SECURITIES MAY NOT BE
SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES LAWS, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED AND THAT THE
SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR TRANSFER IS IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES LAWS.
NOT EXERCISABLE PRIOR TO __________ , 1999. VOID AFTER 5:00 P.M., NEW YORK
TIME, _________, 2003.
_____________________ (_______) WARRANTS
UNDERWRITER'S WARRANT
Dated: _________ , 1998
THIS CERTIFIES THAT, in consideration of $10.00 duly paid, Bell
Investment Group, Inc. ("Bell" or the "Underwriter"), or its registered assigns
(being such a registered assign, a "Holder"), is the owner of this Warrant (the
"Underwriter's Warrant") to purchase from Worldwide Entertainment & Sports
Corp., a Delaware corporation (the "Company"), during the period and at the
prices hereinafter specified, up to _______ shares (the "Shares"), of the
Company's common stock (the "Common Stock"). This Underwriter's Warrant is
issued pursuant to an Underwriting Agreement dated __________ , 1998, between
the Company and the Underwriter in connection with a secondary public offering
(the "Public Offering") through the Underwriter of a number of shares of Common
Stock so as to generate gross proceeds to the Company of a minimum of $4,500,000
and a maximum of $6,500,000. The Shares issuable pursuant to the Underwriter's
Warrant shall have the same terms and conditions as the shares of Common Stock,
as described under the caption "Description of Securities" in the Company's
Registration Statement on Form SB-2, File No. 333 -_____, as amended, (the
"Registration Statement"), except that the Holder shall have registration rights
under the Securities Act of 1933, as amended (the "Act"), for the Underwriter's
Warrant.
1. The rights represented by this Underwriter's Warrant shall be
exercisable at the prices and during the period specified below, upon the terms
and subject to the conditions set forth herein:
1
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<PAGE>
(a) During the period from the date hereof to ________, 1999,
12 months from the effective date of the Registration
Statement (the "Effective Date") inclusive, the Holder
shall have no right to purchase any Shares hereunder.
(b) Between _________, 1999 and ________, 2003, four years
from the effective date (the "Expiration Date") inclusive,
the Holder shall have the option to purchase the Shares
hereunder, the purchase price of the Shares being 120%
above the public offering price of the Common Stock.
(c) After the Expiration Date, the Holder shall have no right
to purchase any Shares hereunder and this Underwriter's
Warrant shall expire at 5:00 P.M. on such date.
2. (a) The rights represented by this Underwriter's Warrant may be
exercised at any time within the periods above specified, in whole or in part,
by (i) the surrender of this Underwriter's Warrant (with the purchase form at
the end hereof properly executed) at the principal executive office of the
Company (or such other office or agency of the Company as it may designate by
notice in writing to the Holder at the address of the Holder appearing on the
books of the Company); (ii) payment to the Company of the exercise price then in
effect for the number of Shares specified in the above-mentioned purchase form
together with applicable stock transfer taxes, if any; and (iii) delivery to the
Company of a duly executed agreement signed by the person(s) designated in the
purchase form to the effect that such person(s) agree(s) to be bound by the
provisions of Paragraph 6 and Paragraphs 7(b), (c) and (d). This Underwriter's
Warrant shall be deemed to have been exercised, in whole or in part to the
extent specified, immediately prior to the close of business on the date the
Underwriter's Warrant is surrendered and payment is made in accordance with the
foregoing provisions of this Paragraph 2, and the person or persons in whose
name or names the certificates for the Shares shall be issuable upon such
exercise shall become the Holder or Holders of record of such Shares at that
time and date. Certificates representing the Shares so purchased shall be
delivered to the Holder within a reasonable time, not exceeding ten (10) days,
after the rights represented by this Underwriter's Warrant shall have been so
exercised.
(b) Notwithstanding anything to the contrary contained in
subparagraph (a) of Paragraph 2, the Holder may elect to exercise this
Underwriter's Warrant in whole or in part by receiving Shares equal to the value
(as determined below) of this Underwriter's Warrant at the principal office of
the Company together with notice of such election in which event the Company
shall issue to the Holder a number of Shares computed using the following
formula:
X = Y(A-B)
----------
A
Where: X = the number of Shares to be issued to the Holder;
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Y = the number of Shares to be exercised under this
Underwriter's Warrant;
A = the current fair market value of one share of
Common Stock (calculated as described below); and
B = the Share Exercise Price, as the case may be.
As used herein, the current fair market value of one share of
Common Stock shall mean the greater of (x) the average of the closing prices of
the Company's Common Stock sold on all securities exchanges on which the Common
Stock may at the time be listed and the NASDAQ National Market, or, if there
have been no sales on any such exchange or the NASDAQ National Market on such
day, the average of the highest bid and lowest asked price on such day on The
Nasdaq Stock Market or otherwise in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization (the "Market Price"), on the trading day immediately
preceding the date notice of exercise of this Underwriter's Warrant is given or
(y) the average of the Market Price per share of Common Stock for the five
trading days immediately preceding the date notice of exercise of this
Underwriter's Warrant is given. If on any date for which the Market Price per
share of Common Stock is to be determined the Common Stock is not listed on any
securities exchange or quoted on the NASDAQ National Market or on The Nasdaq
Stock Market or otherwise in the over-the-counter market, the Market Price per
share of Common Stock shall be the highest price per share which the Company
could then obtain from a willing buyer (not a current employee or director) for
shares of Common Stock sold by the Company, from authorized but unissued shares,
as determined in good faith by the Board of Directors of the Company, unless
prior to such date the Company has become subject to a merger, acquisition or
other consolidation pursuant to which the Company is not the surviving party, in
which case the Market Price per share of Common Stock shall be deemed to be the
value received by the Holders of the Company's Common Stock for each share
thereof pursuant to the Company's acquisition.
3. The Underwriter's Warrant shall not be transferred, sold, assigned,
pledged or hypothecated (other than by will or pursuant to the laws of descent
and distribution) for a period of one year commencing on ________, 1999, except
that it may be transferred to successors of the Holder, and may be assigned in
whole or in part to any person who is an officer or partner of the Underwriter
or to any member of the selling group during such period. Any such assignment
shall be effected by the Holder by (i) executing the form of assignment at the
end hereof and (ii) surrendering this Underwriter's Warrant for cancellation,
together with the duly executed form of assignment, at the office or agency of
the Company referred to in Paragraph 2 hereof, accompanied by a certificate
(signed by a duly authorized officer, agent, member or other representative, as
the case may be, of the Holder), stating that each transferee is a permitted
transferee under this Paragraph 3; whereupon the Company shall issue, in the
name or names specified by the Holder a
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new Underwriter's Warrant(s) of like kind and representing in the aggregate
rights to purchase the same number of Shares as are purchasable hereunder.
4. The Company covenants and agrees that all Shares issuable upon
exercise of this Underwriter's Warrants and all Common Stock issuable upon
exercise of the Warrants underlying this Underwriter's Warrants (the "Warrant
Shares") will, upon issuance thereof and receipt by the Company of payment of
the purchase price therefor in accordance with the terms hereof, be duly and
validly issued, fully paid and nonassessable and no personal liability will
attach to the Holder thereof. The Company further covenants and agrees that
during the period within which the Underwriter's Warrant may be exercised, the
Company will at all times have authorized and reserved a sufficient number of
shares of its Common Stock to provide for the exercise of the Underwriter's
Warrant included therein.
5. The Underwriter's Warrant shall not entitle the Holder to any voting
rights or other rights as stockholder of the Company.
6. (a)(i) During the period of seven years from the Effective Date the
Company shall advise the Underwriter, whether the Underwriter holds this
Underwriter's Warrant or has exercised this Underwriter's Warrant and holds
Shares or Warrant Shares, by written notice at least thirty days prior to the
filing of any post-effective amendment to the Registration Statement or of any
new registration statement or post-effective amendment thereto under the Act,
covering any securities of the Company, for its own account or for the account
of others, except for any registration statement filed on Form S-4 or S-8
(including a Form S-3 related to a Form S-8) and will, for a period of seven
years from the Effective Date, upon the request of the Holder made during such
seven year period, and subject to Paragraph 6(a)(ii), include in any such
post-effective amendment or new registration statement such information as may
be required to permit a public offering of this Underwriter's Warrant, the
Shares, the Warrant Shares (collectively, the "Registerable Securities");
provided that this Paragraph 6(a) shall not apply to any registration statement
filed pursuant to Paragraph 6(b) hereof; and provided, further, that,
notwithstanding the foregoing, the Holder shall have no right to include any
Registerable Securities in any new registration statement or post-effective
amendment thereto unless as of the effective date thereof, the Registration
Statement (as it may hereafter be amended or supplemented) or any new
registration statement under which the Registerable Securities are registered
shall have ceased to be effective or as the prospectus contained therein shall
have ceased to be current. The Company shall supply prospectuses and such other
documents as the Holder may reasonably request in order to facilitate the public
sale or other disposition of the Registerable Securities, use its best efforts
to register and qualify any of the Registerable Securities for sale in such
states as the Holder designates, and do any and all other acts and things which
may be necessary or desirable to enable the Holder to consummate the public sale
or other disposition of the Registerable Securities, all at no expense to the
Holder or the Underwriter, and furnish indemnification in the manner provided in
Paragraph 7 hereof; provided, that, without limiting the foregoing, the Company
shall not be obligated to execute or file any general consent to service of
process or to qualify as a foreign corporation to do business under the laws of
any such jurisdiction.
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The Holder shall furnish information and indemnification as set forth in
Paragraph 7. The Company shall continue to advise the Holders of the
Registerable Securities of its intention to file a registration statement or
amendment pursuant to this Paragraph 5(a) until the earliest of (i) seven years
from the Effective Date; (ii) such time as all of the Registerable Securities
have been registered and publicly sold under the Act; or (iii) such time as in
the opinion of legal counsel to the Company, which counsel shall be reasonably
acceptable to the Holder, the Registerable Securities may be offered and sold by
the Holders thereof without being registered under the Act and any applicable
state securities laws and such securities, upon receipt by the purchasers
thereof pursuant to such sale, will not constitute "restricted securities," as
such term is defined in Rule 144 under the Act.
(ii) If the registration of which the Company gives notice is
for a registered public offering involving an underwriting, the Company shall so
advise the Holder as a part of the written notice given pursuant to Paragraph
6(a)(i). If the Underwriter thereof determines that a limitation of the number
of shares to be underwritten is required, the underwriter may exclude some or
all of the Registerable Securities from such registration (the "Excluded
Registerable Securities"); provided, however, that no other securityholder may
include any such securities in such Registration Statement if any of the
Registerable Securities have been excluded from such registration; and further
provided that the Company will file a new Registration Statement covering the
Excluded Registerable Securities, at the Company's expense, within six months
after the completion of such underwritten offering.
(b) On any one occasion only, if any 50.1% Holder (as defined
below) shall give notice to the Company at any time during the three year period
beginning one year from the Effective Date to the effect that such Holder
desires to register under the Act any or all of the Registerable Securities,
under such circumstances that a public distribution (within the meaning of the
Act) of any such Registerable Securities will be involved (and the Registration
Statement or any new registration statement under which such Registerable
Securities are registered shall have ceased to be effective or the Prospectus
contained therein shall have ceased to be current), then the Company will
promptly, but no later than 60 days after receipt of such notice at the
Company's option, file a post-effective amendment to the current Registration
Statement or a new registration statement pursuant to the Act, so that such
designated Registerable Securities may be publicly sold under the Act as
promptly as practicable thereafter and the Company will use its best efforts to
cause such registration to become and remain effective as provided herein
(including the taking of such steps as are necessary to obtain the removal of
any stop order), provided, that such 50.1% Holder shall furnish the Company with
appropriate information in connection therewith as the Company may reasonably
request in writing. Inclusive of this demand right shall be that the 50.1%
Holder may, at its option, request the filing of a post-effective amendment to
the current Registration Statement or a new registration statement under the
Act, inclusive of the right granted by Paragraph 6(a) on one occasion only
during the six-year period beginning one year from the Effective Date. The 50.1%
Holder may, at its option, request the registration of the Underwriter's Warrant
and/or any of the Shares underlying the Underwriter's Warrant in a registration
statement made by the Company as contemplated by Paragraph 6(a) or in connection
with a request made pursuant to this
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Paragraph 6(b) prior to acquisition of the shares of Common Stock issuable upon
exercise of the Underwriter's Warrant. The 50.1% Holder may, at its option,
request such post-effective amendment or new registration statement during the
described period with respect to the Underwriter's Warrant, or separately as to
the Common Stock issuable upon the exercise of the Underwriter's Warrant, and
such registration rights may be exercised by the 50.1% Holder prior to or
subsequent to the exercise of this Underwriter's Warrant.
Within ten days after receiving any such notice pursuant to this
Paragraph 6(b), the Company shall give notice to any other Holder of the
Underwriter's Warrant or Registerable Securities, advising that the Company is
proceeding with such post-effective amendment or registration statement and
offering to include therein the Registerable Securities held by the other
Holder, provided that they shall furnish the Company with such appropriate
information (relating to the intentions of such Holder) in connection therewith
as the Company shall reasonably request in writing. All costs and expenses of
the post-effective amendment or new registration statement shall be borne by the
Company, except that the Holder(s) shall bear the fees of their own counsel and
any underwriting discounts or commissions applicable to any of the Registerable
Securities sold by them. The Company will maintain such registration statement
or post-effective amendment current under the Act for a period of at least nine
months (and for up to an additional three months if requested by the Holder(s))
from the effective date thereof. The Company shall provide the Holder(s) with
(x) prospectuses, in such quantities as the Holder(s) may request in order to
facilitate the public sale or other disposition of the Registerable Securities,
(y) use its best efforts to register and qualify any of the Registerable
Securities for sale in such states as Holder(s) designate (z), indemnification
in the manner provided in Paragraph 7 hereof. The Company shall also deliver
promptly to the Holder, if requested, copies of all correspondence between the
Commission and the Company, its counsel or auditors and all memoranda relating
to discussions with the Commission or its staff with respect to the registration
statement and permit the Holder to do such investigation, upon reasonable
advance notice, with respect to information contained in or omitted from the
registration statement as it deems reasonably necessary to comply with
applicable securities laws or rules of the NASD. Such investigation shall
include access to books, records and properties and opportunities to discuss the
business of the Company with its officers and independent auditors, all to such
reasonable extent and at such reasonable times as the Holder shall reasonably
request.
(c) The term "50.1% Holder" as used in this Paragraph 6 shall
mean the Holder(s) of at least 50.1% of this Underwriter's Warrant, the Shares
or Warrant Shares and shall include any owner or combination of owners of such
securities, which ownership shall be calculated by determining the number of
Shares held by such owner or owners as well as the number of shares of Common
Stock then issuable upon exercise of the Underwriter's Warrant.
(d) If at any time prior to the effectiveness of the registration
statement filed in connection with an offering pursuant to this Paragraph 6(b)
the 50.1% Holder shall determine not to proceed with the registration, upon
notice to the Company and the payment to the Company by the 50.1% Holder of the
Company's expenses, if any, theretofore incurred in connection with the
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registration statement, the 50.1% Holder may terminate its participation in the
offering, and the registration statement previously filed shall not be counted
against the number of demand registrations permitted under this Paragraph 6(b).
(e) Notwithstanding the foregoing, if the Company shall furnish
to such 50.1% Holder a certificate signed by the President of the Company
stating that in the good faith judgment of the Board of Directors it would be
seriously detrimental to the Company or its stockholders for a registration
statement to be filed in the near future containing the disclosure of material
information required to be included therein by reason of the federal securities
laws, then the Company's obligation to use its best efforts to file a
registration statement shall be deferred for a period during which such
disclosure would be seriously detrimental, provided that this period will not
exceed 30 days and provided further, that the Company shall not defer its
obligation in this matter more than once in any 12 month period.
7. (a) Whenever pursuant to paragraph 6 a registration statement
relating to any Registerable Securities is filed under the Act, amended or
supplemented, the Company will indemnify and hold harmless each Holder of the
Registerable Securities covered by such registration statement, amendment or
supplement (such Holder being hereinafter called the "Distributing Holder"), and
each person, if any, who controls (within the meaning of the Act) the
Distributing Holder, and each underwriter (within the meaning of the Act) of
such securities and each person, if any, who controls (within the meaning of the
Act) any such underwriter, against any losses, claims, damages or liabilities,
joint or several, to which the Distributing Holder, any such controlling person
or any such underwriter may become subject under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any such registration statement or any
preliminary prospectus or final prospectus constituting a part thereof or any
amendment or supplement thereto, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading and will
reimburse the Distributing Holder and such controlling person or underwriter in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable in
any such case, to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made (i) in such registration statement, such
preliminary prospectus, such final prospectus or such amendment or supplement in
reliance upon and in conformity with written information furnished by such
Distributing Holder or any other Distributing Holder for use in the preparation
thereof or (ii) made in any preliminary prospectus, but corrected in the final
prospectus, as amended or supplemented.
(b) The Distributing Holder will indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed such
registration statement and such amendments and supplements thereto, and each
person, if any, who controls the Company (within the meaning of the Act) against
any losses, claims, damages or liabilities, joint or several, to which the
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Company or any such director, officer or controlling person may become subject
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue or alleged untrue statement of any material fact contained in such
registration statement or any preliminary prospectus, or final prospectus
constituting a part thereof, or any amendment or supplement thereto, or arise
out of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement, such preliminary prospectus, such final prospectus
or such amendment or supplement in reliance upon and in conformity with written
information furnished by such Distributing Holder for use in the preparation
thereof; and will reimburse the Company or any such director, officer or
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action.
(c) Promptly after receipt by an indemnified party under this
Paragraph 7 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying
party, give the indemnifying party notice of the commencement thereof, but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Paragraph 7.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in and, to the extent that it
may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Paragraph 7 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
8. This Agreement shall be governed by and in accordance with the laws
of the State of New York.
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IN WITNESS WHEREOF, Worldwide Entertainment & Sports Corp., has caused
this Underwriter's Warrant to be signed by its duly authorized officers, and
this Underwriter's Warrant to be dated as of the date first above written.
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
By: _________________________________
Name:
Title:
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PURCHASE FORM
(To be signed only upon exercise of Underwriter's Warrant)
The undersigned, the Holder of the foregoing Underwriter's Warrant,
hereby irrevocably elects to exercise the purchase rights represented by such
Warrant for, and to purchase thereunder ______, ____ Shares of WORLDWIDE
ENTERTAINMENT & SPORTS CORP., and herewith makes payment of $ therefor (or
hereby surrenders and delivers that portion of the Underwriter's Warrant having
equivalent value (as determined in accordance with the provisions of Paragraph
2(d) of the Underwriter's Warrant)), and requests that the certificates for
shares of Common Stock be issued in the name(s) of, and delivered to
_______________, whose address(es) is (are):
Dated:________________, 19
___________________________
Signature
___________________________
(Print name under signature)
(Signature must conform in all respects to
the name of Holder as specified on the face
of the Underwriter's Warrant).
___________________________
(Insert Social Security or Other Identifying
Number of Holder)
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FORM OF ASSIGNMENT
(To be executed by the registered Holder if such
Holder desires to transfer the Warrant)
FOR VALUE RECEIVED ______________________________________
hereby sells, assigns and transfers unto _________________________________
(Please print name and address of transferee)
this Warrant, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint ______________ Attorney, to transfer
the within Warrant on the books of WORLDWIDE ENTERTAINMENT & SPORTS CORP., with
full power of substitution.
Dated: _____________________________________
___________________________________
Signature
___________________________________
(Print name under signature)
(Signature must conform in all
respects to the name of Holder as
specified on the face of the
Underwriter's Warrant.)
___________________________________
(Insert Social Security or Other
Identifying Number of Holder)
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ESCROW AGREEMENT
This Escrow Agreement is made on the th day of October 1998 by and
between Worldwide Entertainment & Sports Corp., a Delaware corporation of 29
Northfield Avenue, West Orange, New Jersey 07052 (the "Company"), and Liberty
Bank of New York, 11 West 32nd Street, New York, New York 10001, (the "Bank").
WHEREAS, up to _____ shares of common stock of the Company (the
"Shares") are to be offered in a Public Offering (the "Offering") which is
expected to commence on November ___, 1998 (the "Offering Date") and to continue
until the expiration date which shall be forty five (45) days thereafter (the
"Expiration Date"), unless extended by the Company to a date forty five (45)
days thereafter (the "Extended Expiration Date"); and
WHEREAS, the Company has determined that the Offering will be withdrawn
unless subscriptions for shares generating an aggregate minimum of $4,500,000
have been received and accepted by the Company from subscribers (the
"Subscribers") prior to the Expiration Date, unless extended to the Extended
Expiration Date.
WHEREAS, the Company has determined and will agree with the Subscribers
that it will return to the Subscribers all amounts paid to the Company as
subscription payments for the Shares (the "Subscription Payments") in the event
that subscriptions for Shares aggregating at least $4,500,000 have not been
received and accepted by the Company by the Expiration Date, or the Extended
Expiration Date; and
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WHEREAS, the Company has determined and will agree with Subscribers that
the Subscription Payments will be held in escrow until subscriptions for an
aggregate of at least $4,500,000 have been received and accepted by the Company,
or in the event that subscriptions for an aggregate minimum of $4,500,000 have
not been received prior to the Expiration Date or the Extended Expiration Date
such Subscription Payments will be returned to the Subscribers without interest;
and
WHEREAS, in the event that subscriptions for $4,500,000 of Shares are
received prior to the Expiration Date or Extended Expiration Date, subscriptions
for up to an additional $2,000,000 of Shares may be received until the
Expiration Date or Extended Expiration Date;
NOW, THEREFORE, the parties hereto agree as follows:
1. The Bank agrees to act as escrow agent in accordance with the terms
hereof, and as such, to establish an appropriate segregated account (the "Escrow
Account") entitled: Worldwide Entertainment & Sports Corp. Escrow Account and to
receive for deposit therein all of the Subscription Payments.
2. All funds received from Subscribers will be delivered by the Company
to the Bank, together with the name and address of each such Subscriber and the
amounts paid by him. Checks submitted as Subscription Payments will be made
payable to the Bank, as escrow agent, and broker/dealers will transmit such
checks directly to the Bank by the next business day after receipt
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by such broker/dealers. The Bank will, upon final collection of the proceeds of
such items, credit the proceeds to the Escrow Account to be held by it under the
terms of this Escrow Agreement. Funds held in escrow by the Bank will be
invested only in investments permissible under Rule 15c2-4 of the Exchange Act
of 1934, as amended. Any item returned unpaid to the Bank on its first
presentation for payment, unless returned for payment stopped, shall be
presented again for payment and if not then paid shall be returned to the
Company.
3. The Company shall deliver to the Bank a certificate setting forth the
date when the Offering shall expire; i.e., the Expiration Date and if the
Offering be extended a certificate setting forth the Extended Expiration Date.
4. If at any time on or before the Expiration Date or Extended
Expiration Date the Company has received and accepted subscriptions for at least
$4,500,000, the Company shall so notify the Bank in writing. Upon presentation
of a certificate signed by the Company stating that the Company has received and
accepted subscriptions for at least $4,500,000, the Bank shall release to the
Company all funds in the Escrow Account.
5. If subscriptions aggregating $4,500,000 have been received as recited
in paragraph 4 and thereafter subscriptions aggregating up to an additional
$2,000,000 have been received and accepted on or before the Expiration Date or
Extended Expiration Date, the Company shall so notify the Bank in writing. Upon
presentation of a certificate signed by the Company, stating that the
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Company has received and accepted subscriptions of up to an additional
$2,000,000, the Bank shall release to the Company all additional funds in the
Escrow Account.
6. If at the Expiration Date or Extended Expiration Date, the Company
shall not have received and accepted subscriptions for at least $4,500,000, the
Company shall so notify the Bank. The Bank shall as soon as possible thereafter
cause to be distributed to each Subscriber his Subscription Payment, at the
mailing address provided by the Company. Such distribution shall be in the form
of a bank cashier's check payable to each Subscriber.
7. The Bank undertakes to perform only such duties as are expressly set
forth herein.
8. The Bank may rely and shall be protected in acting upon any written
notice, instruction or request furnished to it hereunder and believed by it to
be genuine and believed by it to have been signed or presented by the proper
party or parties.
9. The Bank shall not be liable for any action taken by it in good faith
and believed by it to be authorized or within the rights or powers conferred
upon it by this Agreement, and may consult with counsel of its own choice and
shall have full and complete authorization and protection for any action taken
or suffered by it hereunder in good faith and in accordance with the opinion of
such counsel. The Bank is not bound by the terms of any other agreement between
the parties even if it has knowledge thereof.
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10. The Company hereby agrees to pay and will pay or reimburse the Bank
upon request for all expenses, disbursements and advances, including reasonable
attorney's fees, incurred or made by the Bank in connection with carrying out
its duties hereunder, not to exceed $2,500.
11. The Company hereby agrees to indemnify the Bank for, and to hold it
harmless against any loss, liability or expense incurred without gross
negligence or willful malfeasance on the part of the Bank, arising out of or in
connection with its entering into this Agreement and carrying out its duties
hereunder, including the costs of defending itself against any claim of
liability in the premises; provided, however, that the provisions of this
paragraph shall not apply in the event of any claim, liability, loss, action,
suit or proceeding resulting from the breach by the BANK of any provisions of
this Escrow Agreement or from its gross negligence or willful malfeasance.
12. Should the Bank inform the Company that any check or instrument
entered for collection by it hereunder is uncollectible after payment of the
funds represented by such check or instrument has been made pursuant to the
terms hereof, the Bank shall deliver the returned check or instrument to the
Company.
13. All notices and communications hereunder shall be in writing and
shall be deemed to be duly given if sent by registered or certified mail, return
receipt requested, as follows:
ESCROW AGENT: Liberty Bank of New York
11 West 32nd Street
New York, New York 10001
Attn: Thomas Emery,
Senior Vice President
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COMPANY: Worldwide Entertainment & Sports Corp.
29 Northfield Avenue
West Orange, NJ 07052
Attn: Marc Roberts,
President
or at such other address as may be furnished to the other party in writing by
registered or certified mail, return receipt requested.
IN WITNESS WHEREOF, the parties have executed this Escrow Agreement on
the day and year first above written.
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
By:___________________________________
Marc Roberts, President
By:___________________________________
Roy Roberts, Chief Financial Officer
LIBERTY BANK OF NEW YORK
By:___________________________________
Thomas J. Emery, Senior Vice President
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EXHIBIT 23.01
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the inclusion in Amendment No. 2 this Registration
Statement on Form SB-2 of our report dated February 19, 1998, included in the
annual report on Form 10-KSB of the Worldwide Entertainment & Sports Corp. for
the year ended December 31, 1997 and to the reference to our firm under the
caption "Experts" in the prospectus.
Friedman Alpren & Green LLP
New York, New York
November 19, 1998
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EXHIBIT 23.02
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the inclusion in Amendment No. 2 this Registration
Statement on Form SB-2 of our report dated February 18, 1997, included in the
annual report on Form 10-KSB of the Worldwide Entertainment & Sports Corp. for
the year ended December 31, 1996 and to the reference to our firm under the
caption "Experts" in the prospectus.
Rosenberg Rich Baker Berman & Company
Maplewood, New Jersey
November 19, 1998
