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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
X Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
- - - ---
of 1934
For the quarterly period ended September 30, 1999.
__ Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from _______________ to _______________
Commission file number 000-21585
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 22-3393152
(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
29 Northfield Avenue, West Orange, New Jersey 07052
(Address of Principal Executive Offices)
(973) 325-3244
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes __X____ No ______
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.
Yes ______ No ______
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of November 10, 1999:
Common Stock, $.01 par value - 15,419,420 shares
Transitional Small Business Disclosure Format (check one):
Yes ______ No _______
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PART I.
Item 1. Financial Statements
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1999
(Unaudited)
ASSETS
<TABLE>
<S> <C>
CURRENT ASSETS
Cash and cash equivalents $ 260,259
Certificates of deposit 250,000
Accounts receivable, less allowances for doubtful accounts of $276,208 555,414
Prepaid expenses and other current assets 86,240
Due from boxers and other related parties, net of allowances of $493,295 391,664
Investment in Joint ventures and due from related parties, net of allowances
of $108,094 75,000
Inventory of memorabilia 101,638
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Total Current Assets $ 1,720,215
PROPERTY AND EQUIPMENT-AT COST, net of accumulated
Depreciation
OTHER ASSETS
Security deposit and other assets 21,538
Cash: Escrow Account 250,000
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Total Assets $ 3,269,113
-----------
</TABLE>
See notes to Unaudited Condensed Consolidated Financial Statements.
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WORLDWIDE ENTERTAINMENT & SPORTS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1999
(Unaudited)
LIABILITIES
<TABLE>
<S> <C>
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 598,197
Loans payable 37,818
Escrow funds and amounts due boxers and players 8,500
Income taxes payable 3,600
------------
Total Current Liabilities $ 648,115
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STOCKHOLDERS' EQUITY
Common stock, $.01 par value; authorized 20,000,000 shares;
shares issued, 13,100,263 shares 131,003
Additional paid-in capital 16,037,728
Accumulated deficit (13,535,383)
Demand note receivable on private issuance of Common Stock (12,350)
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2,620,998
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Total Liabilities and Stockholders' Equity $ 3,269,113
------------
</TABLE>
See notes to Unaudited Condensed Consolidated Financial Statements.
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WORLDWIDE ENTERTAINMENT & SPORTS CORP.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended September 30 Nine Months Ended September 30
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Purse income $ 1,561 $ 0 $ 38,750 $ 588,188
Commission income 1,095 771 6,095 48,063
Contract and agency fees 441,796 195,435 471,796 245,005
Endorsements and Marketing fees 111,300 161,439 273,632 225,464
Ticket revenues 70,623 0 88,496 16,324
Merchandise revenues 4,557 68,470 157,159 226,086
----------- ----------- ----------- -----------
630,932 426,115 1,035,928 1,349,130
----------- ----------- ----------- -----------
Cost of Revenues 3,932 68,132 118,932 180,918
Boxing, Training and related expenses 270,659 33,774 554,462 436,446
Promotion and other operating expenses 1,613,611 1,080,729 3,615,653 3,136,828
----------- ----------- ----------- -----------
1,888,202 1,182,635 4,289,047 3,754,192
----------- ----------- ----------- -----------
Loss from operations (1,257,270) (756,520) (3,253,119) (2,405,062)
----------- ----------- ----------- -----------
Other income:
Interest and dividend income 15,719 13,000 76,384 63,793
Other 0 2,049 0 4,221
----------- ----------- ----------- -----------
15,719 15,049 76,384 68,014
----------- ----------- ----------- -----------
Loss before income taxes (1,241,551) (741,471) (3,176,735) (2,337,048)
Income taxes and (benefit) 5,520 (256) 5,760 2,974
----------- ----------- ----------- -----------
NET LOSSES $(1,247,071) $ (741,215) $(3,182,495) $(2,340,022)
=========== =========== =========== ===========
BASIS AND DILUTED
LOSS PER SHARE
$ (0.11) $ (0.10) $ (0.28) $(.34)
=========== =========== =========== ===========
WEIGHTED AVERAGE 1,033,674 7,137,197 1,472,745 6,827,435
=========== =========== =========== ===========
</TABLE>
See notes to Unaudited Condensed Consolidated Financial Statements
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WORLDWIDE ENTERTAINMENT & SPORTS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Cash Flow from Operating Activities $(3,927,142) $(2,931,477)
Cash Flows from Investing Activities (1,754,660) 479,815
Cash Flows from Financing Activities 5,826,901 1,734,194
----------- -----------
Net Increase in Cash and Cash Equivalents 145,099 (717,468)
Cash and Cash Equivalents at Beginning of Period 115,160 745,138
----------- -----------
Cash and Cash Equivalents at End of Period $ 260,259 $ 27,670
----------- -----------
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Year for:
Income Taxes $ 5,760 $ 1,703
=========== ===========
</TABLE>
See notes to Unaudited Condensed Consolidated Financial Statements.
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WORLDWIDE ENTERTAINMENT & SPORTS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - NATURE OF ORGANIZATION AND BASIS OF PRESENTATION:
1. Nature of Organization:
Worldwide Entertainment & Sports Corp. (the "Company") was
incorporated in Delaware on August 15, 1995, for the purpose of
providing management, agency, and marketing services to professional
athletes, artists and entertainers, principally to boxers, football and
basketball players.
2. Basis of Presentation:
The Condensed Financial Statements included herein have been
prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations.
The Condensed Financial Statements included herein reflect, in the
opinion of management, all adjustments (consisting primarily only of
normal recurring adjustments) necessary to present fairly the results
for the interim periods. The results of operations for the nine months
ended September 30, 1999 are not necessarily indicative of results to be
expected for the entire year ending December 31, 1999.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1. The condensed consolidated financial statements include the accounts
of the Company and all of its subsidiaries, all of which are wholly
owned, except for Worldwide Basketball Management, Inc., which company
is 90% owned by the Company and Sportcut.com, Inc., which company is
96.5% owned by the Company. The excess of the accumulated deficits of
these majority owned subsidiaries over the equity capital thereof have
been included in the operations of the Parent Company (WWES).
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 carry forwards for Federal income tax purposes,
expiring in 2018 amounting to approximately $9,000,000. 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.
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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. At September 30, 1999, the Company's uninsured cash
balances amounted to approximately $332,000, including certificates of
deposit.
WORLDWIDE ENTERTAINMENT & SPORTS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED
6. Inventory is stated at cost or market, which ever is lower. Cost is
determined by the first-in, first-out method.
NOTE C - ISSUANCE OF COMMON STOCK
During the three months ended September 30, 1999, the Board of Directors
did not approve the issuance of any shares of common stock of WWES.
NOTE D - STOCK OPTION AND WARRANT GRANTS
During the three months ended September 30, 1999, the Board of Directors
did not approve the issuance of any options to acquire shares of common
stock of WWES.
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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 stockholder of WWBM has entered into a stockholder
agreement with WWES, providing that, in the event WWES desires to sell
all of its shares in this subsidiary to an unrelated third party, then
the minority stockholder is required to sell all of its 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 stockholder.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
General
Worldwide Entertainment & Sports Corp. was organized in August 1995,
to continue 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 Team 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.
While the Company has succeeded to the operations of these businesses, the prior
operating results of such separate businesses should not be viewed as
representative of the future results of operations of the Company.
In April 1999, the Company announced that it had formed a subsidiary,
Sportcut.com, Inc. through which the Company intends to develop and operate a
sports-themed Internet business. Subsequently, in September 1999, the Company
announced that it had put in place Jordan Schlachter as Chief Executive Officer
to lead this business. Mr. Schlachter was previously employed as Director of
Financial Planning and Analysis of NBA Properties where he was involved in
financial operations, business planning, marketing and administration. Mr.
Schlachter has a B.A. from Harvard University and a M.B.A. from New York
University. The Company has incurred significant fees and expenses in the
development of this project and has obtained approximately $3,025,000 in gross
proceeds from a private placement of Common Stock in October 1999, principally
to fund Sportcut.com's future operations.
In March 1999, the Company entered into a Joint Venture Agreement with
Munisteri Sports & Entertainment, Inc., a Texas based boxing management company,
pursuant to which the Company has
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acquired the right to receive 50% of the purses and other revenues generated by
seven heavyweight boxers under management by Munisteri Sports & Entertainment.
The Company has certain funding obligations for these boxers, currently
aggregating $7,000 per month over the next three years and may be required to
contribute an additional $50,000 over the next two years should certain revenue
targets be achieved. The seven heavyweight boxers are Ike Ibeabuchi, Obed
Sullivan, Derrick Banks, Talmadge Griffis, David Bostice, Ed Wright and Robert
Davis.
Establishing and maintaining a presence in each of the Company's areas
of concentration, (i.e., boxing management and team sports player agency)
require significant expenditures. Each sports specific division must develop a
roster of clients, establish relationships within their prospective sports and
develop support services to provide to the athletes. Only a portion of such
expenses incurred by the Company will result in the engagement by a client of
the Company's services, and it is often uncertain the extent to which, even if
retained, a target client will generate significant revenues to the Company. In
addition, the Company incurs significant training expenses for the boxers under
the Company's management, not all of which are directly reimbursed pursuant to
bout agreements for such boxers. In the development of a boxer, particularly a
young amateur boxer, into a professional boxer who can command significant
purses, such expenses can be incurred over a period of years and constitute
hundreds of thousands of dollars or more. The Company must continuously incur
such expenses in contemplation of future revenues, the receipt of which is
uncertain.
The Company's revenues are directly related to the earnings of its
clients. The Company derives revenues based upon a percentage, currently ranging
from 15% to 27-1/2%, of the boxers' purses from professional bouts. The Company
also derives revenues based upon a percentage of salaries and other income
received from contracts, endorsement arrangements and other income producing
activities of athletes for whom the Company or its management acts as agent or
representative. These percentages currently range from up to 3% or 4%,
respectively, for professional football and basketball player contracts
(although occasionally lower percentages are agreed upon) to 10% or 20% for
endorsement and marketing revenues.
The timing of receipt of revenues by the Company is subject to seasonal
variations with respect to revenues generated from the negotiation of player
contracts and subject to irregular patterns in the case of boxing purse revenues
as a result of the irregular occurrence of the bouts. In addition, the magnitude
of the Company's revenues can be expected to experience wide fluctuations based
upon the success or failure of the Company's boxers or the negotiation of player
contracts with significant bonus provisions.
Nine Months Ended September 30, 1999 Compared with Nine Months Ended September
30, 1998
Net revenues for the nine months ended September 30, 1999 were
$1,035,928 as compared to $1,349,130 for the nine months ended September 30,
1998. Purse income decreased to $38,750 for the 1999 period, as compared to
$588,188 for the 1998 period as a result of the size of the purse for a Shannon
Briggs heavyweight championship fight during the 1998 period and relatively few
bouts in the 1999 period, most of which were through joint venture arrangements,
in which the Company receives a portion of the management fee. Ticket revenues
in the 1999 period increased to $88,496 compared to 1998 revenues of $16,324. In
addition, during the nine months ended September 30, 1999, the Company
recognized merchandise revenues from the sale of memorabilia amounting to
$157,159 compared to $226,086 for the 1998 period. The nine months ended
September 30, 1999 reflect agency fees of $471,796 compared to $245,005 in the
comparable 1998 period. In addition, during the 1999 period, marketing fee
income was $273,632 as compared to $225,464 for the 1998 period. These increases
in agency and marketing revenues during the 1999 period were related to the
Company's success in representing additional professional athletes. Interest
income increased to $76,384 during the 1999 period compared to $63,793 for the
1998 period.
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Total expenses for the nine months ended September 30, 1999 increased to
$4,289,047, as compared to $3,754,192 for the nine months ended September 30,
1998. Boxing, training and related expenses increased to $554,462 for the nine
months ended September 30, 1999 from $436,446 for the 1998 period, principally
as a result of the expenses incurred in connection with the Shannon Briggs
boxing match against Frans Botha in August 1999 and additional costs incurred
with new joint venture arrangements commenced in 1999. Promotion and other
operating expenses increased from $3,136,828 for 1998 to $3,615,653 for 1999.
Such increases were attributable to start-up costs associated with the Company's
Internet venture through its Sportcut.com, Inc. subsidiary and increases in
recruiting expenses related to representation of additional athletes. Such
recruiting expenses consist largely of travel and entertainment in conjunction
with the Company's increased levels of activities in the player agency and
marketing areas by the Company during this period. The Cost of Revenues for the
nine months ended September 30, 1999 was $118,932 compared to $180,918 for the
nine months ended September 30, 1998. The Company incurred $61,986 less of
expenses related to its memorabilia business principally because it did not
organize any multi-athlete memorabilia shows during the 1999 period compared to
the 1998 period.
In addition, during the second and third quarters of 1999, the Company
invested approximately $1,632,000 in the formation of its Sportcut.com, Inc.
subsidiary including, the development of the Internet website through which
Sportcut.com will conduct its operations.
As a result of the foregoing, net loss for the nine months ended
September 30, 1999 increased to $3,182,495 as compared to $2,340,022 for the
comparable September 30, 1998 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, 1999 the Company had working capital
of $1,072,100, which amount was primarily the remaining net proceeds from the
Company's secondary public offering in the first quarter of 1999. During the
quarter, the Company invested approximately $1,624,000 on the development of its
Internet business, Sportcut.com, Inc.
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. Although the Company believes
that its current cash and cash equivalents will be sufficient to fund its
operations over the next six months or longer, there can be no assurance that
the Company will have sufficient revenues after such time to fund its operating
requirements. Accordingly, the Company may be required to seek additional
financing through bank borrowings, private or public debt or equity financing or
otherwise. There can be no assurance that any such financing will be available
to the Company on favorable terms, if at all.
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PART II.
Item 1. Legal Proceedings.
In 1999, WWBM filed a complaint against Mr. Derek Anderson in Superior
Court of New Jersey alleging, among other things, that, Mr. Anderson breached a
marketing contract between Mr. Anderson and WWBM by failing to pay WWBM an
amount equal to fifteen percent of all sums received by Mr. Anderson under the
terms of an endorsement contract between Mr. Anderson and Nike, Inc. Mr.
Anderson failed to answer such complaint and WWBM proceeded to take the
appropriate action in order to obtain a judgment against Mr. Anderson. On
November 10, 1999, the parties executed a Stipulation of Settlement settling
this action. In such Stipulation, Mr. Anderson agreed to pay WWBM the sum of
$170,817 according to a payment schedule over the next twelve months. In
addition, Mr. Anderson has agreed to pay WWBM additional sums equal to fifteen
percent (15%) of any sums received by Mr. Anderson from Nike, Inc. after the
date of the settlement under the terms of an endorsement contract between Mr.
Anderson and Nike, Inc. which endorsement contract expires on September 30,
2001.
In 1999, the Company filed an action against Mr. Darnell Jones and
Summit Management International, Inc. in New York Supreme Court to recover the
sum of $41,000 plus interest and attorneys fees due and owing under the terms of
a promissory note issued by such defendants in favor of the Company. The
defendants failed to answer such action and the Company obtained a default
judgment against them in the amount of $45,921.60. The Company is proceeding to
execute on such judgment against the defendants, although there is no assurance
regarding what recovery, if any, the Company will be able to obtain.
Item 2. Other Information
In June 1999, the Company announced that Mr. Charles Koppelman had
joined the Company's Board of Directors. Mr. Koppelman has a long and
distinguished career in the entertainment industry and is currently Chairman and
Chief Executive Officer of CAK Universal Credit Corp., a leading entertainment
finance company. He is also former Chairman and Chief Executive Officer of EMI
Records Group North America.
Pursuant to an Agreement dated as of October 12, 1999 among Charles
Koppelman ("Koppelman), Worldwide Entertainment & Sports Corporation ("The
Company") and Sportcut.com, Inc. ("Sportcut"), Koppelman agreed to serve
Chairman of Sportcut for a minimum three-year term through October 31, 2002.
Sportcut.com is developing an Internet e-commerce business dedicated to
providing viewers with live information and various products and services
related to sports and entertainment that is projected to launch in the late Fall
of 1999. At the time of the Agreement, Sportcut.com was a 96.5% owned subsidiary
of the Company.
As compensation for Koppelman's services as Chairman, The Company and
Sportcut agreed to compensate Koppelman as follows: (A) Sportcut shall issue 500
shares of Sportcut common stock representing 5% of Sportcut's outstanding
capital stock to Koppelman (reducing the Company's ownership of Sportcut.com to
its current 91.5% stake), which shall not be diluted except in the event of
either (i) an underwritten public offering of Sportcut shares or (ii) a merger,
sale or acquisition transaction involving Sportcut (except if such transaction
is with the Company or an affiliate of the Company); (B) The Company shall issue
Koppelman a warrant to purchase up to an aggregate of 375,000 shares of Common
Stock at an exercise price of $2.00 per share subject to the following
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conditions: (i) a warrant to purchase 125,000 shares of the Company in the event
that either the Company or Sportcut shall have closed upon at least a $5,000,000
investment on or before the expiration of six months from the date of such
Agreement; (ii) a warrant to purchase 125,000 shares of the Company in the event
that either the Company or Sportcut shall have closed upon at least a $7,500,000
investment on or before the expiration of twelve months from the date of such
Agreement; and (iii) a warrant to purchase 125,000 shares of the Company in the
event that either the Company or Sportcut shall have closed upon at least a
$10,000,000 investment on or before the expiration of eighteen months from the
date of such Agreement. Koppelman shall be entitled to aggregate the cumulative
amount of any investment made in the Company or Sportcut for purposes of
determining his eligibility for the issuance of the warrants described in (ii)
and (iii) above.
On September 15, 1999, the Company engaged Janssen Partners, Inc.
("Janssen") as Placement Agent to raise between $1,000,000 and $6,000,000 in a
private placement of up to 5,000,000 shares of the Company's Common Stock. The
price of the shares to be sold in the offering will be the average price of the
Company's Common Stock over the ten business days preceding any closing, less a
twenty percent (20%) discount, with a maximum share price of $2.00 per share and
minimum share price of $1.20 per share.
In order to comply with the listing rules of the Nasdaq Small Cap
Market, the Company presently must obtain the approval of its stockholders if it
intends to issue more than approximately 2,600,000 shares of its Common Stock in
a transaction. Accordingly, in order to be able to sell up to 5,000,000 shares,
Janssen is conducting the private placement in two stages. The first, by which
the Company expects to raise approximately $3,200,000 (assuming the placement of
2,600,000 shares at a per share price of $1.20), can be undertaken without
stockholder approval. On October 14, 1999 the Company raised $1,525,000 by
selling 1,138,057 shares of its Common Stock at $1.34 per share in the first
closing of the first stage of the private placement. On October 29, 1999 the
Company closed a second sale of Common Stock in the same offering selling
1,181,100 shares at $1.27 per share thereby raising an additional $1,499,997. To
date, the Company has raised $3,024,997, on sales of 2,319,157 shares.
The Company has scheduled its annual meeting of its stockholders for
December 17, 1999 and has filed a definitive Proxy Statement in connection
therewith. At such meeting, the Company shall seek stockholder approval for the
additional placement of approximately 2,400,000 shares of Common Stock in the
second stage of the Jansen private placement, as well as the issuance of certain
stock and warrant compensation to be paid to Janssen as Placement Agent. If the
stockholders approve the second stage of the financing, the Company anticipates
that it would raise an additional approximately $2,800,000 (assuming the
placement of 2,400,000 shares at a per share price of $1.20).
The Company intends to use the proceeds of the Janssen private placement
to finance the design, implementation, and launch of SportCut.com, over the next
six to twelve months and, as available, for general corporate purposes including
payroll, advertising and marketing and equipment purchases and licenses.
SportCut.com, is a 91.5% owned subsidiary of the Company, formed in April 1999.
It is in its development stages and continues to require capital to implement
its business plan to become a sports-themed e-commerce Internet business.
SportCut.com plans to operate an interactive web site at http://
www.sportcut.com through which it will disseminate sports-related information
and retail sports-related merchandise. SportCut.com is presently projected to
launch in the late Fall of 1999.
The Company has agreed to compensate Janssen for serving as the
Placement Agent in the private placement as follows:
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(i) Initially: (a) 300,000 restricted shares of Common Stock and 300,000
warrants, exercisable over five years, to acquire Common Stock at an exercise
price of $1.50 per share, which was the closing price of the Common Stock, as
reported by the NASDAQ SmallCap Market, on September 15, 1999, the date on which
the Placement Agreement was signed; (b) $100,000, and (c) a monthly consulting
fee of $10,000 for a period of six months;
(ii) If Janssen raises aggregate proceeds of at least $1,000,000,
Janssen shall receive a ten percent (10%) selling commission and a three (3%)
percent non-accountable expense allowance on aggregate proceeds raised in the
private placement;
(iii) If Janssen raises aggregate proceeds of at least $3,000,000,
Janssen shall receive an additional 300,000 restricted shares of Common
Stock and 300,000 warrants, exercisable over five years, to acquire Common
Stock at an exercise price of $1.50 per share, and the monthly consulting
fee shall increase from $10,000 per month to $20,000 per month for a term
of three years; and
(iv) If Janssen raises aggregate proceeds of $6,000,000--the maximum
amount under its agreement with the Company -- Janssen shall receive an
additional 300,000 restricted shares of Common Stock and 300,000 warrants,
exercisable over five years, to acquire Common Stock at an exercise price
of $1.50 per share, and shall also receive 250 shares of common stock of
SportCut.com, which is 5% of SportCut.com's current outstanding shares of
common stock.
In connection with the closing of the sales of an aggregate of 2,319,157
shares of the Company's Common Stock on October 14, 1999 and October 29, 1999
combined, raising approximately $3,024,997 in the aggregate, the Company paid
Janssen a 10% commission on such amount and a 3% non-accountable expense
allowance. The Company has also paid Janssen the aforementioned $100,000 sum.
Closing on $1,525,000 on October 14, 1999 triggered the commencement of the
monthly $10,000 consulting fee as well. The Company and Janssen have agreed,
however, that the issuance of all of the stock and warrant compensation to
Janssen as described above shall be subject to the approval of the Company's
stockholders at the December 17, 1999 Annual Meeting.
As of November 3, 1999 the Company, Bsquared Communications, Inc. and SportCut
entered into an Interim Agreement by which they terminated their April 23, 1999
agreement for the retention of Bsquared's services in the development and
implementation of the Sportcut Website and business plan. The Interim
Agreement set forth the terms by which the parties will continue to cooperate
with regard to the continued development of SportCut's website while
simultaneously negotiating a final settlement of their relationship prior to
November 26, 1999. In the event the parties do not reach a settlement by
such date, they have retained their rights and defenses regarding the
April 23, 1999 agreement.
13
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Worldwide Entertainment & Sports Corp.
----------------------------------------
(Registrant)
Date November 10, 1999 /s/ Marc Roberts
------------------ ----------------------------------------
Marc Roberts, President
(Principal Executive Officer)
Date November 10, 1999 /s/ Roy Roberts
------------------ ----------------------------------------
Roy Roberts, Chief Financial Officer
(Principal Financial Officer)
14
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001002325
<NAME> WORLDWIDE ENTERTAINMENT & SPORTS CORP.
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1999
<PERIOD-START> JAN-01-1999 JAN-01-1999
<PERIOD-END> SEP-30-1999 SEP-30-1999
<CASH> 260,259 260,259
<SECURITIES> 250,000 250,000
<RECEIVABLES> 555,414 555,414
<ALLOWANCES> 276,208 276,208
<INVENTORY> 101,638 101,638
<CURRENT-ASSETS> 1,720,215 1,720,215
<PP&E> 1,370,031 1,370,031
<DEPRECIATION> (92,671) (92,671)
<TOTAL-ASSETS> 3,269,113 3,269,113
<CURRENT-LIABILITIES> 648,115 648,115
<BONDS> 0 0
<COMMON> 131,003 131,003
0 0
0 0
<OTHER-SE> 16,037,728 16,037,728
<TOTAL-LIABILITY-AND-EQUITY> 3,269,113 3,269,113
<SALES> 0 0
<TOTAL-REVENUES> 630,932 1,035,928
<CGS> 3,982 118,932
<TOTAL-COSTS> 1,888,202 4,289,047
<OTHER-EXPENSES> 15,719 76,384
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (1,241,551) (3,176,735)
<INCOME-TAX> 5,520 5,760
<INCOME-CONTINUING> (1,247,071) (3,182,495)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1,247,071) (3,182,495)
<EPS-BASIC> (0.11) (0.28)
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