UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
( x ) ANNUAL REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the year ended December 31, 1997
( ) TRANSITION REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _______ to ________
Commission file number: 33-55254-46
AMERICAN SPORTS HISTORY INCORPORATED
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(Name of small business issuer in its charter)
Nevada 87-0485307
- ------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
18-I HERITAGE DRIVE, CHATHAM, NEW JERSEY 07928
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (973) 635-0665
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: None
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() No
(x)ck if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB (X)
The issuer had no revenues from continuing operations for its most recent
fiscal year ended December 31, 1997.
The aggregate market value of the voting stock held by non-affiliates of
the registrant, based on the average of the closing bid and ask prices on June
5, 1998 of $.0625 and $.53125, respectively, was $847,304.
As of June 5, 1998, the issuer had 6,795,826 shares of its common stock
issued and outstanding or to be issued.
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Documents incorporated by reference:
Description of Document
Agreement between National Logistics, Inc. and Infinet, Inc. dated
August 21, 1995.
Articles of Incorporation of National Logistics, Inc. filed in the
office of the Secretary of State of the State of Nevada on August 9,
1990.
Amendment to the Articles of Incorporation of National Logistics, Inc.
to change the name of the corporation to Fans Holdings, Inc., filed in
the office of the Secretary of State of the State of Nevada on June
30, 1995.
Amendment to the Articles of Incorporation of Fans Holdings, Inc. to
change the name of the corporation to American Sports History
Incorporated, filed in the office of the Secretary of State of the
State of Nevada on September 20, 1995.
Bylaws of National Logistics, Inc.
Purchase Agreement between American Sports History Incorporated and
Vernon Nobles dated February 2, 1996.
American Sports History 1996 Stock Incentive Plan.
Subsidiaries of the Registrant:
Infinet, Inc. - incorporated in the
state of Delaware.
Sunset Interactive Network, Inc.-incorporated in the state of
Michigan.
Transitional Small Business Disclosure Format: Yes ( ) No (X)
Total sequentially numbered page in this document:.
Exhibit index page number: 1.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
Organization:
The Company was incorporated in the state of Nevada on August 9, 1990 as
National Logistics, Inc. National Logistics, Inc. changed its name to Fans
Holdings, Inc. on June 30, 1995, and subsequently to American Sports History
Incorporated ("ASH") on September 20, 1995. On August 21, 1995, ASH acquired
100% of the capital stock of Infinet, Inc., a Delaware corporation ("Infinet").
On January 14, 1998, the Company acquired 100% of the capital stock of Sunset
Interactive Network Inc., a Michigan corporation (SIN). As used in this
document, the "Company" refers to ASH and its subsidiaries, Infinet and SIN
(effective January 14, 1998), unless the context indicates otherwise.
Business:
ASH entered into an Agreement dated August 21, 1995, pursuant to which it
acquired from Infinet's sole stockholder, Jeane Hays Nerlino, 100% of the
capital stock of Infinet, in exchange for 5,000,000 shares of ASH's restricted
common stock. The 5,000,000 shares of common stock represented approximately
83.3% of the issued and outstanding shares of ASH's common stock, which is the
only class of its equity securities issued and outstanding. At the direction of
Mrs. Nerlino, the 5,000,000 shares of common stock were issued to her husband,
Vincent M. Nerlino, and as a result, Mr. Nerlino may thus be deemed to have
acquired control of ASH from David R. Yeaman and Krista Castleton, the previous
officers and directors of ASH, and from Capital General Corporation, both of
whom may be deemed to have been the Company's "parents" and "promoters" pursuant
to the rules and regulations promulgated under the Securities Act of 1933. Mr.
Yeaman and Ms. Castleton control and have beneficial ownership of the shares of
common stock owned directly and indirectly by Capital General Corporation, and
exercise shared voting power and shared investment power with respect to such
shares.
In conjunction with its acquisition by ASH, Infinet transferred
substantially all of its assets (consisting primarily of marketable securities)
and certain of its liabilities, the net carrying value of which was
approximately $119,000 to its former sole stockholder, thereby reducing
outstanding accrued liabilities to the stockholder by the same amount.
For accounting purposes, the acquisition of Infinet by ASH was treated as a
recapitalization of Infinet, with Infinet as the acquiror (reverse acquisition).
ASH had no assets or operations prior to May 1995. The historical financial
statements prior to August 21, 1995 are those of Infinet. The business of
Infinet has historically been investing and consulting, but in conjunction with
its acquisition by ASH, the Company commenced the business of publishing a
variety of nostalgic sports magazines effective May 1, 1995. Accordingly, the
historical operations of Infinet have been classified as discontinued
operations. Although the Company has incurred significant start-up cost, since
the Company has not yet generated any revenue from operations, the Company is
still considered to be in the development stage.
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ASH had previously entered into an Agreement dated May 24, 1995, to acquire
100% of the outstanding capital stock of Fans Publishing, Inc., an Arizona
corporation ("Fans"), the publisher of "DIAMOND" magazine, a nostalgic baseball
magazine, of which Mr. Nerlino was a director and 21% shareholder. Infinet had
made non-interest bearing advances to Fans aggregating $431,751 ($434,671 at
December 31, 1994) to finance its operations. In addition, ASH made advances to
Fans for operating expenses of $80,856 during 1995. It was subsequently
determined that the acquisition of Fans by ASH was not feasible due to the
deteriorating financial condition of Fans. Accordingly, the advances to Fans by
Infinet and ASH were determined to be uncollectible and were charged to
operations during the year ended December 31, 1995. This transaction was never
consummated and no shares of ASH's common stock were issued. However, in
anticipation of the completion of this transaction, the previous officers and
directors of ASH resigned effective May 31, 1995, and Mr. Nerlino was appointed
as the sole director and President of ASH.
The Company agreed to pay Capital General corporation a fee of $150,000 for
services rendered with respect to the abandoned acquisition of Fans and the
completed acquisition of Infinet, of which $115,000 was paid. The Company also
issued 200,000 shares of common stock to Capital General Corporation for
additional services rendered during 1995, which were valued at $2,000. The
aggregate fee to Capital General Corporation of $152,000 was charged to
operations during the year ended December 31, 1995.
On January 14, 1998, the Company entered into an agreement with Sunset
Interactive Network, Inc. (SIN), a newly formed Michigan corporation, to
purchase 100% of the common stock of SIN in exchange for the issuance of 500,000
shares of ASH's common stock to be paid in four equal installments during 1998.
The president, Peter Klamka, will continue in the same capacity at SIN, as
well as be a board member of ASH.
SIN is registered as an interactive media company whose objective is to
provide entertainment information through the World Wide Web by utilizing
recognized celebrity names. Operations for SIN have not yet commenced and
start-up funding is solely dependent on successfully obtaining outside sources
of financing. Even if sufficient capital were available to commence operations,
there is no guarantee that the Company will be successful or meet its goals and
objectives.
In 1997 the Company incurred general and administrative expenses of
$246,404, lawsuit settlement expense of $122,500 and consulting fees of $2,500.
In 1996, general and administrative expenses and consulting fees were $855,129
and $307,475 respectively. The Company funded operations from the sale of stock,
loans from officers and stockholders, and issuance of stock in exchange for
services rendered.
Product Development Strategy:
The Company intends to focus its efforts on becoming a multi-media
publishing company with its primary focus on creating a web site to promote a
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historical sports magazine covering America's five major professional sports:
football, baseball, basketball, hockey and soccer. Major league sports are a
dominating interest to the American public, who not only has a passion for the
current season's highlights, but also a profound fascination with historical
statistics, former players and nostalgic moments from past famous games. The
Company was conceived to chronicle the heritage of American sports history, and
to become recognized as the definitive source for historical sports content by
sport enthusiasts of all ages. The Company intends to capitalize on the current
trend in sports nostalgia and the increased growth of the general sports
marketplace, as well as the worldwide development of, and desire for, American
sports products. The Company also intends to market sports memorabilia, and
through its entertainment division, to produce sports-related videos and
television productions.
Through the acquisition of SIN, a wholly owned subsidiary of ASH, the
Company intends to enter into the entertainment market through the World Wide
Web, with the objective of becoming the leading internet based sports historian.
While the Company had initially intended to publish hard copy magazines, it
has now decided to publish on the World Wide Web. As of June 5, 1998, the
Company had not begun the production process.
The Company has copyrighted five custom-designed logos that have been
designed for its prospective magazine. The Company intends to file a trademark
application for "American Sports History" and intends to trademark and copyright
each magazine name once publication commences.
The Company requires a minimum of approximately $5,000,000 of operating
capital through December 1999 to pay off current debt and implement its business
plan of publishing an on-line nostalgic sports magazine and entering the
entertainment industry through the internet. The Company intends to raise this
operating capital through the sale of its equity securities. However, there can
be no assurances that the Company will be successful in raising sufficient
operating capital on a timely basis, at an acceptable cost, and under acceptable
terms and conditions in order to implement its business plan. To the extent that
the Company is unable to raise the necessary operating capital, it will not be
able to implement its business plan, and it will have to curtail or cease
operations. In addition, even if the Company does raise sufficient operating
capital through the sale of its equity securities, there can be no assurances
that the net proceeds will be sufficient to enable the Company to develop its
new line of business to a level where it will generate profits and cash flows
from operations.
Marketing and Distribution:
In order to reach its intended customer, the sports and entertainment
oriented retail consumer, management intends to utilize promotional advertising
that will be coordinated both independently and cooperatively with other sports
publications, radio and television media, sports events, consumer products,
specialty retail distributors, the internet and other organizations and
associations.
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The Company intends to introduce a broad-based subscriber acquisition
program, which will include direct to consumer communications through various
media for its proposed magazine, and which may include a video premium offer.
The Company also intends to offer occasional hard copy editions of its
magazine for special events. Public announcements by the announcers in the
stadiums and messages on the stadium's electronic scoreboards will be utilized
to inform fans about the Company's magazines.
Through its wholly-owned subsidiary, SIN, the Company anticipates the sale
of retail entertainment related items such as recorded music, books, apparel,
concert tickets, gifts and collectibles, with the assistance of relationships
formed with several world renowned celebrities. The Company anticipates that
revenues will be primarily generated from on-line advertisers.
The Company will also be reviewing opportunities in the areas of bundling
and cross-promotions programs containing magazines, T-shirts and coupons.
Acquisition Of Other Assets:
On January 30, 1996, the Company issued 120,000 shares of its restricted
common stock for the acquisition of a film library consisting of 16 hours of
sports footage film and the license rights to use 36 hours of footage from the
Historic Footage film library (not related to sports). As stipulated in the
contract, the Company also agreed to issue up to an additional 120,000 shares of
common stock in the event that the initial 120,000 shares were not sufficient to
generate $600,000 of proceeds to the seller. The Company valued the 120,000
shares of common stock issued at estimated fair value of $.25 per share, and
recorded the aggregate value of such shares of $30,000 as a deposit for the film
library. As of December 31, 1997 no additional shares of stock were issued. The
Company is currently negotiating a revision of the original contract terms with
the owner of the film library. No conclusion has yet been reached. Management
believes loss of this contract will not have a material effect on future
operations.
License Agreements:
On January 12, 1996, the Company entered into a Licensing Agreement with
the National Football League Alumni, Inc. ("NFLA") relating to the Company's use
of certain trademarks owned or beneficially owned by NFLA. The license agreement
was for the period beginning January 1, 1995 and ending on December 31, 2001.
Pursuant to the terms of the agreement, the Company issued 300,000 shares of the
its common stock and agreed to issue additional shares, not to exceed 300,000 to
cover future royalty payments to the NFLA. The Company has not yet filed a
registration statement covering such shares with the Securities and Exchange
Commission. At the time of issue to the NFLA, the Company valued the 300,000
shares of common stock at estimated fair value of $.25 per share, and recorded
the aggregate value of such shares of $75,000 as prepaid royalties.
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On May 28, 1996, the Company entered into a Licensing Agreement with Gage
Marketing Group, LLC ("Gage"), an exclusive agent for the NFLA. The Company paid
$100,000 for the right to be the presenting sponsor of the January 1996 Alumni
Player of the Year Awards Dinner. Gage granted the Company the rights to the
video footage of that dinner as well as future sponsorship rights. The initial
term was for the period beginning May 15, 1996 and ending on May 14, 2001.
Pursuant to the terms of the agreement, the Company issued 250,000 shares of its
common stock to cover future royalty payments to Gage and agreed to pay $600,000
in cash for the rights to be the presenting sponsorship of the dinners. The
Company has not yet filed a registration statement covering such shares with the
Securities and Exchange Commission. At the time of issue to Gage, the Company
valued the 250,000 shares of common stock at estimated fair value of $.25 per
share, and recorded the aggregated value of such shares of $62,500 as prepaid
royalties.
As of December 31, 1996, the contracts with the NFLA and Gage terminated in
accordance with the terms and conditions stipulated in the respective contracts.
As a result, the Company did not realize the benefits associated with these
agreements, and accordingly, charged the prepaid royalties to operations for the
year ended December 31, 1996.
Competition:
There is significant competition among sports magazines, including such
well known and widely circulated magazines as "Sports Illustrated", "Sport" and
"Inside Sports." All of these magazines are published by entities which are
significantly better capitalized than the Company, which have significantly
larger facilities, and which employ a larger number of personnel who have more
experience than the Company's employees. In addition, there is competition with
other magazines which provide reading entertainment and which may divert the
spending of discretionary income from purchasing the Company's magazines.
The Company intends to compete against other sports magazines by providing
a unique, high-quality product focusing on historical professional sporting
events and personalities.
The market for internet services is new, intensely competitive and subject
to rapid change. The number of web sites on the internet has grown dramatically
without substantial barriers to entry. The Company believes that the utilization
of celebrity names will ensure a competitive advantage over other web sites that
may be considered competition for the same audience. The intention is to anchor
itself into relationships with celebrities as well as develop innovative and
aggressive strategies in technical and contextual presentation on the web,
focusing predominately on history and nostalgia while interacting with current
events in sports.
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Employees:
During 1996 the Company had three employees. Early in 1997 the Company
reduced its staff to one employee. (see "ITEM 9. DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
ACT"). The Company periodically retains outside consultants to perform certain
corporate administrative tasks.
ITEM 2. DESCRIPTION OF PROPERTY
The Company does not own, and does not anticipate acquiring, any real
estate, principal plants and/or other property.
The Company occupied its Scottsdale, Arizona editorial offices on a
month-to-month basis at a monthly rent of $1,043 through January 1997. The
Company currently operates its corporate offices from office facilities provided
by its President on a month-to-month basis without charge.
ITEM 3. LEGAL PROCEEDINGS
On June 30, 1996, a Default Judgement was entered against Infinet, the
Company's wholly-owned subsidiary, and Vincent M. Nerlino, the President and
principal shareholder of the Company. The entry of the Default Judgement was the
result of a Cross-Complaint filed by William Brin, former President of Fans
Publishing, Inc., against Infinet,Jeane Hays Nerlino, the wife of Vincent M.
Nerlino and the former sole stockholder of Infinet, and Vincent M. Nerlino, a
former director and shareholder of Fans Publishing, Inc., among others, in
Superior Court of Arizona, Maricopa County, Case No. CV 95-18275.
The Complaint was filed by Dr. Craig B. Pearson against Fans Publishing,
Inc., Mr. Nerlino, Mrs. Nerlino, Mr. Brin, Mr. Bianchi and others, alleging,
among other things, fraudulent sale of securities, breach of contract, fraud and
breach of fiduciary duties. Dr. Pearson was seeking, among other things, actual
damages of $600,000, punitive damages, and attorneys' fees.
Effective October 14, 1997, on behalf of himself and the Company, Mr.
Nerlino, Chairman of the Company, signed a proposed settlement agreement
whereby the Company is obligated to pay the plaintiff $5,000 within 120 days of
signing the agreement and an additional $95,000 without interest, to be paid
within three years of the effective date of the agreement. In addition, the
Company is obligated to issue to Dr. Pearson, 225,000 shares of its common stock
within 30 days of the signing of the agreement. In the opinion of counsel, the
agreement is binding on both the Company and Mr. Nerlino as its President and
CEO.
As of June 5, 1998, the Company had not yet paid any of its obligation, and
As such, is in default under the terms of the agreement. Counsel for the
Company has contacted the plaintiff and his attorney and is currently in the
process of attempting to renegotiate certain terms of the settlement agreement.
However, if this attempt is unsuccessful and should any legal action be
initiated against the Company due to its defaulting, the Company will vigorously
defend itself.
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Legal counsel for the Company is currently holding 225,000 shares of the
Company's common stock and $5,000 for the benefit of Dr. Pearson, and has been
instructed by management to release such stock and proceeds to the plaintiff
upon resolution of this matter.
On August 2, 1996, the Company became a defendant in a case involving one
of its current stockholders. The plaintiff is seeking refund of the $200,000
original amount invested in the Company's common stock plus interest and legal
costs incurred, based on allegations that the Company failed to register the
stock timely. Trial is set for the end of November 1998. Legal counsel for the
Company believes the case has no merit and the Company will vigorously contest
the case. There can be no assurances that this matter will be satisfactorily
resolved, and as such, a verdict against the Company would have a material
adverse effect on the Company's financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company did not submit any matters to a vote of its security holders
during the fourth quarter of the fiscal year ended December 31, 1997.
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PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a). Market Information
The Company's common stock has been traded in the over-the-counter market
on the Over the Counter Electronic Bulletin Board under the symbol "ASPH" since
September 20, 1995. In May 1997 the Company effectuated a 1 for 10 reverse stock
split at which time the symbol was changed to "AMSH." Prior to that date, there
was no market for the Company's common stock. The trading market is limited and
sporadic and should not be deemed to constitute an "established trading market".
The following table sets forth the range of bid prices for the common stock
during the periods indicated, and represents inter-dealer prices, which do not
include retail mark-ups and mark-downs, or any commission to the broker-dealer,
and may not necessarily represent actual transactions. The information set forth
below was provided by the National Quotation Bureau, Inc.
Year Ended December 31, 1996:
Quarter High Low
------- ----- ------
1 $4.00 $.01
2 5.00 .25
3 1.50 .46875
4 3.00 .0625
Year Ended December 31, 1997:
Quarter High Low
------- ---- ---
1 $.04 $.04
2 .05 .01
3 2.00 .05
4 .25 .125
(b) Holders:
Approximate number of
Record Holders (as of
Title of Class June 5, 1998)
-------------- ----------------------
Common stock, $.01 par value 460(1)
(1) Included in the number of stockholders of record are three records holders
who hold 50,010 shares of common stock as nominees or under "street name".
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(c) Dividends:
The Company has never paid cash dividends on its common stock. Payment of
dividends is within the discretion of the Company's board of directors and will
depend, among other factors, on earnings and debt service requirements, as well
as the operating and financial condition of the Company. At the present time,
the Company's anticipated working capital requirements are such that it intends
to follow a policy of retaining earnings in order to finance the development of
its business. Accordingly, the Company does not expect to pay a cash dividend
within the foreseeable future (see "ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION").
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Overview:
Effective January 14, 1998, the Company acquired SIN. SIN has no
operations, but it is the intention of the Company to establish a web site and
sell various entertainment related items through the internet.
Although the Company has incurred a significant amount of start-up costs, since
the Company has not yet generated any revenues from operations, the Company is
still considered to be in the development stage.
Statement of Operations -
Years Ended December 31, 1997 and 1996:
During the year ended December 31, 1997, general and administrative
Expenses, liability from lawsuit settlement and consulting fees were $246,404,
122,500 and $2,500 respectively, including 1,375,000 shares of common stock
issued to a consultant and the Company's Chief Executive Officer (see "ITEM 10.
EXECUTIVE COMPENSATION - Summary Compensation Table"), which were valued at
$57,500. During the year ended December 31, 1996, general and administrative
expenses and consulting fees were $855,129 and $307,475 respectively, including
2,428,400 shares of common stock issued to consultants, employees and officers,
which were valued at $260,083.
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During the years ended December 31, 1997 and 1996, the Company had net
losses of $371,404 and $1,162,398 respectively.
As of December 31, 1997 and 1996, the Company was a development stage
company that had not yet generated any revenues from operations. The Company
expects to incur continuing general and administrative expenses, without any
commensurate operating revenues, until such time as it is able to commence
revenue-generating operations. The generation of revenue will be dependent upon
the Company raising substantial working capital from the sales of equity
securities and or obtaining funds from loan proceeds, and operating revenues
after establishing its website. There can be no assurances, however, that the
Company will ultimately be successful in raising the necessary capital and in
publishing one or more nostalgic sports magazine.
Financial Condition - December 31, 1997:
The Company will require a minimum of approximately $5,000,000 of operating
capital through December 1999 to implement its business plan of publishing an
on-line, nostalgic sports magazine. The Company intends to attempt to raise this
operating capital through the sale of its equity securities and/or seek outside
private sources of financing. However, there can be no assurances that the
Company will be successful in raising sufficient operating capital on a timely
basis, at an acceptable cost, and under acceptable terms and conditions in order
to implement its business plan. To the extent that the Company is unable to
raise the necessary operating capital, it will not be able to implement its
business plan, and it will have to curtail or cease operations. In addition,
even if the Company does raise sufficient operating capital through the sale of
its equity securities, there can be no assurances that the net proceeds will be
sufficient to enable the Company to develop its new line of business to a level
where it will generate profits and cash flows from operations.
During the year ended December 31, 1997, the Company issued 1,375,000
common shares for services rendered by its employee and an outside consultant ,
which were valued at $57,500 (see "ITEM 10. EXECUTIVE COMPENSATION Summary
Compensation Table"). During the year ended December 31, 1996, the Company sold
563,750 shares of its common stock for $307,508. In addition, the Company issued
2,428,200 common shares for services rendered by employees, consultants and
officers, which were valued at $260,083.
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Management of the company believes that it will be able to sustain limited
operations during the year ending December 31, 1998, with the cash resources
generated by the continuing sale of small amounts of common stock, issuance of
stock for services, and through management's ability to control discretionary
expenditures. Except for the Company's employment agreement with its President,
the Company has no fixed expenses. During the year ended December 31, 1997, the
Company did not pay any compensation to officers in cash, and the Company
intends to continue to defer the cash payment of compensation to officers until
such time as the Company has adequate working capital and/or cash flow. The
Company intends to continue to issue shares of its common stock to officers,
employee and consultants for services rendered to conserve working capital.
ITEM 7. FINANCIAL STATEMENTS
The financial statements are listed at "Index to Financial Statements"
in this document.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
Disclosure requirements for Item 304 of Regulation S-B have been
previously reported under Item 8 of the December 31, 1996 10-KSB.
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PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF EXCHANGE ACT
The following table and text sets forth the name and ages of all
directors and executive officers of the Company and their positions and offices
with the Company as of June 5, 1998. All of the directors will serve until the
next annual meeting of shareholders and until their successors are elected and
qualified, or until their earlier death, retirement, resignation or removal. A
brief description of the business experience of each director and executive
officer during the past five years and an indication of directorships held by
each director in other companies subject to the reporting requirements under the
federal securities law is also provided.
Name Age Positions Director Since
- ------------------ --- ------------------ --------------
Vincent M. Nerlino 62 President, Chief May 31, 1995
Executive Officer,
Chief Financial
Officer, Secretary
And Director
Peter Klamka 29 - Director January 14, 1998
There are no family relationships among directors and executive officers.
Biographies of Directors and/or officers:
Vincent M. Nerlino - Mr. Nerlino has been President, Chief Executive
Officer, Chief Financial Officer, Secretary and a Director since May 31, 1995.
Prior to acquiring control of the Company, Mr. Nerlino was a registered
securities representative providing investment and financial advice from 1975
until 1995, and served as a vice president with Paine Webber, an associate
director with Bear Stearns & Co., Inc. and senior vice president with
Oppenheimer & Co., Inc. Mr. Nerlino was previously a director and shareholder of
Fans Publishing, Inc. (see "ITEM 1. DESCRIPTION OF BUSINESS - Business" and
"ITEM 3. LEGAL PROCEEDINGS" for information regarding Fans Publishing, Inc. and
related litigation involving Mr. Nerlino.)
Peter Klamka- Mr. Klamka has been a Director since January 14, 1998. From
1990 through 1991, Mr. Klamka was employed as an analyst at Credit Lyonnaise.
From 1991 through 1993, he was employed by a private investment concern, after
which he became the sole stockholder of a manfacturing company which he
subsequently sold in 1994. From 1993 through 1997, Mr. Klamka developed several
entertainment related products including the first authorized celebrity web-site
in 1995.
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The Company has not entered into any employment agreement with Mr. Klamka,
nor has it restricted him from involving himself in a business outside the
Company that may be in direct competition with the Company.
Compliance with Section 16(a) of the Exchange Act:
The Company does not have any securities registered pursuant to Section
12(g) of the Securities Exchange Act of 1934, and accordingly, the Company's
officers, directors and affiliates are not required to file any Forms 3, 4
and/or 5.
ITEM 10. EXECUTIVE COMPENSATION
Summary Compensation Table
--------------------------
Name and Annual
Principal Compensation
Position Year Salary
- -------- ---- ------------
Vincent M. Nerlino 1996 $50,000 (1)
President, Chief Executive 1997 $55,000 (1)
Officer, Chief Financial
Officer and Secretary
(1) Consists of 1,100,000 and 1,250,000 shares of common stock issued to Mr.
Nerlino in 1996 and 1997 respectively, as partial consideration under his
employment agreement. The shares were valued at $50,000 and $55,000,
respectively (see "Employment Agreement").
Employment Agreement:
The Company entered into an employment agreement with Vincent M. Nerlino
for a period of five years beginning on January 1, 1996 and ending on December
31, 2000, pursuant to which Mr. Nerlino will serve as the Company's President
and Chief Executive Officer. The employment agreement provides for base annual
compensation of $200,000 and an annual bonus of 7.5% of pretax operating profits
in excess of $200,000 in 1996, $1,000,000 in 1997, $1,500,000 in 1998,
$2,000,000 in 1999 and $2,500,000 in 2000. Mr. Nerlino will also be provided
with an automobile allowance of $1,000 per month. At the conclusion of the
employment agreement, Mr. Nerlino will receive a one-year consulting contract at
the most recent year's base annual compensation. In lieu of cash payment for
employment services, the Company issued 1,250,000 and 1,100,000 shares of its
common stock valued at $55,000 and $50,000, respectively, to Mr. Nerlino during
the years ended December 31, 1997, and 1996 as partial payment under the
contract.
15
<PAGE>
Board of Directors:
Directors of the Company are reimbursed for travel expenses incurred in
attending Board meetings. During the fiscal year ended December 31, 1997, there
were no meetings of the Board of Directors, with all corporate actions being
approved by the unanimous written consent of the Board of Directors. The Company
had no audit, nominating or compensation committees or committees performing
similar functions during the fiscal year ended December 31, 1997.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As used in this section, the term beneficial ownership with respect to a
security is defined by Rule 13d-3 under the Securities Exchange Act of 1934 as
consisting of sole or shared voting power (including the power to vote or direct
the vote) and/or sole or shared investment power (including the power to dispose
of or direct the disposition of) with respect to a security through any
contract, arrangement, understanding, relationship or otherwise, subject to
community property laws.
As of June 5, 1998, the Company had authorized 25,000,000 shares of its
common stock, $.01 par value, of which 6,795,826 shares were issued and
outstanding or to be issued.
The following table sets forth certain information regarding the beneficial
ownership of the common stock as of June 5, 1998. Listed below is the name and
address of each beneficial owner of more than 5% of the Company's common stock
known to the Company, the number of shares of common stock beneficially owned by
each such person or entity, and the percent of the Company's common stock so
owned. Also listed below are the number of shares of common stock of the Company
beneficially owned, and the percentage of the Company's common stock owned, by
each officer and director and by all officers and directors of the Company as a
group. Each such person or entity has sole voting or investment power with
respect to the shares of common stock, except as otherwise indicated. Beneficial
ownership consists of a direct interest in the shares of common stock, except as
otherwise indicated.
Name and Address Amount and Nature of Percent of Shares
of Beneficial Owner Beneficial Ownership of Common Stock
- ------------------- -------------------- -----------------
Gerard Management,Inc. 400,000 5.9%
Management:
Vincent M. Nerlino 3,441,750 (1) 50.7%
18-I Heritage Drive
Chatham, NJ 07928
Peter Klamka 500,000 7.4%
All Directors and
Officers as a
Group (1 person) 3,941,750 62.0%
16
<PAGE>
(1) Includes 625,000 shares of common stock owned by Jeane Hays Nerlino, the
wife of Vincent M. Nerlino, and 811,000 shares of common stock owned by Vincent
M. Nerlino as custodian for Michael Nerlino, who is the minor son of Vincent M.
and Jeane Hays Nerlino. Excludes 857,000 shares of common stock owned by various
members of Mr. Nerlino's extended family over which Mr. Nerlino does not
exercise voting or investment power.
Changes in Control:
There are no contractual or other arrangements known to the Company which
may later result in a change in control of the Company.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the years ended December 31, 1996 and 1997, the Company issued
shares of common stock to related parties as set forth below. For additional
information regarding shares of common stock issued to officers, see "ITEM 10.
EXECUTIVE COMPENSATION - Summary Compensation Table" and "ITEM 11. SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT."
Shares of Common
Recipient Stock Issued
- --------- ----------------
1996
- ----
Vincent M. Nerlino (employment agreement) 1,100,000
Jean Nerlino (services rendered) 525,000
1997
- ----
Vincent M. Nerlino (employment agreement) 1,250,000
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a)
Exhibits:
Exhibit Number Description of Document
1 Purchase Agreement between American Sports History
Incorporated and Sunset Interactive Network, Inc. dated
January 14, 1998.
17
<PAGE>
(b) Reports on Form 8-K: Three months ended December 1997
(a) - (b)
Letter on Change in Certifying Accountant dated December 30, 1997 -
incorporated by reference
(c) Financial Data Schedule
June 5, 1998
18
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
AMERICAN SPORTS HISTORY INCORPORATED
------------------------------------
(Registrant)
Date: August 22, 1998 By: /s/ VINCENT M. NERLINO
----------------------
Vincent M. Nerlino
President
In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Date: August 22, 1998 By: /s/ VINCENT M. NERLINO
----------------------
Vincent M. Nerlino
President and Director
(Chief Executive,
Financial and Accounting
Officer)
19
<PAGE>
Index to Financial Statements
Report of Independent Auditor ............................................ F-1
Consolidated Balance Sheets, Dec. 31, 1997 and 1996 ...................... F-2
Consolidated Statements of Operations, for the
year ended December 31, 1997 and 1996, and cumulative
from May 1, 1995 ........................................................ F-3
Consolidated Statement of Stockholders' Deficit, for
the year ended December 31, 1997 and 1996 ............................... F-4
Consolidated Statements of Cash Flows, for the years
ended December 31, 1997 and 1996, and cumulative
from May 1, 1995 ........................................................ F-5
Notes to consolidated financial statements ........................ F-6 to F-10
20
<PAGE>
REPORT OF INDEPENDENT AUDITOR
To the Board of Directors and Shareholders
American Sports History Incorporated
I have audited the consolidated balance sheet of American Sports History
Incorporated and Subsidiary (A Development Stage Company) as of December 31,
1997 and 1996, and the related consolidated statements of operations,
stockholders' deficit and cash flows for the years then ended and cumulative
from May 1, 1995. These financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I 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.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of American
Sports History Incorporated and Subsidiary (A Development Stage Company) as of
December 31, 1997 and 1996 and the results of their operations, stockholders'
deficit and cash flows for the years then ended in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company's significant operating loss, significant
continuous capital requirements and the uncertainty with respect to its ability
to pay debts as they become due, raises substantial doubt about the Company's
ability to continue as a going-concern. The consolidated financial statements do
not include any adjustments that might result from the outcome of these
uncertainties.
Michelle M. Gelinas
Certified Public Accountant
Chatham, New Jersey
June 30, 1998, except for
Notes 4 and 9 which are
dated August 21, 1998
F-1
<PAGE>
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARY
A (DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
1997 1996
--------- ---------
ASSETS
Current Assets:
Cash $7 $8
Prepaid Taxes 3,442
--------- ---------
Total Current Assets 7 3,450
Other Assets:
Deposit (Note 5) 30,000 30,000
Trade Name 5,000 5,000
--------- ---------
Total Other Assets 35,000 35,000
--------- ---------
TOTAL ASSETS 35,007 38,450
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts Payable $296,055 $298,839
Due to Officer (Note 9) 324,299 166,669
Loan from Stockholder (Note 3) 83,376 50,260
Notes Payable (Note 3) 23,400 23,400
Liability from Settlement of Lawsuit (Note 4) 122,500
Liability from Sale of Common Stock
subsequently rescinded 22,260 22,260
Income Taxes Payable resulting from
Discontinued Operations 32,000 32,000
--------- ---------
Total Current Liabilities 903,890 593,428
Stockholders' Deficit (Notes 5 and 7)
Common Stock $.01 and $.001 par value
at December 31, 1997 and 1996, respectively;
authorized 25,000,000 shares issued and
outstanding - 2,770,826 and 13,958,262
shares December 31, 1997 and 1996 respectively 27,708 13,958
Additional Paid-In Capital 1,260,263 1,216,514
Deficit (Deficit of $2,072,457 accumulated
since May 1, 1995) (2,156,854) (1,785,450)
--------- ---------
Total Stockholders' Deficit (868,883) (554,978)
========= =========
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $35,007 $38,450
========= =========
See Notes To Consolidated Financial Statements.
F-2
<PAGE>
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31,1997 AND 1996
AND CUMULATIVE FROM MAY 1, 1995
Cumulative
from
1997 1996 May 1, 1995
---------- ---------- ------------
REVENUES
Interest $0 $206 $468
EXPENSES
General and Administrative 246,404 855,129 1,407,594
Lawsuit Settlement 122,500 122,500
Consulting fees 2,500 307,475 461,975
Write-off of advances for
terminated acquisition 0 80,856
---------- ---------- ------------
Total Expenses 371,404 1,162,604 2,072,925
---------- ---------- ------------
LOSS FROM OPERATIONS (371,404) (1,162,398) (2,072,457)
---------- ---------- ------------
NET LOSS ($371,404) ($1,162,398) ($2,072,457)
========== ========== ============
NET LOSS PER COMMON SHARE ($0.18) ($0.10)
========== ========== ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 2,114,576 12,061,000
========== ========== ============
See Notes To Consolidated Financial Statements.
F-3
<PAGE>
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
Additional
Common Stock Paid-In (Accumulated
Shares Amount Capital Deficit)
--------- ------- ----------- -----------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1995 10,296,112 $10,297 $485,084 ($623,052)
Shares issued for assets 670,000 670 166,830
Shares issued for services 2,428,400 2,428 257,655
Sale of common stock 563,750 563 306,945
Net Loss (1,162,398)
--------- ------- ----------- -----------
BALANCE, December 31, 1996 13,958,262 13,958 1,216,514 ($1,785,450)
Effect of 1 for 10 reverse stock split (12,562,436)
Shares issued for services 1,375,000 13,750 43,750
Net Loss (371,404)
--------- ------- ----------- -----------
BALANCE, December 31, 1997 2,770,826 $27,708 $1,260,264 ($2,156,854)
========= ======= =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
F-4
<PAGE>
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
AND CUMULATIVE FROM MAY 1, 1995
<TABLE>
<CAPTION>
Cumulative
from May 1,
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Loss from continuing operations ($371,404) ($1,162,398) ($2,072,457)
Adjustments to reconcile loss from
continuing operations to net cash
provided by (used in) operating activities:
Write-off of Prepaid Royalty 137,500 137,500
Shares of common stock issued for services 57,500 260,083 540,508
Changes in operating assets and liabilities:
Prepaid taxes 3,442 3,442
Other assets (5,000)
Liability from Settlement of Lawsuit 122,500 122,500
Accounts payable and accrued expenses (2,785) 213,000 246,215
Due to officer 157,630 166,669 324,299
---------- ---------- ----------
Net cash (used in) continuing operations (33,117) (385,146) (702,993)
---------- ---------- ----------
Net cash (used in) operating activities (33,117) (385,146) (702,993)
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of notes 23,400 23,400
Loan from stockholder 33,116 50,260 83,376
Sale of common stock 307,508 573,964
Liability from sales of common stock rescinded (2,640) 22,260
---------- ---------- ----------
Net cash provided by financing activities 33,116 378,528 703,000
---------- ---------- ----------
NET INCREASE (DECREASE) IN CASH (1) (6,618) 7
CASH-Beginning of period 8 6,626
---------- ---------- ----------
CASH-End of period $7 $8 $7
========== ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE>
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANACIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization- The Company was incorporated in the State of Nevada on
August 9, 1990 as National Logistics, Inc. National Logistics, Inc.
changed its name to Fans Holdings, Inc. on June 30, 1995, and
subsequently to American Sports History Incorporated ("ASH") on
September 20, 1995. On August 21, 1995, ASH acquired 100% of the
capital stock of Infinet, Inc. ("Infinet"). As used in this document,
the "Company " refers to ASH and its subsidiary, Infinet, unless the
context indicates otherwise.
Basis of Presentation-
For accounting purposes, the acquisition of Infinet by ASH has been
treated as a recapitalization of Infinet, with Infinet as the acquirer
(reverse acquisition). ASH had no assets or operations prior to May
1995. The historical financial statements prior to August 21, 1995 are
those of Infinet. The business of Infinet has historically been
investing and consulting, but in conjuction with its acquisition by
ASH, the Company commenced the business of publishing a variety of
nostalgic sports magazines effective May 1, 1995. Accordingly, the
historical operations of Infinet have been classified as discontinued
operations. Although the Company has incurred a significant amount of
start-up costs, since the Company has not generated any revenues from
operations, the Company is still considered to be in the development
stage.
Use of Estimates- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those
estimates.
Income Taxes- The Company utilizes the asset and liability approach for
financial accounting and reporting for income taxes. If it is more
likely than not that some portion or all of a deferred tax asset will
not be realized, a valuation allowance is recognized.
Net (Loss) per Common Share- Net loss per common share is calculated
based on the weighted average number of common shares outstanding for
the year ended.
2. GOING CONCERN
The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and
satisfaction of liabilities in the normal course of business. The
financial statements do not include any adjustments relating to the
F-6
<PAGE>
recoverability of the recorded assets or the classification of the
liabilities that might be necessary should the Company be unable to
continue as a going concern.
The Company incurred a net loss of $371,404 for the year ended December
31, 1997, resulting in an accumulated deficit of $2,156,854 and a
stockholders' deficit of $868,883.
Management of the Company has currently prepared a business plan
summarizing its strategy for the next several years. Under this plan,
approximately $5,000,000 will be required through December 1999, to pay
off current debt and fund the start up of an on-line nostalgic sports
magazine. The Company is currently negotiating with several independent
parties regarding certain contracts that will help achieve the
promotion of its magazine. The intention is to raise capital through
the sale of its equity securities and/or to seek outside private
sources of financing. There can be no assurances that the Company will
be successful in its attempts to raise sufficient capital essential to
its survival. To the extent the Company is unable to raise the
necessary operating capital, it will not be able to implement its
business plan, and it will become necessary to curtail or cease
operations. Additionally, even if the Company does raise sufficient
operating capital, there can be no assurances that the net proceeds
will be sufficient enough to enable it to develop its business to a
level where it will generate profits and cash flows from operations.
3. TRANSACTIONS WITH RELATED PARTIES
Loan From Stockholder/Notes Payable- Loan from stockholder of $83,376
at December 31, 1997 reflects advances made to and expenses paid on
behalf of the Company by Jeane Hays Nerlino. Notes payable of $23,400
at December 31, 1997 represents direct loans made to the Company by
stockholders. The loans and notes are due on demand. The notes bear
interest at 10% per annum. Total interest cost incurred for the year
ended December 31, 1997 was $4,566.
See also Note 6 to the Consolidated Financial Statements.
4. LIABILITY FROM SETTLEMENT OF LAWSUIT
Effective October 14, 1997, on behalf of himself and the Company, Mr.
Nerlino, Chairman of the Company, signed a proposed settlement
agreement arising from a previous lawsuit. Under the terms of the
agreement, the Company is obligated to pay the plaintiff $100,000
without interest over a three year period and issue 225,000 shares of
its common stock, commencing on the effective date of the agreement.
The Settlement will be secured by a security interest in the assets of
the Company. As of December 31, 1997, no payments of stock or cash
were made, and as such, the Company is in default under the terms of
the agreement. Due to this default, the amount in the proposed
settlement agreement has been classified as a current liability in the
December 31, 1997 financial statements.
F-7
<PAGE>
5. ACQUISITION OF OTHER ASSETS
Deposits- On January 30, 1996, the Company issued 120,000 shares of its
restricted common stock for the acquisition of a film library
consisting of 16 hours of sports footage film and license rights to use
36 hours of footage from Historical Footage film library (not related
to sports). As stipulated in the contract, the Company also agreed to
issue up to an additional 120,000 shares of common stock in the event
that the initial 120,000 shares were not sufficient to generate
$600,000 of proceeds to the seller. The Company valued the 120,000
shares of commom stock issued at estimated fair value of $.25 per
share, and recorded the aggregate value of such shares of $30,000 as a
deposit for the film library. As of December 31, 1997, no additional
shares of stock were issued.
The Company is currently negotiating a revision of the original
contract terms with the owner of the film library. No conclusion has
yet been reached.
On January 12, 1996, the Company entered into a licensing agreement
with National Football League Alumni, Inc. ("NFLA") relating to the
Company's use of certain trademarks owned or beneficially owned by
NFLA. The license agreement was for the period beginning January1, 1995
and ending on December 31, 2001. Pursuant to the terms of the
agreement, the Company issued 300,000 shares of its common stock and
agreed to issue additional shares, not to exceed 300,000, to cover
future royalty payments to the NFLA. The Company has not yet filed a
registration statement covering such shares with the Securities and
Exchange Commission.
On May 28, 1996, the Company entered into a licensing agreement with
Gage Marketing Group, LLP ("GAGE"), an exclusive agent for the NFLA.
The Company paid $100,000 for the right to be the presenting sponsor of
the January 1996 NFLA Alumni Player of the Year Awards Dinner. GAGE
granted the Company rights to the video footage of that dinner as well
as future sponsorship rights. The initial term was for the period
beginning May 15, 1996 and ending on May 14, 2001. Pursuant to the
terms of the agreement, the Company issued 250,000 shares of its common
stock to cover future royalty payments to Gage and agreed to pay
$600,000 in cash for the rights to be the presenting sponsorship of the
dinners. The Company has not yet filed a registration statement
covering such shares with the Securities and Exchange Commission.
As of December 31, 1996, the contracts with the NFLA and GAGE
terminated in accordance with the terms and conditions stipulated in
the respective contracts. As a result, the Company did not realize the
benefits associated with these agreements, and accordingly, has charged
the prepaid royalties to operations during 1996.
F-8
<PAGE>
6. COMMON STOCK
During the year ended December 31, 1997, the Company issued 1,375,000
shares of its common stock. Included in those shares were 1,250,000
shares issued to Mr. Nerlino, as partial payment in lieu of cash under
his employment agreement with the Company (See Note 9).
On May 15, 1997, the Board of Directors of the Company authorized a 1
for 10 reverse stock split upon unanimous approval by its stockholders.
As of that date, the total number of common shares issued and
outstanding was reduced from 13,958,262 (no stock was issued by the
Company between December 31, 1996 and May 15, 1997) to 1,395,826, and
related par value was increased to .01 cents per common share from .001
cents per common share.
7. INCOME TAXES
There were no provisions for income taxes for the years ended December
31, 1997 and 1996. The Company has federal tax net operating loss carry
forwards of approximately $1,900,000, which are available to offset
future taxable income, expiring through 2012. The utilization of such
carry-forwards will be limited by the change in ownership. The Company
has not filed Federal or State tax returns since its inception.
8. STOCKHOLDERS' DEFICIT
The authorized capital stock of the Company consists of 25,000,000
shares of common stock with $.01 par value.
9. COMMITMENTS AND CONTINGENCIES
Employment agreement- The Company entered into a five year employment
agreement with Vincent Nerlino beginning on January 1, 1996 and
terminating on December 31, 2000, pursuant to which Mr. Nerlino serves
as the Company's President and Chief Executive Officer. The employment
agreement provides for base annual compensation of $200,000 and an
annual bonus based on pretax operating profits. The Company is
obligated to provide Mr. Nerlino with an automobile allowance of $1,000
per month. At the conclusion of the employment agreement, Mr. Nerlino
will receive a one-year consulting contract at the most recent year's
base annual compensation . In lieu of cash payment for employment
services, the Company issued 1,250,000 shares of its common stock
valued at $55,000 to Mr. Nerlino during the year ended December 31,
1997, as partial payment under the contract.
Legal Proceedings- On June 30, 1996 a default judgment was entered
against Infinet Inc., the wholly-owned subsidiary of American Sports
History Inc. and certain of the Company's principal stockholders by a
former affiliated party of Infinet Inc., alleging breach of contractual
commitments and other matters. Effective October 14, 1997, the Company
signed a proposed settlement agreement with the plaintiff, which in the
opinion of legal counsel for the Company, is binding. Under its terms,
the Company is obligated to pay the plaintiff $100,000 plus issue
F-9
<PAGE>
225,000 shares of its common stock. The proposed liability regarding
this settlement has been charged to operations by the Company as of
December 31, 1997. See also Note 4.
On August 2, 1996, the Company became a defendant in a case involving
one of its current stockholders. The plaintiff is seeking a refund of
approximately $200,000, the original amount invested in the Company's
common stock. Legal counsel for the Company believes the case has no
merit.
10. SUBSEQUENT EVENTS
On January 14, 1998, the Company entered into an agreement with Sunset
Interactive Network, Inc. (SIN), a newly formed Michigan corporation,
to purchase 100% of SIN's capital stock in exchange for the issuance of
500,000 shares of the Company's common stock.
Through the acquisition, the Company intends to establish a web site
for its proposed sports magazine and market entertainment products
through the worldwide web, with the technical capabilities of SIN.
Being a newly formed corporation, SIN has no operations and will
require significant capital to commence operations.
F-10
Mr. Peter Klamka
Sunset Interactive Network, Inc.
1905 Anderson Avenue
Ann Arbor, Michigan 48104
Dear Mr. KLamka:
This serves as our Letter of Intent ("LOI") which provides for a thirty (30) day
period of exclusive negotiation between American Sports History, Inc. ("AMSHK or
"Buyer") and Sunset Interactive Network, Inc. ("SIN or "Seller") to:
a. enter into a Definitive Agreement for acquisition by AMSH of one
hundred (100%) percent of the total shares of SIN and all other affiliated
companies, properties, equipment and related business assets, if any, and
b. to include as part of the agreement the services of Mr. Peter C. Klamka
of as President of SIN, and that SIN would become a wholly owned subsidiary of
AMSH upon completed execution of the Agreement.
AMSH, a Nevada Corporation, has corporate offices at 1905 Anderson Avenue, Suite
200, Ann Arbor Michigan 48104 and is solely owned by Mr. Peter C. Klamka. SIN
is free of any and all liabilities except as may relate to existing or pending
contracts with various licensors for its Internet content offerings. SIN is an
interactive media company providing primarily but not limited to the Internet
proprietary content, information and merchandise relating to a variety of
licensors including celebrity content.
CONSIDERATION
Final valuation will be agreed to by both parties and the Definitive Agreement
will outline all terms. It is proposed that the business be acquired with
restricted common shares of AMSH which may or may not include registration
rights. Final acceptance is subject to approval by both parties including the
Board of Directors of AMSH.
The parties acknowledge and agree to indemnify and hold the other harmless
against any third party claims that may arise from this agreement.
The signors of this agreement shall enter into exclusive negotiations and due
dilligence upon reciept of mutually executed copies.
AMERICAN SPORTS HISTORY, INC.
(A Nevada Corporation)
/s/ Vincent M. Nerlino
Vincent M. Nerlino, President
SUNSET INTERACTIVE NETWORK, INC.
(A Nevada Corporation)
Peter C. Klamka, President
AMERICAN SPORTS HISTORY, INC.
18_I Heritage Drive
Chatham N J 07928
-------------------------------
SUNSET INTERACTIVE NETWORK, INC.
1905 Anderson Avenue
Ann Arbor, Michigan 48104
January 14, 1998
THIS DEFINITIVE AGREEMENT, as related and referred to in the Letter of
Intent, dated 12/11&12/97, between the two parties, is made and entered into
this 14th day of January 1998 by and between American Sports History, Inc.
(herein referred to as (AMSH), A Nevada Corporation with its principal place of
business at 18-I Heritage Dr., Chatham, NJ 07928, AND Sunset Interactive
Network, Inc. (herein referred to as SIN), a Nevada Corporation with its
principal place of business at 1905 Anderson Ave., Ann Arbor, Michigan 48104.
WHEREAS, Peter Klamka, president and 100% sole and exclusive owner of (SIN)
hereby agrees to sell his 100% ownership of (SIN) to (AMSH) effective upon the
signing by both authorized parties of this purchase and sale DEFINITIVE
AGREEMENT, and under the following terms and conditions.
PURCHASE PRICE/CONSIDERATION
- ----------------------------
IN THE UNDERSTANDING of Peter Klamka's exclusive ownership of (SIN), free
of liabilities and litigation, (AMSH) therefore, in consideration for its 100%
acquisition of (SIN) agrees to purchase from Peter Klamka all of the assets and
properties of (SIN).
It is herein acknowledged by both parties that upon selling his 100%
interest of (SIN) to (AMSH), Peter Klamka will receive 500,000 (five hundred
thousand) restricted common shares of (AMSH) to be issued January 1998 and
distributed to him in intervals as follows:
125,000 upon the signing of this agreement
125,000 April 1998
125,000 July 1998
125,000 October 1998
It is understood by both parties that (SIN) will become a 100% wholly owned
subsidiary of (AMSH), and that Peter Klamka will continue his duties and
position as president of (SIN) with his objective to be as described in the
Executive Summary, Exhibit "A", immediately upon execution of this agreement for
a period of one year.
CORPORATE AUTHORITY
- -------------------
The execution and deliver of this DEFINITIVE AGREEMENT, and the carrying
out of the provisions hereof have been fully authorized by the board of
directors of (ASPH) and (SIN).
<PAGE>
Page -2- (AMSH)/(SIN) DEFINITIVE AGREEMENT
LITIGATION
- ----------
It is understood by Peter Klamka of the litigation actions and proceeding
regarding (AMSH) currently underway as reported in its latest 10K, December
1996.
INDEMNIFICATION
- ---------------
The parties acknowledge and agree to indemnify and hold the other harmless
against any third party claims that may arise from this agreement.
AMERICAN SPORTS, HISTORY, INC.
(A Nevada Corporation)
/s/ Vincent M. Nerlino
Vincent M. Nerlino, President
SUNSET INTERACTIVE NETWORK, INC.
(A Nevada (crossed out) Corporation)
/s/ Peter C. Klamka
Peter C. Klamka, President
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<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 7
<SECURITIES> 0
<RECEIVABLES> 0
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<INVENTORY> 0
<CURRENT-ASSETS> 7
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 35,007
<CURRENT-LIABILITIES> 903,890
<BONDS> 0
0
0
<COMMON> 27,708
<OTHER-SE> (868,883)
<TOTAL-LIABILITY-AND-EQUITY> 35,007
<SALES> 0
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<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (371,404)
<INCOME-TAX> 0
<INCOME-CONTINUING> (371,404)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (371,404)
<EPS-PRIMARY> (.18)
<EPS-DILUTED> (.18)
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