U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
( X ) REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
Commission file number: 33-55254-46
AMERICAN SPORTS HISTORY INCORPORATED
(Exact name of small business issuer as specified in its charter)
Nevada 87-0485307
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
21 Maple Avenue, Bay Shore, New York 11706-8752
(Address of principal executive offices)
(516) 206-2674
Issuer's telephone number, including area code
Not Applicable
(Former name, former address and former
fiscal year, if changed since last report)
Check whether the issuer (1) filed all reports required to
be filed by Section 13 or 15 (d) of the Exchange Act during
the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90
days.
Yes ( X ) No ( )
As of August 11, 1999, the issuer had 10,466,026 shares of
its common stock issued and outstanding or to be issued.
Transitional Small Business Disclosure Format: Yes ( ) No ( X )
<PAGE>
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 1999 and December 31, 1998 1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and six months ended June 30, 1999
and 1998 and cumulative from May 1, 1995 2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1999 and 1998
and cumulative from May 1, 1995 3
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 4 - 7
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION 8 - 9
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS 10
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 10
SIGNATURES 11
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARIES
(A Development Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
1999 1998
(Unaudited)
ASSETS
Current assets
Cash $ 48,284 $ 3,344
Prepaid expenses 22,440 -
Total current assets 70,724 3,344
Other assets 10,434 2,667
$ 81,158 $ 6,011
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable and accrued $ 359,168 $ 336,034
expenses
Due to officers 633,582 402,541
Loans from stockholder 120,441 117,056
Notes payable and accrued interest 509,829 80,375
Liability from settlement of lawsuit 95,000 95,000
Total current liabilities 1,718,020 1,031,006
Liability from settlement of lawsuit 50,000 50,000
Total liabilities 1,768,020 1,081,006
Commitments and contingencies
Stockholders' deficit
Common stock, $.01 par value; 25,000,000
shares authorized, issued and outstanding
- 10,446,026 shares at June 30, 1999
and 9,746,026 at December 31, 1998 104,660 97,460
Additional paid-in capital 1,906,438 1,593,638
Accumulated deficit ($3,432,313
accumulated during the
development stage) (3,516,710) (2,766,093)
Unearned compensation (181,250) -
Total stockholders' deficit (1,686,862) (1,074,995)
$ 81,158 $ 6,011
See notes to condensed consolidated financial statements.
1
<PAGE>
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARIES
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended Cumulative
June 30, June 30, from May 1,
1999 1998 1999 1998 1995
<S> <C> <C> <C> <C> <C>
Revenue
Interest income $ - $ - $ 9 $ - $ 504
Expenses
Product development 291,000 - 371,000 - 371,000
General and
administrative 238,757 64,973 379,626 137,717 2,802,461
Lawsuit settlements - - - - 178,500
Write-off of advances
for terminated
acquisition - - - - 80,856
529,757 64,973 750,626 137,717 3,432,817
Net loss $(529,757) $ (64,973) $(750,617) $(137,717) $(3,432,313)
Basic and diluted
net loss per share $ (0.05) $ (0.01) $ (0.08) $ (0.02)
Weighted average number
of common shares
outstanding 10,201,081 6,735,342 9,974,811 6,113,025
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE>
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARIES
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Cumulative
Six months ended June 30 from May 1,
1999 1998 1995
INCREASE (DECREASE) IN CASH
Cash flows from operating activities
Net loss $(750,617) $(137,717) $(3,432,313)
Adjustments to reconcile net loss
to net cash used in operating
activities
Write-off of prepaid royalty - - 137,500
Depreciation and amortization 733 - 3,629
Write-off of deposit - - 30,000
Impairment of goodwill - - 14,437
Common stock issued for partial
settlement of lawsuit - - 6,000
Stock options issued to
non-employees for services 36,000 - 48,333
Common stock issued for services 102,750 34,750 932,052
Changes in assets and liabilities
Prepaid expenses (22,440) - (22,440)
Prepaid taxes - - 3,442
Other assets - (4,248) (5,000)
Liability from settlement of
lawsuits - - 167,500
Accounts payable and
accrued expenses 23,135 4,314 299,396
Due to officers 132,632 89,118 535,173
Accrued interest 4,454 - 18,602
Net cash used in operating
activities (473,353) (13,783) (1,263,689)
Cash flows from investing activities
Purchase of equipment and trademarks (8,500) - (8,500)
Cash flows from financing activities
Advances from officers 108,408 - 108,408
Proceeds from issuance of notes 443,500 - 466,900
Repayments of advances and notes (28,500) - (28,500)
Loans from stockholder 3,385 17,000 120,441
Issuance of common stock - 8,780 630,964
Liability from sale of common
stock rescinded - - 22,260
Net cash provided by
financing activities 526,793 25,780 1,320,473
Net increase in cash 44,940 16,997 48,284
Cash, beginning of period 3,344 7 -
Cash, end of period $ 48,284 $ 17,004 $ 48,284
See notes to condensed consolidated financial statements.
3
<PAGE>
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARIES
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998
1 Basis of presentation and management's plan
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 ("AMSH" or the "Company") on September 20,
1995. On August 21, 1995, AMSH acquired 100% of the capital
stock of Infinet, Inc. ("Infinet"). For accounting purposes,
the acquisition of Infinet by AMSH has been treated as a
recapitalization of Infinet, with Infinet as the acquirer
(reverse acquisition). AMSH had no assets or operations
prior to May 1995. The historical financial statements prior
to August 21, 1995 are those of Infinet. Although the
Company has incurred a significant amount of start-up costs,
since the Company has not generated any revenue from
operations, it is still considered to be in the development
stage.
The Company incurred a net loss of $750,617 for the six
months ended June 30, 1999, resulting in an accumulated
deficit of $3,516,710. Management of the Company is
developing a business plan summarizing its strategy for the
next several years. This plan is now focused on providing
U.S. sports and educational content utilizing all available
technologies of the Internet, media, advanced
telecommunications and storage technologies. Under this
plan, significant cash will be required over the next 12
months to pay off current debt and fund its implementation.
The intention is to raise capital through the sale of its
equity securities and/or to seek outside private sources of
financing. In connection with this, the Company has issued
approximately $614,000 in non-interest bearing demand
promissory notes to various parties, including officers of
the Company, in the first seven months of 1999. Significant
additional cash will be required.
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.
These matters raise substantial doubt about the Company's
ability to continue as a going concern. However, the
accompanying condensed consolidated 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
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.
2 Significant accounting policies
Interim financial information
The condensed consolidated balance sheet as of June 30, 1999
and the condensed consolidated statements of operations and
cash flows for the three and six months ended June 30, 1999
and 1998 and cumulative from May 1, 1995, have been prepared
by the Company without audit. These interim financial
statements include all adjustments, consisting only of
normal recurring accruals, which management considers
necessary for a fair presentation of the financial
statements for the above periods. The results of operations
for the six months ended June 30,
4
<PAGE>
2 Significant accounting policies (continued)
Interim financial information (continued)
1999, are not necessarily indicative of results that may be
expected for the full year.
These condensed consolidated financial statements should be
read in conjunction with the consolidated financial
statements and notes thereto for the year ended December 31,
1998. The accounting policies used in preparing the
condensed consolidated financial statements are consistent
with those described in the December 31, 1998 consolidated
financial statements.
Principles of consolidation
The consolidated financial statements include the accounts
of the Company and its wholly-owned subsidiaries. All
significant intercompany transactions and balances have been
eliminated in consolidation.
Stock options
Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS 123")
establishes a fair value-based method of accounting for
stock compensation plans. The Company has chosen to adopt
the disclosure requirements of SFAS 123 and continue to
record stock compensation for its employees in accordance
with Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" ("APB 25"). Under APB 25,
charges are made to operations in accounting for stock
options granted to employees when the option exercise prices
are below the fair market value of the common stock at the
grant date. Options granted to non-employees are recorded
in accordance with SFAS 123.
Use of estimates
In preparing condensed consolidated financial statements in
conformity with generally accepted accounting principles,
management makes estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures
of contingent assets and liabilities at the date of the
condensed consolidated financial statements, as well as the
reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those
estimates.
Reclassifications
Certain reclassifications have been made to the condensed
consolidated financial statements shown for the prior
periods in order to conform to the current period's
classifications.
5
<PAGE>
3 Transactions with related parties
Loans from stockholder
From time to time, one of the Company's stockholders (the
stockholder is also the Chairman's spouse) has advanced the
Company funds used for working capital purposes and paid
expenses on behalf of the Company. Such advances have no
scheduled repayment terms and no stated interest rate.
Loans from stockholder amounted to $120,441 at June 30,
1999. Periodically the Company has also engaged such
stockholder to provide services to the Company and in
return, the Company issued common stock in payment for such
services.
Notes payable and accrued interest
Notes payable of $509,829 at June 30, 1999, represent loans
made to the Company by various parties, including
stockholders, and amounts owed to professional service firms
for services rendered. These notes are due on demand and
some bear interest at 10% per annum. The Company received
proceeds of $193,500 and $443,500 from the issuance of non-
interest bearing demand promissory notes during the three
and six months ended June 30, 1999, respectively, and an
additional $38,000 through July 1999.
Due to officers
Due to officers of $633,582 at June 30, 1999, represents
amounts owed to the Company's Chairman ($511,193) and
various officers of the Company ($122,389) that are non-
interest bearing and have no scheduled repayment terms. The
amounts owed to the Chairman consist principally of unpaid
salary. The amounts owed to other officers consist of
working capital advances. The Company is currently
renegotiating the Chairman's employment contract as well as
the amounts owed to him. Additionally, during 1998, the
Company shared office facilities with the Chairman without
charge.
4 Commitments and contingencies
Employment agreements
The Company entered into a five-year employment agreement
with Vincent M. Nerlino beginning on January 1, 1996 and
terminating on December 31, 2000, pursuant to which Mr.
Nerlino served as the Company's Chairman, President and
Chief Executive Officer. Mr. Nerlino is currently serving
only as Chairman. The employment agreement provides for
annual base 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 annual base compensation.
Mr. Nerlino's employment agreement is currently being
renegotiated.
6
<PAGE>
4 Commitments and contingencies (continued)
Employment agreements (continued)
In the second quarter of 1999, the Company entered into
three-year employment agreements with five additional
members of senior management. Under the terms of the
employment agreements, each executive will receive an annual
base salary of $90,000. A portion of the base salaries may
be paid in common stock in lieu of cash. In light of the
Company's current financial difficulties, in the initial
contract year the five employees have agreed to accept a
total of 520,000 shares of common stock and $190,000 of
cash. Additionally, the base salaries may be increased based
on certain performance milestones and must be approved by
the Company's President, Chief Executive Officer and Board
of Directors. The agreements may be terminated with or
without cause. As an incentive to enter into an agreement,
in the second quarter of 1999, one of the officers received
200,000 shares of common stock and 750,000 stock options,
with an exercise price of $1.00, that vest in equal
installments over three years commencing June 2000.
Legal proceedings
On June 30, 1996, a default judgment was entered against
Infinet, the Company's wholly-owned subsidiary, and certain
of the Company's principal stockholders by a former
shareholder of Fans Publishing, Inc., alleging breach of
contractual commitments and other matters. Effective October
14, 1997, on behalf of himself and the Company, Mr. Nerlino
entered into a proposed settlement agreement whereby the
Company is obligated to pay $100,000 in cash and is also
obligated to issue 225,000 shares of its common stock. As a
result, the Company recorded a charge to operations of
$122,500 in 1997.
The $100,000 is payable, without interest, in two
installments: $5,000 within 120 days of the agreement and
$95,000 by October 14, 2000. The common stock was to be
issued within 30 days of the effective date of the
agreement. Since the first cash installment was paid in
November 1998 and the common stock was issued in June 1999,
the Company became in default of the agreement. Should any
legal action be initiated against the Company due to its
late payment default, the Company will vigorously defend
itself. As a result of the default, the Company recorded the
balance due as a current liability.
On August 2, 1996, the Company became a defendant in a case
involving one of its current stockholders. The stockholder
was seeking a refund of approximately $200,000, the original
amount invested in the Company's common stock. On November
2, 1998, the Company entered into a settlement agreement
with the stockholder. The Company is obligated to pay
$50,000, without interest, 18 months from the effective date
of the agreement, and has issued 50,000 shares of its common
stock to the stockholder. As a result, the Company recorded
a charge to operations of $56,000 in 1998 and classified the
remaining liability as long-term.
The Company is delinquent in paying many of its outstanding
debts and has been notified by several creditors that they
have already initiated or may pursue legal remedies. The
Company believes that all amounts are appropriately accrued
in its financial statements. Since the Company does not
currently have the financial resources to satisfy these
debts, it intends to negotiate settlements with its
creditors in the near term. It is not possible to predict
the ultimate outcome of these matters.
7
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Forward-looking statements
This Form 10-QSB includes, without limitation, certain
statements containing the words "believes", "anticipates",
"estimates", and words of a similar nature, constitute
"forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. This Act
provides a "safe harbor" for forward-looking statements to
encourage companies to provide prospective information about
themselves so long as they identify these statements as
forward looking and provide meaningful, cautionary
statements identifying important factors that could cause
actual results to differ from the projected results. All
statements other than statements of historical fact made in
this Form 10-QSB are forward-looking. In particular, the
statements herein regarding industry prospects and future
results of operations or financial position are forward-
looking statements. Forward-looking statements reflect
management's current expectations and are inherently
uncertain. The Company's actual results may differ
significantly from management's expectations.
Overview
Although the Company has incurred significant start-up
costs, since the Company has not yet generated any revenue
from operations, the Company is still considered to be in
the development stages.
Results of operations
During the quarter ended June 30, 1999 and June 30, 1998,
general and administrative expenses were $238,757 and
$64,973, respectively. Cumulative from May 1, 1995, the
Company has incurred $2,802,461 of general and
administrative expense. The Company currently has six
employees. In the business plan, it is contemplated that
additional employees will be added as funding permits.
Product development expenses were incurred during the
quarter ended June 30, 1999 totaling $291,000. With the new
business strategy which calls for the use of technology, the
Company has spent approximately $400,000 on research and
development activity. The Company will seek to secure
patent and copyright protection for any intellectual
property developed.
During the quarters ended June 30, 1999 and 1998, the
Company had net losses of $529,757 and $64,973,
respectively. During the six months ended June 30, 1999 and
1998, the Company incurred net losses of $750,617 and
$137,717, respectively.
As of June 30, 1999 and 1998, the Company was a development
stage company that had not yet generated any revenue from
operations. The Company expects to incur continuing general
and administrative expenses, without any commensurate
operating revenue, 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.
There can be no assurances, however, that the Company will
ultimately be successful in raising the necessary capital
and in establishing itself as a sports information and
services provider.
Liquidity and capital resources
The Company incurred a net loss of $750,617 for the six
months ended June 30, 1999, resulting in an accumulated
deficit of $3,516,710. Management of the Company is
developing a business plan summarizing its strategy for the
next several years. This plan is now focused on providing
U.S. sports and educational content utilizing all available
technologies of the Internet, media, advanced
telecommunications and storage technologies. Under this
plan, significant cash will be required over the next 12
months to pay off current debt and fund its implementation.
The intention is to raise capital through the sale of its
equity securities and/or to seek outside private
8
<PAGE>
Liquidity and capital resources (continued)
sources of financing. In connection with this, the Company
has issued approximately $614,000 in non-interest bearing
demand promissory notes to various parties, including
officers of the Company, in the first seven months of 1999.
Significant additional cash will be required.
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. These matters raise substantial doubt about the
Company's ability to continue as a going concern.
Management of the Company intends to sustain operations
during the year ending December 31, 1999, with the cash
resources generated by the continuing sale of common stock,
issuance of stock for services, and through management's
ability to control discretionary expenditures. During the
quarter ended June 30, 1999, 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, employees
and consultants for services rendered to conserve working
capital.
Year 2000 implication
The Year 2000 issue is the result of computer programs being
written using two digits (rather than four) to define the
applicable year. Computer programs that have time-sensitive
software may recognize a date using "00" as the year 1900
rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of
operations, including among other things, a temporary
inability to process transactions, send invoices or engage
in other normal business activities. The Company maintains
internal equipment and contracts with third-party vendors
for the provision of certain information technology and
other services.
The Company is currently reviewing the potential impact of
the year 2000 on the processing of date-sensitive
information by the Company's internal computer equipment and
the computer systems and equipment of the third-party
vendors on which the Company's business relies. There is no
current estimate of the potential cost to resolve Year 2000
issues that may arise. There can be no assurance that the
Company will be able to address, in a timely fashion, all
potential Year 2000 problems, or that the systems of the
third-party vendors upon which the Company's business relies
(and the maintenance and operation of which are not within
the control of the Company) will be Year 2000 compliant or
will become Year 2000 compliant in a timely manner. Any
Year 2000 problems could impact the provision of products or
services to the Company's customers and could subject the
Company to the risk of litigation, lost revenue and loss of
future customers.
9
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Note 4 to Condensed Consolidated Financial
Statements "Commitments and Contingencies."
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a)Exhibits: Included only with the electronic filing of
this report is the Financial Data Schedule for the six-
month period ended June 30 1999 (Exhibit Ref. No. 27).
(b)Reports on Form 8-K: Current report on Form 8-K,
dated June 14, 1999 was filed on June 18, 1999 to report
a change of accountants.
10
<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.
AMERICAN SPORTS HISTORY INCORPORATED
Date: August 11, 1999 By: /s/ HERBERT J. HEFKE
Herbert J. Hefke
President and Chief Executive Officer
August 11, 1999 By: /s/ JEFFREY HWANG
Jeffrey Hwang
Chief Financial Officer
11
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 48,284
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 70,724
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 81,158
<CURRENT-LIABILITIES> 1,718,020
<BONDS> 0
0
0
<COMMON> 104,660
<OTHER-SE> 1,906,438
<TOTAL-LIABILITY-AND-EQUITY> 81,158
<SALES> 0
<TOTAL-REVENUES> 9
<CGS> 0
<TOTAL-COSTS> 750,626
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (750,617)
<INCOME-TAX> 0
<INCOME-CONTINUING> (750,617)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (705,617)
<EPS-BASIC> (0.08)
<EPS-DILUTED> (0.08)
</TABLE>
