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 September 30, 1998
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
18-I Heritage Drive, Chatham, New Jersey 07928
(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 ( ) No ( X )
As of July 13, 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 )
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AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARIES
(A Development Stage Company)
FORM 10-QSB - SEPTEMBER 30, 1998
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 1998 and December 31, 1997 1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and nine months ended September 30, 1998 and 1997
and cumulative from May 1, 1995 2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1998 and 1997
and cumulative from May 1, 1995 3
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 4 - 11
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 12 - 13
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS 14
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS 14
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES 14
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 14
ITEM 5 - OTHER INFORMATION 14
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 14
SIGNATURES 15
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PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARIES
(A Development Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
1998 1997
(Unaudited)
ASSETS
Current assets
Cash $ 4,207 $ 7
Total current assets 4,207 7
Other assets 53,560 35,000
$ 57,767 $ 35,007
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable and accrued expenses $ 348,149 $ 350,315
Due to officer 344,541 324,299
Loans from stockholder 92,556 83,376
Notes payable and accrued interest 70,613 23,400
Liability from settlement of lawsuit 106,000 122,500
Total current liabilities 961,859 903,890
Liability from settlement of lawsuit 50,000 -
Total liabilities 1,011,859 903,890
Commitments and contingencies
Stockholders' deficit
Common stock, $.01 par value; 25,000,000 shares
authorized, issued and outstanding - 9,096,026
shares at September 30, 1998 and 2,770,826
shares at December 31, 1997 90,960 27,708
Additional paid-in capital 1,509,805 1,260,263
Accumulated deficit ($2,470,460 accumulated
during the development stage) (2,544,857) (2,156,854)
Total stockholders' deficit (954,092) (868,883)
$ 57,767 $ 35,007
See notes to condensed consolidated financial statements.
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AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARIES
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Nine months ended Cumulative
September 30, September 30, from
May 1,
1998 1997 1998 1997 1995
Revenue
Interest income $ 24 $ - $ 25 $ - $ 493
Expenses
General and
Administrative 204,310 58,458 342,028 177,527 2,211,597
Lawsuit settlements 56,000 - 56,000 - 178,500
Write-off of advances
For terminated
Acquisition - - - - 80,856
260,310 58,458 398,028 177,527 2,470,953
Net loss $(260,286) $ (58,458) $(398,003) $(177,527) $(2,470,460)
Basic and diluted
net loss per share $ (0.03) $ (0.03) $ (0.06) $ (0.09)
Weighted average number
of common shares
outstanding 8,807,062 1,770,826 6,975,708 1,895,826
See notes to condensed consolidated financial statements.
2
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARIES
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended September 30, Cumulative
from May 1,
1998 1997 1995
INCREASE (DECREASE) IN CASH
Cash flows from operating activities
Net loss $(398,003) $(177,527) $(2,470,460)
Adjustments to reconcile net loss to
net cash used in operating activities
Write-off of prepaid royalty - - 137,500
Common stock issued for services 216,794 57,500 757,302
Changes in assets and liabilities
Prepaid taxes - - 3,442
Other assets (3,560) - (8,560)
Liability from settlement of lawsuits 56,000 - 178,500
Accounts payable and
Accrued expenses 35,580 (7,422) 281,795
Due to officers 20,242 104,497 344,541
Accrued interest 10,967 - 10,967
Net cash used in operating activities (61,980) (22,952) (764,973)
Cash flows from financing activities
Proceeds from issuance of notes - - 23,400
Loans from stockholder 9,180 22,957 92,556
Issuance of common stock 57,000 - 630,964
Liability from sale of common
Stock rescinded - - 22,260
Net cash provided by financing
Activities 66,180 22,957 769,180
Net increase in cash 4,200 5 4,207
Cash, beginning of period 7 8 -
Cash, end of period $ 4,207 $ 13 $ 4,207
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Goodwill acquired in common stock purchase of Sunset
Interactive Network, Inc. $ 15,000
Common stock issued for partial payment of lawsuit liability $ 22,500
Common stock issued for repayment of note payable $ 1,500
See notes to condensed consolidated financial statements.
3
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AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARIES
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
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 $398,003 for the nine
months ended September 30, 1998, resulting in an accumulated
deficit of $2,544,857. 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 through December 1999 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 $550,000 in non-
interest bearing demand promissory notes to various parties,
including officers of the Company, in the first and second
quarters 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 September 30,
1998 and the condensed consolidated statements of operations
and cash flows for the three and nine months ended September
30, 1998 and 1997 and cumulative from May 1, 1995, have been
prepared by the Company without audit. These interim
financial statements include all adjustments, consisting
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2 Significant accounting policies (continued)
Interim financial information (continued)
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 nine months ended September 30, 1998, 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,
1997. The accounting policies used in preparing the
condensed consolidated financial statements are consistent
with those described in the December 31, 1997 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.
Common stock split
On May 15, 1997, the Board of Directors of the Company
authorized a 1 for 10 reverse stock split. 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 January 1, 1997 and May 15, 1997) to 1,395,826, and
related par value was increased to $.01 per common share
from $.001 per common share.
All references to the number of common shares and per share
amounts in the condensed consolidated statements of
operations and notes to the condensed consolidated financial
statements have been restated to reflect the effect of the
split for all periods presented.
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.
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2 Significant accounting policies (continued)
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.
3 Acquisition of Sunset Interactive Network, Inc.
On January 14, 1998, the Company entered into an agreement
with Sunset Interactive Network, Inc. ("SIN"), a newly
formed Delaware corporation, to purchase 100% of SIN's
capital stock in exchange for the issuance of 500,000 shares
of the Company's common stock, valued at $15,000. SIN was a
newly formed corporation with no operations, and
accordingly, the Company recorded goodwill of $15,000.
SIN was registered as an interactive media company whose
objective was to provide entertainment information through
the World Wide Web utilizing recognized celebrity names.
The Company intended to establish a web site for its
proposed sports magazine and market entertainment products
through the worldwide web. However, SIN required significant
capital to commence operations. In the fourth quarter of
1998, in conjunction with the development of its new
business plan, management decided not to further develop
SIN. As a result, management determined that the goodwill
related to the acquisition of SIN was impaired and,
accordingly, a provision for impairment of $14,437 was
recorded in the fourth quarter of 1998.
4 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 $92,556 at September 30,
1998. 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.
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4 Transactions with related parties (continued)
Notes payable and accrued interest
Notes payable of $70,613 at September 30, 1998, represent
loans made to the Company by stockholders and amounts owed
to professional service firms for services rendered. These
notes are due on demand and bear interest at 10% per annum.
The Company received proceeds of approximately $550,000,
exclusive of repayments of $28,500, from the issuance of non-
interest bearing demand promissory notes during the first
and second quarters of 1999.
Due to officer
Due to officer of $344,541 at September 30, 1998,
represents amounts owed to the Company's Chairman. These
amounts consist principally of unpaid salary, are non-
interest bearing and have no scheduled repayment terms. The
Company is currently renegotiating the Chairman's employment
contract as well as the amounts owed to him.
5 Other assets
Deposits
On January 30, 1996, the Company issued 120,000 shares of
its restricted common stock towards 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 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. In the fourth quarter of 1998, in
conjunction with the development of its new business plan,
management decided not to pursue the purchase of the film
library. As a result, no additional shares of stock were
issued and the $30,000 deposit was written off during the
fourth quarter of 1998. The Company is currently negotiating
a revision to the original contract with the owner of the
film library. No final conclusion has been reached and no
additional adjustments have been made in the condensed
consolidated financial statements.
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6 Stockholders' deficit
Common stock
During the nine months ended September 30, 1998, the Company
issued 6,325,000 shares of its common stock as follows:
- 246,000 shares were issued to approximately 25 individuals
for cash proceeds of $57,000.
- 500,000 shares were issued to purchase 100% of Sunset
Interactive Network, Inc.'s common stock (Note 3).
- 50,000 shares were issued as partial repayment of an
outstanding note payable.
- 225,000 shares were issued toward the settlement of a
lawsuit (Note 2).
- 3,000,000 shares were issued to the Company's Chairman (as
partial payment under his employment contract, Note 7) and
400,000 shares were issued to two officers/directors of the
Company, which resulted in a charge to operations of $141,000.
- 300,000 shares were issued to the Chairman's spouse for
services performed which resulted in a charge to operations of
$10,500.
- 1,604,200 shares were issued to various consultants and
professional service firms for services provided during 1998
(including 400,000 shares to Gerard Management Inc., 100,000
shares to Robert P. Maerz and 50,000 shares to Penn & Cobb
Productions, Inc., see Note 8), which resulted in a charge to
operations of $65,294.
During the fourth quarter of 1998, the Company issued
650,000 shares of its common stock as follows:
- 400,000 shares were issued to an officer of the Company,
which resulted in an aggregate charge to operations of $48,000 in
the fourth quarter of 1998.
- 200,000 shares to Next Generation Networks Technology, Inc.
- 50,000 shares were issued toward the settlement of a lawsuit
(Note 7).
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6 Stockholders' deficit (continued)
Stock options
In the fourth quarter of 1998, the Company granted a total
of 5,850,000 stock options. 50,000 of these options are
exercisable immediately and 5,800,000 options vest in equal
installments over three years commencing November 1999. No
stock options were granted for the nine months ended
September 30, 1998 or 1997. The following table summarizes
information about fixed stock options outstanding at
December 31, 1998:
Options outstanding
Weighted-average
Number remaining Options
Options Outstanding contractual exercisable
exercise price At 12/31/98 life (in years) at 12/31/98
$ .12 1,200,000 10 -
$ 1.00 4,650,000 10 50,000
5,850,000 50,000
7 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.
In lieu of cash payments for employment services, the
Company issued 3,000,000 shares of its common stock to Mr.
Nerlino during the nine months ended September 30, 1998, as
partial payment under the contract. Mr. Nerlino's
employment agreement is currently being renegotiated.
In 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.
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7 Commitments and contingencies (continued)
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 1998,
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 issued 50,000 shares of its common
stock to the stockholder (in the fourth quarter of 1998).
As a result, the Company recorded a charge to operations of
$56,000 in the third quarter of 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.
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8 Consulting agreements
Next Generation Networks Technology, Inc.
Effective November 18, 1998, the Company entered into a
business and consulting services agreement with Next
Generation Networks Technology, Inc. ("NGN"). In connection
with the agreement, Kenneth O. Roko, NGN's Chief Executive
Officer, will serve as an officer and a member of the
Company's Board of Directors and assist in the
implementation of the Company's technological strategies in
order to establish the Company as a major contributor and
presence on the Internet.
Under the terms of the agreement in the fourth quarter of
1998, the Company issued 200,000 shares of its common stock
to NGN and has also granted 1,200,000 stock options with an
exercise price of $.12 per share (Note 6). The Company is
also obligated to pay $50,000 to NGN, upon completion of the
Company's new strategic business plan. In addition, the
Company is obligated to pay NGN certain additional
compensation based on specified future performance.
Gerard Management Inc.
Effective January 5, 1998, the Company entered into a
business and consulting services agreement with Gerard
Management Inc. ("GMI"). Under the terms of the agreement,
GMI will provide Internet strategy consulting as well as
programming and basic maintenance of the Company's website
in exchange for 400,000 shares of the Company's common stock
(Note 6). The agreement shall terminate on January 4, 2000,
unless terminated earlier in accordance with the agreement.
Robert P. Maerz and Penn & Cobb Productions, Inc.,
Effective February 28, 1998, the Company entered into
business and consulting agreements with Robert P. Maerz and
Penn & Cobb Productions, Inc. Under the terms of the
agreements, the consultants will help create and implement
the Company's business plan as well as market the Company
throughout the media and entertainment industry. 100,000 and
50,000 shares were issued to Robert P. Maerz and Penn & Cobb
Productions, Inc., respectively, in accordance with the
consulting agreements (Note 6). The agreements terminate
upon satisfactory completion of the services as set forth in
the agreement.
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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 September 30, 1998 and 1997,
general and administrative expenses were $204,310 and
$58,458, respectively. Cumulative from May 1, 1995, the
Company has incurred $2,211,597 of general and
administrative expense.
During the quarters ended September 30, 1998 and 1997, the
Company incurred net losses of $260,286 and $58,458,
respectively. During the nine months ended September 30,
1998 and 1997, the Company incurred net losses of $398,003
and $177,527, respectively.
As of September 30, 1998 and 1997, 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 $398,003 for the nine
months ended September 30, 1998, resulting in an accumulated
deficit of $2,544,857. 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 through December 1999 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
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sources of financing. In connection with this, the Company
has issued approximately $550,000 in non-interest bearing demand
promissory notes to various parties, including officers of
the Company, in the first and second quarters 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 September 30, 1998, 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.
13
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Note 7 to Condensed Consolidated Financial
Statements "Commitments and Contingencies.".
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
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 nine-
month period ended September 30, 1998 (Exhibit Ref. No.
27).
(b)Reports on Form 8-K: None.
14
<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: July 14, 1999 By: /s/ HERBERT J. HEFKE
Herbert J. Hefke
President and Chief Executive Officer
July 14, 1999 By: /s/ JEFFREY HWANG
Jeffrey Hwang
Chief Financial Officer
15
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<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 4,207
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<RECEIVABLES> 0
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<PP&E> 0
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<CURRENT-LIABILITIES> 961,859
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0
0
<COMMON> 90,960
<OTHER-SE> 1,509,805
<TOTAL-LIABILITY-AND-EQUITY> 57,767
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<INCOME-PRETAX> (398,003)
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<INCOME-CONTINUING> (398,003)
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<NET-INCOME> (398,003)
<EPS-BASIC> (.06)
<EPS-DILUTED> (.06)
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