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, 1999
( ) 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)
21 MAPLE AVENUE, BAY SHORE, NEW YORK 11706-8752
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (631) 206-2674
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(x) No( )
Check 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, 1999. The aggregate market value
of the voting stock held by non-affiliates of the registrant,
based on the last sale price on March 23, 2000 was $7,357,050.
As of March 23, 2000, the issuer had 9,466,026 shares of its
common stock issued and outstanding.
Documents incorporated by reference: None.
Transitional Small Business Disclosure Format: Yes ( ) No (x)
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
Business Development:
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") on September 20,
1995. On August 21, 1995, AMSH acquired 100% of the capital
stock of Infinet, Inc., a Delaware corporation ("Infinet"). On
May 15, 1997, the Board of Directors of the Company authorized a
1 for 10 reverse stock split. On January 14, 1998, the Company
acquired 100% of the capital stock of Sunset Interactive Network,
Inc., a newly formed Delaware corporation ("SIN"). As used in
this document, the "Company" refers to AMSH and its subsidiaries,
Infinet and SIN (effective January 14, 1998), unless the context
indicates otherwise.
For two years prior to April 1999, the Company had attempted
to publish magazines that featured sports with a nostalgia
spirit. These efforts were not successful. No revenues were
realized from operations and expenses were incurred during these
efforts.
In April 1999, a new management team was recruited to develop
a new business strategy. As a result, the Company is now focused
on providing sports instruction and education content to sports
fans. The Company is looking into the advantages of using
various technologies related to the Internet to deliver content
to its customers.
The Company now intends to focus its efforts on developing
its sports-related instruction and education business around
America's five major professional sports: baseball, basketball,
football, hockey and soccer (the "Business"). With respect to
these areas, the Company intends to make investments in (i) its
Internet web-site, SportsInfo.com, (ii) sports camps and (iii)
its digital card that resembles a traditional paper trading card
(the "SportsVZN Card").
SportsInfo.com
The Company intends to build the Business around its
Internet web-site. Ideally, the web-site will allow sports fans
to gain access to both instructional and educational content.
The Company believes that such a web-site will be well received
by the public as current sports-related web-sites generally focus
on teams, scores and news rather than on education or
instruction. Furthermore, those web-sites that do include
instruction typically only address a single sport whereas the
Company intends to offer sports fans access to instructional and
educational content across multiple sports via its web-site. The
Company plans to include, on its web-site, features such as
narratives written by and about players, off-line and on-line
instructional material and on-line chats with players, coaches,
and other sports personalities. By taking advantage of emerging
technology, the Company plans to use its web-site to make each
sports fan's experience interactive. Each sports fan will be
able to select the sport in which he or she is interested, assess
his or her skill level and receive appropriate instructional
content. Initially, the skill level is expected to be determined
through the use of a questionnaire. The Company expects to
create a feature whereby its customers would be able to use the
web-site to send a video of themselves playing such sport to the
Company so that a professional may assess the customer's skill
level. The Company also expects to create a feature whereby it
can deliver its instructional content to its customers in a video
format. It is expected that the first generation of this feature
would allow the customer to download the video instruction and
play the video. The customer would also be able to play the
video in slow motion as well as forward and rewind the video.
Ultimately, the Company plans to develop or otherwise obtain the
ability to create an on-line instructional service.
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The Company is also considering the development of an e-
commerce web-site where sports fans would be able to purchase
instructional material, audio and video content, sports
merchandise and authenticated sports memorabilia. The Company
intends to offer to its customers the opportunity to purchase
instructional content in the form of books, tapes, DVDs, and pay-
per-view audio/video material. There is a plan to sell to sports
fans sports memorabilia. Lastly, the Company plans to identify
quality instructional sports camps operators around the country
so that it can include a referral feature on its web-site whereby
the Company can provide its customers with a referral to a local
sports camp with which it is familiar.
In connection with its web-site, the Company has been
working with Media Vault, Inc. and Square Moon, Inc. Media
Vault, Inc. is assisting the Company in its initial preparation
for the web-site. Square Moon, Inc. is working with the Company
to develop its content delivery system.
The initial launch of the Company's web-site is planned
during the year 2000.
Sports Camps
The Company intends to operate baseball, softball, and
soccer camps, in the NY metro area and in Florida. Robert C.
Dromerhauser, Vice President of Marketing, has experience in
operating both baseball and softball camps and will lead the
Company in its efforts to acquire existing sports camps and/or
build new sports camps. The sports camps likely will be taught
by experienced coaches, some of whom may be former professional
athletes. The sports camps will target boys and girls between
five (5) and fifteen (15) years of age. The sports camps likely
will be seasonal and operate in a series of one week sessions.
The Company also intends to offer off-line year-round training
and is currently discussing the use of certain indoor facilities.
The instructional camps are integral to the Company, as they
will help the Company to fulfill the instructional part of its
mission. Participants in the sports camps will be provided with
information regarding the Company's other products and may become
part of the Company's regular customer base.
SportsVZN Card
The Company has developed a prototype of a digital card that
resembles a traditional paper trading card (the "SportsVZN Card")
for demonstration purposes. The Company plans to develop a
production version as soon as it finalizes any changes to the
prototype.
The production version of the card likely is expected to be
a card shaped CD that has a picture of a professional athlete on
its surface. When the card is placed in a CD reading device, it
would display a full screen view of the athlete. The customer
then would be able to view (i) all of such athlete's career
statistics and (ii) select video clips of the player and his
team. The Company plans to include a feature which would allow
its customers to use the SportsVZN Card to link to the Company's
web-site and obtain updated information with respect to players,
participate in on-line sessions and purchase products. Lastly,
the card would provide the Company's customers with a short
instructional segment.
While the Company does not anticipate a complete migration
from the traditional paper trading cards to the new electronic
trading cards, the Company believes that a market for the
SportsVZN Card will develop. The Company believes that the
public will be attracted to these cards because, unlike a
traditional paper card, the SportsVZN Card, if successfully
developed, would be interactive in nature and would allow
customers to access a variety of information.
Prior to 1999, a minimal amount was spent on research and
development activity, and no patents were applied for and
copyrights were not sought. In 1999, with the new business
strategy that calls for the use of technology, the Company has
spent approximately $467,000 on research and development
activity.
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The Company expects to secure patent or copyright protection for
any intellectual property developed.
The Company may seek to acquire the rights to licensed
property from major sports leagues either on its own or in
partnership with other companies. The acquisition of licenses
with professional sports leagues is a major undertaking requiring
both capital and execution capability. There can be no assurance
that the Company will be able to acquire rights to licensed
property either on its own or in partnership with other
companies.
Marketing and Distribution:
Since April 1999, the Company has been developing its
marketing strategies, which includes working closely with
potential strategic business partners, including other sports
related web-sites and sports marketing organizations, and
capitalizing on the relationships that have been established by
the management team over the course of their careers. To reach
its potential customers, management expects to utilize
promotional advertising both independently and in cooperation
with sports publications, radio and television media, sports
events, consumer products, specialty retail distributors, sports-
related web-sites and other organizations and associations which
have established membership bases. The Company has engaged in
preliminary discussions to promote its web-site with local radio
stations, sponsors of professional sports teams, and sports
merchandisers.
The Company expects to advertise its web-site as well as
seek other means to attract sports fans to our web-site. For
instance, the SportsVZN card enables its users to link directly
to the Company's web-site.
Competition:
There is significant competition for the business the
Company intends to pursue. On the Internet side, web users with
an interest in sports can go to web sites sponsored by the major
television networks (ABC, CBS, CNN, FOX, NBC), specialty sports
networks (ESPN, The Golf Channel, SpeedVision) and professional
sports leagues (MLB, MLS, NASCAR, (W)NBA, NFL, NHL, (L)PGA).
Many of the existing participants in the sports web site business
are significantly better capitalized than the Company, have
significantly larger facilities, and employ a larger number of
personnel who have more experience than the Company's employees.
The competition for instructional sports camps is different as
the competition is largely fragmented. Here, the challenge will
be entering new markets where the local competitor has been
entrenched for some time.
The Company expects to compete by providing the fan with an
experience that is different from that otherwise available
through the application of current and emerging technology.
There will be a focus on bringing the fan closer to the player
through direct and indirect means. We believe that judicious use
of technology will always provide the fan with a higher value
experience.
The market for the sports-related information and related
products is intensely competitive, and the Company expects
competition to increase. With regard to the Company's potential
sports-related e-commerce business, there are a number of web-
sites designed to sell and market such items. Some of these web-
sites are direct sellers of such sports-related memorabilia.
Currently, the Company believes that the Company's principal
competitors are web-sites sponsored by the major television
networks (ABC, CBS, CNN, FOX, NBC), specialty sports networks
(ESPN, The Golf Channel, SpeedVision) and professional sports
leagues (MLB, MLS, NASCAR, (W)NBA, NFL, NHL, (L)PGA).
Additionally, the cost of developing a similar web-site is low.
Accordingly, the Company expects that additional web-sites that
are competitive with the Company's business will develop. In the
future, the Company could also face competition from traditional
media companies, such as newspaper, television and radio
companies, many of which currently operate web-sites. There can
be no assurance that the Company will be able to compete
effectively against these existing or potential competitors.
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The Company believes that its model is unique in that it
will address the clear need for sports instructional content
across select sports and deliver it to its customers using
emerging technology. The Company believes its delivery system
will allow it to compete with established providers of sports-
related information. The Company seeks to provide features that
such other competitors do not now have. However, the e-commerce
market is changing rapidly and there can be no assurance that we
will be able to remain competitive.
Sports Camps
The competition for instructional sports camps is different
as the competition is largely fragmented, as there are no
national franchises of sports camps. Typically, in any given
area there are multiple providers of instructional sports camps.
Upon commencement of operations, the Company's challenge will be
to enter into markets, some of which may contain entrenched local
competitors. The Company plans to gain market share in such
areas by retaining and promoting the experience of members of
management of other sports camps. Additionally, the Company may
seek to retain the services of local talent through an alliance
or otherwise.
SportsVZN Card
Presently, the potential competitors for the SportsVZN Card
are the paper sports card companies; e.g., UpperDeck, Topps, etc.
However, the Company believes that such competitors are not
likely to fully pursue the manufacture of digital sports cards
because of the investments that they made in their paper-based
business.
The Company expects to compete by providing the fan with an
experience that is different from that otherwise available,
through the application of current and emerging technology. We
expect that there will be a focus on bringing the fan closer to
the player through direct and indirect means. For example,
digital sports cards introduced by the established paper card
companies have been passive in design. In the Internet age where
choice and ability to interact are at a premium, the Company
believes sports fans want more than what has been offered to
them. The SportsVZN Card may include features such as active
links to Internet web-sites to make it more similar to the sports
fan's Internet experience. Accordingly, the content will no
longer be static; it will be dynamic, as customers will be able
to update their content by downloading additional information
from the Internet. With this product, the Company believes that
it can provide sports fans with a higher value experience.
Employees:
During 1999, the Company had six employees. The Company
periodically retains outside consultants to perform certain
corporate administrative tasks. In the business plan, it is
contemplated that additional employees will be added as funding
permits.
ITEM 2. DESCRIPTION OF PROPERTY
The Company does not own, and does not anticipate acquiring,
any real estate, principal plants and/or other property.
Beginning in April 1999, the Company operated its corporate
offices from office facilities in Bay Shore, New York at a
monthly rent of $1,250.
ITEM 3. 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 Craig Pearson, 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 that required the Company to
pay $100,000 in cash
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and 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.
On August 2, 1996, the Company became a defendant in a case
involving one of its current stockholders, Robert T. Wheeler.
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 Mr. Wheeler. Pursuant to the agreement, the Company
issued 50,000 shares of its common stock to Mr. Wheeler in 1998.
The Company is also required to pay $25,000 in May 2000 and
$25,000 in November 2001.
The Company is delinquent in paying many of its outstanding
debts and has been notified by some 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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company submitted one matter to a vote of its security
holders during the fourth quarter of the fiscal year ended
December 31, 1999. It was to increase the authorized shares from
25,000,000 to 75,000,000. This was approved by a majority of the
shareholders. However, as no filings in the State of Nevada has
been made, the increase has not taken effect.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a). Market Information
The Company's common stock is traded in the over-the-counter
market. Quotations for the common stock appear on the OTC
Bulletin Board under the symbol "AMSH". 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 markdowns, or any commission to the
broker-dealer, and may not necessarily represent actual
transactions. The information set forth below for the years
ended December 31, 1998 and 1999 and year to date 2000 was
provided by Bloomberg.com.
Year Ended December 31, 1998:
Quarter High Low
1 $1.1250 $0.0312
2 0.7500 0.0625
3 0.9375 0.1250
4 0.9375 0.5058
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Year Ended December 31, 1999:
Quarter High Low
1 $1.0312 $0.5000
2 $0.8125 $0.4375
3 $1.0100 $0.3000
4 $0.8125 $0.3125
Year to Date March 23, 2000:
High Low
$1.8750 $0.6500
(b) Holders:
There were approximately 484 shareholders of record on March
23, 2000 of the Company's common stock with a par value of
$0.001.
(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.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
Overview:
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.
Statement of Operations -
Years Ended December 31, 1999 and 1998:
During the year ended December 31, 1999, general and
administrative expenses and product development expenses were
$738,677 and $466,708, respectively. During the year ended
December 31, 1998, general and administrative expenses and
lawsuit settlement costs were $553,266 and $56,000, respectively.
Prior to 1999, a minimal amount was spent on research and
development activity. In 1999, with the new business strategy
that calls for the use of technology, the Company has spent
approximately $467,000 on research and development activity.
During the years ended December 31, 1999 and 1998, the
Company had net
losses of $1,205,376 and $609,239, respectively.
As of December 31, 1999 and 1998, 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. 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.
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Financial Condition - December 31, 1999:
The Company incurred a net loss of $1,205,376 for the year
ended December 31, 1999, resulting in an accumulated deficit of
$3,971,469. 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 2000 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 addition to the notes issued by the
Company in 1999, approximately $537,000 of promissory notes were
issued in the first quarter of 2000. Significant additional cash
will be required.
There can be no assurance 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.
During the year ended December 31, 1999, the Company issued
720,000 common shares for services rendered by its employees and
outside consultants, which were valued at $360,000. During the
year ended December 31, 1998, the Company issued 6,975,200 common
shares for cash proceeds, for the acquisition of SIN, in
settlement of lawsuits and notes payable, and for services
rendered by its employees and outside consultants, which were
valued at $390,794.
The Company currently has six employees. In the business
plan, it is contemplated that additional employees will be added
as funding permits. Management of the Company intends to sustain
operations during the year ending December 31, 2000, 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 year ended
December 31, 1999, the Company did not pay any compensation to
officers in cash. Common stock was issued to officers for a
portion of accrued compensation with the remainder carried as an
accounts payable.
The Company is currently preparing a private offering
memorandum where holders of the Company's notes payable will be
allowed to exchange their notes for Company common stock at a
fixed exchange rate. At December 31, 1999, the Company has notes
payable to investors and officers aggregating approximately
$790,000. Additionally, $537,500 of promissory notes were issued
during the period from January 1, 2000 through March 22, 2000.
It is expected that substantially all of these note holders will
be offered the opportunity to participate in the exchange. While
the Company anticipates completing the offering memorandum in the
first half of 2000, there can be no assurances that the Company's
offering will be successful.
Forward-Looking Statements:
This Annual Report on Form 10-KSB contains forward-looking statements
within the meaning of Section 21E of the Securities Exchange Act of 1934,
as amended, and Section 27A of the Securities Act of 1933, as amended. For
this purpose, any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, the words "believes," "anticipates," "plans,"
"expects" and similar expressions are intended to identify forward-looking
statements. Such forward-looking statements represent management's current
expectations and are inherently uncertain.
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Investors are warned that actual results may differ from management's
expectations.
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
On June 14, 1999, Michelle M. Gelinas, CPA (the "Former
Accountant") declined to stand for reappointment as the
independent public accountant for American Sports History
Incorporated. The Former Accountant reported on the financial
statements for the fiscal years ended December 31, 1997 and 1996.
The reports of the Former Accountant did not contain any adverse
opinion or a disclaimer of opinion, and were not qualified or
modified as to any uncertainty (except as to the Company's
"ability to continue as a going concern"), audit scope or
accounting principle.
During the Company's two most recent fiscal years and
subsequent interim periods through the date of this report, there
were no disagreements with the Former Accountant on any matter of
accounting principles or practice, financial statement
disclosure, or auditing scope or procedure, which disagreements
if not resolved to the satisfaction of the Former Accountant
would have caused it to make reference thereto in its report on
the financial statements for such years.
At its board meeting on June 14, 1999, the Board of
Directors of the Company engaged the accounting firm of Hays &
Company as its new independent accountants, effective June 14,
1999.
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 March 23, 2000. All
of the directors will serve until the next annual meeting of
shareholders and until their successors are elected and
qualified, or until their 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 64 Chairman May 1995
Herbert J. Hefke 53 President & Chief April 1999
Executive Officer, and
Director
Kenneth O. Roko 49 Secretary & Chief April 1999
Operating Officer, and
Director
Arthur J. 37 Director April 1999
Dromerhauser
Robert C. 36 VP-Marketing, and April 1999
Dromerhauser Director
Jeffrey Hwang 45 Chief Financial n.a.
Officer
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Arthur J. Dromerhauser and Robert C. Dromerhauser are
brothers. There are no other family relationships among
directors and executive officers.
Biographies of Directors and/or officers:
Vincent M. Nerlino - Mr. Nerlino has been a Director since
May 1995. He became Chairman in April 1999 when additional
officers were hired. Previously, he was President, Chief
Executive Officer, and Secretary.
Herbert J. Hefke, President and Chief Executive Officer,
joined the Company in April 1999. Mr. Hefke retired as a
Managing Director of Morgan Guaranty Trust Company and head of
Global Human Resources for J.P. Morgan & Co. Inc. after thirty
years of service. He is currently on the Board of Directors for
J.P. Morgan Services Inc. in Wilmington, Delaware and the Long
Island Aquarium in Bay Shore, New York. Mr. Hefke will be
overseeing the general operations, assuming responsibility for
management along with the development of new customers,
advertising and investor relations.
Kenneth O. Roko, Secretary and Chief Operating Officer,
joined the Company in April 1999. Mr. Roko brings a background
of strategic planning, technological development, analysis,
implementation and vast Internet experience from his work at US
Agency for International Development, where he was employed for
the last ten years. Mr. Roko is President & CEO and Director of
NGN Technology, Inc., a technology consulting company which
provided services to the Company. He will oversee AMSH's
strategic business planning and coordinate technology resources
and relationships for the Company's products and services.
Arthur J. Dromerhauser, Investor Relations, has been a
consultant with the Company since July 1998. He is President of
Dromerhauser Consultants, Inc., a management consulting firm.
Mr. Dromerhauser has been a private investor for several years.
He is responsible for all investor matters, is involved in
capital raising activities, and is involved in setting the
Company's business strategy.
Robert C. Dromerhauser, Vice President of Marketing, joined
the Company on April 1999. Mr. Dromerhauser brings the seasoned
relationships and the valued insights of a former professional
baseball player with the New York Mets and Baltimore Orioles. He
is the co-owner with Mr. Bud Harrelson of the Buddy Harrelson
Baseball & Softball Academy. Mr. Dromerhauser is responsible for
securing advertisers, creating relationships with professional
and amateur sports associations (active and retired), and
assisting in the securing of access to licensed media for
incorporation in the Company's content portfolio.
Jeffrey Hwang, Chief Financial Officer, joined the Company
on June 1999. Mr. Hwang was a Vice President in Capital Markets
& Syndicate at J.P. Morgan & Co. where he raised capital for high
technology and other corporate clients. He joined J.P. Morgan &
Co. in 1980. Prior to receiving his M.B.A. degree from Harvard
Business School, Mr. Hwang was an auditor with Price Waterhouse &
Co. He is responsible for all financial matters other than
Investor Relations.
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
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Summary Compensation Table:
Annual Compensation Long-Term Compensation
(a) (b) (c) (d) (e) (f)
Restricted All Other
Name and Salary Stock Award(s) Options/SAR Compensation
Principal Position Year ($) (#) ($) ($)
Vincent M. Nerlino 1999 22,500(1)
Chairman 1998 200,000(1) 1,200,000 12,000(1)
1997 200,000(1) 12,000(1)
Herbert J. Hefke 1999 63,750(2)
President & CEO 1998 48,000 (2) 1,000,000
(1) As per employment agreement. Amounts accrued for but only
partially paid in the form of 1,250,000 and 3,000,000 shares of
common stock issued to Mr. Nerlino in 1997 and 1998,
respectively. The shares were valued at $55,000 and $120,000,
respectively. In December 1999, Mr. Nerlino entered into a new
employment agreement. Amounts owed to Mr. Nerlino were reduced
and converted into a three year note payable. In addition, Mr.
Nerlino returned 1,000,000 shares of common stock to the Company.
(2) As per employment agreement. Salary was paid in the form of
common shares. In 1998, Mr. Hefke was awarded 400,000 common
shares and 1,000,000 stock options. The stock options vest over
three years and have a exercise price of $1.00.
Option Grants:
Stock options were granted to the following Directors and
officers during 1999.
Percent of
Total Number of
Options Securities
Granted to Underlying Exercise
Directors Options Price Per Expiration
Name and Officers Granted* Share Date
Jeffrey Hwang 100.0% 750,000 $1.00 6/15/09
* Stock options granted to Directors and officers vest over a
three-year period.
11
<PAGE>
Year-end Option Values:
The following table sets forth certain information
concerning the number
and value of options held by each officer and director on
December 31, 1999. No stock options were exercised during 1999.
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Fiscal Year End at Fiscal Year End (3)
Name Unexercisable Exercisable Unexercisable Exercisable
Vincent M. Nerlino 800,000 400,000 $0 $0
Herbert J. Hefke 666,667 333,333 $0 $0
Kenneth O. Roko(1) 800,000 400,000 $553,600 $276,800
Arthur J. 1,600,000 800,000 $0 $0
Dromerhauser (2)
Robert C. 1,600,000 800,000 $0 $0
Dromerhauser (2)
Jeffrey Hwang 750,000 0 $0 n.a.
(1) Stock options granted to NGN Technology, Inc. for which
Kenneth O. Roko is deemed to have control as its President &
Chief Executive Officer.
(2) Stock options granted to Dromerhauser Consultants, Inc. for
which Arthur J. Dromerhauser and Robert C. Dromerhauser are each
deemed to have control.
(3) Represents the difference between the current market price of
the common stock at fiscal year end ($0.812 per share) and the
option exercise price.
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. In
lieu of cash payments for employment services, the Company issued
3,000,000 and 1,250,000 shares of its common stock valued at
$120,000 and $55,000 to Mr. Nerlino during the years ended
December 31, 1998 and 1997, respectively, as partial payment
under the contract. In December 1999, Mr. Nerlino entered into a
new three-year employment agreement. Amounts previously owed to
him under the previous employment contract were settled for a
$185,435 three-year note payable. In addition, one million
shares previously issued to him were returned to the Company.
In the second quarter of 1999, the Company entered into
three-year employment agreements with additional members of
management, Herbert J. Hefke, Kenneth O. Roko, Arthur J.
Dromerhauser, Robert C. Dromerhauser, and Jeffrey Hwang. 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 condition, 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, Jeffrey Hwang 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.
Board of Directors:
Directors of the Company are reimbursed for travel expenses
incurred in
attending Board meetings. During the fiscal year ended December
31, 1999, there
12
<PAGE>
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, 1999.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the common stock as of March 23, 2000. 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.
Amount and Nature of Percent
Name and Address of Beneficial Ownership of
Beneficial Owner Stock Stock Options* Class
Management:
Vincent M. Nerlino 3,501,750(1) 400,000 39.5%
21 Maple Avenue
Bay Shore, NY 11706
Herbert J. Hefke 580,000 333,333 9.3%
21 Maple Avenue
Bay Shore, NY 11706
Kenneth O. Roko 260,000(2) 400,000 6.7%
21 Maple Avenue
Bay Shore, NY 11706
Arthur J. 348,750(3) 800,000 11.2%
Dromerhauser
21 Maple Avenue
Bay Shore, NY 11706
Robert C. 228,750(3) 800,000 10.0%
Dromerhauser
21 Maple Avenue
Bay Shore, NY 11706
Jeffrey Hwang 240,000 2.5%
21 Maple Avenue
Bay Shore, NY 11706
All Directors and 5,159,250 1,933,333 62.2%
Officers as a Group
(6 persons)
Others:
GHQ Ltd 500,000 5.3%
Belize City, Belize
* Stock options exercisable at March 23, 2000.
(1) Includes 675,000 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 824,500 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.
13
<PAGE>
(2) Stock options includes stock options granted to NGN
Technology, Inc. for which Kenneth O. Roko is deemed to have
control as its President & Chief Executive Officer.
(3) Includes (i) 348,750 shares of Common Stock owned by Dromerhauser
Consultants, Inc. for which Arthur J. Dromerhauser is deemed to have
control and (ii) options to acquire 2,400,000 shares of Common Stock
owned by Dromerhauser Consultants, Inc. for which Arthur J. Dromerhauser
is deemed to have control, 800,000 of which are currently exercisable.
(4) Includes (i) 228,750 shares of Common Stock owned by Dromerhauser
Consultants, Inc. for which Robert C. Dromerhauser is deemed to have
control and (ii) options to acquire 2,400,000 shares of Common Stock
owned by Dromerhauser Consultants, Inc. for which Robert C. Dromerhauser
is deemed to have control, 800,000 of which are currently exercisable.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Effective November 18, 1998, the Company entered into a
business and consulting services agreement with NGN 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, the Company
issued 200,000 shares of its common stock and has granted
1,200,000 stock options with an exercise price of $0.12 per
share. The Company is also obligated to pay $50,000 to NGN for
the Company's new strategic business plan. This agreement was
terminated effective January 20, 2000.
In 1999, Herbert J. Hefke, President & CEO of the Company,
Arthur J. Dromerhauser, a director of the Company, and Jeffrey
Hwang, Chief Financial Officer, advanced funds to the Company in
the form of a demand note payable. Mr. Hefke was owed $132,640 at
December 31, 1999. Robert C. Dromerhauser is co-owner of the
Buddy Harrelson Baseball & Softball Academy ("BHBSA"). BHBSA also
advanced funds to the Company in the form of a demand note payable and
was owed $10,000 at December 31, 1999.
In 1999, Arthur J. Dromerhauser, a member of the Board of Directors
of the Company, advanced funds in the amount of $41,908 to the
Company in exchange for a demand note payable. At December 31, 1999,
$41,908 remained outstanding.
In December 1999, Mr. Nerlino entered into a new three-year
employment agreement. Amounts previously owed to him under the
previous employment contract were settled for a $185,435 three-
year note payable. In addition, one million shares previously
issued to him were returned to the Company.
The Chairman's spouse was involved in various transactions with the
Company from 1996 to 1998. In 1998, the Company issued 300,000 shares of
Common Stock as compensation for services rendered by her. From time to
time, the Chairman's spouse has advanced the Company funds used for working
capital purposes and paid expenses on behalf of the Company. In 1999, the
Company converted amounts outstanding (totaling $120,441 at the time) into a
three-year non-interest bearing note payable which calls for no payments
until December 31, 2002, at which time the entire outstanding amount of
$120,441 is due.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
Reports on Form 8-K:
No report on Form 8-K were filed by the Company during the
last calendar quarter of 1999.
Exhibits:
Copies of the following documents are included as exhibits
to this report pursuant to Item 601 of Regulation S-B.
14
<PAGE>
EXHIBIT TABLE
Exhibit SEC Ref. Title of Document Locations
No. No.
1 (3)(i) Articles of incorporation of Sep/Fm10-KSB
National Logistics, Inc. filed in Ex. No. 3.1
the office of the Secretary of
State of the State of Nevada on
August 9, 1990. (A)
2 (3)(i) Amendment to the Articles of Sep/Fm10-KSB
Incorporation of National Ex. No. 3.2
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. (A)
3 (3)(i) Amendment to the Articles of Sep/Fm10-KSB
Incorporation of Fans Holdings, Ex.No. 3.3
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. (A)
4 (3)(i) Bylaws of National Logistics, Inc. (A) Sep/Fm10-KSB
Ex. No. 3.4
5 (10) Employment agreement between Jul/Fm10-KSB
American Sports History Ex. No. 10.7
Incorporated and Vincent M. Nerlino
dated January 2, 1996. (D)
6 (10) American Sports History Incorporated Jul/Fm10-KSB
Employment Agreement. (D) Ex. No. 10.8
7 (10) Agreement between American Sports Jul/Fm10-KSB
History Incorporated and NGN Ex. No. 10.9
Technology, Inc. dated November 18,
1998. (D)
8 (10) American Sports History Jul/Fm10-KSB
Incorporated Qualified Stock Option Ex.No. 10.10
Agreement. (D)
9 (10) American Sports History Jul/Fm10-KSB
Incorporated Unqualified Stock Ex. No. 10.11
Option Agreement. (D)
10 (16) Letter addressed to the Securities Jun/Fm8-K
and Exchange Commission from Ex. No. 16.2
Michelle Gelinas, CPA, dated June
14, 1999. (C)
11 (21) Infinet, Inc. - incorporated in the
state of Delaware.
Sunset Interactive Network, Inc. -
incorporated in the state of
Delaware.
12 (10) Employment agreement between This Filing
American Sports History
Incorporated and Vincent M. Nerlino
dated December 31, 1999.
12 (27) Financial Data Schedule (E) n.a.
(A) These exhibits are included in the Company's annual report
on Form 10-KSB, for the fiscal year ended December 31, 1995, and
filed with the Securities and Exchange Commission on September 9,
1996, and are incorporated herein by reference. The reference
under the column "Location" is to the exhibit number in the
report on Form 10-KSB.
(B) This exhibit is included in the Company's annual report on
Form 10-KSB, for the fiscal year ended December 31, 1997, and
filed with the Securities and Exchange Commission on August 26,
1998, and is incorporated herein by reference. The reference
under the column "Location" is to the exhibit number in the
report on Form 10-KSB.
15
<PAGE>
(C) This exhibit is included in the Company's current report on
Form 8-K, dated June 14, 1999, and filed with the Securities and
Exchange Commission on June 18, 1999, and is incorporated by
herein by reference.
(D) This exhibit is included in the Company's annual report on
Form 10-KSB, for the fiscal year ended December 31, 1998, and
filed with the Securities and Exchange Commission on July 13,
1999, and is incorporated herein by reference. The reference
under the column "Location" is to the exhibit number in the
report on Form 10-KSB.
(E) The Financial Data Schedule for the year ended December 31,
1999, is presented only in the electronic filing with the Securities
and Exchange Commission.
16
<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: March 23, 2000 By: /s/ HERBERT J. HEFKE
------------------------
Herbert J. Hefke
President & Chief Executive Officer
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: March 23, 2000 By: /s/ VINCENT M. NERLINO
--------------------------
Vincent M. Nerlino
Chairman and Director
March 23, 2000 By: /s/ HERBERT J. HEFKE
------------------------
Herbert J. Hefke
President, Chief Executive Officer
and Director
March 23, 2000 By: /s/ KENNETH O. ROKO
------------------------
Kenneth O. Roko
Secretary, Chief Operating Officer
and Director
March 23, 2000 By: /s/ ARTHUR J. DROMERHAUSER
------------------------------
Arthur J. Dromerhauser
Director
March 23, 2000 By: /s/ ROBERT C. DROMERHAUSER
------------------------------
Robert C. Dromerhauser
Vice President-Marketing and
Director
March 23, 2000 By: /s/ JEFFREY HWANG
---------------------
Jeffrey Hwang
Chief Financial Officer
17
<PAGE>
AMERICAN SPORTS HISTORY INCORPORATED
AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
AND CUMULATIVE FROM MAY 1, 1995
18
<PAGE>
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
AND CUMULATIVE FROM MAY 1, 1995
INDEX
INDEPENDENT AUDITOR'S REPORT F-1
CONSOLIDATED BALANCE SHEET, December 31, 1999 F-2
CONSOLIDATED STATEMENTS OF OPERATIONS, years ended
December 31, 1999 and 1998 and cumulative from May 1, 1995 F-3
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT, years ended
December 31, 1998 and 1999 F-4
CONSOLIDATED STATEMENTS OF CASH FLOWS, years ended
December 31, 1999 and 1998 and cumulative from May 1, 1995 F-5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-6 - F-15
19
<PAGE>
Board of Directors and Stockholders
American Sports History Incorporated
Bay Shore, New York
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying consolidated balance sheet of
American Sports History Incorporated and subsidiaries (the
"Company") (a development stage company) as of December 31, 1999,
and the related consolidated statements of operations,
stockholders' deficit and cash flows for the years ended December
31, 1999 and 1998 and cumulative from May 1, 1995. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of American Sports History Incorporated and
subsidiaries as of December 31, 1999 and the results of their
operations and cash flows for the years ended December 31, 1999
and 1998, in conformity with generally accepted accounting
principles.
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going
concern. As discussed in Note 1 to the consolidated financial
statements, the Company's significant operating losses,
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.
s/ Hays & Company
February 17, 2000, except for Note 11,
which is dated March 22, 2000
New York, New York
F-1
<PAGE>
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999
ASSETS
Current assets
Cash $ 228
Prepaid expenses 6,250
Total current assets 6,478
Other assets 9,984
$16,462
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable and accred expenses $507,382
Notes payable to officers 174,548
Notes payable and accrued interest 615,785
Liability from settlement of lawsuits, current 120,000
Total current liabilities 1,417,715
Liability from settlement of lawsuits, non-current 25,000
Notes payable to director 274,771
Total liabilities 1,717,486
Commitments and contingencies (Notes 1, 4, 7, 8, 9, 10 and 11)
Stockholders' deficit
Common stock, $.001 par value;
25,000,000 shares authorized,
9,466,026 shares issued and outstanding 9,466
Additional paid-in capital 2,313,479
Accumulated deficit ($3,887,072 accumulated
during the development stage) (3,971,469)
Unearned compensation (52,500)
Total stockholders' deficit (1,701,024)
$16,462
See notes to consolidated financial statements.
F-2
<PAGE>
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
Year ended December 31, Cumulative
from May 1,
1999 1998 1995
Revenue
Interest income $ 9 $ 27 $ 504
Expenses
Product development 466,708 - 466,708
General and administrative 738,677 553,266 3,161,512
Lawsuit settlements - 56,000 178,500
Write-off of advances for - - 80,856
terminated acquisition
1,205,385 609,266 3,887,576
Net loss $(1,205,376) $(609,239) $(3,887,072)
Basic and diluted net loss
per share $ (0.13) $ (0.08)
Weighted average number
of common shares outstanding 9,220,766 7,527,867
See notes to consolidated financial statements.
F-3
<PAGE>
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
YEARS ENDED DECEMBER 31, 1998 AND 1999
<TABLE>
<CAPTION>
Common stock Additional Total
Paid-in Unearned Accumulated stockholders'
Shares Amount Capital compensation deficit deficit
<S> <C> <C> <C> <C> <C> <C>
Balance, January 13, 1998 2,770,826 $ 2,771 $1,285,200 $ - $(2,156,854) $(868,883)
Sale of common stock 246,000 246 56,754 - - 57,000
Common stock issued for
Purchase of Sunset Interactive 500,000 500 14,500 - - 15,000
Network, Inc.
Common stock issued for re-
payment of note payable 50,000 50 1,450 - - 1,500
Common stock issued towards
settlement of various lawsuits 275,000 275 28,225 - - 28,500
Stock options issued to
non-emplouees for services - - 12,333 - - 12,333
Common stock issued for services 5,904,200 5,904 282,890 - - 288,794
Net loss - - - - (609,239) (609,239)
Balance, December 31 ,1998 9,746,026 9,746 1,681,352 - (2,766,093) (1,074,995)
Amounts owed to director
contributed to equity - - 249,312 - - 249,312
Common stock rescinded (1,000,000) (1,000) (59,000) - - (60,000)
Imputed interest on notes payable
to officers - - 10,452 - - 10,452
Stock options issued to
non-employees for services - - 72,083 - - 72,083
Common stock issued for services 720,000 720 359,280 (52,500) - 307,500
Net loss - - - - (1,205,376) (1,205,376)
Balance, December 31, 1999 9,466,026 $ 9,466 $2,313,479 $(52,500) $ (3,971,469)$(1,701,024)
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31, Cumulative
from May 1,
1999 1998 1995
INCREASE (DECREASE) IN CASH
Cash flows from operating activities
Net loss $(1,205,376) $ (609,239) $(3,887,072)
Adjustments to reconcile net loss to
Net cash used in operating activities
Write-off of prepaid royalty - - 137,500
Depreciation and amortization
expense 2,683 2,896 5,579
Write-off of deposit - 30,000 30,000
Impairment of goodwill - 14,437 14,437
Common stock issued for partial
settlement of lawsuit - 6,000 6,000
Stock options issued to non-
employees for service 72,083 12,333 84,416
Common stock issued for services,
net of stock rescinded 247,500 288,794 1,076,802
Imputed interest on notes
payable to officers 10,452 - 10,452
Changes in assets and liabilities
Prepaid expenses and other assets (6,250) - (7,808)
Liability from settlement of lawsuits - 45,000 167,500
Accounts payable and accrued
expenses 181,743 30,046 458,004
Loan from director - 78,242 402,541
Accrued interest 19,116 14,148 33,264
Net cash used in operating activities (678,049) 87,343 (1,468,385)
Cash flows from investing activities
Purchase of equipment and
domain name (10,000) - (10,000)
Cash flows from financing activities
Proceeds from issuance of notes to
officers 174,548 - 174,548
Proceeds from issuance of notes 573,500 - 596,900
Repayment of notes (66,500) - (66,500)
Loan from director 3,385 33,680 120,441
Issuance of common stock - 57,000 630,964
Liability from sale of common
stock rescinded - - 22,260
Net cash provided by financing
activities 684,933 90,680 1,478,613
Net (decrease) increase in cash (3,116) 3,337 228
Cash, beginning of period 3,344 7 -
Cash, end of period $ 228 $ 3,344 $ 228
See notes to consolidated financial statements.
F-5
<PAGE>
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.
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 $1,205,376 for the
year ended December 31, 1999, resulting in, an
accumulated deficit of $3,971,469. Management of the
Company is continuing to develop 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 2000 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 addition
to the notes issued by the Company in 1999,
approximately $537,000 of promissory notes were issued
in the first quarter of 2000. 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 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
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.
F-6
<PAGE>
2 Significant accounting policies (continued)
Start-up and organization costs
The Company accounts for start-up costs in accordance
with Statement of Position 98-5, "Reporting on the
Costs of Start-up Activities" ("SOP 98-5"), issued by
the American Institute of Certified Public Accountants.
SOP 98-5 requires the cost of start-up activities,
including organization costs, to be expensed as
incurred.
Property and equipment
Property and equipment are carried at cost.
Expenditures determined to represent additions and
betterments are capitalized. Expenditures for
maintenance and repairs are charged directly to the
appropriate operating accounts at the time, the expense
is incurred. Depreciation and amortization of property
and equipment is computed using the straight-line
methods over the estimated useful lives of the assets,
which range from five to ten years.
Intangible assets
During 1999, the Company acquired an Internet domain
name for $6,500, which is included in other assets in
the accompanying consolidated balance sheets. The
domain name is being amortized using the straight-line
method over 60 months.
Product development
Research and development costs are expensed as
incurred. Costs associated with the development of
software products will be capitalized when
technological feasibility is established.
Impairment of long-lived assets
The Company reviews its long-lived assets, including
goodwill resulting from business acquisitions, for
impairment whenever events or changes in circumstances
indicate that the carrying amount of the assets may not
be fully recoverable. To determine recoverability of
its long-lived assets, the Company evaluates the
probability that future undiscounted net cash flows,
without interest charges, will be less than the
carrying amount of the assets. If such assets are
considered to be impaired, the impairment to be
recognized is measured by the amount by which the
carrying amount of the assets exceeds the fair value of
the assets.
Basic and diluted net loss per share
The Company displays earnings per share in accordance
with Statement of Financial Accounting Standards
No.128, "Earnings Per Share" ("SFAS 128"). SFAS 128
requires dual presentation of basic and diluted
earnings per share. Basic earnings per share includes
no dilution and is computed by dividing the net loss
available to common stockholders by the weighted
average number of common shares outstanding for the
period. Outstanding stock options, warrants and other
potential stock issuances have not been considered in
the computation of diluted net loss per share since the
effect of their inclusion would be antidilutive.
F-7
<PAGE>
2 Significant accounting policies (continued)
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 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 consolidated financial
statements, as well as the reported amounts of revenue
and expenses during the reporting period. Actual
results could differ from those estimates.
Fair value of financial instruments
Carrying amounts of certain of the Company's financial
instruments including cash, approximate fair value due
to their relatively short maturities. The various notes
payable are recorded at carrying value with terms as
disclosed elsewhere in the notes to consolidated
financial statements. It is not practical to estimate
the fair value of these amounts because of the
uncertainty of the timing of the payments.
Income taxes
The Company accounts for income taxes using the
liability method, which requires the determination of
deferred tax assets and liabilities based on the
differences between the financial and tax bases of
assets and liabilities using enacted tax rates in
effect for the year in which differences are expected
to reverse. The net deferred tax asset is adjusted by
a valuation allowance, if, based on the weight of
available evidence, it is more likely than not that
some portion or all of the net deferred tax asset will
not be realized.
Reclassifications
Certain reclassifications have been made to the
consolidated financial statements shown for the prior
years in order to conform to the current year's
classifications.
F-8
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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 world
wide 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.
4 Transactions with related parties
Notes payable to officers
Notes payable to officers totaling $174,548 at December
31, 1999, represent advances made by two of the
Company's officers to be used for working capital
purposes. These advances are non-interest bearing and
have no scheduled repayment terms. Interest expense, at
an annual rate of 10%, has been imputed on these notes
and reflected as additional paid-in capital.
Notes payable to director
Notes payable to director ($274,771 at December 31,
1999) includes notes payable to the Company's Chairman
of the Board ($185,435) and his spouse ($89,336).
On December 31, 1999 the Company converted a portion of
amounts previously owed to the Chairman (consisting
principally of unpaid salary, totaling $403,642 at the
time) into a three-year non-interest bearing note
payable which calls for no payments until December 31,
2002, at which time the entire outstanding amount of
$250,000 is due. The Company has recorded the note
($185,435 at December 31, 1999) by calculating the
present value of the future payment to be made using an
imputed interest rate of 10%. Additionally, during
1998, the Company shared office facilities with the
Chairman without charge.
From time to time, the Chairman's spouse had advanced
the Company funds used for working capital purposes and
paid expenses on behalf of the Company. In 1999, the
Company converted amounts outstanding (totaling
$120,441 at the time) into a three-year non-interest
bearing note payable which calls for no payments until
December 31, 2002, at which time the entire outstanding
amount of $120,441 is due. The Company has recorded
the note ($89,336 at December 31, 1999) by calculating
the present value of the future payment to be made
using an imputed interest rate of 10%. Periodically
the Company had also engaged the Chairman's spouse to
provide services to the Company and in return, the
Company issued common stock in payment for such
services (Note 7).
F-9
<PAGE>
4 Transactions with related parties (continued)
Notes payable to director (continued)
The $249,312 difference between the amounts previously
due to the Chairman and his spouse and the present
value of the total future payments has been contributed
to additional paid-in capital of the Company.
Shared office facilities
During 1999, the Buddy Harrelson Baseball and Softball
Academy ("BHBSA") utilized a portion of the Company's
office facilities at no charge. Additionally BHBSA
provided $68,500 of non-interest bearing demand loans
to the Company. The Company has repaid $63,500 of
these loans and at December 31, 1999, the $5,000
balance is included in notes payable and accrued
interest. One of the Company's officers/directors is a
co-owner of BHBSA.
5 Notes payable and accrued interest
Notes payable of $615,785 at December 31, 1999,
represent loans made to the Company by various
investors as well as amounts owed to certain vendors
which were converted to formal notes. $425,198 of
these notes are non-interest bearing and $190,587 of
these notes bear interest at rates ranging from 7% to
10% per annum. Total interest costs related to these
notes for the years ended December 31, 1999 and 1998
was approximately $17,000 and $6,000, respectively.
The notes are short-term in nature and are therefore
classified as a current liability.
6 Accounts payable and accrued expenses
Accounts payable and accrued expenses consist of the
following at December 31, 1999:
Trade accounts payable $ 307,468
Accrued officers' salary 118,750
Due to NGN (Note 10) 50,000
Liability for rescinded stock 31,164
$ 507,382
7 Stockholders' deficit
Common stock
Year ended December 31, 1999
During the year ended December 31, 1999, the Company
issued 520,000 shares of common stock to five senior
executives of the Company in lieu of cash salary and
200,000 shares were issued as an inducement for one of
the senior executives to join the Company. These shares
were valued at $360,000.
Pursuant to a new employment agreement with the
Company's Chairman (Note 9), 1,000,000 shares of the
Company's common stock were rescinded. These shares
were originally issued in 1998 as compensation and were
valued at $60,000. Accordingly, this compensation
charge was reversed in 1999.
F-10
<PAGE>
7 Stockholders' deficit (continued)
Common stock (continued)
Year ended December 31, 1999 (continued)
During the fourth quarter of 1999, the Board of
Directors voted to increase the authorized number of
shares of common stock from 25,000,000 to 75,000,000.
This was approved by a majority of the Company's
shareholders. The Company expects to effectuate this
change in 2000.
Year ended December 31, 1998
During the year ended December 31, 1998, the Company
issued 6,975,200 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.
* 275,000 shares were issued toward the settlement of
various lawsuits (Note 9).
* 3,000,000 shares were issued to the Company's Chairman
(as partial payment under his employment contract, Note 9)
and 800,000 shares were issued to three officers/directors
of the Company, which resulted in an aggregate charge to
operations of $189,000.
* 300,000 shares were issued to the Chairman's spouse for
services performed which resulted in a charge to operations
of $10,500.
* 1,804,200 shares were issued to various consultants and
professional service firms for services provided during 1998
(including 200,000 shares to Next Generation Networks
Technology, Inc., 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 10), which resulted in a
charge to operations of $89,294.
Stock options
In 1999, the Company granted a total of 1,070,000 stock
options, which remain outstanding at December 31, 1999.
In 1998, the Company granted a total of 5,850,000 stock
options, which also remain outstanding at December 31,
1999. 1,983,333 of these options are exercisable
immediately and substantially all of the remainder
vests over the next two years. The Company recognized
compensation costs for stock options awarded to non-
employees totaling $72,083 and $12,333 for the years
ended December 31, 1999 and 1998, respectively. The
following table summarizes information about fixed
stock options outstanding at December 31, 1999:
F-11
<PAGE>
7 Stockholders' deficit (continued)
Stock options (continued)
Options outstanding
Weighted- average
Number remaining Options
Option outstanding contractual exercisable
ercise price at 12/31/99 life (in years) at 12/31/99
$ .12 1,200,000 9 400,000
$ 1.00 5,720,000 9 1,583,333
6,920,000 1,983,333
The Company applies APB No. 25 and related
interpretations in accounting for options issued to
employees. Stock-based employee compensation cost, if
recorded under SFAS 123, would have increased the
Company's net loss by approximately $112,000 or $(.01)
per share in 1999. The effect in 1998 was not material.
The fair value of options granted during 1999 are
estimated on the date of grant using the Black-Scholes
option-pricing model with the following assumptions:
(1) expected volatility approximated 300%, (2) risk-
free interest rate of 4.8%, and (3) expected lives of
10 years.
8 Benefit from income taxes
The tax effects of temporary differences and net
operating loss carryforwards that give rise to deferred
tax assets or liabilities at December 31, 1999 are
summarized as follows:
Net operating loss carryforward $ 980,000
Other items 160,000
Valuation allowance on net deferred tax asset (1,140,000)
Deferred tax asset, net $ -
The Company has provided for a full valuation allowance
on the net deferred tax asset due to the uncertainty of
its realization.
There were no provisions for income taxes during the
years ended December 31, 1999 and 1998 due to the
Company's net losses since inception. The Company has
federal net operating loss carryforwards of
approximately $2,800,000, which are available to offset
future taxable income, if any, expiring through 2019.
These losses are subject to substantial limitations as
a result of IRC Section 382 rules governing changes in
control. The Company has not filed federal or state
tax returns since its inception.
F-12
<PAGE>
9
Commitments and contingencies
Employment agreements
In the second quarter of 1999, the Company entered into
three-year employment agreements with five 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 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.
On December 31, 1999, the Company entered into a new
three-year employment agreement with its Chairman of
the Board and terminated the previous agreement.
Pursuant to the new agreement, the Chairman is entitled
to an annual base salary of $90,000. The agreement may
be terminated with or without cause. As part of the
agreement, the Chairman returned 1,000,000 shares of
the Company's common stock previously issued to him
(Note 7) and converted amounts previously owed to him
into a non-interest bearing note payable (Note 4).
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 settlement
agreement that required the Company to pay $100,000 in
cash and 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.
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.
Pursuant to the agreement, the Company issued 50,000
shares of its common stock to the stockholder in 1998.
The Company is also obligated to pay $25,000 in May
2000 and $25,000 in November 2001.
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.
F-13
<PAGE>
9 Commitments and contingencies (continued)
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. No conclusion has been reached with respect to the
satisfaction of any possible contractual obligations
and no additional adjustments have been made in the
consolidated financial statements.
10 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, the Company issued
200,000 shares of its common stock and has also granted
1,200,000 stock options with an exercise price of $.12
per share (Note 7). The Company is also obligated to
pay $50,000 to NGN, for the Company's new strategic
business plan. This agreement was terminated effective
January 20, 2000.
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 7). The agreement
expired on January 4, 2000.
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 7). The agreements terminated upon
satisfactory completion of the services as set forth in
the agreement.
F-14
<PAGE>
11
Subsequent event
The Company is currently preparing a private offering
memorandum where holders of the Company's notes payable
will be allowed to exchange their notes for Company
common stock at a fixed exchange rate. At December 31,
1999, the Company has notes payable to investors and
officers aggregating approximately $790,000.
Additionally, $537,500 of promissory notes were issued
during the period from January 1, 2000 through March
22, 2000. It is expected that substantially all of
these note holders will be offered the opportunity to
participate in the exchange. While the Company
anticipates completing the offering memorandum in the
first half of 2000, there can be no assurances that the
Company's offering will be successful.
F-15
<PAGE>
Exhibit No. 12
American Sports History Incorporated
Form 10-KSB
File No. 33-55254-46
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of December 31, 1999, by and
between AMERICAN SPORTS HISTORY INCORPORATED, a Nevada
corporation, (the "Company"), and VINCENT M. NERLINO, residing
at 18-1 Heritage Dr., Chatham, New Jersey, 07928 ("Executive").
W I T N E S S E T H:
WHEREAS, the Company presently employees Executive
pursuant to the terms of the Employment Agreement, dated January
1, 1996 (the "1996 Agreement"), by and between the Company and
Executive;
WHEREAS, the Company and Executive wish to terminate
the 1996 Agreement, enter into certain other arrangements
regarding shares owned by Executive in the Company's common
stock, par value $.01 per share (the "Common Stock"), and options
granted to Executive in shares of the Common Stock and
outstanding compensation owed to Executive by the Company; and
WHEREAS, the Company wishes to continue to avail itself
of the advice and services of Executive, and Executive wishes to
continue to be employed by the Company;
NOW, THEREFORE, in consideration of the premises and of
the mutual agreements set forth herein, the parties agree as
follows:
1. Termination of 1996 Agreement, Return of Shares,
Cancellation of Debt/Issuance of Note and Stock Options.
1.1 Termination of 1996 Agreement. Effective as of
the date hereof (the "Effective Date"), the 1996 Agreement is
hereby terminated and of no further force and effect.
1.2 Return of Stock. Executive agrees to return to
the Company his stock certificates evidencing Executive's
ownership of 1 million shares of the Common Stock on the
Effective Date, together with such instruments of transfer
and such other documents as the Company may reasonably request
to evidence such return. Such shares shall be canceled by the
Company and returned to authorized but unissued shares of the Common Stock.
1.3 Cancellation of Debt/Issuance of Note. Of the
$566,892 in amounts owed to Executive by the Company on September
30, 1999, $316,892 is hereby canceled and the remaining $250,000
shall be evidenced by a note in the form attached hereto as
Exhibit A.
1.4 Stock Options. The Company and Executive
acknowledge that under the Company's 1998 Stock Incentive Plan,
the Company granted to Executive options permitting Executive to
purchase 1.2 million shares of the Common Stock. Any other
options or warrants to purchase the Common Stock of the Company
granted or purported to be granted to Executive,
E-1
<PAGE>
including the
options granted under the Company's 1996 Stock Option Plan (the
"1996 Stock Option Plan"), are canceled and of no force and
effect.
1.5 Release. Except as otherwise provided in this
Agreement, Executive releases and discharges the Company from all
actions, causes of action, obligations, liabilities, suits,
debts, dues, sums of money, accounts, reckonings, bonds, bills,
specialties, covenants, contracts, controversies, agreements,
promises, variances, trespasses, damages, judgments, executions,
claims and demands whatsoever, in law or equity (collectively,
"Claims"), which Executive ever had, now has or hereafter can,
shall or may have against the Company for, upon, or by reason of
any matter, cause or thing whatsoever from the beginning of the
world to the date hereof whether or not he now knows of such
Claims, including, without limitation, any Claims under the 1996
Agreement and the 1996 Stock Option Plan. Without limiting the
foregoing, it is understood and agreed that the effect of this
release is not limited by any territorial limitation of any kind
and applies in all jurisdictions whatsoever.
2. Employment and Term.
2.1 Employment. Subject to the terms and conditions
of this Agreement, the Company agrees to employ Executive, and
Executive agrees to serve the Company, as an Chairman of the
Board. Subject to the supervision and direction of the Chief
Executive Officer ("CEO"), Executive shall assist in the
management of the day-to-day operations of the Company.
Executive shall also carry out such other duties and
responsibilities as pertain to his position or as shall otherwise
be agreed from time to time by Executive and the CEO. Executive
shall report to the CEO.
2.2 Term. The term of this Agreement (the "Term")
shall commence on the Effective Date and shall continue through
the third anniversary of such date.
2.3 Policies. The Company shall advise Executive of
its general corporate policies and procedures as to travel,
entertainment and other expenses and accounting and internal
controls, and Executive shall comply with such policies.
3. Compensation.
3.1 Salary. During the Term, the Company shall pay to
Executive, in equal installments in accordance with the Company's
policies, a salary of $90,000 per annum as Chairman of the Board.
Until such time as the Company is able to raise sufficient funds
to permit the payment of salaries in cash to all officers of the
Company, the Company shall be permitted to make salary payments
to Executive in the Common Stock on the same basis as it makes
salary payments to other similarly situated executives employed
by the Company.
3.2 Health, Dental and Disability Insurance. At such
time as health insurance is available to other executives
employed by the Company, Executive and his family, to the extent
that Executive and each family member is eligible under the
applicable plan or policy, shall be provided with health and/or
dental insurance, as the case may be, comparable to that
maintained by the Company for its executives generally. Until
such time, it shall be Executive's responsibility to provide
health coverage for him and his family.
E-2
<PAGE>
3.3 Expense Reimbursement. Executive shall be
required to obtain specific approval of his expenditures for
travel, entertainment and lodging from the CEO. Subject to the
foregoing, Executive shall be entitled to reimbursement for
normal and reasonable travel, entertainment and other expenses
which are incurred by him in the performance of his duties
consistent with the Company's expense policies and procedures.
The Company shall pay or reimburse Executive for such expenses
upon presentation, within a reasonable time after such expenses
are incurred, of an itemized account of such expenses, together
with such vouchers or receipts for individual expense items as
the Company may from time to time require under its normal
policies and procedures.
3.4 Time Off. Executive shall be entitled to [__]
paid work days per year to be used in accordance with the
policies of the Company then in effect.
4. Termination for Certain Causes.
4.1 Termination for Cause. In the event of
Executive's (i) continuing gross neglect (after written warning)
or willful misconduct in the performance of his duties, (ii)
breach of any provision of Sections 5 or 6, (iii) conviction for
a felony (iv) drunkenness or illegal use of drugs which
interferes with the performance of his duties under this
Agreement and which continues after written warning, or (v)
performance is determined to be unacceptable or incompatible with
Company goals and objectives, this Agreement and Executive's
employment may be terminated by the Company without prior notice;
provided, that, in the case of termination pursuant to clause
(v), the Company shall provide Executive with 60 days' prior
written notice outlining Executive's performance deficiencies.
If, within such 60 day period, Executive's performance fails to
substantially correct the deficiencies outlined in such notice,
to the satisfaction of the Company, the Company may, on such 60th
day, terminate Executive's employment hereunder.
4.2 Termination Without Cause. This Agreement may be
terminated without cause by the Company in the Company's sole
discretion. Such termination shall require at least 180 days'
prior written notice to Executive. In the event of termination
by the Company pursuant to this Section 4.2, the Executive will
immediately be relieved of all duties and responsibilities;
provided, that, Company shall pay to Executive the compensation
specified in Section 3.1 for the 180 day period immediately
following the delivery of such notice.
4.3 Termination on Account of Death or Disability. If
Executive, due to physical or mental disability or incapacity, is
unable substantially to perform his duties hereunder for a period
of 90 consecutive days or more, the Company shall have the right
to terminate Executive's employment hereunder on 30 days' prior
written notice. If Executive is able to and recommences
rendering services and performing his duties hereunder within
such 30day notice period, such notice shall be vitiated. In
addition, in the event of Executive's death or disability,
E-3
<PAGE>
Executive or his personal representatives shall be entitled to
receive all earned but unpaid compensation through the date of
termination of his employment.
5. NonCompetition.
(a) Executive agrees, for the Non-Competition Period
(as defined in Section 5(b)), that he shall not, in the States of
New Jersey and New York and in any other area in the United
States in which the Company conducts its business, during the Non-
Competition Period (or for such lesser area or such lesser period
as may be determined by a court of competent jurisdiction to be a
reasonable limitation on the competitive activity of Executive),
directly or indirectly:
(i) engage, for or on behalf of himself or
any person or entity other than the Company in the
business of the Company as conducted during the
Non-Competition Period (the "Business");
(ii) solicit or attempt to solicit business
for services offered by the Company from any
parties who are clients of the Company during the
Non-Competition Period or to whom the Company
makes proposals for services during the Non-
Competition Period;
(iii) otherwise divert or attempt to
divert from the Company any business involving the
Business during the Non-Competition Period;
(iv) solicit or attempt to solicit for any
business endeavor any employee of the Company; or
(v) render any services as a joint venturer,
partner, consultant or otherwise to, or have any
interest as a stockholder, partner, member, lender
or otherwise in, any person or entity which is
engaged in activities which, if performed by
Executive, would violate this Section 5.
The foregoing shall not prevent Executive from purchasing or
owning (i) up to 5% of the voting securities of any corporation,
the securities of which are publicly-traded, or (ii) any interest
in any entity which is not also engaged in the Business.
Executive shall, during the Term, direct any business
opportunities relating to the Business that may come to his
attention to the Company. References to the Company in this
Section 5 shall also be deemed to refer to their respective
divisions and subsidiaries.
(b) For the purposes of this Agreement, the "Non-
Competition Period" means, from the Effective Date until the
fifth anniversary of such date.
E-4
<PAGE>
6. Confidentiality.
6.1 General. At all times after the date hereof,
Executive shall not, in any capacity other than as an employee of
the Company, disclose or use any information respecting the
Company or its respective businesses and affairs that is treated
as confidential by the Company; provided, however, that such
obligation shall not apply to any information (i)to the extent
that it is or becomes part of public or industry knowledge from
authorized sources other than Executive or (ii)which Executive is
required by law to disclose (but only to the extent required to
be so disclosed).
6.2 Return of Materials. On the termination of his
employment by the Company for any reason, Executive shall
promptly deliver to the Company all material of a confidential
nature (whether or not marked as such), including, without
limitation, budgets, financial statements or projections,
drawings, manuals, letters, notes, notebooks, reports and
customer and suppliers lists, and all copies or summaries
thereof, relating to the Company's business or affairs which are
in Executive's possession or control.
6.3 Remedies and Survival. Because the Company would
not have an adequate remedy at law to protect their businesses
from any breach of the provisions of Sections 5 or 6, the Company
shall be entitled, in the event of such a breach or threatened
breach thereof by Executive, to injunctive relief, in addition to
such other remedies and relief that would be available to the
Company. In the event of such a breach, in addition to any other
remedies, the Company shall be entitled to receive from Executive
payment of, or reimbursement for, its reasonable attorneys' fees
and disbursements incurred in successfully enforcing any such
provision; provided, that Executive shall be entitled to receive
from the Company payment of, or reimbursement for, his reasonable
attorneys' fees and disbursements incurred in any proceeding
commenced by the Company pursuant to this Section 7 in which the
Company is not successful. The provisions of Sections 5 and 6
and of this Section 7 shall survive any termination of this
Agreement.
7. Arbitration.
7.1 General. Any controversy or claim arising out of
or relating to this Agreement shall be finally resolved by
arbitration pursuant to the Commercial Arbitration Rules of the
American Arbitration Association; provided, however, that this
Section 8.1 shall not in any way affect the right of the Company
to seek injunctive relief or any other remedies pursuant to
Section 7. Any such arbitration shall take place in New York,
New York, before three arbitrators, one of which shall be
appointed by the Company, one by Executive and the third by the
arbitrators so appointed; provided, however, that the parties may
by mutual agreement designate a single arbitrator. The parties
further agree that (i)the arbitrators shall be empowered to
include arbitration costs and attorney fees in the award to the
prevailing party in such proceedings and (ii)the award in such
proceedings shall be final and binding on the parties. The
E-5
<PAGE>
arbitrators shall apply the law of the State of New York,
exclusive of conflict of laws principles, to any dispute.
Judgment on the arbitrators' award may be entered in any court
having the requisite jurisdiction. Nothing in this Agreement
shall require the arbitration of disputes between the parties
that arise from actions, suits or proceedings instituted by third
parties.
7.2 Consent to Jurisdiction; Service of Process. Each
party irrevocably submits to the jurisdiction and venue of the
arbitration described in Section 8.1 and to the jurisdiction and
venue of the federal and state courts sitting in New York County,
New York, for the enforcement of any judgment on the arbitrators'
award, and waives any objection it may have with respect to the
jurisdiction of such arbitrations or courts or the inconvenience
of such forums or venues. The Company appoints Salans Hertzfeld
Heilbronn Christy & Viener, 620 Fifth Avenue, New York, New York
10020, Attention: Jeffrey Schweon, Esq., and Executive appoints
_______________________________________________________,
Attention: ___________, as their respective attorneys-in-fact and
authorized agents solely to receive on their behalf, service of
any demands for, or any notice with respect to, arbitration
hereunder or any service of process. Service on either of such
attorneys-in-fact may be made by registered or certified mail or
by personal delivery, in any case return receipt requested, and
shall be effective as service on the Company or Executive, as the
case may be. Nothing herein shall be deemed to affect any right
to serve any such demand, notice or process in any other manner
permitted under applicable law.
8. Entire Agreement; Amendments; No Waivers. This
Agreement sets forth the entire understanding of the parties with
respect to its subject matter and merges and supersedes all prior
and contemporaneous understandings of the parties with respect to
its subject matter. No provision of this Agreement may be waived
or modified, in whole or in part, except by a writing signed by
each of the parties. Failure of any party to enforce any
provision of this Agreement shall not be construed as a waiver of
its rights under such or any other provision. No waiver of any
provision of this Agreement in any instance shall be deemed to be
a waiver of the same or any other provision in any other
instance.
9. Communications. All notices, consents and other
communications given under this Agreement shall be in writing and
shall be deemed to have been duly given (a) when delivered by
hand or by Federal Express or a similar overnight courier to, (b)
five days after being deposited in any United States post office
enclosed in a postage prepaid registered or certified mail
envelope addressed to, or (c) when successfully transmitted by
facsimile (with a confirming copy of such communication to be
sent as provided in (a) or (b) above) to, the party for whom
intended, at the address or facsimile number for such party set
forth below, or to such other address or facsimile number as may
be furnished by such party by notice in the manner provided
herein; provided, however, that any notice of change of address
or facsimile number shall be effective only upon receipt.
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<PAGE>
If to the Company or : with a copy to:
American Sports History Incorporated Salans Hertzfeld
Heilbronn Christy & Viener
21 Maple Avenue 620 Fifth Avenue
Bayshore, New York 11706 New York, New York 10020
Attention: Herbert J. Hefke Attention: Jeffrey
Schweon, Esq.
Fax No.: (516) 665-9231 Fax No.: (212) 632-5555
If to Executive:
Mr. Vincent M. Nerlino
18-1 Heritage Dr.
Chatham, New Jersey 07928
10. Successors and Assigns. This Agreement shall be
binding on, enforceable against and inure to the benefit of, the
parties and their respective successors and permitted assigns,
and nothing herein is intended to confer any right, remedy or
benefit upon any other person. No party may assign its rights or
delegate its obligations under this personal Agreement without
the express written consent of the other parties; provided,
however, that on the sale or transfer of all or substantially all
of the assets and business of the Company to another party, or
the merger or consolidation of the Company with another entity,
this Agreement shall inure to the benefit of, and be binding on,
both Executive and the party purchasing such assets, business and
goodwill, or surviving such merger or consolidation, as the case
may be, in the same manner and to the same extent as though such
other party were the Company, without the need for any consent
from Executive; provided, further, however, that no such
assignment contemplated by the foregoing proviso shall relieve or
discharge the Company of any liabilities under this Agreement
without the express written agreement of Executive.
11. Governing Law. This Agreement shall in all
respects be governed by and construed in accordance with the laws
of the State of New York applicable to agreements made and fully
to be performed in such state, without giving effect to conflicts
of law principles.
12. Severability and Savings Clause. If any provision
of this Agreement is held to be invalid or unenforceable by any
court or tribunal of competent jurisdiction, the remainder of
this Agreement shall not be affected thereby, and such provision
shall be carried out as nearly as possible according to its
original terms and intent to eliminate such invalidity or
unenforceability. In this regard, the parties agree that the
provisions of Section 5, including, without limitation, the scope
of the territorial and time restrictions, are reasonable and
necessary to protect and preserve the Company's legitimate
interests. If the provisions of Section5 are held by a court of
competent jurisdiction to be in any respect unreasonable, then
such court may reduce the territory or time to which it pertains
or otherwise modify such provisions to the extent necessary to
render such provisions reasonable and enforceable.
E-7
<PAGE>
13. Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
instrument.
14. Construction. Headings used in this Agreement are
for convenience only and shall not be used in the interpretation
of this Agreement. References to Sections are to the Sections of
this Agreement. As used herein, the singular includes the plural
and the masculine, feminine and neuter gender each includes the
others where the context so indicates.
E-8
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed
this Agreement as of the date first set forth above.
AMERICAN SPORTS HISTORY INCORPORATED
By___ /s/ Herbert J. Hefke____________________________
Name: Herbert J. Hefke
Title: President & Chief Executive Officer
_______/s/ Vincent M. Nerlino_________________________
Vincent M. Nerlino
E-9
<PAGE>
PROMISSORY NOTE
$250,000 December 31,
1999
New York, New York
FOR VALUE RECEIVED, AMERICAN SPORTS HISTORY
INCORPORATED, a Nevada corporation ("Maker"), hereby promises to
pay to the order of VINCENT M. NERLINO ("Payee"), the principal
sum of TWO HUNDRED FIFTY THOUSAND United States Dollars
($250,000) on December 31, 2002. No interest shall be due and
payable on the unpaid principal balance of this Note. This Note
is the promissory note referred to in Section 1.3 of the
Employment Agreement, of even date herewith, between Maker and
Payee.
1. Optional Prepayment. Maker shall have the right
at any time and from time to time to prepay, in whole or in part,
the unpaid principal amount of this Note, without penalty or
premium.
2. Waiver. A delay by Payee in exercising a right or
remedy with respect to this Note shall not constitute a waiver
thereof; a waiver of a default, right or remedy shall not
constitute a waiver of a subsequent default, right or remedy; and
a single or partial exercise of a right or remedy shall not
preclude another or further exercise thereof or the exercise of
another right or remedy.
3. Miscellaneous.
(a) All payments under this Note shall be made to
Payee, by certified or official bank check to the order of Payee
or by wire transfer to Payee's account as Payee may from time to
time direct. If the principal amount payable hereunder becomes
due and payable on a Saturday, Sunday or public holiday in the
State of New York (a "Business Day"), the due date thereof shall
be extended to the next succeeding Business Day.
(b) Maker agrees to pay, and save Payee harmless
against, any liability for the payment of any costs and expenses,
including, without limitation, reasonable attorneys' fees and
disbursements, arising in connection with the enforcement by
Payee of any of its rights hereunder.
(c) This Note may not be amended or modified except in
a writing signed by Payee and Maker. If any provision of this
Note is held to be invalid or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions
of this Note shall be unaffected thereby.
(d) Maker may not assign this Note or delegate its
obligations hereunder. This Note shall inure to the benefit of
Payee and its successors and assigns.
E-10
<PAGE>
(e) This Note in all respects shall be governed by and
construed in accordance with the laws of the State of New York
applicable to agreements made and fully to be performed in such
State, without giving effect to conflicts of law principles.
(f) Upon receipt of evidence reasonably satisfactory
to Maker of the loss, theft, destruction or mutilation of this
Note and, in the case of loss, theft or destruction, upon receipt
of indemnity or security reasonably satisfactory to Maker from
Payee or, in the case of mutilation, upon surrender of the
mutilated Note, Maker shall make and deliver a new Note of like
tenor in lieu of this Note.
IN WITNESS WHEREOF, the undersigned has caused
this Note to be duly executed as of the day and year first above
written.
AMERICAN SPORTS HISTORY INCORPORATED
By: /s/ Herbert J.Hefke
Name: Herbert J. Hefke
Title: President & Chief
Executive Officer
E-11
<PAGE>
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<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 228
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,478
<PP&E> 0
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<TOTAL-ASSETS> 16,462
<CURRENT-LIABILITIES> 1,417,715
<BONDS> 274,771
0
0
<COMMON> 9,466
<OTHER-SE> (1,657,990)
<TOTAL-LIABILITY-AND-EQUITY> 16,462
<SALES> 0
<TOTAL-REVENUES> 9
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<TOTAL-COSTS> 1,205,385
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
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<INCOME-PRETAX> (1,205,376)
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