<PAGE>
As filed with The Securities and Exchange Commission on October 29, 1998
Registration No. 333-90
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
Post-Effective
Amendment No. 5
to
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-----------
MILLENNIUM SPORTS MANAGEMENT, INC.
(Exact name of small business issuer as specified in its charter)
New Jersey 7900 22-3127024
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation) Classification Code Number) Identification No.)
Ross' Corner
U.S. Highway 206 and County Route 565
P.O. Box 117
Augusta, New Jersey 07822-0117
(973) 383-7644
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
BARRY M. LEVINE
President and Chief Executive Officer
Millennium Sports Management, Inc.
Ross' Corner
U.S. Highway 206 and County Route 565
P.O. Box 117
Augusta, New Jersey 07822-0117
(973) 383-7644
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-------------------
Copy to:
SHAHE SINANIAN, ESQ.
Greenberg Traurig
200 Park Avenue
New York, New York 10166
(212) 801-9200
-------------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
Pursuant to Rule 416, there are also being registered hereby such
additional indeterminate number of shares of such Common Stock as may become
issuable by reason of stock splits, stock dividends, and similar adjustments as
set forth in the provisions of the Class D Warrants and Class A Warrants.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
Pursuant to Rule 429, this Registration Statement includes a combined prospectus
relating to the Registrant's prior registration statements, Registration No.
33-62252 declared effective by the Commission on September 24, 1993, and
Registration No. 33-79930 declared effective by the Commission on September 26,
1994.
DEREGISTRATION OF UNSOLD SECURITIES
The Registrant hereby requests the deregistration of 8,188,000 Class D
Warrants and 8,188,000 shares of common stock underlying such Class D Warrants,
which have not been sold.
<PAGE>
SKYLANDS PARK MANAGEMENT, INC.
Cross-Reference Sheet Showing Location in Prospectus,
Filed as Part of Registration Statement, of Information
Required by Form SB-2
<TABLE>
<CAPTION>
Item Number in
Form SB-2 Item Caption in Form SB-2 Location in Prospectus
- --------- ------------------------- ----------------------
<S> <C> <C>
1 Front of Registration Statement and Front Cover Page
Outside Front Cover of Prospectus
2 Inside Front and Outside Back Cover Inside Front Cover Page; Back Cover Page
Pages of Prospectus
3 Summary Information and Risk Factors Prospectus Summary; Risk Factors
4 Use of Proceeds Use of Proceeds
5 Determination of Offering Price Front Cover Page; Risk Factors
6 Dilution Dilution
7 Selling Security Holders Selling Security Holders
8 Plan of Distribution Not Applicable
9 Legal Proceedings Risk Factors; Business
10 Directors, Executive Officers, Management; Principal Shareholders;
Promoters and Control Persons Certain Transactions
11 Security Ownership of Certain Management; Principal Shareholders
Beneficial Owners and Management
12 Description of Securities Dividend Policy; Description of Securities
13 Interest of Named Experts and Counsel Not Applicable
14 Disclosure of Commission Position on Description of Securities; Part II of
Indemnification for Securities Act Registration Statement
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Liabilities
15 Organization Within Last Five Years Certain Transactions
16 Description of Business Front Cover Page; Prospectus Summary; The Company;
Use of Proceeds; Dividend Policy; Capitalization;
Selected Financial Data; Plan of Operations and
Management's Discussion and Analysis of Financial
Condition and Results of Operations; Business;
Management; Principal Shareholders; Certain
Transactions; Description of Securities; Index to
Financial Statements
17 Management's Discussion and Analysis The Company; Plan of Operations and Management's
or Plan of Operation Discussion and Analysis of Financial Condition and
Results of Operations; Business
18 Description of Property Business
19 Certain Relationships and Related Certain Transactions
Transactions
20 Market for Common Equity and Related Front Cover Page; Dividend Policy; Market Price of
Matters Common Stock; Description of Securities
21 Executive Compensation Management
22 Financial Statements Index to Financial Statements
23 Changes In and Disagreements With Experts
Accountants on Accounting and
Financial Disclosure
24 Indemnification of Officers and Description of Securities; Part II of Registration
Directors Statement
</TABLE>
<PAGE>
Prospectus
MILLENNIUM SPORTS MANAGEMENT, INC.
1,012,000 Shares of Common Stock
Issuable Upon Exercise of Outstanding Class D Common Stock Purchase Warrants
2,585,954 Shares of Common Stock
Issuable Upon Exercise of Outstanding Class A Common Stock Purchase Warrants
-------------
This Prospectus relates to the issuance by Millennium Sports Management,
Inc., a New Jersey corporation (the "Company"), of up to 1,012,000 shares of
common stock of the Company ("Common Stock") issuable upon the exercise of
1,012,000 currently outstanding Class D Common Stock Purchase Warrants of the
Company (the "Class D Warrants"). Each Class D Warrant entitles the holder
thereof to purchase one share of Common Stock at a purchase price, subject to
adjustment, of $.50 (plus, to the extent not theretofore paid, the $.10 purchase
price for such Class D Warrant) at any time until March 31, 2003. The Class D
Warrants are not redeemable by the Company. See "Description of Securities -
Class D Warrants."
This Prospectus also relates to the issuance of up to 2,585,954 shares of
Common Stock upon the exercise of 923,555 currently outstanding redeemable
Common Stock Purchase Warrants of the Company (the "Class A Warrants"). Each
Class A Warrant entitles the holder thereof to purchase 2.8 shares of Common
Stock at a total purchase price, subject to adjustment, of $2.80 at any time
until the extended expiration date of December 31, 1998, and is redeemable by
the Company at any time at a redemption price of $.10 per Class A Warrant upon
30 days' prior written notice, provided that the closing bid price of the Common
Stock equals or exceeds $32.70 per share for any 20 trading days within a period
of 30 consecutive trading days ending on the fifth trading day prior to the date
of notice of redemption. The exercise price and number of shares purchasable
upon exercise of each Class A Warrant are subject to adjustment under certain
circumstances. In connection with any exercise of Class A Warrants, the shares
issuable to each exercising holder in respect of its Class A Warrants then being
exercised will be aggregated, and any fractional share interest will be
eliminated. See "Description of Securities - Class A Warrants."
As used in this Prospectus, the Class D Warrants and Class A Warrants are
sometimes collectively referred to as the "Warrants."
The Common Stock and the Class A Warrants are currently listed separately
on the SmallCap Market of the National Association of Securities Dealers, Inc.
Automated Quotation System (NASDAQ) under the symbols "MSPT" and "MSPTW,"
respectively. On October 23, 1998, the closing bid quotations for the Common
Stock and the Class A Warrants were $0.3125 per share and $0.1875 per Class A
Warrant. See "Market Price of Common Stock" and "Description of Securities." The
Company does not intend to list the Class D Warrants on NASDAQ or with any
securities exchange, which will have the effect of limiting any trading
opportunities in the Class D Warrants. See "Risk Factors - No NASDAQ Listing of
Class D Warrants."
The exercise of the Warrants may be prohibited in certain states. See "Risk
Factors - Current Prospectus and State Registration Required to Exercise
Warrants." Although the Warrants were initially sold in jurisdictions in which
such Warrants and the underlying shares of Common Stock were qualified for sale,
purchasers who reside in or may move to jurisdictions in which those Warrants or
underlying Common Stock are not registered for sale or otherwise qualified, may
have purchased such Warrants in the aftermarket during the period when such
Warrants are exercisable. In this event, the Company would be unable to issue
the underlying Common Stock to such persons desiring to exercise their Warrants
unless and until such Common Stock could be qualified for sale in the
jurisdictions in which such purchasers reside, or unless an exemption to such
qualification exists in such jurisdiction.
1
<PAGE>
The initial offering price, exercise price and other terms of the Class D
Warrants were determined by the Company based on its capital requirements at the
time of the initial offer of the Class D Warrants (taking into consideration
required payments to the Company's creditors and working capital needs, and
setting the exercise price at a discount to the then-market price of the Common
Stock in order to foster the sale and exercise of the Class D Warrants), and
are not necessarily related to the Company's asset value, net worth or any other
established criteria of value. The exercise price and other terms of the Class A
Warrants were originally determined by negotiation between the Company and A.S
Goldmen & Co., Inc. ("Goldmen"), which acted as underwriter of the Common Stock
and Class A Warrants sold in the Company's initial public offering consummated
in 1993. The exercise price of the Class A Warrants has previously been
voluntarily reduced by the Company. As adjusted, such exercise price and such
terms were not and are not necessarily related to the Company's asset value, net
worth or any other established criteria of value. See "Risk Factors" beginning
on page 9 and "Plan of Distribution."
Although the Company is currently operating as a going concern, the Company
had accumulated losses of approximately $4,993,000 through December 31, 1997,
and has incurred and expects substantial further losses in 1998.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 9.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
CERTAIN BROKER-DEALERS ARE THE PRINCIPAL MARKETMAKERS FOR THE COMPANY'S
SECURITIES. UNDER THESE CIRCUMSTANCES, THE BID AND ASK PRICES FOR THE COMPANY'S
SECURITIES MAY BE SIGNIFICANTLY INFLUENCED BY DECISIONS OF THE MARKETMAKERS TO
BUY OR SELL THESE SECURITIES FOR THEIR OWN ACCOUNT. ADDITIONALLY, NO ASSURANCE
CAN BE GIVEN THAT ANY MARKETMAKING ACTIVITIES OF THE MARKETMAKERS WILL BE
CONTINUED AT ANY TIME.
The date of this Prospectus is __________, 1998
2
<PAGE>
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form SB-2 under the Securities Act of
1933, as amended (the "Securities Act") with respect to the securities offered
hereby. This Prospectus, filed as a part of the Registration Statement, does not
contain certain information set forth in or annexed as exhibits to the
Registration Statement, and reference is made to such exhibits to the
Registration Statement for the complete text thereof. For further information
with respect to the Company and the securities offered hereby, reference is made
to the Registration Statement and to the exhibits filed as part thereof, which
may be inspected at the office of the Commission without charge, or copies
thereof may be obtained therefrom upon payment of a fee prescribed by the
Commission. Statements contained in this Prospectus regarding the contents of
any contract or other document are not necessarily complete, and although the
material terms of such contracts and documents are described in this Prospectus,
in each instance reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement, each such statement
being qualified in all respects by such reference.
Reports filed by the Company with the Commission pursuant to the
information requirements of the Exchange Act may be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Room 1024, Washington D.C. 20549, and at the following Regional Offices of
the Commission: New York Regional Office, 7 World Trade Center, 13th Floor, New
York, New York 10048; and Chicago Regional Office, Northwest Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material may be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, at prescribed rates.
Copies of such materials, and of the Registration Statement, may also be
obtained on the World Wide Web through the Commission's Internet address at
"http://www.sec.gov."
The Company furnishes its shareholders with annual reports containing
audited financial statements, and makes available its quarterly reports for the
first three quarters of each fiscal year containing unaudited interim financial
information, in accordance with the Company's status as a reporting company
under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Shareholders may obtain the most recent such reports by making written request
therefor to the Company's shareholder relations officer at the Company's
principal executive offices located at Ross' Corner, U.S. Highway 206 and County
Route 565, P.O. Box 117, Augusta, New Jersey 07822-0117. Similarly, the Company
will provide, upon request and without charge, to each person who receives this
Prospectus, a copy of any of the information incorporated by reference in this
Prospectus; and requests therefor should be directed to the Company's
shareholder relations officer at the Company's principal executive offices
located at Ross' Corner, U.S. Highway 206 and County Route 565, P.O. Box 117,
Augusta, New Jersey 07822-0117, telephone (973) 383-7644.
This Prospectus contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 with respect to
the financial condition, results of operations, business and business plan of
the Company. These forward-looking statements involve certain risks and
uncertainties. No assurance can be given that any such matters will be realized.
Factors that may cause actual results to differ materially from those
contemplated by such forward-looking statements include, among others, the
following possibilities: (i) competitive conditions in the industries in which
the Company operates; and (ii) general economic conditions that are less
favorable than expected. Further information on other factors which could affect
the financial results of the Company and such forward-looking statements is
included in the section herein entitled "Risk Factors."
3
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified by, and must be read in conjunction
with, the more detailed information and financial statements appearing elsewhere
in this Prospectus. As used in this Prospectus, the term "Company" means
Millennium Sports Management, Inc., a New Jersey corporation formerly known as
Skylands Park Management, Inc. Unless otherwise indicated, all share and per
share information in this Prospectus gives effect to a 1-for-10 reverse stock
split of the Common Stock effected in November 1996. Unless otherwise indicated,
such share and per share information does not give effect to (i) 11,071 shares
of Common Stock reserved for issuance pursuant to the Company's 1993 Stock
Option Plan, or (ii) 844,772 shares of Common Stock reserved for issuance as
of October 5, 1998 pursuant to the Company's 1996 Stock Award Plan.
The Company
Millennium Sports Management, Inc., formerly known as Skylands Park
Management, Inc. (the "Company"), was incorporated in the State of New Jersey in
August 1991. The Company has developed a regional sports entertainment and
recreation center in Sussex County, New Jersey, known as the Skylands Park
Sports and Recreation Center (the "Complex"). Sussex County is located in the
heart of New Jersey's "Skylands" region (comprised of the counties of Sussex,
Warren, Passaic, Morris and Hunterdon), approximately 50 miles northwest of New
York City. The Complex has been designed with a view to addressing both the
entertainment interests and the sports and other recreational needs of the
region's diverse population (including interest in spectator sports, and the
need for equipment and practice facilities for participatory sports and
activities), including tourists who visit the region annually. The Company also
seeks to take advantage of the related market for sporting goods, sports apparel
and sports collectibles.
The centerpiece of the Complex is Skylands Park, which is a 4,300 seat
professional baseball stadium ("Skylands Park"), and is, among other things, the
home of the New Jersey Cardinals (the "Team"), a Class "A" Minor League
affiliate of the St. Louis Cardinals Major League baseball franchise of the
National League. The Company has a minority ownership interest in Minor League
Heroes, L.P. ("Heroes"), the limited partnership that owns the Team. The Team is
a member of the New York-Penn League. Skylands Park was placed in operation in
April 1994, and the Team has played all of its home games at Skylands Park
during the 1994 through 1998 minor league baseball seasons.
During the 1998 calendar year, in addition to the Team's 38 regular season
home games, Skylands Park hosted a total of 28 college, high school and other
amateur game dates, including eight home games of the New Jersey Diamonds, a
team owned and operated by the Ladies Professional Baseball ("LPB") league. LPB
suspended operations early in the 1998 baseball season, and it is uncertain
whether or when LPB will resume operations.
4
<PAGE>
The other portions of the Complex follow a courtyard village design theme,
and include a recreation facility containing batting cages, a sports video
parlor, mini-gym, children's party room and sports collectibles store; a
wholesale and retail sporting goods outlet; and an exhibit hall. On game days
during the first part of the 1998 baseball season, the Company operated, in the
exhibit hall, a sports lounge serving beer, wine, soft drinks and light snack
foods; however, due to a lack of business, the Company has terminated the
sports lounge operation, and it is currently considering other potential uses of
the exhibit hall (although the Company has not entered into any commitments or
agreements regarding any such alternate uses).
In 1994 through 1996, the Company published six issues of BarnStorming: New
Jersey's Baseball Magazine, a baseball magazine edited by Phil Pepe, a
nationally syndicated sports columnist and author. The Company did not realize a
profit from the magazine, and the Company has discontinued publication of
BarnStorming.
The Company currently operates, in the Complex, a Skylands Sporting Goods
store, which sells, both at retail and at wholesale, a broad range of sporting
goods related to baseball and other sports, and Team paraphernalia and apparel.
In 1998, the Company entered into agreements with affiliates of Golf
Stadiums, Inc., William F. Rasmussen and Glenn J. Rasmussen, in implementation
of such parties' October 1997 letter of intent, with respect to the development,
through a joint venture corporation known as Stadium Capital, Inc. ("Stadium
Capital"), of a "Stadium Golf" resort destination (including two 18-hole
professional golf courses and a related "Stadium" facility containing luxury
boxes and/or condominium units, grandstand seating, telecast facilities,
professional golf facilities and dining and locker room amenities) in Naples,
Florida. The Company currently holds 50% of the outstanding capital stock of
Stadium Capital. Stadium Capital is in the start-up phase, and the
implementation of its business plan is dependent upon raising substantial
financing. Stadium Capital has previously terminated a proposed private
placement in which it sought to raise a small portion of the total financing
contemplated by its business plan, and there can be no assurance that Stadium
Capital will be able to obtain any or all of this required financing.
The Company also intends to utilize the professional skills and collective
sports-related backgrounds of its management team to provide strategic,
financial and operational consulting services to small to mid-sized professional
franchise owners and sports facility operators. However, the Company has not yet
entered into any definitive consulting arrangements.
The Company filed a voluntary petition for reorganization with the United
States Bankruptcy Court for the District of New Jersey (the "Court") on June 1,
1994. The Company made such filing with a view to fostering a more orderly
payment and resolution of the Company's obligations. On April 13, 1995, with the
requisite approval of the Company's creditors, the Court approved and confirmed
the Company's plan of reorganization (the "Plan"), and pursuant to the Plan, the
Company has paid approximately $4,945,000 of its pre-petition liabilities
(which were in the aggregate allowed amount of approximately $5,100,000) at
their original principal amounts, leaving due $63,542 which has been set aside
for payment, and $90,865 of insider claims (payable primarily to former officers
and directors) which may be paid in cash or, at each claimant's option, in
shares of Common Stock valued at their market price as of the date that the
claimant elects to be paid in such manner. As of October 5, 1998, the Company
had set aside the sum of $63,542 (representing the final payment required to be
made under the promissory note issued to the Company's non-insider unsecured
pre-petition creditors), and the Company will pay such amount to such creditors
upon verification of certain adjustments that were made with respect to a small
number of creditors' claims at the time of the confirmation of the Plan. See
"Plan of Operations and Management's Discussion and Analysis of Financial
Condition and Results of Operations - Plan of Reorganization."
5
<PAGE>
The Offering
Securities Offered ......... 1,012,000 shares of Common Stock issuable upon
exercise of 1,012,000 outstanding Class D
Warrants. See "Description of Securities -
Class D Warrants."
2,585,954 shares of Common Stock issuable upon
exercise of 923,555 outstanding Class A
Warrants. See "Description of Securities -
Class A Warrants."
Terms of the
Class D Warrants............ Each Class D Warrant entitles the holder to
purchase one share of Common Stock at a price
of $.50 (plus, to the extent not theretofore
paid, the $.10 purchase price for such Class D
Warrant) at any time until March 31, 2003. The
Class D Warrants are not redeemable by the
Company. The number of shares purchasable, and
the exercise price per share applicable, upon
any exercise of the Class D Warrants are
subject to adjustment on a proportional
arithmetic basis in the event of any stock
split, stock dividend, combination of shares,
recapitalization or other such event relating
to the outstanding Common Stock which may
occur from time to time after the date of this
Prospectus. See "Description of Securities
- Class D Warrants."
Terms of the
Class A Warrants............ Each Class A Warrant entitles the holder to
purchase 2.8 shares of Common Stock at a total
price of $2.80 at any time until the extended
expiration date of December 31, 1998. The
Class A Warrants are subject to redemption at
$.10 per Class A Warrant on 30 days' prior
written notice if the closing bid price of the
Common Stock equals or exceeds $32.70 per
share for any 20 trading days within a period
of 30 consecutive trading days ending on the
fifth day prior to the date of the notice of
redemption. The number of shares purchasable,
and the exercise price per share applicable,
upon any exercise of the Class A Warrants
are subject to adjustment on a proportional
arithmetic basis in the event of any stock
split, stock dividend, combination of shares,
recapitalization or other such event relating
to the outstanding Common Stock which may
occur from time to time after the date of
this Prospectus; in addition, in the event
that the Company, at any time after the date
of this Prospectus, issues Common Stock
or rights to acquire Common Stock (subject to
certain exceptions) at a price less than the
then-current market price or exercise price,
the number of shares and exercise price per
share will be subject to a formula adjustment
to reflect the economic dilution or potential
economic dilution created by such event. In
connection with any exercise of Class A
Warrants, all shares of Common Stock issuable
to the exercising holder in respect of those
Class A Warrants then being exercised will be
aggregated, and any fractional share interest
will be eliminated. See "Description of
Securities - Class A Warrants."
Shares of Common Stock Outstanding:
Prior to the offering...... 7,188,085 shares (as of October 5, 1998)
After the offering ........ 10,786,039 shares (1)
Use of Proceeds............. The Company intends to set aside the first
$1,000,000 of net proceeds of this offering
for its working capital requirements, which
may include payments to executive officers in
respect of accrued compensation, and up to
$90,865 of unsecured claims which remain
payable primarily to former officers and
directors pursuant to the Company's Plan of
Reorganization. Any additional
6
<PAGE>
net proceeds may be utilized for facilities
development and/or business acquisitions,
although the Company currently has no binding
commitments with respect to any such matters.
The Company reserves the right to alter the
foregoing priorities respecting the
application of net proceeds, if one or more
attractive acquisitions were to become
available. See "Use of Proceeds" and "Plan of
Operations and Management's Discussion and
Analysis of Financial Condition and Result of
Operations."
NASDAQ Symbols:
Common Stock.............. MSPT
Class A Warrants.......... MSPTW
Risk Factors................ Investment in the securities offered hereby
involves a high degree of risk, including,
among other risks, the immediate need for
additional financing; limited operating
history and lack of profitability; potential
cash flow shortages; and possible lack of an
active trading market for the Common Stock.
Investment in the securities should be
considered only by persons who can afford the
loss of their entire investment. See "Risk
Factors."
- ----------
(1) Gives effect to the exercise of all of the Warrants.
7
<PAGE>
Summary Financial Information
The following sets forth summarized financial information for the periods
indicated. The information set forth below should be read in conjunction with
the audited and unaudited financial statements and notes thereto which appear
elsewhere in this Prospectus. The summary financial information for the six
months ended June 30, 1998 is unaudited and has been prepared by management, and
is not necessarily indicative of the results for the full year.
Statement of Operations Data:
<TABLE>
<CAPTION>
Year Ended December 31, Six Months Ended June 30,
----------------------- -------------------------
1997 1996 1998 1997
---- ---- ---- ----
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Total revenues $656,554 $770,733 $ 207,501 $ 239,432
Cost of sales and services(1) (1,517,619) (1,637,328) 1,426,727 747,797
----------- ----------- ----------- ----------
Loss from operations (861,065) (866,595) (1,219,226) (508,365)
----------- ----------- ----------- ----------
Other Income (Expense):
Equity in income of limited partnership 93,985 111,009 -- --
Interest income (expense) (58,140) (111,794) 3,968 (49,558)
----------- ----------- ----------- ----------
35,845 (785) 3,968 (49,558)
----------- ----------- ----------- ----------
Net Loss ($825,220) $(867,380) $(1,215,258) $ (557,923)
=========== =========== =========== ==========
Weighted average common shares outstanding 2,203,043 1,212,202 6,054,907 1,333,611
=========== =========== =========== ==========
Basic and diluted loss per share $(0.37) $(0.72) $ (0.20) $ (0.42)
=========== =========== ============ ==========
</TABLE>
Balance Sheet Data:
<TABLE>
<CAPTION>
June 30, 1998
-------------
(Unaudited)
<S> <C>
Property and improvements, net $12,634,199
Cash and short-term investments 528,244
Total assets 13,866,859
Total liabilities 614,838
Total stockholders' equity 13,252,021
Total liabilities and stockholders' equity 13,866,859
</TABLE>
- ----------
(1) Costs during the six months ended June 30, 1998 include a non-cash pre-tax
charge of $734,375, representing compensation expense attributable to the
issuance of stock options to directors of the Company at an exercise price
below the fair market value of the underlying Common Stock.
8
<PAGE>
RISK FACTORS
Investment in the Company involves a high degree of risk and should be
considered only by persons who can afford the loss of their entire investment.
In addition to the other information in this Prospectus, investors should
carefully consider the following among other factors in evaluating an investment
in the securities offered hereby.
Consistent History of Losses From Operations
The Company incurred significant losses during its construction phase, and
has incurred operating losses in each year of operations. Although the Company
has placed into operation substantially all elements of the Complex, the
Company's ability to operate profitably will depend on a number of other
factors, including the public's ongoing reception to the Complex, general
economic conditions which will affect the amounts available for recreational
expenditures generally, and the Company's ability to add business operations to
provide cash flow on a year-round basis. There is a substantial probability
that, unless the Company is able to successfully promote Skylands Park and the
Complex for a substantial number of additional events in the spring through the
fall, and/or is able to develop or acquire supplemental businesses which can
produce revenues and positive cash flow in the winter months (which would
require the Company to obtain additional financing, whether by means of this
offering or otherwise), the Company will continue to incur losses and negative
cash flow from its existing operations. From the inception of the Company
through December 31, 1997, the Company incurred accumulated losses of
approximately $4,993,000, including reorganization expenses attributable to its
bankruptcy proceedings of approximately $637,000. Additional losses have been
incurred and can be expected to be incurred in 1998 and thereafter.
This history of losses can be expected to continue to have a material
adverse effect on the Company's ability to obtain additional financing.
Furthermore, if the Company were able to obtain debt financing, the Company's
history of losses would likely subject the Company to mandatory compliance with
strict financial covenants (with little leeway granted for non-compliance). In
addition, the Company's history of losses would materially adversely affect the
Company's ability to respond to market changes, and, with respect to floating
rate loans, the Company would be extremely sensitive to changes in prevailing
interest rates (with the potential for even small increases in market interest
rates to have a material adverse effect on the Company's business, operations
and operating results).
Due to the Company's consistent history of operating losses, the likelihood
of continuing losses in the future, and the Company's need for additional
financing to cover such potential losses and pay its liabilities when due, the
opinion of the Company's independent auditors, included in the audited financial
statements appearing elsewhere in this Prospectus, includes a "going concern"
qualification, indicating that the foregoing factors raise substantial doubt
about the Company's ability to continue as a going concern.
Bankruptcy Proceedings; Need for Additional Capital
On June 1, 1994, the Company filed a voluntary petition for reorganization
with the United States Bankruptcy Court for the District of New Jersey (the
"Court"). Such filing was precipitated by the Company's lack of necessary
capital, and was made in order to enable the Company to establish orderly
payment mechanisms for its then-outstanding obligations. Although the Company's
Plan of Reorganization (the "Plan") has been approved and implemented, and the
Company has paid substantially all of its pre-petition liabilities in the
original amounts thereof and in accordance with the Plan, the funds utilized to
make such payments have been made primarily out of the net proceeds of equity
financings, and not out of cash flow from operations. Unless and until the
Company is able to more fully utilize its existing facilities, and/or is able to
develop or acquire supplemental businesses, it is unlikely that the Company will
produce sufficient cash flow from operations to cover its expenses; accordingly,
9
<PAGE>
the Company will need to raise additional capital to sustain its operations, and
there can be no assurance that the Company will be able to do so on favorable
terms, if at all. In addition, the Company may, notwithstanding its adherence to
the Plan, continue to suffer the stigma that is often attached to companies that
have been the subject of bankruptcy proceedings, and this may in the future
materially adversely affect the market price of the Company's securities, and
the Company's ability to transact business on terms that would be available to
other entities which have not been the subject of bankruptcy proceedings.
Possible Inability to Obtain Additional Equity Financing
Pursuant to this offering, the Company is offering an aggregate of
3,597,954 shares of Common Stock issuable upon exercise of the Warrants. The
Company has also reserved an aggregate of 11,071 shares of Common Stock for
issuance pursuant to the Company's 1993 Stock Option Plan, and an aggregate of
844,772 shares of Common Stock (including 750,000 shares which are subject to
certain future performance contingencies) for issuance pursuant to the
Company's 1996 Stock Award Plan. As a result, the Company's ability to obtain
additional equity financing in the future may be adversely affected by the
existence of outstanding Warrants and options. The holders of such Warrants
and/or options may exercise them at a time when the Company could obtain
additional capital on terms more favorable than those provided by the Warrants
and/or options. The exercise of a significant number of Warrants and/or options
could have a depressive effect upon the market price of the Common Stock. There
can be no assurance that the Company will be able to raise additional funds
through a subsequent public offering or otherwise. See "Management - Stock
Option Plan," "Management - Stock Award Plan" and "Description of Securities."
Current Prospectus and State Registration
Required to Exercise Warrants
The Warrants are not exercisable unless, at the time of the exercise, the
Company has a current prospectus covering the shares of Common Stock issuable
upon exercise of the Warrants and such shares have been registered, qualified or
deemed to be exempt under the securities laws of the state of residence of the
exercising holder of the Warrants. Although the Company will use its best
efforts to maintain a current prospectus relating to the Warrants until the
expiration of the exercise periods of the Warrants, there is no assurance that
it will be able to do so. See "Description of Securities."
Influence of Certain Marketmakers
Certain broker-dealers are the principal marketmakers for the Company's
securities. For this reason, the bid and asked prices for the Company's
securities may be significantly influenced by decisions of these marketmakers to
buy or sell these securities for their own account. Furthermore, there can be no
assurance that any marketmaking activities of these marketmakers will be
continued at any time. If such marketmakers were to significantly reduce or
cease such marketmaking activities, this could have a material adverse effect on
the market price of the Company's securities.
10
<PAGE>
Qualification Requirements for NASDAQ
Securities; Risk of Low-Priced Securities
Although the Company's Common Stock and Class A Warrants are currently
listed on NASDAQ, the Company was notified by NASDAQ, by letter dated October 5,
1998, that due to the recent failure of the Common Stock to maintain a closing
bid price of at least $1.00 per share, the Common Stock and Class A Warrants
would be subject to delisting if the closing bid price of the Common Stock did
not equal or exceed $1.00 per share for ten consecutive trading days prior to
January 5, 1999. If the Company is unable to take action (such as a reverse
stock split) that will have the effect of achieving the minimum bid price for
the Common Stock, or is unable to demonstrate to NASDAQ's satisfaction a plan by
which the Company will again satisfy the NASDAQ listing requirements, the
Company's securities will be delisted from NASDAQ. Trading, if any, in the
Company's securities would thereafter be conducted in the over-the-counter
market on the National Association of Securities Dealers, Inc. ("NASD") OTC
Electronic Bulletin Board established for securities that do not meet the NASDAQ
listing requirements, or quoted in what are commonly referred to as the "pink
sheets." As a result, an investor may find it more difficult to dispose of, or
to obtain accurate price quotations and volume information concerning, the
Company's securities.
In addition, if the Company's securities were delisted from NASDAQ, they
would be subject to the low-priced security or so-called "penny stock" rules
that impose additional sales practice requirements on broker-dealers who sell
such securities to persons other than established customers and accredited
investors (generally defined as investors with net worth in excess of $1,000,000
or annual income exceeding $200,000, or $300,000 together with his or her
spouse). In the event that the Company's securities become subject to the "penny
stock" rules, holders of the Company's securities will find it substantially
more difficult to obtain price information and/or dispose of their securities.
Potential "Dram Shop" Liability
The Company serves alcoholic beverages, such as beer, at Skylands Park.
Under New Jersey law, facilities that serve alcoholic beverages are subject to
"dram shop" laws and legislation, which impose liability on licensed alcoholic
beverage servers for injuries or damages caused by their negligent service of
alcoholic beverages to a visibly intoxicated person or to a person whom the
server knows (or reasonably should know) is a minor, if and to the extent that
such service is the proximate cause of the injury or damage and such injury or
damage is a reasonably foreseeable consequence of the negligent service. The
Company is named as an additional insured on its concessionaire's insurance,
which the Company believes is adequate to protect against such liability.
However, there can be no assurance that such coverage will apply in all cases,
that the Company will not be subject to a judgment in excess of such insurance
coverage, or that such insurance coverage will continue to be available. The
imposition of a judgment in excess of the Company's insurance coverage would
have a material adverse effect on the Company. See "Business - Insurance."
11
<PAGE>
Insurance
Although the Company maintains (and plans to continue to maintain)
insurance coverage that it believes to be customary and generally consistent
with the levels and types of coverage existing for other owners and operators of
sports stadiums and related entertainment facilities, to the extent that such
coverage is inadequate or the Company incurs losses which are uninsured, such
losses could have a material adverse effect on the Company and its capital
resources. See "Business - Insurance."
Seasonality
The Company's revenues and cash flow from operations have been
significantly greater in each spring, summer and fall, than in the winter months
when Skylands Park is not rented for outdoor events, and the Company relies upon
income generated by its other businesses. The Company has historically been
unable to generate sufficient cash flow from operations during the seasons of
full operations, and the Company has thus been required to utilize other cash
resources (primarily from the issuance of equity securities) to meet cash flow
shortages, including the payment of operating expenses in the winter months.
There can be no assurance that, in the future, the Company will have sufficient
other cash resources to cover off-season expenses, or that the Company will be
able to acquire or develop any businesses which would provide revenues and/or
cash flow during the winter months. Although the Company has invested in a 50%
ownership interest in Stadium Capital with a view to mitigating the existing
seasonality in the Company's business, there can be no assurance as to whether
or when Stadium Capital will be successful in implementing its business plan, or
whether or when the Company will be able to derive any revenues or cash flow
from that investment.
Competition
The Company's revenues have been and are anticipated to be generated
primarily from rental fees charged to the Team and other tenants (such as Ladies
Professional Baseball, and college and high school baseball teams) and from
concession sales and parking fees generated from events scheduled at Skylands
Park, as well as the Company's other businesses in the Complex. Accordingly, the
Company competes primarily for the public's entertainment expenditures. Although
the Company believes that Sussex County, New Jersey is a growing market for
sports-oriented entertainment, especially as a result of its growing tourism
attractions, there can be no assurance that the Company will be successful in
marketing its businesses. In this connection, the Company has competed and will
be competing with established companies and other sports and entertainment
complexes (including four sports and entertainment complexes in Sussex County,
where the Company is located) with substantially greater financial resources and
name recognition than those of the Company, and there can be no assurance that
the Company will be able to successfully compete against such companies and
sports and entertainment complexes for the public's entertainment expenditures.
In addition, the Company's sporting goods business competes with sporting goods
retailers operating in the proximate geographic area of the Complex, as well as
national mail order and catalogue
12
<PAGE>
businesses. See "Business - Competition," "Business - Minor League Baseball at
Skylands Park" and "Business - Leases."
Conflicts of Interest
Barry J. Gordon and Marc H. Klee, who are directors of the Company, are
also executive officers and equity owners of the general partner of the limited
partnership which owns the Team. In order to avoid potential conflicts, the
Company has established a policy that requires that decisions relating to the
relationship between the Company and the Team be made by directors other than
Messrs. Gordon and Klee. See "Certain Transactions," "Principal Shareholders"
and "Management."
Dependence on Key Personnel; Lack of Prior
Experience; Need for Additional Personnel
The Company is dependent upon Barry M. Levine (the Company's President and
Chief Executive Officer), who is employed pursuant to an employment agreement
which expires on December 31, 1999, and Robert H. Stoffel, Jr. (the Company's
Chief Financial Officer), who is employed pursuant to an employment agreement
which expires on October 31, 1998. (See "Management - Employment Agreements.")
The loss or unavailability of Mr. Levine or Mr. Stoffel could have a material
adverse effect on the operations of the Company. Mr. Levine and Mr. Stoffel have
each agreed to devote the majority of their business time to the affairs of the
Company. The Company does not maintain life insurance on the lives of either of
such individuals.
The successful marketing of the proposed businesses of the Company is
partially dependent upon the availability of qualified personnel. Prior to
joining the Company, neither Mr. Levine nor any other executive officer of the
Company had any significant experience in operating or managing businesses of
the type conducted and proposed to be conducted by the Company. There can be no
assurance that the Company will be successful in recruiting qualified personnel,
or in retaining such personnel, or, if retained, retained at a cost deemed
reasonable to the Company. See "Business - Employees," "Management - Directors
and Executive Officers" and "Management - Employment Agreements."
Stadium Golf
The Company contributed $150,000 in cash to the capital of Stadium Capital,
Inc., and has paid the additional sum of $25,000 to Golf Stadiums, Inc. in
reimbursement of certain pre-organization expenses relating to Stadium Capital;
and the Company has also agreed to issue to two affiliates of William F.
Rasmussen and Glenn J. Rasmussen an aggregate of 1,000,000 Class D Warrants
(subject to a restriction prohibiting such Class D Warrants and any shares of
Common Stock issuable thereunder from being sold or transferred at any time
prior to March 31, 2000 without the Company's written consent). Stadium Capital
is a joint venture formed by the Company with certain affiliates of Golf
Stadiums, Inc., William F. Rasmussen and Glenn J. Rasmussen. The purpose of such
joint venture is to plan, construct, develop and operate a "Stadium Golf" resort
destination in Naples, Florida. In order to implement its business plan, Stadium
Capital will need to raise substantial amounts of financing. Stadium Capital has
previously terminated a private placement in which it was unable to raise a
portion of the financing contemplated by its business plan, and there can be no
assurance as to whether or when it will be able to obtain any or all of the
required financing, or whether or when the Company will receive any return on
its investment in Stadium Capital. See "Business-Stadium Golf."
13
<PAGE>
Dividends
The Company has not paid any cash dividends on its Common Stock and does
not intend to pay any such cash dividends in the foreseeable future. The Company
intends to retain its earnings for use in operating and developing its business
and does not expect to change this policy. See "Dividend Policy."
Shares Eligible for Future Sale
Substantially all of the currently outstanding shares of Common Stock are
now freely tradable or may be sold in compliance with Rule 144 or another
applicable exemption under the Securities Act.
Under Rule 144, a person who has held restricted securities of the Company
for one year may, every three months, sell in ordinary broker's transactions or
in transactions directly with a marketmaker, a number of shares of Common Stock
equal to the greater of 1% of the Company's then-outstanding Common Stock or the
average weekly trading volume during the four calendar weeks prior to such sale.
Rule 144 also permits the sale of restricted shares without any quantity
limitations by a person who is not an affiliate of the Company and has satisfied
a two-year holding period. Existing holdings of restricted securities of the
Company are such that the volume limitations under Rule 144 are not an
impediment to the sale of any of such shares. Sales of Common Stock under Rule
144 may, in the future, have a depressive effect on the then-current market
price of the Common Stock. This could result in shareholders of the Company
receiving a lower price upon any resale of their shares of Common Stock, and
could impair the Company's ability to raise capital on favorable terms, if at
all.
Restrictions on Change of Control of
the Company; Issuance of Preferred Stock
The Company's Certificate of Incorporation and By-Laws contain certain
provisions that could have the effect of delaying or hindering a change of
control or sale of the Company, which could limit the ability of shareholders to
dispose of their Common Stock in certain transactions. See "Description of
Securities - Common Stock" and "Description of Securities - Certificate of
Incorporation and By-Laws."
In addition, the Board of Directors may issue one or more series of
preferred stock without any action by the shareholders of the Company, the
existence and/or terms of which may adversely affect the rights of the holders
of the Common Stock. In addition, the issuance of preferred stock may be used as
an "anti-takeover" device without further action on the part of the
shareholders. Issuance of preferred stock, which may be accomplished through a
public offering or a private placement to parties favorable to current
management, may dilute the voting power of holders of Common Stock (such as by
issuing preferred stock with super voting rights) and may render more difficult
the removal of current management, even if such removal may be in the
shareholders' best interest. See "Description of Securities - Preferred Stock."
14
<PAGE>
No Preemptive Rights; Possible Dilutive Events
The holders of Common Stock do not have any subscription, redemption or
conversion rights, nor do they have any preemptive or other rights to acquire or
subscribe for additional, unissued or treasury shares. Accordingly, if the
Company were to elect to sell additional shares of Common Stock following this
offering, or if insiders were to elect to receive payment of their pre-petition
claims in the form of shares of Common Stock, the persons acquiring Common Stock
in this offering would have no right to purchase additional shares, and as a
result, their percentage equity interest in the Company would be reduced. See
"Description of Securities - Common Stock."
Potential Benefit to Certain Insiders
A portion of the net proceeds of this offering may be used to pay accrued
compensation to officers of the Company, and to repay up to $90,865 in
pre-petition obligations owed by the Company to certain insiders (consisting
primarily of former directors and executive officers of the Company and certain
of their affiliates). See "Use of Proceeds," "Plan of Operations and
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Plan of Reorganization" and "Certain Transactions." As such, these
persons would derive a unique benefit from this offering, which would not be
applicable to other shareholders of the Company.
No NASDAQ Listing of Class D Warrants
The Company does not intend to apply to have the Class D Warrants listed on
NASDAQ or any securities exchange. Accordingly, any trading in the Class D
Warrants would be conducted in the over-the-counter market on the NASD OTC
Electronic Bulletin Board, through the "pink sheets," or otherwise in privately
negotiated transactions. Thus, any purchasers of the Class D Warrants will
encounter difficulty in disposing of, or obtaining accurate price quotations and
volume information concerning, the Class D Warrants. Although, upon exercise of
the Class D Warrants, the exercising holder(s) will be entitled to receive
registered and tradable shares of Common Stock which will be listed on the
NASDAQ SmallCap Market, this will require the payment of the exercise price
(and, to the extent not theretofore paid, the purchase price) of the subject
Warrants by the exercising holder(s).
THE COMPANY
The Company was incorporated in New Jersey on August 28, 1991. The
Company's executive offices are located at Ross' Corner, U.S. Highway 206 and
County Route 565, P.O.Box 117, Augusta, New Jersey 07822-0117, and its telephone
number is (973) 383-7644.
15
<PAGE>
USE OF PROCEEDS
The estimated net proceeds to be received by the Company, assuming the
exercise of all of the Warrants and after deducting estimated expenses payable
by the Company (to the extent not paid in connection with prior offerings) in
connection with this offering, will total approximately $3,183,154.
The Company intends to set aside the first $1,000,000 of any net proceeds
as a working capital fund for the Company's operations. Such working capital may
be applied to the payment of accrued compensation to officers of the Company,
and pre-petition claims of certain insiders (consisting primarily of former
directors and executive officers).
Any additional net proceeds will be utilized by the Company to expand its
business, either through construction and development of additional or upgraded
facilities within the Complex, or by means of investing in or acquiring other
businesses in the sports or entertainment fields. Other than the Company's
agreements regarding its investment in Stadium Capital, the Company has not
identified any prospective acquisitions, and is not engaged in any discussions
and has not entered into any agreements with respect to any potential
acquisitions. There can be no assurance that the Company will, in fact, be able
to identify suitable acquisitions, or that the Company will be able to
consummate any acquisitions on terms acceptable to the Company or otherwise.
The Company reserves the right to alter the foregoing priorities respecting
the application of net proceeds if one or more attractive acquisitions were to
become available to the Company.
Pending application of any net proceeds, such net proceeds will be invested
by the Company in short-term interest-bearing liquid investments.
DIVIDEND POLICY
The Company has not paid cash dividends to its shareholders since its
inception and has no intention of paying any dividends to its shareholders in
the foreseeable future. The Company intends to reinvest earnings, if any, in the
operation and development of its business.
16
<PAGE>
CAPITALIZATION
The following table sets forth, as of June 30, 1998, (i) the
capitalization of the Company, and (ii) the capitalization of the Company as
adjusted to reflect the receipt by the Company of the net proceeds from the
exercise of all of the Warrants. This table should be read in conjunction with
the Company's audited financial statements and the notes thereto included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
June 30, 1998
-----------------
Historical As Adjusted
---------- -----------
<S> <C> <C>
Shareholders' equity:
Preferred Stock, no par value; 500,000
shares authorized; none issued $ -- $ --
Common Stock, no par value, stated value
$.10 per share; 20,000,000 shares
authorized; 7,166,185 shares issued and
outstanding; 10,774,139 shares issued
and outstanding, as adjusted 716,617 1,077,412
Additional paid-in capital 18,743,263 21,565,622
Accumulated deficit (6,207,859) (6,207,859)
----------- -----------
Total shareholders' equity $13,866,859 $16,435,175
=========== ===========
</TABLE>
17
<PAGE>
MARKET PRICE OF COMMON STOCK
The following represents the range of reported high ask and low bid
quotations for the Common Stock on a quarterly basis since January 1, 1996, as
reported on the SmallCap Market of the National Association of Securities
Dealers, Inc. automated quotation system (NASDAQ). None of such quotations have
been adjusted to reflect the 1-for-10 reverse stock split in respect of the
Common Stock, which became effective on November 7, 1996.
<TABLE>
<CAPTION>
Period High Low
------ ---- ---
<S> <C> <C>
1st Quarter 1996 $1.125 $0.40
2nd Quarter 1996 $0.53 $0.21
3rd Quarter 1996 $0.437 $0.125
4th Quarter 1996 $0.75 $0.25
1st Quarter 1997 $1.72 $0.25
2nd Quarter 1997 $2.125 $0.75
3rd Quarter 1997 $2.44 $1.50
4th Quarter 1997 $5.125 $2.03
1st Quarter 1998 $5.56 $2.69
2nd Quarter 1998 $4.09 $1.375
3rd Quarter 1998 $1.93 $0.375
4th Quarter 1998 $0.75 $0.19
(through October 23, 1998)
</TABLE>
On October 23, 1998, the closing bid price for the Common Stock was
$0.3125, and the Company had 647 shareholders of record as of that date. The
Company believes that there are in excess of 2,000 beneficial owners of Common
Stock.
18
<PAGE>
SELECTED FINANCIAL DATA
The selected financial data presented below as of December 31, 1997 and
December 31, 1996 and for the years then ended are derived from the financial
statements of the Company which have been audited by Wiss & Company, LLP,
independent public accountants, and which appear elsewhere in this Prospectus.
The summary financial information for the six months ended June 30, 1998 is
unaudited, and is not necessarily indicative of the results for the full year.
The information set forth below should be read in conjunction with the audited
and unaudited financial statements and notes thereto which appear elsewhere in
this Prospectus.
Statement of Operations Data:
<TABLE>
<CAPTION>
Year Ended December 31, Six Months Ended June 30,
----------------------- -------------------------
1997 1996 1998 1997
---- ---- ---- ----
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Total revenues $656,554 $770,733 $ 207,501 $ 239,432
Cost of sales and services(1) (1,517,619) (1,637,328) 1,426,727 747,797
----------- ----------- ----------- ----------
Loss from operations (861,065) (866,595) (1,219,226) (508,365)
----------- ----------- ----------- ----------
Other Income (Expense):
Equity in income of limited partnership 93,985 111,009 -- --
Interest income (expense) (58,140) (111,794) 3,968 (49,558)
----------- ----------- ----------- ----------
35,845 (785) 3,968 (49,558)
----------- ----------- ----------- ----------
Net Loss ($825,220) $(867,380) $(1,215,258) $ (557,923)
=========== =========== =========== ==========
Weighted average common shares outstanding 2,203,043 1,212,202 6,054,907 1,333,611
=========== =========== =========== ==========
Basic and diluted loss per share $(0.37) $(0.72) $ (0.20) $(0.42)
=========== =========== =========== ==========
</TABLE>
Balance Sheet Data:
<TABLE>
<CAPTION>
June 30, 1998
-------------
(Unaudited)
<S> <C>
Property and improvements, net $12,634,199
Cash and short-term investments 528,244
Total assets 13,866,859
Total liabilities 614,838
Total stockholders' equity 13,252,021
Total liabilities and stockholders' equity 13,866,859
</TABLE>
- -----------
(1) Costs during the six months ended June 30, 1998 include a non-cash pre-tax
charge of $734,375, representing compensation expense attributable to the
issuance of stock options to directors of the Company at an exercise price
below the fair market value of the underlying Common Stock.
19
<PAGE>
PLAN OF OPERATIONS AND MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the information set forth in the audited financial statements and notes thereto
included in this Prospectus.
Plan of Operations
Prior to Skylands Park beginning to host events and generate revenues in
the second quarter of 1994, the Company was a development stage entity that did
not generate any significant operating revenues. During this period, the
Company's primary activities were limited to planning the construction and
development of Skylands Park and the Complex; obtaining financing for Skylands
Park and the Complex, primarily through the private placement of Common Stock
and warrants in March 1993, the sale of Common Stock and Class A Warrants as
part of an initial public offering consummated on October 1, 1993, and
short-term borrowings in March and April 1994; and completing a substantial
portion of Skylands Park and the Complex. Skylands Park is a 4,300 seat
professional baseball stadium which, among other things, has been and will be
leased for sports and other entertainment events.
In the second quarter of 1994, the Company received a temporary certificate
of occupancy for Skylands Park (and the sporting goods store/ticket office, the
Team clubhouse/administrative offices, and the maintenance building). Beginning
with the 1994 Minor League baseball season, the Team, which is a member of the
New York-Penn League, has played all of its home games at Skylands Park. The
Company has a minority ownership interest in Minor League Heroes, L.P.
("Heroes"), which is the limited partnership that owns the Team. During the 1994
calendar year, in addition to the Team's 38 regular season home games and 4
playoff games, Skylands Park also hosted 53 college and other amateur baseball
games, seven concerts and two professional wrestling events; however, such
events only generated limited amounts of revenues for the Company, due in part
to the fact that certain portions of the Complex were either incomplete or
otherwise non-operational.
The other portions of the Complex follow a courtyard village design theme,
and include a recreation facility containing batting cages, a sports video
parlor, mini-gym, children's party room and sports collectibles store; a
wholesale and retail sporting goods outlet; and an exhibit hall.
From June 1, 1994 to April 13, 1995, the Company operated as a
debtor-in-possession under Chapter 11 of the United States Bankruptcy Code. On
April 13, 1995, the Court approved the Company's plan of reorganization (the
"Plan"), and pursuant to the Plan, the Company has paid substantially all of its
pre-petition liabilities at their original principal amounts. See "Plan of
Operations and Management's Discussion and Analysis of Financial Condition and
Results of Operations - Plan of Reorganization."
20
<PAGE>
The construction of Skylands Park and the Complex was suspended from June
1, 1994 through December 31, 1994. The Company obtained the Court's permission
and sufficient financing to enable the Company to resume construction and
development work on Skylands Park and the Complex during the first quarter of
1995. Substantially all of such facilities are completed and in operation, and
the Company holds a certificate of occupancy for such facilities.
For the 1995 calendar year, in addition to the Team's 38 regular season
home games, Skylands Park hosted a total of 98 amateur baseball games. Other
events (including concerts, antique and craft fairs, sports card shows, and art
and traveling exhibits) were held at the Company's facilities for a total of 24
calendar dates in 1995. For the 1996 season, the Company held a total of 61
college and high school baseball games at Skylands Park; in the 1997 season, the
Company held a total of 91 college and high school baseball games at Skylands
Park; and in the 1998 season, the Company held a total of 28 non-Team baseball
game dates (including eight home games of the New Jersey Diamonds of the LPB) as
well as two professional wrestling events and three paid photo shoots. However,
LPB suspended operations early in the 1998 baseball season, and it is uncertain
whether or when LPB will resume operations. See "Business-Agreement with Ladies
Professional Baseball."
In 1994 through 1996, the Company published six issues of BarnStorming: New
Jersey's Baseball Magazine, a baseball magazine edited by Phil Pepe, a
nationally syndicated sports columnist and author. The Company did not realize a
profit from the magazine, and the Company has discontinued publication of
BarnStorming.
The Company currently operates, in the Complex, a Skylands Sporting Goods
store, which sells, year-round both at retail and at wholesale, a broad range of
sporting goods relating to baseball and other sports, and Team paraphernalia and
apparel. The Company also operates the Barn, a year-round recreational facility
in the Complex, which contains batting cages, a sports video parlor, mini-gym
and children's party room, and a subleased space in which an unaffiliated third
party sells sports collectibles.
The Company has acquired a 50% stock interest in Stadium Capital, which is
a start-up joint venture between the Company and certain affiliates of Golf
Stadiums, Inc., William F. Rasmussen and Glenn J. Rasmussen. Stadium Capital has
been formed for the purpose of designing, developing and operating a "Stadium
Golf" resort destination (including two 18-hole professional golf courses and
related facilities) in Naples, Florida. The prospects for this joint venture are
substantially dependent upon Stadium Capital raising substantial debt and/or
equity financing, of which there is no assurance. See "Business-Stadium Golf."
The Company also intends to utilize the professional skills and collective
sports-related backgrounds of its management team to provide strategic,
financial and operational consulting services to small to mid-sized professional
franchise owners and sports facility operators. Such backgrounds include Mr.
Stoffel's three years of experience as Vice President and Chief Controller of
the New York Yankees, Mr. Levine's five years of experience as an executive
officer of a publicly traded sports memorabilia and collectibles company, and
Mr. Gordon's and Mr. Klee's eight years of experience as managing owners and
operators of minor legal baseball teams. However, the Company has not yet
entered into any definitive consulting arrangements.
The Company anticipates receiving approximately $40,000 per year in rent
from the Team, which management does not believe will constitute a significant
portion of the Company's
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revenues. The Company expects to generate additional revenues from, among other
things, parking fees, the rentals of skyboxes and advertising signs in Skylands
Park, the rental of Skylands Park for other sports and entertainment events, and
the operation of the retail, recreational and other related facilities in the
Complex, and its ownership interest in the limited partnership that owns the
Team. The Company leased six skyboxes in 1998 for an aggregate annual rental of
$55,000 (of which the Team is entitled to retain $19,152), for which the Company
received payment in the second quarter of 1998. In addition, the Company is
entitled to 20% of all revenues from advertising sign rental commitments at
Skylands Park, and the Company's 20% share of such revenues in 1997 was
approximately $76,000.
Although the Company does not expect to receive significant rental income
from the Team, the Company does expect that it will continue to derive income
and cash distributions through its minority ownership interests in Heroes (see
"Plan of Operations and Management's Discussion and Analysis of Financial
Condition and Results of Operations-Purchase of Interest in Heroes").
Accordingly, the revenues generated by the Team through paid admissions and its
ancillary operations will indirectly benefit the Company. A portion of the
Company's cash flow in each year of operations has been received in the form of
a distribution from Heroes in respect of the Company's share of the net income
of Heroes.
Sources and Uses of Resources and Comparative Annual Results for the Years Ended
December 31, 1997 and 1996
During the year ended December 31, 1997, the Company's revenues were
approximately $657,000, consisting of approximately $301,000 of stadium rentals,
admissions and parking fees, approximately $97,000 of retail sales,
approximately $149,000 of concession sales, and approximately $110,000 of
advertising and subscription revenues. Revenues in 1996 were approximately
$771,000, with the reduction in revenues from 1996 to 1997 being primarily
attributable to a reduction in retail sales due to reduced institutional sales
resulting from limited cash flows.
From 1996 to 1997, total operating expenses were reduced from approximately
$1,637,000 in 1996 to approximately $1,518,000 in 1997; this change is
attributable to a substantial reduction in the cost of retail sales
(corresponding to the reduction in revenues from retail sales). All other
categories of operating expenses remained substantially constant from 1996 to
1997.
The Company incurred a loss of approximately $825,000 in 1997, as compared
to a loss of approximately $867,000 in 1996. The decreased loss is attributable
primarily to a $53,000 reduction in interest expense, as the Company paid down
its interest-bearing pre-petition liabilities during 1997. Due primarily to an
82% increase in the number of weighted average common shares outstanding, loss
per share went from $.72 per share in 1996 to $.37 per share in 1997.
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The Company will need to obtain substantial additional financing to sustain
operations beyond 1998. The Company currently has outstanding an aggregate of
923,555 Class A Warrants and 1,012,000 Class D Warrants. There can be no
assurance as to whether or when any of such Warrants may be exercised.
Due to the Company's consistent history of operating losses, the likelihood
of continuing losses in the future, and the Company's need for additional
financing to cover such potential losses and pay its liabilities when due, the
opinion of the Company's independent auditors, included in the audited financial
statements appearing elsewhere in this Prospectus, includes a "going concern"
qualification, indicating that the foregoing factors raise substantial doubt
about the Company's ability to continue as a going concern.
Comparative Quarterly Results for the Six Months Ended June 30, 1998 and 1997
The Company's stadium and facility rentals and admissions during the six
months ended June 30, 1998 was approximately $127,000, as compared to
approximately $132,000 in the six months ended June 30, 1997. The 4% decrease
is principally attributable to a reduction in the number of high school and
college baseball games played at Skylands Park. Retail sales decreased
approximately 23% from $95,000 to $73,000 during the six months ended June 30,
1998 as compared to the comparable prior year period, which decrease is
primarily attributable to a reduction in traffic at Skylands Park, and reduced
merchandise selection.
Cost of stadium operations increased by approximately 5% to approximately
$101,000 for the six months ended June 30, 1998, as compared to approximately
$96,000 for the same period in 1997. The increase reflects a more proactive
approach in maintaining the Complex. Cost of retail sales decreased
approximately $33,000 to approximately $35,000 for the six months ended June 30,
1998 from approximately $68,000 for the six months ended June 30, 1997. The
cost of retail sales as a percentage of retail sales decreased to approximately
48% for the six months ended June 30, 1998 as compared to approximately 72% for
the same period in 1997. This decrease is principally attributable to a change
in product mix, allowing for higher profit margins.
Selling, general and administrative expenses decreased by approximately
$27,000 (7%) to approximately $373,000 for the six months ended June 30, 1998,
as compared to approximately $400,000 for the same period in 1997. This
decrease is due principally to management's emphasis on effecting an overall
reduction of excess costs.
On April 29, 1998, pursuant to the Company's stock award plan adopted in
December 1996 (the "Stock Award Plan"), the Company granted the right to
purchase a total of 250,000 shares of Common Stock at $.25 per share to members
of the Company's Board of Directors. In accordance with generally accepted
accounting principles, a non-cash charge to earnings of $734,375 was recorded as
compensation expense, representing the difference between the exercise price and
the fair market value per share on the date of grant for the full award of
250,000 shares. As of October 5, 1998, rights to purchase 155,228 of such shares
had been exercised, and rights to purchase 94,772 shares remained outstanding.
Depreciation and amortization remained relatively stable at approximately
$183,000 for the six months ended June 30, 1998 and 1997.
Net loss in the six months ended June 30, 1998 was approximately
$1,215,000, as compared to approximately $558,000 in the six months ended June
30, 1997. The increased net loss was attributable to the non-cash charge to
earnings of $734,375 relating to stock compensation to directors and the
decrease in revenues, offset by a decrease in interest expense of $54,000 during
the six months ended June 30, 1998.
In 1998, management of the Company has undertaken a close analysis of the
Company's expenses, with a view to eliminating unnecessary and/or duplicative
expenses, while maintaining the Complex in good condition. Management believes
that it has implemented all expense reductions that are prudent and reasonably
possible, and that efforts to improve the Company's business are now best
focused on increasing gross revenues through the development of additional
sources of revenues, preferably during the winter months or on a year-round
basis. Although management is actively exploring possible additional business
activities, other than the Company's investment in the start-up Stadium Capital,
the Company has not entered into any agreements or commitments with respect to
any such matters. Certain of such proposed business activities could require
the Company to obtain additional financing, and there can be no assurance that
the Company would be able to obtain any such financing.
Plan of Reorganization
Pursuant to the Plan, the Company's various pre-petition liabilities, and
the administrative expenses relating to the reorganization, were divided into
several classifications, which were treated in substantially the following
manner.
First, all previously unpaid administrative claims relating to the
reorganization proceedings, and all priority claims (other than tax claims,
which are payable over six years or as may otherwise be agreed by the Company
and the subject tax authorities), were paid at the time of or shortly after the
confirmation of the Plan. The total of such claims was approximately $400,000.
In April 1995, the Company repaid in full a $200,000 loan which was secured
by substantially all of the Company's assets (other than its equity interest in
the Team). Total payments in respect of this loan, including all unpaid accrued
interest, were approximately $223,000.
Also in April 1995, the Company paid to Strescon, a mechanic's lienholder
in respect of pre-petition liabilities, the sum of approximately $115,000. (The
balance of Strescon's claim was categorized as a general unsecured claim, and
was paid on a ratable basis with the other unsecured pre-petition liabilities.)
Also in April 1995, the Company paid $1,600,000 in respect of its
pre-petition unsecured liabilities (including payment in full of de minimis
claims, and subject to the Company's reservation of rights to contest a limited
number of unsecured claims), leaving a balance due in respect of such claims of
$2,608,153, which has since been paid in full (except for $63,542 which has been
set aside as the final payment, pending verification of certain adjustments to
creditors' claims), substantially out of equity proceeds received by the Company
subsequent to the confirmation of the Plan.
Claims held by insiders (consisting primarily of former directors and
executive officers of the Company and certain of their affiliates) in respect of
pre-petition obligations (including but not limited to pre-petition loans made
to the Company) were in the aggregate amount of approximately $339,609. Of this
amount, $244,994 was, through October 5, 1998, paid through the issuance of
Common Stock valued at the market price thereof on the date such form of
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payment was selected by the subject insider pursuant to the Plan. As of October
5, 1998, the remaining $90,865 balance of insiders' claims was payable either
in cash, or at the option of the subject insider, in shares of Common Stock
valued at its market price at the time that such form of payment is selected by
the subject insider.
Equity interests, including interests of shareholders and warrantholders,
were not altered or impaired under the terms of the Plan.
The foregoing description of the Plan is merely a summary of certain
material provisions thereof, and is qualified in its entirety by the specific
provisions of the Plan. A copy of the Plan is included as an exhibit to the
Registration Statement of which this Prospectus is a part.
Liquidity and Capital Resources
The Company's primary sources of liquidity since its inception have been
the sale of shares of common stock to and short-term borrowings from certain
shareholders, which were used during the period from inception through March
1993; the net proceeds of approximately $739,000 from a private placement of
common stock and warrants, which were used during the period from March 1993
through September 1993; the net proceeds of approximately $5,815,000 from an
initial public offering of common stock and Class A Warrants, which were used
during the last quarter of 1993 and the first quarter of 1994; short-term
borrowings from certain officers, former shareholders and other related and
unrelated parties during March, April and May 1994, which were used during the
first and the beginning of the second quarter of 1994; net proceeds of
approximately $6,830,000 from the exercise of Class A Warrants and Class B
Warrants, which were received and used during the fourth quarter of 1994 and in
1995; net proceeds of $1,500,000 from a private placement of Common Stock in
August 1995 (all of which proceeds were utilized to make a partial prepayment of
the Creditors' Note); and net proceeds of approximately $2,691,000 from the
issuance and exercise of Class A Warrants, Class D Warrants, underwriter's
warrants and stock options in 1997 and the first and second quarters of
1998.
Substantially all of such capital resources have been utilized for the
planning, construction and development of the Complex, for working capital for
the Company's operations (including funding shortfalls in the Company's cash
flow from operations), for the payment of administrative expenses relating to
the Company's reorganization proceedings, and for a $150,000 capital
contribution to Stadium Capital. Pending application of funds to such purposes,
the Company has invested its funds in interest-bearing bank accounts, insured
money market accounts, short-term certificates of deposit, and other liquid
investments. As of June 30, 1998, the Company had capitalized costs of
approximately $14,000,000 (before depreciation) for the purchase of land and the
development and construction of Skylands Park and the Complex.
Although the Company derived significant revenues from operations in 1994
through 1997 (including operation of limited facilities in 1994, and the entire
Complex in 1995 through 1997), those revenues were not sufficient to cover
operating expenses or produce a positive cash flow. As a result, the Company
incurred significant net losses during such years. Revenues from the rental of
Skylands Park to its primary tenant have not been and will not be significant.
Instead, management expects that the Company will generate revenues from skybox
rentals, advertising signs and parking fees for Team games, from the rental of
Skylands Park for other sports and entertainment events, and from ancillary
activities and the operation of related facilities in the Complex; management is
also focused on identifying other sources of revenues (particularly in the
winter months or on a year-round basis). However, with the exception of Stadium
Capital (which has not yet and may not in the future become operational), the
Company has not identified or entered into any commitments for any such
additional businesses; furthermore, certain of such other business activities
could require the Company to obtain additional financing, and there can be no
assurance that the Company would be able to obtain any such financing. If the
Company is unable to generate additional revenues from its existing facilities
or develop or acquire additional businesses for operations in the winter months,
additional losses (in addition to those incurred in the first half of 1998) may
also be expected in the remainder of 1998 and thereafter.
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As of June 30, 1998, the Company had cash totaling approximately $465,000
(exclusive of $63,542 set aside for the final payment under the Creditors'
Note). Management believes that the Company is in need of additional liquid
resources to enable the Company to sustain operations beyond 1998, whether
through the exercise of its remaining outstanding Warrants, through the issuance
of other equity securities, and/or from other sources. The Company has
outstanding 923,555 Class A Warrants and 1,012,000 Class D Warrants; however,
there can be no assurance as to whether or to what extent any of such Warrants
may be exercised. In addition to such potential equity financing, management of
the Company is exploring possibilities for bank financing or other debt
financing, although the Company has no commitments for any such financing.
The Company's history of operating losses, the likelihood of ongoing
operating losses, and the need to raise additional financing to sustain ongoing
operations and pay the Company's liabilities as they mature, has caused the
Company's independent auditors to include a "going concern" qualification in
their opinion on the Company's financial statements as of December 31, 1997 and
for the year then ended. If the Company is unable to raise additional financing,
the Company may be required to sell certain assets (such as its interest in the
Team) to raise required cash, or may be required to again seek the protection of
the Bankruptcy Court. Although management continues to explore various financing
alternatives, the Company does not have any commitments with respect to any
additional financing.
Purchase of Interest in Heroes
In 1994, the Company purchased limited partnership interests in Heroes, the
limited partnership that owns the Team.
As of June 30, 1998, the Company owned a 16.82% limited partnership
interest in Heroes. The cost of the Company's limited partnership interests was
$284,375 paid in cash, including $14,875 paid to persons who were then directors
and executive officers of the Company.
The Company is using the equity method to account for its investment in
Heroes. The operations of Heroes are highly seasonal because the Team does not
play any games during the first and last quarters of the year.
Historically, the Company's share of the net income of Heroes has been
$90,000 or more in each year, and the Company has received cash distributions
from Heroes in amounts ranging from $35,000 to $100,000 in each year. On
February 10, 1998, the Company received from Heroes the sum of $98,994,
representing the Company's full distributions from Heroes with respect to the
1997 year.
Seasonality
The Company's cash flow from operations is significantly greater in each
spring, summer and fall than in the winter months when Skylands Park is not
rented for outdoor events, and the
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Company relies upon income generated by its other businesses. In the event that
the Company is unable to generate sufficient cash flow from operations during
the seasons of full operations, or the Company is unable to develop or acquire
additional businesses which will generate cash flow in the off-season, the
Company may be required to utilize other cash reserves (if any) or seek
additional financing to meet operating expenses, and there can be no assurance
that there will be any other cash reserves or that additional financing will be
available or, if available, on reasonable terms.
Year 2000 Compliance
The Company is not itself dependent to any significant extent on computer or
other embedded information systems, nor, to the Company's knowledge, are any of
its customers dependent on computer or other embedded information systems in
such customers' dealings with the Company. Certain of the Company's vendors and
suppliers may, however, be so dependent, although the Company has not yet
undertaken any investigation to determine the nature or extent of any Year 2000
issues that may be posed by vendor unpreparedness. Thus, while the Company will
not be required to incur any material costs or expenses in order to adapt,
modify or upgrade its information systems to be Year 2000 compliant, the Company
still needs to determine the degree of its vendors' preparedness and whether
alternate suppliers will be needed or available in the event of any disruption
in supply of goods or services to the Company. The Company expects to discuss
with its key vendors the status of their Year 2000 readiness in the fourth
quarter of 1998, and to promptly thereafter identify possible alternative
suppliers to the extent that such action may be called for based on any relative
lack of Year 2000 readiness by existing suppliers. The Company does not expect
the costs of this investigation to be material.
New Accounting Pronouncements
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,"
requires that certain long-lived assets be reviewed for possible impairment and
written down to fair value, if appropriate. The Company adopted this new
pronouncement in 1996, and the impact of adoption has not had a material effect
on the Company's financial statements.
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," requires companies to measure employee stock
compensation plans based on the fair value method of accounting. However, the
statement allows the alternative of continued use of Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees," with pro forma
disclosure of net income and earnings per share determined as if the fair value
based method had been applied in measuring compensation cost. The Company
provides pro forma disclosure.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards 128, "Earnings Per Share" ("SFAS 128"), which
is effective for financial statements for both interim and annual periods ending
after December 31, 1997. The Company adopted SFAS 128 in the fourth quarter of
1997. SFAS 128 replaces the presentation of primary and fully diluted earnings
per share with basic and diluted earnings per share. Basic earnings per share is
calculated based on the weighted average number of common shares outstanding
during the period and excludes all dilution. Diluted earnings per share is
calculated by using the weighted average number of common shares outstanding,
while also giving effect to all dilutive potential common shares that were
outstanding during the period. SFAS 128 had no impact on the loss per share for
the year ended December 31,1996.
Statement of Financial Accounting Standards No. 131 (SFAS 131), "Disclosure
about Segments of an Enterprise and Related Information," was issued in July
1997, and is effective for periods beginning after December 15, 1997. SFAS 131
introduces a new model for segment reporting, called the "management approach."
The management approach is based on the way the chief operating decision maker
organizes segments based on product and services, geography, legal structure,
management structure or any manner in which management desegregates a company.
The management approach replaces the notion of industry and geographic segments
in current Financial Accounting Standards Board standards. The Company intends
to adopt SFAS 131 in its 1998 financial statements and the impact of adoption is
not expected to have a material effect on the Company's financial
statements.
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BUSINESS
The Company was incorporated in the State of New Jersey in August 1991,
under the name "Skylands Park Management, Inc." The Company has developed a
regional sports entertainment and recreation center in Sussex County, New
Jersey, known as the Skylands Park Sports and Recreation Center (the "Complex").
Sussex County is located in the heart of New Jersey's "Skylands" region
(comprised of the counties of Sussex, Warren, Passaic, Morris and Hunterdon),
approximately 50 miles northwest of New York City. The Complex has been designed
with a view to addressing both the entertainment interests and the sports and
other recreational needs of the region's diverse population (including interest
in spectator sports, and the need for equipment and practice facilities for
participatory sports and activities), including tourists who visit the region
annually. The Company also seeks to take advantage of the related market for
sporting goods, sports apparel and sports collectibles.
The centerpiece of the Complex is Skylands Park, which is a 4,300 seat
professional baseball stadium, and is, among other things, the home of the New
Jersey Cardinals (the "Team"), a Class "A" Minor League affiliate of the St.
Louis Cardinals Major League baseball franchise of the National League. The
Company has a minority ownership interest in Minor League Heroes, L.P.
("Heroes"), the limited partnership that owns the Team. The Team is a member of
the New York-Penn League. Skylands Park was placed in operation in April 1994,
and the Team has played all of its home games at Skylands Park during the 1994
through 1998 minor league baseball seasons.
During the 1998 calendar year, in addition to the Team's 38 regular season
home games, Skylands Park hosted a total of 28 college, high school and other
amateur game dates, including eight home games of the New Jersey Diamonds, a
team owned and operated by the Ladies Professional Baseball ("LPB") league. LPB
suspended operations early in the 1998 baseball season, and it is uncertain
whether or when LPB will resume operations.
The other portions of the Complex follow a courtyard village design theme,
and include a recreation facility containing batting cages, a sports video
parlor, mini-gym, children's party room and sports collectibles store; a
wholesale and retail sporting goods outlet; and an exhibit hall. On game days
during the first part of the 1998 baseball season, the Company operated, in the
exhibit hall, a sports lounge serving beer, wine, soft drinks and light snack
foods; however, due to a lack of business, the Company has terminated the sports
lounge operation, and it is currently considering other potential uses of the
exhibit hall (although the Company has not entered into any commitments or
agreements regarding any such alternate uses).
In 1994 through 1996, the Company published six issues of BarnStorming: New
Jersey's Baseball Magazine, a baseball magazine edited by Phil Pepe, a
nationally syndicated sports columnist and author. The Company did not realize a
profit from the magazine, and the Company has discontinued publication of
BarnStorming.
The Company currently operates, in the Complex, a Skylands Sporting Goods
store, which sells, year-round both at retail and at wholesale, a broad range of
sporting goods relating to baseball and other sports, and Team paraphernalia and
apparel.
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The Company has invested in a 50% stock interest in Stadium Capital, which
is a start-up joint venture between the Company and certain affiliates of Golf
Stadiums, Inc., William F. Rasmussen and Glenn J. Rasmussen. Stadium Capital has
been formed for the purpose of designing, developing and operating a "Stadium
Golf" resort destination (including two 18-hole professional golf courses and
related facilities) in Naples, Florida. The prospects for this joint venture are
substantially dependent upon Stadium Capital raising substantial debt and/or
equity financing, of which there is no assurance.
The Company also intends to utilize the professional skills and collective
sports-related backgrounds of its management team to provide strategic,
financial and operational consulting services to small to mid-sized professional
franchise owners and sports facility operators. Such backgrounds include Mr.
Stoffel's three years of experience as Vice President and Chief Controller of
the New York Yankees, Mr. Levine's five years of experience as an executive
officer of a publicly traded sports memorabilia and collectibles company, and
Mr. Gordon's and Mr. Klee's eight years of experience as managing owners and
operators of minor legal baseball teams. However, the Company has not yet
entered into any definitive consulting arrangements.
The Company filed a voluntary petition for reorganization with the United
States Bankruptcy Court for the District of New Jersey (the "Court") on June 1,
1994. Such filing was precipitated by a lack of capital at that time, and was
made in order to enable the Company to arrange a more orderly payment and
resolution of its obligations. On April 13, 1995, with the requisite approval of
the Company's creditors, the Court approved and confirmed the Company's plan of
reorganization (the "Plan"), and pursuant to the Plan, the Company has paid
substantially all of its pre-petition liabilities at their original principal
amounts. See "Plan of Operations and Management's Discussion and Analysis of
Financial Condition and Results of Operations - Plan of Reorganization."
In November 1996, in order to create additional available authorized but
unissued shares of Common Stock, and in an effort to increase the market price
of the Common Stock (in anticipation of stricter NASDAQ listing requirements),
the Company effected a 1-for-10 reverse stock split in respect of the
then-outstanding Common Stock.
Skylands Park
The first and most significant of the businesses of the Company is the
operation of Skylands Park, which includes clubhouses, concession stations and
press accommodations as well as 10 private "skybox" suites. Each suite contains
indoor and outdoor seats overlooking the field and offers other amenities,
including private food and beverage service. These suites are available for
leasing primarily on an annual basis.
It is anticipated that the Team will play all of its home games during each
minor league baseball season at Skylands Park. The Company has agreed to rent
Skylands Park to the Team for a base rent of $1,100 per game plus utilities
(prorated based on usage) and a 20% share of signage revenues, and the Company
is entitled to retain all parking fees generated at Team games. The Company has
also entered into a lease with Ladies Professional Baseball ("LPB") for the use
of Skylands Park in the 1998, 1999 and 2000 baseball seasons, and the Company
expects to continue to lease Skylands Park for college, high school and other
amateur baseball games. However, LPB suspended operations early in the 1998
baseball season, and it is uncertain whether or when LPB will resume operations.
See "Business - Agreement with Ladies Professional Baseball."
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Minor League Baseball at Skylands Park
The Company has executed a long-term lease (running through September 2008,
subject to prior termination) with Minor League Heroes, L.P. ("Heroes"), the
owner of the Team. The Team is a Class "A" Minor League affiliate of the St.
Louis Cardinals Major League franchise.
The Minor Leagues are organized as the National Association of Professional
Baseball Leagues and currently consist of four levels of playing ability. These
levels, in descending order, are Class AAA, Class AA, Class A and Rookie. Each
level has various organized leagues based upon geographic area. The New
York-Penn League concluded its 58th year of operation in 1998, and is the
longest continuously operating Class "A" professional baseball league in North
America. Currently, the League has 14 franchises, all of which are affiliated
with a Major League baseball franchise. One franchise is located in Ontario,
Canada, two franchises are located in Pennsylvania, two franchises are located
in Massachusetts, one franchise is located in Vermont, seven franchises are
located in New York State, and one franchise (the Team) is located in New
Jersey.
The Team has been affiliated with the St. Louis Cardinals Major League
franchise since 1982, and currently operates under a player development contract
which expires after the 2002 Minor League season.
During the 1994 Minor League season, the Team held 38 regular-season and
four playoff home games at Skylands Park. During each of the 1995 through 1998
Minor League seasons, the Team held 38 regular season home games at Skylands
Park. Average attendance for each of these games exceeded 4,000 paid admissions.
All ticket receipts from Team home games played at Skylands Park are revenues
belonging to the Team.
In the first quarter of 1994, the Company purchased limited partnership
interests in Heroes, and the Company now owns a 16.82% interest in Heroes.
Other Events at Skylands Park
Based on its experience in the 1994 through 1998 seasons, the Company
believes that baseball at Skylands Park will not be limited to the professional
ranks. College games, both regular and post-season tournament play, as well as
high school and other amateur leagues, have used and continue to seek to use the
Skylands Park facilities. In the 1994 calendar year, a total of 53 college, high
school and other amateur baseball games were held at Skylands Park, and for the
1995, 1996 and 1997 calendar years, a total of 98, 61 and 91, respectively,
amateur baseball games were played at Skylands Park. In the 1998 calendar year,
a total of 28 non-Team baseball game dates were held at Skylands Park, including
eight home games of the New Jersey Diamonds of the LPB.
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In the 1994 calendar year, the Company also held seven concerts at Skylands
Park, and leased a portion of the Complex for two professional wrestling events.
In 1995, such additional events, including concerts, antique and craft fairs,
sports card shows, and art and travelling exhibits, utilized the Company's
facilities for a total of 24 calendar dates. Although the Company did not host
any such additional events in 1996, and only one concert in 1997 and two
professional wrestling events in 1998, management of the Company is pursuing
alternative arrangements for hosting such types of events on a basis which will
minimize the Company's risk of incurring losses from such events. All of these
events have produced and are expected to produce revenue for the Company in the
form of concession sales, facility rental fees or ticket sales, parking fees,
corporate sponsorship of events, and value enhancement of fence signs and
corporate skyboxes; however, in many instances, cash revenues from these events
were not sufficient to cover the Company's cash expenses. The profitability of
Skylands Park will be largely dependent upon receiving adequate revenues from
these ancillary events.
The Complex also includes a 6,300 square foot exhibit hall, which houses
baseball and other sports exhibits of local, regional, and national interest.
The Company held a dedication ceremony for the exhibit hall in December 1995, at
which time the initial exhibits included a 38-piece collection of limited
edition lithographs portraying great moments in Major League baseball parks;
photographs, newspapers and paraphernalia chronicling the history of the New
Jersey Cardinals franchise and the Sussex County Colonels; commemorative plaques
and photographs from the Sussex County Sports Hall of Fame; and autographs and
memorabilia of past and present Major League baseball players. On game days
during the first part of the 1998 baseball season, the Company operated, in the
exhibit hall, a sports lounge serving beer, wine, soft drinks and light snack
foods; however, due to a lack of business, the Company has terminated the sports
lounge operation, and it is currently considering other potential uses of the
exhibit hall (although the Company has not entered into any commitments or
agreements regarding any such alternate uses).
Land Acquisition
The Complex is located on a tract of land owned by the Company, consisting
of approximately 28.5 acres located in Frankford Township, New Jersey at the
intersection of U.S. Highway 206 and Sussex County Route 565. The land was
acquired by the Company at a cost of approximately $1,202,000, and as part of
the purchase agreement, the seller of the land agreed to pay up to 50% of the
costs for installing certain roads and other sitework improvements. The Company
does not expect to receive any such payments in respect of site work
improvements until the seller begins to develop its adjoining properties at some
indeterminate time in the future.
Construction of the Complex and Government Regulations
Baseball facilities to be used by Minor League teams must meet certain
standards established by Major League Baseball and the National Association of
Professional Baseball Leagues. Skylands Park has been designed to meet or exceed
all such required standards. Gould Evans Associates, the architectural
consultant for Major League Baseball, has issued its approval of the stadium
design on behalf of Major League Baseball.
As part of the construction of Skylands Park, the Company was required,
under applicable environmental regulations, to construct and install a
wastewater treatment system. The cost of this system was approximately $700,000,
and the Company expends approximately $62,000 per year in connection with the
operation, inspection and testing of the system. Other than such wastewater
treatment system, the Company was not and is not required to incur any material
costs and expenses in order to comply with federal, state or local environmental
laws and regulations relating to its current operations.
The Company has been issued a permanent certificate of occupancy for all of
the existing facilities in the Complex, and has received final site plan
approval from Frankford Township.
30
<PAGE>
The Company has also received and has in effect all other required licenses and
permits (including food, beverage and liquor licenses) for the operation of
Skylands Park and the Complex. The sale of alcoholic beverages at Skylands Park
entails the risk of liability under so-called "dram shop" laws.
The Barn
The Company has built a 16,500 square foot indoor recreational facility on
the grounds of the Complex, known as "The Barn." The Barn is intended to provide
sports and entertainment activities for fans on game days, including facilities
for the casual visitor to Skylands Park, for the serious athlete looking to
improve his or her skill level in baseball, and for those seeking a specially
planned program such as a birthday party or a group sports activity. The Barn is
open twelve months a year, and contains five baseball and softball batting
cages, a soft-play area, a sports video parlor, a children's party room, a
mini-gym for half-court basketball, and an aerobics court. A professional
batting/pitching tunnel, which is used by the Team during the Minor League
baseball season, is also available for private instruction. The Barn also houses
Bob's Hot Corner, which is space leased by an unaffiliated third party, in which
such third party sells sports collectibles for his own account.
Skylands Sporting Goods
Since May 1993, the Company has operated Skylands Sporting Goods as both a
retail and wholesale distributor of a broad range of sporting goods, including
baseballs, bats and gloves, Team paraphernalia and apparel, and equipment
related to other sports such as basketball, football and hockey. The store
encompasses approximately 3,000 square feet, of which approximately one-half is
dedicated to the retail business. It is expected that volume purchasing derived
from outfitting school teams, recreation leagues, and local amateur teams will
enable the Company to provide discounted prices to retail customers.
The Company has been authorized by Heroes to sell Team apparel and merchandise
in the Skylands Sporting Goods store; such items are sold for the account of
Heroes, which pays the Company a 20% commission on all such sales made in the
Skylands Sporting Goods store. Skylands Sporting Goods also sells licensed
apparel and other merchandise bearing the logos and symbols of other
professional teams; in such cases, the manufacturer or procurer of the goods is
licensed or sublicensed to utilize such intellectual property rights, and like
other sporting goods stores, the Company purchases such goods from the
manufacturer or a distributor, and offers such goods for sale in its store.
Stadium Golf
In the first quarter of 1998, the Company began to implement the
transactions contemplated by its October 1997 letter of intent with certain
affiliates of Golf Stadiums, Inc., William F. Rasmussen and Glenn J. Rasmussen.
Pursuant to such transactions, the Company and the Rasmussens' affiliates have
formed Stadium Capital, which has as its purpose the planning, construction,
development and operation of a "Stadium Golf" resort destination (including two
18-hole professional golf courses and a related "Stadium" facility containing
luxury boxes and/or condominium units, grandstand seating, telecast facilities,
professional golf facilities and dining and locker room amenities) in Naples,
Florida. The Company currently owns 50% of the outstanding stock of Stadium
Capital, in consideration of which the Company has contributed to Stadium
Capital an aggregate of $150,000 in cash. In addition, the Company
31
<PAGE>
has paid the sum of $25,000 to Golf Stadiums, Inc. in reimbursement of certain
pre-organization expenses relating to Stadium Capital, and has agreed to issue
to two affiliates of the Rasmussens an aggregate of 1,000,000 Class D Warrants
(subject to a restriction prohibiting such Class D Warrants and any shares
issuable thereunder from being sold or transferred at any time prior to March
31, 2000 without the Company's written consent).
Stadium Capital entered into binding commitments for the purchase of land
in Naples, Florida on which it proposed to develop this golf facility; however,
due to the failure to raise the necessary funding to complete the purchase of
such land, Stadium Capital's purchase rights have been terminated. Based on the
assumed development of such land, Stadium Capital's budget called for a total of
$66,250,000 to be spent for the acquisition, development and initial promotion
of this facility. There can be no assurance as to whether or when Stadium
Capital will be able to secure another development site or obtain any or all of
the required financing for its business plan, although the Company is hopeful
that its investment in Stadium Capital may eventually enable the Company to
mitigate the problems of seasonality inherent in the Company's current business.
BarnStorming Magazine
In 1994 through 1996, the Company published six issues of BarnStorming: New
Jersey's Baseball Magazine, a baseball magazine edited by Phil Pepe, a
nationally syndicated sports columnist and author. The Company did not realize a
profit from the magazine, and the Company has discontinued publication of
BarnStorming.
Insurance
The Company maintains all-risk and general liability insurance covering
personal injury which may be suffered by patrons of Skylands Park and the other
facilities in the Complex, with limits of coverage of $1,000,000 per occurrence
and $2,000,000 in the aggregate. The Company also maintains approximately
$9,000,000 of property damage insurance coverage. The Company is also named as
an additional insured on its concessionaire's liability insurance coverage,
which includes coverage relating to "dram shop" liability. Although the Company
believes that such insurance coverage will be adequate to insure against the
risks relating to the ownership and operation of the Complex, there is no
assurance that such insurance coverage will continue to be available at
commercially reasonable rates, or at all, or that if available, such coverage
will be sufficient to insure against potential liability which the Company may
incur in the future.
The Company also maintains casualty and liability coverage in respect of
the Skylands Sporting Goods store, in amounts which the Company believes to be
normal and customary for such types of operations.
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<PAGE>
Competition
Located in northwest New Jersey, Sussex County is part of the State's
Skylands region, comprising the counties of Sussex, Warren, Passaic, Morris and
Hunterdon. According to a 1993 report of the Sussex County Office of Economic
Development and the Sussex County Chamber of Commerce (which report relied in
substantial part on information contained in a 1992 survey by the New Jersey
Department of Travel & Tourism), the Skylands region generated $1.6 billion in
tourism expenditures in 1991, with Sussex County accounting for more than $125
million. Approximately 4,200 people in Sussex County are employed in
tourism-related jobs. Among Sussex County's major tourist attractions are Action
Park, Wild West City, Waterloo Village and Space Farms. Other recreation
facilities, including the Meadowlands sports facility located in East
Rutherford, New Jersey, are also within driving distance from Sussex County.
However, the closest Minor League baseball franchises are a Class "A" New
York-Penn League team located in Hudson Valley, New York, which is approximately
a 55-mile drive from Skylands Park, a Class "AAA" team located in Scranton,
Pennsylvania, which is approximately a 70-mile drive from Skylands Park, and a
Class "AA" team located in Trenton, New Jersey, which is approximately a
110-mile drive from Skylands Park; and, in addition, owners and developers in
the independent Northeast League and Atlantic League have built, are building
and/or have proposed the construction of minor league-sized baseball stadiums in
Montclair, Newark, Somerset and Atlantic City, New Jersey, and in Mountain Dale
and Newburgh, New York, Allentown and Easton, Pennsylvania, and Bridgeport,
Connecticut. The closest Major League baseball franchises are the New York
Yankees and the New York Mets, respectively located in Bronx County and Queens
County, New York. The Company's revenues have been generated primarily from
ticket and concession sales generated from events scheduled at Skylands Park
(other than Team events), parking fees from events at Skylands Park (including
Team games), a percentage of advertising charges for the rental of signs and
other advertising at Skylands Park, as well as the Company's recreational
facilities, sporting goods store and other businesses. Although the Company
believes that Sussex County is a growing market for sports-oriented
entertainment, especially as a result of its growing tourism attractions, there
can be no assurance that the Company will be successful in marketing its
businesses. In this connection, the Company is competing with established
companies having substantially greater financial resources than those of the
Company, and there can be no assurance that the Company will be able to
successfully compete against such companies for the public's entertainment
expenditures. The Company's sporting goods business also competes with sporting
goods stores operating in the locality of the Complex, and national mail order
and catalogue businesses.
Employees
Barry M. Levine (the Company's President and Chief Executive Officer) and
Robert H. Stoffel, Jr. (the Company's Chief Financial Officer) have entered into
employment agreements with the Company extending through December 31, 1999 and
October 31, 1998, respectively, pursuant to which each of such individuals has
agreed to devote the majority of his business time to the affairs of the
Company. See "Risk Factors - Dependence on Key Personnel" and "Management -
Employment Agreements."
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<PAGE>
As of October 5, 1998, the Company had a total of eight permanent
employees, consisting of four full-time employees and four part-time employees.
The Company also hires additional part-time employees in the spring through the
fall seasons, as required for the operation of Skylands Park in connection with
games and other events. The Company employs up to a total of 50 such part-time
employees per year, of which up to 18 may be at work at any one time.
None of the Company's employees is represented by any labor union or other
collective bargaining unit. The Company has not experienced any significant
degree of employee turnover, and the Company believes that its relations with
its employees are satisfactory.
Lease with the Team
The Company has entered into a long-term lease (the "Stadium Lease") for
Skylands Park with Heroes, the owner of the Team. Under the terms of the Stadium
Lease, the Company was required to construct and make available to Heroes a new
Minor League baseball stadium for the Team to play its home games by the spring
of 1994. The Stadium Lease commenced June 1, 1994 and expires September 30,
2008. Under the Stadium Lease, Heroes is obligated to pay rent of $1,100 per
game scheduled to be played at Skylands Park subject to adjustment in certain
instances. Such rent is subject to a 10% increase effective at the beginning of
each of the 2001 and 2005 minor league baseball seasons. The rent is payable in
installments (each approximately 50%) on August 1 and October 1 of each year.
Heroes may cancel the Stadium Lease if: (a) Skylands Park is not constructed as
required by the terms of the Stadium Lease, (b) Skylands Park does not meet all
minimum requirements under the Professional Baseball Agreement ("PBA") among the
Minor Leagues' governing organizations, or (c) at any time during any Minor
League baseball season, Skylands Park does not meet the requirements as set
forth in the PBA. In addition, Heroes may terminate the Stadium Lease after the
Minor League baseball seasons of 2003, 2004, 2005, 2006 and 2007 during the
period from October 1 through November 30 if: (i) the average paid attendance
for Team games during the immediately preceding baseball season was less than
900 people per game, and (ii) the Team did not realize an operating profit in
its previous fiscal year. The Stadium Lease will automatically terminate if the
New York-Penn League is disbanded, or if the Team is required to relocate from
Skylands Park or is disbanded by the New York-Penn League or Major League
Baseball (other than for reasons of Heroes' or the Team's bankruptcy, financial
mismanagement or non-compliance with rules and regulations). In the event of
such termination, a penalty of $70,000 will be payable by Heroes to the Company.
Heroes may voluntarily cancel the Stadium Lease by payment of a lump sum equal
to 75% of the remaining outstanding rent (based upon an assumed $35,000 rent per
year). In addition, if the New York-Penn League is disbanded, the Stadium Lease
will be terminated without any further obligation of the parties.
The Team is entitled to play its regular season and post-season home games
and hold pre-season training and practice sessions open to the public at
Skylands Park. The Team is entitled to exclusive use of the home clubhouse and
batting/pitching tunnel on days that Team home games are to be played ("Game
Days"). The Company has the right to schedule other activities at Skylands Park
for such times as will not materially interfere with the Team's scheduled games.
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<PAGE>
All parking facilities are operated by the Company and the Company is
entitled to retain all revenues derived therefrom. Heroes is required to provide
and pay for the following with respect to Game Days: (i) game staff personnel,
such as ushers, ticket takers and P.A. announcers, (ii) security personnel
during the Team games and open practices, (iii) medical personnel, and (iv)
skybox attendants. The Company is required to provide all utilities but Heroes
pays the cost of such utilities pro-rated according to their use.
Heroes sets admission prices for Game Days and retains all Game Day
admission revenues, except that the Company is entitled to establish the price
for, and retain all revenues from, admissions to skyboxes at Skylands Park for
all events; provided that (a) the price of game tickets for Team games (valued
at box seat prices) is to be paid to Heroes out of the Company's skybox
revenues, and (b) Heroes is provided with one skybox during the minor league
baseball season. On Game Days, Heroes has the exclusive right to sell, and
retain revenues from the sale of, food, beverages and souvenirs of the Team.
During the off-season, Heroes has the right to use the Skylands Park souvenir
shop to sell Team souvenirs subject to paying a 20% commission to the Company on
all such sales, or, at Heroes' option, a fixed fee of $825 per month (subject to
10% escalations in each of the 2000 and 2004 minor league baseball seasons).
The Company is required, at its sole expense, to (i) perform all
maintenance work necessary both before and during the minor league baseball
season to maintain Skylands Park in conformity with standards maintained
generally by minor league baseball facilities, (ii) provide the Team with an
administrative office at Skylands Park, and (iii) provide and maintain radio and
television broadcast facilities at Skylands Park. Heroes is entitled to all
revenues derived from broadcasts of the Team activities, as well as revenues
from the sale of, and advertising in, scorebooks, year-books, media guides and
other sponsorships associated with the Team. The Company, on the other hand,
retains the exclusive right to sell, and retain revenues from the sale of,
sponsorships attributable to the name of Skylands Park and the exhibition space
within Skylands Park. However, if the Company sells a sponsorship package which
includes the name of Skylands Park for an amount in excess of $250,000, Heroes
will receive 10% of the price of such sponsorship. Revenues received from sign
rentals and advertising in Skylands Park are divided 80% to Heroes and 20% to
the Company.
In the event of casualties such as fire, earthquake, rain, flood or any
other acts of God, the Company is not required to restore or rebuild Skylands
Park, and Heroes may terminate the Stadium Lease. In the event any portion of
the property is taken by eminent domain which results in loss of use of Skylands
Park by the Team, Heroes may terminate the Stadium Lease. The Company and Heroes
have agreed to indemnify each other from all damages, losses and liabilities
caused by or arising from any breach of the Stadium Lease.
Agreement with Ladies Professional Baseball
In February 1998, the Company entered into a lease agreement with Ladies
Professional Baseball ("LPB"), which owns and operates a professional women's
baseball league which is to include, commencing in the 1998 baseball season, a
franchise to be owned and operated by the league and to be known as the New
Jersey Diamonds (the "Diamonds"). Pursuant to the lease
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<PAGE>
agreement, the Diamonds were expected to play all of their home games at
Skylands Park in each of the 1998, 1999 and 2000 baseball seasons. Base rent
under the lease is at the rate of $1,300 per game. In 1998, the Diamonds were
scheduled to play 28 home games at Skylands Park, resulting in a base rent of
$36,400 for the year; however, in July 1998, LPB announced that, due to low
attendance and projected economic losses, it was canceling all further league
games for the balance of 1998, including the remaining 20 Diamonds home games.
LPB's public announcement suggested that LPB was attempting to secure additional
financing to enable it to resume operations in 1999 or thereafter; however,
there can be no assurance as to whether or when LPB will resume operations, and
the Company is uncertain if LPB will satisfy the remaining lease payments,
consisting of the second half of payments for 1998 and all of 1999 and 2000. LPB
is currently in default under its lease with the Company, and the Company has
the immediate right to terminate such lease and/or bring legal action against
LPB for the unpaid rent and lost concession income and parking revenues for the
second half of the 1998 season and the anticipated loss of rentals, concession
income and parking revenues for the 1999 and 2000 baseball seasons (subject to
reduction of damages in the event and to the extent that the Company is able to
secure an alternate tenant to cover the dates on which LPB would have utilized
Skylands Park). The prospects for any collection from LPB are uncertain.
If LPB resumes operations in 1999, LPB's lease with the Company further
provides that LPB will be responsible for providing game day personnel and
security, and the Company will be responsible for stadium maintenance, traffic
control and parking. LPB is entitled to retain all revenues from admissions to
Diamonds games and all revenues from the sale of LPB's souvenirs, and to receive
30% of all net receipts from sales of food and non-alcoholic beverage
concessions during Diamonds games. The Company will retain 70% of all net food
and non-alcoholic beverage concession receipts (after payments to the Company's
concessionaire), 100% of alcoholic beverage concession receipts, and 100% of
parking fees.
Other Leases
The Company is party to a lease with Robert Adams d/b/a Bob's Hot Corner
("Adams") which expires on December 31, 1998, pursuant to which the Company is
leasing to Adams a 400 square foot area in the Barn, within which Adams operates
his own store. The lease provides for average rent of $500 per month plus
various escalations calculated as a percentage of annual sales, if any, in
excess of $75,000. Adams' store uses the leased space to display and sell
trading cards and sports memorabilia except cards depicting or relating to the
New Jersey or St. Louis Cardinals or the New York-Penn League. The Company is
required to supply heating, cooling and electricity and the use of a cash
register, display cases and storage space. Adams is obligated to organize and
conduct, for the Company, sports card shows in Skylands Park or any other
location reasonably selected by the Company, in consideration of which he will
receive 10% of the total fees received by the Company from exhibitors at the
shows.
Litigation
On June 1, 1994, the Company filed a voluntary petition for reorganization
under Chapter 11 of the United States Bankruptcy Code. The petition was filed in
the United States Bankruptcy Court for the District of New Jersey, and the case
was assigned Case No. 94-23761. On April 13, 1995, with the requisite approval
of the Company's creditors, the Plan was approved and confirmed by the Court.
The Company has since paid substantially all of its pre-petition liabilities at
the original principal amounts thereof, in accordance with the Plan. See "Plan
of Operations and Management's Discussion and Analysis of Financial Condition
and Results of Operations - Plan of Reorganization."
The Company is not party to any other material legal proceedings.
36
<PAGE>
MANAGEMENT
Directors and Executive Officers
The members of the Board of Directors and executive officers of the Company
are as follows:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Barry M. Levine 54 President, Chief Executive Officer, and Director
Robert H. Stoffel, Jr. 58 Vice President, Chief Financial Officer, Chief
Accounting Officer, and Director
Barry J. Gordon 53 Director
Marc H. Klee 43 Director
</TABLE>
All directors are elected at the annual meeting of shareholders and hold
office until the next annual meeting and until their successors have been
elected and qualified. Officers are elected by and hold office at the discretion
of the Board of Directors.
The following sets forth biographical information as to the business
experience of each executive officer and director of the Company.
Barry M. Levine was elected a Director and the President and Chief
Executive Officer of the Company in October 1996. From March to October 1996,
Mr. Levine was unemployed. From December 1991 through March 1996, Mr. Levine
held various offices (including, at varying times, President, Chief Executive
Officer, Executive Vice President, Chief Financial and Administrative Officer,
Vice President-Finance and Administration, and Treasurer) in, and from April
1994 through March 1996 was a Director of, Sports Heroes, Inc. ("SHI"), a
publicly traded company which was engaged primarily in the business of acquiring
and marketing sports memorabilia and related collectible items. Mr. Levine
resigned from SHI in March 1996, and subsequently, in May 1996, SHI filed a
voluntary petition for reorganization under Chapter 11 of the United States
Bankruptcy Code; and in October 1996, such case was converted to a proceeding
under Chapter 7 of the United States Bankruptcy Code. Prior to his employment
with SHI, Mr. Levine was Chief Financial Officer of Pharmos Corporation (a New
York-based pharmaceutical company), and from 1984 to 1991 he was Chief Financial
Officer of Cardio Fitness Corporation. Mr. Levine is also a certified public
accountant, and spent sixteen years with a certified public accounting firm,
where he was a partner.
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<PAGE>
Robert H. Stoffel, Jr. has been Vice President, Chief Financial Officer and
Chief Accounting Officer of the Company since January 1993, and a Director of
the Company from May 1995 to June 1995 and from February 1996 to the date of
this Prospectus. Mr. Stoffel has been an independent financial consultant from
1990 to the present, serving several contract research organizations in the
pharmaceutical field. Specifically, Mr. Stoffel has been working in the areas of
acquisitions and accounting systems. From 1987 to 1990, he was Vice President
and Chief Controller for the New York Yankees, reporting directly to its
Managing General Partner and Principal Owner George Steinbrenner. Mr. Stoffel
has over 30 years of professional experience in the area of finance.
Barry J. Gordon has been a Director of the Company since October 1996.
Since 1980, Mr. Gordon has been President and a Director of American Fund
Advisors, Inc., a money management firm, and has served as Chairman of the Board
of that company since 1987. In addition, Mr. Gordon is a Director of Winfield
Capital Corp., a publicly traded small business investment company, a Director
of Hain Food Corp., a publicly traded specialty foods product company, and
President of the John Hancock Global Technology Fund, a mutual fund specializing
in telecommunications and technology securities. From April 1989 to March 1996,
Mr. Gordon was also a Director of SHI. Mr. Gordon is also the Chairman and Chief
Executive Officer of the general partner of Heroes, which is the limited
partnership that owns the Team. Mr. Gordon is also Chairman and Chief Executive
Officer of the general partner of the limited partnership that owns the Norwich
Navigators, a Class "AA" minor league affiliate of the New York Yankees.
Marc H. Klee has been a Director of the Company since October 1996. Since
May 1984, Mr. Klee has been Senior Vice President and a Director of American
Fund Advisors, Inc., and since May 1987, Mr. Klee has also been Senior Vice
President of John Hancock Technology Series, Inc., a mutual fund specializing in
technology securities. Mr. Klee is also the Treasurer and Secretary of the
general partner of Heroes, and the Vice President, Treasurer and Secretary of
the general partner of the limited partnership that owns the Norwich Navigators.
Executive Compensation
The Company did not pay any cash compensation to its executive officers in
1991 or 1992. Although compensation for services was paid to certain executive
officers in 1992 through the issuance of certain shares of Common Stock (see
"Certain Transactions"), and cash compensation was paid in 1993 and thereafter,
no executive officer or other employee received total compensation in excess of
$100,000 in any of 1991, 1992, 1993, 1994, 1995 or 1996. See "Certain
Transactions."
The following table shows all compensation of all types paid or accrued in
the Company's three most recent full fiscal years for services rendered in all
capacities by the Company's Chief Executive Officer.
38
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Total Compensation
Position Year Salary Options/SAR's (#) Paid or Accrued
- -------- ---- ------ ----------------- ---------------
<S> <C> <C> <C> <C>
Robert A. Hilliard 1995 $ 77,175(2) 0 $77,175(1)(2)
Chairman and
Chief Executive Officer 1996 $ 81,000(3) 5,000(4) $81,000(1)(3)
Barry M. Levine 1996 $ 31,250(5) 15,000 $31,250(1)(5)
President and
Chief Executive Officer 1997 $125,000 0 $ 125,000(1)
</TABLE>
- ----------
(1) Does not include benefits or perquisites in an aggregate amount which is
less than 10% of the total compensation for the subject year.
(2) Consists of $30,000 paid in cash, and an additional $47,175 accrued.
(3) Consists of $7,500 paid in cash, and an additional $73,500 accrued.
(4) Consists of 5,000 stock options which were repriced in 1996, and have since
lapsed without exercise.
(5) Consists of $31,250 accrued following the commencement of Mr. Levine's
employment on October 1, 1996.
Employment Agreements
The Company entered into an employment agreement with Mr. Levine in October
1996, pursuant to which Mr. Levine is to serve as President and Chief Executive
Officer of the Company through December 31, 1999 at an annual salary of
$125,000. Mr. Levine agreed to accrue and defer receipt of his salary and other
cash compensation through June 30, 1997, to the extent required by the Company's
lack of cash resources.
The Company has also entered into an amended employment agreement with Mr.
Stoffel, pursuant to which Mr. Stoffel is to serve as Vice President and Chief
Financial Officer of the Company through December 31, 1999 at an annual salary
of $78,000.
Under the terms of their respective agreements, each of Messrs. Levine and
Stoffel is required to devote the majority of his business time to the affairs
of the Company, and is prohibited, for the duration of his employment agreement,
from engaging in any activities which are competitive with the businesses of the
Company.
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<PAGE>
Director Compensation
The Company has adopted a policy whereby the Company will pay each
non-employee director $500 per year for serving in such capacity, in addition to
reimbursement of out-of-pocket expenses in connection with attending directors'
meetings. To the date of this Prospectus, although there have been numerous
directors' meetings, no such directors' fees or expenses have been paid or
accrued, and all of such fees in respect of prior meetings have been waived. All
current non-employee directors have agreed to waive such fees for their current
term of office.
Stock Option Plan
The Company's 1993 Stock Option Plan (the "Stock Option Plan") was adopted
by the Company's Board of Directors on April 14, 1993, was approved by a
majority of the Company's shareholders on July 23, 1993, and became effective on
August 9, 1993. The Stock Option Plan provides for the granting of options to
key employees (including officers), non-employee directors and consultants to
purchase up to 53,571 shares of Common Stock which are intended to qualify
either as incentive stock options ("Incentive Stock Options") within the meaning
of Section 422 of the Internal Revenue Code, as amended, or as options which are
not intended to meet the requirements of such section.
The Stock Option Plan provides for its administration by an administrative
committee of two directors (the "Committee") which has discretionary authority,
subject to certain restrictions, to determine the number and type of options to
be granted and the individuals to whom, the times at which and the exercise
price for which options will be granted.
The exercise price of all options granted under the Stock Option Plan must
be at least equal to the fair market value of the underlying shares of Common
Stock on the date of the grant, or, in the case of Incentive Stock Options
granted to an individual owning more than 10% of the Company's outstanding
voting shares, at least 110% of the fair market value of such shares on the date
of the grant. The maximum exercise period for which options may be granted is
ten years from the date of grant (five years in the case of an Incentive Stock
Option granted to an individual owning more than 10% of the Company's
outstanding voting shares). The aggregate fair market value (determined at the
date of the option grant) of shares of Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by the holder of the
option during any calendar year may not exceed $100,000.
Through October 23, 1998, an aggregate of 42,500 options granted under the
Stock Option Plan had been exercised (40,000 by executive officers and
directors, all in 1997), and 5,000 options had lapsed without exercise. As of
October 23, 1998, 2,000 options remained outstanding under the Stock Option
Plan, and 9,071 options remained available for future issuance under the Stock
Option Plan.
40
<PAGE>
The following table sets forth all stock option exercises by executive
officers and directors of the Company during the fiscal year ended December 31,
1997, the "value" (i.e., the amount by which the fair market value of the
underlying common stock exceeded the option exercise price on the date of
exercise) realized upon such exercises, and the number of remaining options held
by executive officers and directors of the Company as of December 31, 1997.
<TABLE>
<CAPTION>
Number of Value of
Shares Acquired on Value Unexercised Options Unexercised
Name Exercise Realized at Year End Options
- ---- -------- -------- ------------------- -----------
<S> <C> <C> <C> <C>
Barry M. Levine 15,000 $22,500 0 --
Robert H. Stoffel, Jr. 5,000 $18,100 0 --
Barry J. Gordon 10,000 $14,688 0 --
Marc H. Klee 10,000 $14,688 0 --
</TABLE>
Stock Award Plan
In December 1996, the Board of Directors adopted a Stock Award Plan
pursuant to which, subject to the achievement of certain targets, the Board of
Directors is given the authority to grant, to such members of the Board,
executive officers, key employees and consultants to the Company as may be
determined by the Board, the right to purchase up to an aggregate of 1,000,000
shares of Common Stock at a nominal price for a limited period of time. Up to
250,000 shares of Common Stock may be awarded from time to time if and after the
Company receives gross proceeds of $2,000,000 between the date of adoption of
the Stock Award Plan and December 31, 1997 from issuances of equity securities
of the Company, and up to an additional 250,000 shares of Common Stock may be
awarded from time to time if and after the Company receives additional gross
proceeds (over and above the first $2,000,000) of $2,200,000 or more, on or
before December 31, 1998, from issuances of equity securities of the Company. Up
to an additional 250,000 shares of Common Stock may be awarded from time to time
if and after the Company achieves a positive cash flow from operations for any
two consecutive fiscal quarters, and up to an additional 250,000 shares of
Common Stock may be awarded time to time if and after the Company achieves an
operating profit for any two consecutive fiscal quarters. In the event and to
the extent that any person to whom any such award may be granted shall fail to
timely purchase the subject shares of Common Stock, then such shares will again
become available for award under this plan.
The first threshold for awards under the Stock Award Plan (i.e., the
Company's receipt of gross equity proceeds of $2,000,000 on or before December
31, 1997) was satisfied, and by reason thereof, in April 1998, the Board
granted to Messrs. Levine, Stoffel, Gordon and Klee the right to purchase
70,000, 50,000, 65,000 and 65,000 shares, respectively, of Common Stock at $.25
per share at any time and from time to time through October 31, 1998. Through
October 23, 1998, these individuals exercised their rights under the Stock Award
Plan and purchased 155,228 shares of Common Stock. The Company recognized
compensation expense in the second quarter of 1998 based on the excess of the
fair market value price per share of Common Stock over the $.25 exercise price
under all of the options granted. This resulted in a compensation expense
recorded in the second quarter of 1998 of $734,375.
41
<PAGE>
CERTAIN TRANSACTIONS
In October 1993, the Company and Robert H. Stoffel, Jr. entered into an
agreement whereby, in lieu of Mr. Stoffel's receiving certain shares of Common
Stock (which were originally to be transferred to Mr. Stoffel as an inducement
for entering into employment with the Company), the Company agreed to pay to Mr.
Stoffel a total of $35,000. Of such $35,000, a total of $25,000 has been paid in
cash, and the remaining $10,000 was paid in 1996 by the issuance to Mr. Stoffel
of an aggregate of 3,230 shares of Common Stock.
In March 1994, the Company borrowed $100,000 and $6,000, respectively, from
Robert A. Hilliard and John C. Ertmann (each of whom was then a director and
executive officer of the Company), which loans bear simple interest at 15% per
annum and matured in November 1994. Of such amounts, through October 5, 1998,
$74,075 had been paid through the issuance of shares of Common Stock to one of
such individuals, and the remaining portion of such obligations is now payable
in cash or, at the option of the subject creditor, in shares of Common Stock
valued at the market price thereof at the time of such payment election. At the
time such loans were borrowed, the Company was not able to obtain financing from
any other persons at a lower interest rate.
In April 1994, Barry J. Gordon and Marc H. Klee each loaned the Company the
principal amount of $125,000. Such loans were included in the Company's
pre-petition obligations to unsecured creditors, and have since been paid or set
aside pursuant to the Company's payments under the Creditors' Note.
Also in April 1994, the Company received an advance from Heroes, the
limited partnership that owns the Team, in the aggregate amount of $180,000.
This advance consists of unsecured loans in the aggregate amount of $125,000
(which were non-interest-bearing until their due date on October 31, 1994, and
thereafter have accrued interest at the rate of 2% per month on the first
$60,000 of principal and 1.25% per month on the remaining $65,000 of principal,
until fully paid), and the sum of $55,000 which was designated as a prepayment
of rentals and advertising fees. Pursuant to the agreements under which the
advance was made, Heroes agreed to reimburse the Company for certain additional
construction costs to be undertaken by the Company, and reserved the right to
satisfy such reimbursement obligations by offset against up to $65,000 of loan
principal and reduction of the $55,000 of rent and advertising prepayments.
However, as a result of the Company's reorganization proceedings, there are
substantial uncertainties relating to Heroes' right to offset its obligations
for current rents, fees and reimbursement obligations against its pre-petition
advances, and thus, in the Company's financial statements, the Company has
continued to reflect the entire $180,000 advance as a loan payable, and includes
rents and advertising fees payable by Heroes (totalling $49,000 for the period
from June 16, 1994, when the Team played its first game at Skylands Park,
through December 31, 1994) in income as and when earned, without regard to
either the pre-petition designation of the $55,000 as being "prepayments," or
any rights of offset described above.
42
<PAGE>
Also in April 1994, the Company also borrowed $20,000 from Richard A.
Hunsicker (who was then a director of the Company), and in May 1994, the Company
borrowed an additional $15,000 from Mr. Hilliard. These loans bear simple
interest at 15% per annum and matured in November 1994. Of such amounts, through
October 5, 1998, $20,000 had been paid through the issuance of shares of Common
Stock to Mr. Hunsicker, and the $15,000 owed to Mr. Hilliard is now payable in
cash or, at Mr. Hilliard's option, in shares of Common Stock valued at the
market price thereof at the time of such payment election. At the time such
loans were borrowed, the Company was not able to obtain financing from any other
persons at a lower interest rate.
The proceeds of the foregoing 1994 loans were used for the construction of
the Complex and for working capital. Other than the loans from Messrs. Gordon
and Klee and the advance from Heroes (which has been classified and paid or set
aside with the Company's other pre-petition liabilities), all of the foregoing
loans have been classified separately from the Company's other unsecured pre-
petition liabilities within the framework of the Plan, and the remaining $47,115
balance thereof as of October 5, 1998 may be repaid in cash or in shares of
Common Stock valued at their market price as of the time election is made to
receive payment in such form.
As of December 31, 1997, in addition to the aforedescribed $180,000 loan,
the Company was indebted to Heroes in respect of other pre-petition liabilities
subject to compromise (consisting primarily of the unremitted portion of
proceeds from season ticket subscriptions collected by the Company on behalf of
Heroes) of $81,606. This amount has been repaid or set aside ratably with the
Company's other pre-petition liabilities.
In April 1997, the Company borrowed an additional $40,000 from Heroes. In
December 1997, Heroes applied $10,000 of the principal of this loan to exercise
20,000 Class D Warrants, and in March 1998, Heroes applied the remaining $30,000
principal balance of this loan to exercise 60,000 Class D Warrants.
Conflicts of Interest
Two directors of the Company, Barry J. Gordon and Marc H. Klee, are also
executive officers and equity owners in the limited partnership that owns the
Team. In light of the potential conflicts of interest, the Company has adopted
policies whereby all matters relating to the relationship between the Company
and the Team will be determined by directors other than Messrs. Gordon and Klee.
43
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of October 23, 1998, the number of
shares of Common Stock owned by each person (including any "group" as used in
Section 13(d)(3) of the Exchange Act) known to the Company to be the beneficial
owner of more than five percent of the Common Stock, each director of the
Company, and all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
Percentage of Common Stock
Number --------------------------
of Before After
Name and Address of Owner(1) Shares(2) Offering Offering(3)
- ---------------------------- --------- -------- -----------
<S> <C> <C> <C>
Barry M. Levine 46,393 (4) 0.7% 0.4%
Robert H. Stoffel, Jr 17,693 (5) 0.2% 0.2%
Barry J. Gordon 69,163 (6) 1.0% 0.6%
Marc H. Klee 92,863 (6) 1.3% 0.9%
William F. Rasmussen 500,000 (7) 6.5% 4.4%
Glenn J. Rasmussen 500,000 (8) 6.5% 4.4%
All directors and
executive officers as
a group (four persons) 226,652 (4)(5)(6) 3.1% 2.1%
</TABLE>
- ----------
(1) The address for all persons other than William F. Rasmussen and Glenn J.
Rasmussen is c/o Millennium Sports Management, Inc., Ross' Corner, U.S.
Highway 206 and County Route 565, P.O. Box 117, Augusta, New Jersey 07822-
0117. The address for William F. Rasmussen and Glenn J. Rasmussen is c/o
Golf Stadiums, Inc., 2706 Horseshoe Drive South, Naples, Florida 34104.
(2) All shares are directly held unless otherwise stated.
(3) Gives effect to the exercise of all of the Warrants.
(4) Includes 31,193 shares which are subject to currently exercisable options.
(5) Includes 11,193 shares which are subject to currently exercisable options.
(6) Includes 26,193 shares which are subject to currently exercisable options.
(7) Consists of 500,000 shares which are subject to currently exercisable
warrants issuable to William F. Rasmussen's affiliate, TGT of Naples, Inc.
(8) Consists of 500,000 shares which are subject to currently exercisable
warrants issuable to Glenn J. Rasmussen's affiliate, GTG of Naples, Inc.
44
<PAGE>
DESCRIPTION OF SECURITIES
General
The Company is authorized by its Certificate of Incorporation to issue an
aggregate of 20,000,000 shares of Common Stock, no par value, stated value $.10
per share, of which 7,188,085 shares are issued and outstanding immediately
prior to this offering, and 500,000 shares of preferred stock, without par value
(the "Preferred Stock"), of which no shares are issued or outstanding on the
date of this Prospectus. All outstanding shares of Common Stock are of the same
class, and have equal rights and attributes.
The following description of certain matters relating to the securities of
the Company is a summary and is qualified in its entirety by the provisions of
the Company's Certificate of Incorporation and By-Laws, copies of which have
been filed as exhibits to the Registration Statement of which this Prospectus is
a part. See "Additional Information."
Common Stock
The holders of Common Stock are entitled to one vote per share on all
matters submitted to a vote of shareholders of the Company. In addition, such
holders are entitled to receive ratably such dividends, if any, as may be
declared from time to time by the Board of Directors out of funds legally
available therefor. In the event of the dissolution, liquidation or winding up
of the Company, the holders of Common Stock are entitled to share ratably in all
assets remaining after payment of all liabilities of the Company. All
outstanding shares of Common Stock are fully paid and nonassessable.
The holders of Common Stock do not have any subscription, redemption or
conversion rights, nor do they have any preemptive or other rights to acquire or
subscribe for additional, unissued or treasury shares. Accordingly, if the
Company were to elect to sell additional shares of Common Stock following this
offering, or if the Company were, at the election of insiders, to issue
additional shares of Common Stock in satisfaction of such insiders' pre-petition
claims, persons acquiring Common Stock in this offering would have no right to
purchase additional shares, and as a result, their percentage equity interest in
the Company would be reduced.
Pursuant to the Company's By-Laws, except for any matters which, pursuant
to the New Jersey Business Corporation Act ("New Jersey Law"), require a greater
percentage vote for approval, the holders of a majority of the outstanding
Common Stock, if present in person or by proxy, are sufficient to constitute a
quorum for the transaction of business at meetings of the Company's
shareholders. Further, except as to any matters which, pursuant to New Jersey
Law, require a greater percentage vote for approval, the affirmative vote of the
holders of a majority of the Common Stock present in person or by proxy at any
meeting (provided a quorum as aforesaid is present thereat) is sufficient to
authorize, affirm or ratify any act or action.
The holders of Common Stock do not have cumulative voting rights.
Accordingly, the holders of more than half of the outstanding shares of Common
Stock can elect all of the
45
<PAGE>
directors to be elected in any election. In such event, the holders of the
remaining shares of Common Stock would not be able to elect any directors. The
Board of Directors is empowered to fill any vacancies on the Board of Directors
created by the resignation, death or removal of directors.
In addition to voting at duly called meetings at which a quorum is present
in person or by proxy, New Jersey Law and the Company's By-Laws provide that
shareholders may take action without the holding of a meeting by written consent
or consents signed by the holders of a majority of the outstanding shares of the
capital stock of the Company entitled to vote thereon. Prompt notice of the
taking of any action without a meeting by less than unanimous consent of the
shareholders will be given to those shareholders who do not consent in writing
to the action. The purposes of this provision are to facilitate action by
shareholders and to reduce the corporate expense associated with annual and
special meetings of shareholders. Pursuant to the rules and regulations of the
Commission, if shareholder action is taken by written consent, the Company is
required to send to each shareholder entitled to vote on the matter acted on,
but whose consent was not solicited, an information statement containing
information substantially similar to that which would have been contained in a
proxy statement.
Preferred Stock
The Preferred Stock may be issued in series, and shares of each series will
have such rights and preferences as are fixed by the Board of Directors in the
resolutions authorizing the issuance of that particular series. In designating
any series of Preferred Stock, the Board of Directors may, without further
action by the holders of Common Stock, fix the number of shares constituting
that series and fix the dividend rights, dividend rate, conversion rights,
voting rights (which may be greater or lesser than the voting rights of the
Common Stock), rights and terms of redemption (including any sinking fund
provisions), and the liquidation preferences of the series of Preferred Stock.
It is to be expected that the holders of any series of Preferred Stock, when and
if issued, will have priority claims to dividends and to any distributions upon
liquidation of the Company and that they may have other preferences over the
holders of the Common Stock.
The Board of Directors may issue one or more series of Preferred Stock
without action of the shareholders of the Company. Accordingly, the issuance of
Preferred Stock may adversely affect the rights of the holders of the Common
Stock. In addition, the issuance of Preferred Stock may be used as an
"anti-takeover" device without further action on the part of the shareholders.
Issuance of Preferred Stock, which may be accomplished through a public offering
or a private placement to parties favorable to current management, may dilute
the voting power of holders of Common Stock (such as by issuing Preferred Stock
with super voting rights) and may render more difficult the removal of current
management, even if such removal may be in the shareholders' best interest.
46
<PAGE>
Class D Warrants
The following is a brief summary of the material provisions of the Class D
Warrants, but such summary does not purport to be complete and is qualified in
all respects by reference to the actual text of the Warrant Agreement between
the Company and Continental Stock Transfer & Trust Company. A copy of such
Warrant Agreement has been filed as an exhibit to the Registration Statement of
which this Prospectus is a part. See "Additional Information."
Each Class D Warrant entitles the holder thereof to purchase, at any time
from the date of this Prospectus through March 31, 2003, one share of Common
Stock at a price of $.50 (plus, to the extent not theretofore paid, the $.10
purchase price per Class D Warrant), subject to adjustment in accordance with
the provisions referred to below.
The Company does not have the right to redeem the Class D Warrants. The
exercise price of the Class D Warrants bears no relation to any objective
criteria of value and should in no event be regarded as an indication of any
future market price of the securities offered hereby.
The exercise price and number of shares of Common Stock purchasable upon
the exercise of the Class D Warrants are subject to proportional arithmetic
adjustment upon the occurrence of certain events, including stock dividends,
stock splits, combinations or reclassifications of the Common Stock. The Class D
Warrants do not confer upon holders any voting or any other rights as
shareholders of the Company.
1,000,000 Class D Warrants, issuable to two affiliates of the Rasmussens,
are subject to a restriction prohibiting such Class D Warrants and any shares
issuable thereunder from being sold or transferred at any time prior to March
31, 2000 without the Company's prior written consent.
Class A Warrants
The following is a brief summary of the material provisions of the Class A
Warrants, but such summary does not purport to be complete and is qualified in
all respects by reference to the actual text of the Warrant Agreement (as
amended) between the Company and Continental Stock Transfer & Trust Company. A
copy of such Warrant Agreement and all amendments thereto have been filed as an
exhibit to the Registration Statement of which this Prospectus is a part. See
"Additional Information."
Each Class A Warrant entitles the holder thereof to purchase, at any time
through the extended expiration date of December 31, 1998, 2.8 shares of Common
Stock at a total price of $2.80, subject to adjustment in accordance with the
anti-dilution and other provisions referred to below. In connection with any
exercise of the Class A Warrants, the shares of Common Stock issuable to each
exercising holder in respect of its Class A Warrants then being exercised will
be aggregated, and any fractional share interest will be eliminated.
47
<PAGE>
The Class A Warrants are subject to redemption by the Company at a price of
$.10 per Class A Warrant upon 30 days' prior written notice if the closing bid
price of the Common Stock equals or exceeds $32.70 per share for any 20 trading
days within a period of 30 consecutive trading days ending on the fifth trading
day prior to the date of the notice of the redemption. If the Class A Warrants
were redeemed prior to their exercise, the holders thereof would lose the
benefit of the market price of the Class A Warrants and/or the difference
between the market price of the underlying Common Stock as of such date and the
exercise price of such Warrants, as well as any possible future price
appreciation in the Common Stock.
The exercise price of the Class A Warrants bears no relation to any
objective criteria of value and should in no event be regarded as an indication
of any future market price of the securities offered hereby.
The exercise price and the number of shares of Common Stock purchasable
upon the exercise of the Class A Warrants are subject to proportional
arithmetic adjustment upon the occurrence of certain events, including stock
dividends, stock splits, combinations or reclassification of the Common Stock;
in addition, in the event that, after the date of this Prospectus, the Company
issues Common Stock or rights to acquire Common Stock (subject to certain
exceptions, including the issuance of Common Stock upon exercise of the Class D
Warrants and options outstanding under the Stock Award Plan) at a price per
share less than the then-current market price or the exercise price of the Class
A Warrants, the number of shares and exercise price per share applicable to the
Class A Warrants are subject to adjustment on a formula basis to account for
such economic dilution or potential economic dilution. The Class A Warrants do
not confer upon holders any voting or any other rights as shareholders of the
Company.
Certificate of Incorporation and By-Laws
The Company's By-Laws provide that each director has one vote on each
matter for which directors are entitled to vote. The Certificate of
Incorporation and/or the By-Laws also provide that from time to time, by
resolution, the Board of Directors has the power to increase the number of
directors to up to 6 persons, and to designate the persons to serve in such new
directorships. These provisions, in addition to the existence of authorized but
unissued capital stock (as to which existing shareholders have no preemptive or
other such rights), may have the effect, either alone or in combination with
each other, of making more difficult or discouraging an acquisition of the
Company deemed undesirable by the Board of Directors. See "Management -
Directors and Executive Officers."
Indemnification of Certain Persons
The Company's Certificate of Incorporation and By-Laws provide that the
Company will indemnify its officers and directors to the fullest extent allowed
by the New Jersey General Corporation Law, as it now exists and as it may be
amended.
In connection with the Company's initial public offering consummated in
October 1993, the Company agreed to indemnify and hold harmless A.S. Goldmen &
Co., Inc. (as underwriter of the offering) and each controlling person of the
underwriter from and against any losses or claims asserted against any of such
persons by reason of any alleged untrue material statement or omission in the
Company's offering documents related to such offering, except to the extent that
any such statement or omission was made in reliance upon and in conformity with
written information provided by the underwriter for use in the offering
documents. The underwriting agreement
48
<PAGE>
contains a corresponding reciprocal indemnity from A.S. Goldmen & Co., Inc. in
favor of the Company, its directors and certain of its officers and controlling
persons, in respect of any losses or claims arising out of any information
furnished by A.S. Goldmen & Co., Inc. for use in the offering documents.
Insofar as indemnification for liabilities under the Securities Act of 1933
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities included in this Prospectus, the Company will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by the Company is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
Transfer and Warrant Agent
The Company has appointed Continental Stock Transfer & Trust Company, 2
Broadway, New York, New York 10004, as the transfer and warrant agent for the
Common Stock, Class D Warrants and Class A Warrants.
SHARES ELIGIBLE FOR FUTURE SALE
The Common Stock and Class A Warrants are currently listed and quoted on
the NASDAQ SmallCap Market. (The Company does not intend to similarly list the
Class D Warrants.) Substantially all of the currently outstanding shares of
Common Stock are freely tradable or may be resold pursuant to Rule 144
promulgated under the Securities Act ("Rule 144").
In general, under Rule 144, a person (or persons whose shares are required
to be aggregated) who has satisfied a one-year holding period may, every three
months, sell in ordinary broker's transactions or in transactions directly with
a marketmaker, a number of shares of Common Stock which does not exceed the
greater of 1% of the then-outstanding shares of Common Stock or the average
weekly trading volume of the Common Stock during the four calendar weeks prior
to such sale. Rule 144 also permits the sale of restricted shares of Common
Stock without any quantity limitations by a person who is not an affiliate of
the Company and who has owned those shares for at least two years. Existing
holdings of restricted securities of the Company are such that the volume
limitations under Rule 144 are not an impediment to the sale of any of such
shares. The Company is unable to predict the effect that any subsequent sales of
the Company's securities by its existing shareholders, under Rule 144 or
otherwise, may have on the then-prevailing market price of the Common Stock,
although such sales could have a depressive effect on such market price, and
could impair the Company's ability to raise capital. The foregoing summary of
Rule 144 is not intended to be a complete description thereof.
49
<PAGE>
LEGAL MATTERS
The validity of the securities offered hereby is being passed upon for the
Company by Greenberg Traurig, 200 Park Avenue, New York, New York 10166.
EXPERTS
The financial statements of the Company as of December 31, 1996 and 1997
and for the years then ended included in this Prospectus and Registration
Statement have been audited by Wiss & Company, LLP, independent certified public
accountants, as indicated in their report with respect thereto and are included
herein in reliance upon the authority of said firm as experts in accounting and
auditing.
On August 2, 1995, in accordance with the recommendation and approval of
the Board of Directors of the Company, the Company dismissed its former
auditors, J.H. Cohn LLP ("Cohn"), as the principal accountants to audit the
Company's financial statements.
Cohn's report on the Company's financial statements for the fiscal year
ended December 31, 1993 included a "going concern" emphasis paragraph,
indicating that there were substantial doubts about the Company's ability to
continue as a going concern, due to (a) the Company's historical lack of
significant revenues or cash from operating activities, (b) the Company's need
to obtain substantial additional financing to complete the construction of
certain facilities and commence certain of its planned operating activities, and
(c) the Company's Chapter 11 reorganization proceedings (which commenced on June
1, 1994 and continued through the confirmation of the Plan on April 13, 1995).
During the Company's fiscal year ended December 31, 1995, and the interim
period from January 1, 1995 through August 2, 1995 (the date of the dismissal of
Cohn as the Company's independent accountants), there were no disagreements
between the Company and Cohn on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure.
Effective on August 2, 1995, the Company engaged the firm of Wiss &
Company, LLP ("Wiss"), 354 Eisenhower Parkway, Livingston, New Jersey 07039, as
the principal accountants to audit the Company's financial statements. Such
accounting firm had not previously rendered any services to the Company or been
consulted by the Company (or any person acting on its behalf) for any purpose.
Wiss' report on the Company's financial statements as of December 31, 1997
and for the year then ended included a "going concern" qualification, indicating
that there were substantial doubts about the Company's ability to continue as a
going concern, due to the Company's historical negative cash flow from
operations and the Company's need to obtain additional financing.
50
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Financial Statements as of December 31, 1997, and for the Years
Ended December 31, 1997 and 1996
Independent Auditors' Report ............................................. F-2
Balance Sheet as of December 31, 1997 .................................... F-3
Statements of Operations for the years ended
December 31, 1997 and 1996 ............................................ F-4
Statements of Changes in Stockholders' Equity for the years ended
December 31, 1997 and 1996 ............................................ F-5
Statements of Cash Flows for the years ended
December 31, 1997 and 1996 ............................................ F-6
Notes to Financial Statements ............................................ F-7
Financial Statements as of June 30, 1998, and for the Six Months Ended
June 30, 1998 and 1997 (Unaudited)
Balance Sheet as of June 30, 1998 (Unaudited)............................. F-17
Statements of Operations for the six months ended June 30, 1998 and 1997
(Unaudited)............................................................... F-18
Statements of Changes in Stockholders' Equity for the six months
ended June 30, 1998 (Unaudited)........................................... F-19
Statements of Cash Flows for the six months ended June 30, 1998 and 1997
(Unaudited)............................................................... F-20
Notes to Financial Statements (Unaudited)................................. F-21
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Millennium Sports Management, Inc.
(formerly Skylands Park Management, Inc.)
We have audited the balance sheet of Millennium Sports Management, Inc.
(formerly Skylands Park Management, Inc.) as of December 31, 1997 and the
related statements of operations, changes in stockholders' equity and cash flows
for each of the two years in the period then ended. 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 financial statements referred to above present fairly, in
all material respects, the financial position of Millennium Sports Management,
Inc. (formerly Skylands Park Management, Inc.) at December 31, 1997, and the
results of its operations and its cash flows for each of the two years in the
period ended December 31, 1997 in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses from operations
that raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 1. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
WISS & COMPANY, LLP
Woodbridge, New Jersey
February 25, 1998, except as to Note 12 for
which the date is March 11, 1998
F-2
<PAGE>
MILLENNIUM SPORTS MANAGEMENT, INC.
(Formerly Skylands Park Management, Inc.)
Balance Sheet
December 31, 1997
ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
PROPERTY AND EQUIPMENT, AT COST, $ 12,799,986
LESS ACCUMULATED DEPRECIATION
CASH 115,295
INVENTORIES 85,170
INVESTMENT IN LIMITED PARTNERSHIP, AT EQUITY 485,555
OTHER ASSETS 108,680
------------
$13,594,686
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Amounts due insiders, pursuant to Chapter 11 proceedings $ 339,609
Accounts payable 250,110
Accrued interest 209,297
Accrued compensation - officers and directors 170,775
------------
Total Liabilities $ 969,791
STOCKHOLDERS' EQUITY:
Preferred stock, no par value; 500,000 shares authorized,
none issued --
Common stock, no par value, stated value $.10 per share;
20,000,000 shares authorized and 4,353,607 shares issued 435,361
Additional paid-in capital 17,182,135
Accumulated deficit (4,992,601)
Total Stockholders' Equity ------------- 12,624,895
-----------
$13,594,686
===========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
MILLENNIUM SPORTS MANAGEMENT, INC.
(Formerly Skylands Park Management, Inc.)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1997 1996
---- ----
<S> <C> <C>
REVENUES:
Stadium rentals and admissions $ 301,293 $ 304,865
Retail sales 96,514 222,499
Concession sales 149,130 147,396
Advertising and subscription revenues 109,617 95,973
----------- -----------
Totals 656,554 770,733
----------- -----------
COST OF SALES AND SERVICES:
Costs of stadium operations $ 285,287 $ 272,141
Costs of retail sales 79,580 206,506
Selling, general and administrative expenses 783,923 780,936
Depreciation 368,829 377,745
----------- -----------
1,517,619 1,637,328
----------- -----------
LOSS FROM OPERATIONS (861,065) (866,595)
----------- -----------
OTHER INCOME (EXPENSE):
Equity in income of limited partnership 93,985 111,009
Interest (net) (58,140) (111,794)
----------- -----------
35,845 (785)
----------- -----------
NET LOSS $ (825,220) $ (867,380)
=========== ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 2,203,043 1,212,202
=========== ===========
BASIC AND DILUTED LOSS PER COMMON SHARE $ (0.37) $ (0.72)
=========== ===========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
MILLENNIUM SPORTS MANAGEMENT, INC.
(Formerly Skylands Park Management, Inc.)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock
--------------------- Additional
Number Paid-in Accumulated
of Shares Amount Capital Deficit Total
--------- ------ ------- ------- -----
<S> <C> <C> <C> <C> <C>
BALANCES, JANUARY 1, 1996 1,207,727 $120,773 $15,544,911 $(3,300,001) $12,365,683
YEAR ENDED DECEMBER 31, 1996:
Issuance of common stock:
For services rendered by an
officer and an employee, at fair value 3,920 392 11,858 -- 12,250
Upon conversation of debt 3,230 323 9,771 -- 10,094
Upon exercise of warrants 10 1 95 -- 96
Net loss -- -- -- (867,380) (867,380)
--------- -------- ----------- ----------- ------------
BALANCES, DECEMBER 31, 1996 1,214,887 121,489 15,566,635 (4,167,381) 11,520,743
YEAR ENDED DECEMBER 31, 1997:
Issuance of common stock upon exercise of warrants:
Class A warrants, net of costs 279,720 27,972 210,413 238,385
Class D warrants, net of costs 2,725,000 272,500 1,058,921 1,331,421
Issuance of common stock for services
rendered by an officer 1,500 150 225 375
Issuance of common stock upon
conversion of debt 90,000 9,000 36,000 45,000
Issuance of Class D Warrants, net of costs 300,922 300,922
Exercise of options under Stock Option
Plan 42,500 4,250 9,019 13,269
Net Loss -- -- -- (825,220) (825,220)
--------- -------- ----------- ----------- ------------
BALANCES, DECEMBER 31, 1997 4,353,607 $435,361 $17,182,135 $(4,992,601) $12,624,895
========= ======== =========== =========== ============
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
MILLENNIUM SPORTS MANAGEMENT, INC.
(Formerly Skylands Park Management, Inc.)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------
1997 1996
----------- ---------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (825,220) $(867,380)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 368,829 377,745
Equity in income of limited partnership (93,985) (104,109)
Common stock issued for services rendered 375 12,250
Changes in operating assets and liabilities:
Inventory 39,007 1,688
Other assets (40,945) (10,766)
Accounts payable and accrued expenses (299,089) 365,864
----------- ---------
Net cash flows from operating activities (851,028) (224,708)
----------- ---------
INVESTING ACTIVITIES:
Net disbursements of restricted cash -- 24,125
Purchases of property and improvements (41,616) (45,306)
Distribution from limited partnership 30,469 156,406
----------- ---------
Net cash flows from investing activities (11,147) 135,225
----------- ---------
FINANCING ACTIVITIES:
Repayments of creditors' notes payable (940,627) (45,029)
Deferred offering costs -- (25,500)
Proceeds from issuance of common stock
and warrants, net of costs 1,909,497 96
----------- ---------
Net cash flows from financing activities 968,870 (70,433)
----------- ---------
NET CHANGE IN CASH 106,695 (159,916)
CASH, BEGINNING OF YEAR 8,600 168,516
----------- ---------
CASH, END OF YEAR $ 115,295 $ 8,600
=========== =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 151,002 $ 17,741
=========== =========
Income taxes paid $ -- $ --
=========== =========
NON-CASH FINANCING ACTIVITIES:
Issuance of common stock and warrants upon conversion
of outstanding debt $ 45,000 $ 10,094
=========== =========
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE>
MILLENNIUM SPORTS MANAGEMENT, INC.
(Formerly Skylands Park Management, Inc.)
NOTES TO FINANCIAL STATEMENTS
Note 1 - Basis of Presentation and Management's Plans to Overcome Operating and
Liquidity Difficulties:
The accompanying financial statements of Millennium Sports Management,
Inc. (formerly Skylands Park Management, Inc.) (the "Company") have
been presented on the basis that it is a going concern, which
contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company reported net
losses of approximately $825,000 and $867,000 for the years ended
December 31, 1997 and 1996, respectively. In addition, the Company had
an accumulated deficit of approximately $4,992,000 at December 31,
1997. Revenues from operations in 1997 and 1996 were not sufficient to
cover operating expenses or produce a positive cash flow from
operations. Additional losses are expected in 1998. The Company will
require additional working capital to cover anticipated losses and
sustain operations in 1998, and will also be required to pay the
remaining accrued interest balance of the pre-petition liabilities in
1998 (See Note 2). Accordingly, the Company will need to obtain
additional financing through the exercise of outstanding warrants,
through the issuance of other equity securities, by bank financing
and/or through other sources. Although management continues to explore
various financing alternatives, the Company does not have any
commitments with respect to any additional financing. In February
1997, the Company's registration statement on Form SB-2 was declared
effective. The maximum proceeds sought from this secondary offering
approximated $10,000,000. The net proceeds from the offering amounted
to approximately $1,689,000 through December 31, 1997, and an
additional $648,000 was raised from the sale of equity securities in
the first quarter of 1998.
During 1997, management continued to attempt to develop plans to
further curtail its general and administrative expenses, with a view
to eliminating unnecessary and/or duplicate expenses, while
maintaining the Complex in good condition. Management currently
believes that it has implemented all expense reductions that are
prudent and reasonably possible, and that efforts to improve the
Company's business are now best focused on increasing gross revenues
through the development of additional sources of revenues, preferably
during the winter months or on a year-round basis. Although management
is actively exploring possible additional business activities, other
than the Company's investment in the start-up joint venture (see Note
12), the Company has not yet entered into any agreements or
commitments with respect to any such matters. As discussed above, the
Company believes that the additional $648,000 of equity financing
received in the first quarter of 1998 through the exercise of warrants
will provide the Company with sufficient funds to cover its 1998
anticipated negative cash flow from operations.
Reference should be made to "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere
herein for additional information.
Note 2 - Organization, Proceedings Under Chapter 11 And Subsequent Operations:
Organization and development - The Company operates a regional sports
entertainment and recreation center in Sussex County, New Jersey,
known as the Skylands Park Sports and Recreation Center (the
"Complex"). The Complex includes a professional baseball stadium
("Skylands Park") used for sports and other entertainment events, and
other adjacent recreational and commercial
F-7
<PAGE>
facilities (the "Related Facilities") that include, among other
things, a sports apparel and collectibles store, a wholesale and
retail sporting goods outlet, batting cages and a video parlor.
The Company did not have sufficient financing to pay its contractors
and other vendors and, as a result, filed a voluntary petition for
reorganization under Chapter 11 of the United States Bankruptcy Code
in the United States Bankruptcy Court (the "Court") for the District
of New Jersey on June 1, 1994 (the "Petition Date"). The Company
operated as a debtor-in-possession subject to the jurisdiction of the
Court from the Petition Date through April 13, 1995, the date its plan
of reorganization (the "Plan") was confirmed.
During the years ended December 31, 1997 and 1996, the Company
generated only limited amounts of revenues from the events held at
Skylands Park and the operation of the Related Facilities and, as a
result, the Company incurred significant net losses during such years.
Revenues from the rental of Skylands Park to its primary tenant have
not and will not be significant. Instead, management expects that the
Company will generate revenues primarily from the rental of skyboxes
and advertising signs in Skylands Park, the rental of Skylands Park
for certain other sports and entertainment events, concession sales,
and the operation of the Related Facilities in the Complex.
Accordingly, the Company's ability to generate significant additional
revenues will be dependent upon, among other things, its ability to
generate future attendance at events and the success of its other
commercial operations.
Confirmation of Plan of Reorganization - The Company's Plan was
confirmed by its creditors and the Court on April 13, 1995 (the
"Confirmation Date"). Since the Confirmation Date, the Company has
paid the unsecured pre-petition liabilities that were pursuant to the
terms of a secured promissory note (the "Creditors' Note"). The
Creditors' Note bore interest on the unpaid principal balance at the
prime rate plus 3%. The unpaid accrued interest is due and payable on
or before April 26, 1998. The Creditors' Note was secured by
substantially all of the assets of the Company.
Claims of "insiders" (generally, the directors and executive officers
of the Company and certain of their affiliates) of approximately
$339,000 as of the Confirmation Date (including accrued salaries and
loans and advances made to the Company) may be paid from time to time
after payment in full of the Creditors' Note, as the cash flow of the
Company may permit; however, each insider has the option to elect to
be paid in shares of common stock of the Company valued at the then
current market price of such common stock as reported on "NASDAQ."
Equity interests, including interests of stockholders and warrant
holders, were not altered or impaired under the terms of the Plan.
However, the terms of the Plan prohibit the Company from paying
dividends until all payments required under the Plan have been made.
F-8
<PAGE>
Pursuant to Statement of Position 90-7, the Company did not adopt
"fresh-start" reporting (and, as a result, revalue all of its assets
and liabilities) since the holders of the Company's existing voting
stock immediately prior to confirmation held the same relative voting
interests after confirmation. In addition, since the Company will be
paying all of its pre-petition liabilities at their original principal
amounts, the Company did not recognize any material gain or loss as a
result of the confirmation of the Plan.
Note 3 - Summary of Significant Accounting Policies:
Estimates and Uncertainties - The preparation of financial statements
in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the period. Actual
results could differ from those estimates.
Revenue Recognition - The Company recognizes revenues from facility
rentals and stadium admissions upon official completion of such
events, advertising on a pro-rata basis over the minor league baseball
season, and retail sales at the time the customer takes possession of
the merchandise.
Financial Instruments - Financial instruments include cash, other
assets, accounts payable, accrued interest and amounts due to
insiders. The following methods were used in determining the fair
value of the financial instruments:
Cash, other assets, accounts payable and accrued interest - Due
to the short-term maturity of these instruments, carrying value
approximates fair value.
Due to insiders - Although it is impractical to determine the
current fair value of this liability or its current interest rate
because of the lack of an identifiable market for financial
instruments with similar characteristics, management considers
this liability to approximate its fair value due to the
short-term nature of the obligation.
Property and Equipment - Property and equipment are recorded at cost
and are depreciated using straight line and accelerated methods over
the estimated useful lives of the assets. The estimated useful lives
used in computing depreciation are: buildings and improvements - 40
years, and equipment - 5 to 10 years.
The Company adopted Statement of Financial Accounting Standards 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed of ("SFAS 121") in 1996. SFAS 121 requires that
long-lived assets and certain identifiable intangibles to be held and
used by the Company be reviewed for impairment whenever there is an
indication that the carrying amount of the asset may not be
recoverable. Recoverability of these assets is reviewed annually by
management. Impairment loss is measured by determining the amount by
which the carrying value of the asset exceeds the fair value of the
asset by using quoted market prices, selling prices of similar assets
or the present value of the estimated expected cash flows of the
operations to which the assets relate. The adoption of SFAS 121 has
not had a significant effect on the consolidated financial position or
results of operations.
Inventories - Inventories principally consist of merchandise for
resale which is stated at the lower of cost (first-in, first-out
method) or market.
Investment in Limited Partnership - The Company accounts for its
direct 16.82% interest in Minor League Heroes, L.P. ("Heroes"), the
limited partnership that leases Skyland Park, pursuant to the equity
method. Under this method, the proportionate interest in the net
income or loss of the limited partnership is reflected in the
F-9
<PAGE>
Company's results of operations. The Company's investment is reduced
by any distributions from the limited partnership.
Income Taxes - Deferred tax assets and liabilities are computed
annually for temporary differences between the financial statement and
tax bases of assets and liabilities that will result in taxable or
deductible amounts in the future based on enacted tax laws and rates
applicable to the periods in which the temporary differences are
expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount
expected to be realized.
Concentration of Credit Risk - The Company maintains cash in bank
accounts. Such bank accounts are insured by the Federal Deposit
Insurance Corporation up to $100,000 per institution. Uninsured
balances, including outstanding checks, totaled approximately $73,000
at December 31, 1997.
Net Income (Loss) Per Common Share - In February 1997, the Financial
Accounting Standards Board issued Statement of Financial Accounting
Standards 128, Earnings Per Share ("SFAS 128") which is effective for
financial statements for both interim and annual periods ending after
December 31, 1997. The Company adopted SFAS 128 in the fourth quarter
of 1997. SFAS 128 replaces the presentation of primary and fully
diluted earnings per share with basic and diluted earnings per share.
Basic earnings per share is calculated based on the weighted average
number of common shares outstanding during the period and excludes all
dilution. Diluted earnings per share is calculated by using the
weighted average number of common shares outstanding, while also
giving effect to all dilutive potential common shares that were
outstanding during the period. Such dilutive potential common shares
have been excluded since the effect would be anti-dilutive, due to net
losses for all periods presented. Weighted average shares outstanding
was calculated based on the number of days that the respective shares
were outstanding during the year. SFAS 128 had no impact on the loss
per share for the year ended December 31, 1996.
Stock-Based Compensation - The Company has elected to follow
Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees (APB 25) and related interpretations in accounting
for its employee stock options. Under APB 25, because the exercise
price of employee stock options equals the market price of the
underlying stock on the date of grant, no compensation expense is
recorded. The Company has adopted the disclosure-only provisions of
Statement of Financial Accounting Standards ("SFAS") No. 123,
Accounting for Stock-Based Compensation ("SFAS 123"). Common stock
issued for services rendered is recorded at the fair value of such
common stock on the date of issuance, as determined using quoted
market prices.
Reclassification - Certain amounts previously reported have been
reclassified to conform to current year presentation.
F-10
<PAGE>
Note 4 - Property and Equipment:
Property and equipment at December 31, 1997 consists of the following:
<TABLE>
<S> <C>
Land $ 1,202,342
Buildings and improvements 12,377,983
Equipment 493,496
------------
14,073,821
Less: Accumulated depreciation 1,273,835
------------
$ 12,799,986
============
</TABLE>
Note 5 - Investment in Limited Partnership:
The Company's statement of operations includes income of $93,985
(1997) and $111,009 (1996) attributable to the Company's equity in
Heroes' net income. The carrying value of the investment was reduced
by distributions received by the Company of $30,469 in 1997 and
$156,406 in 1996.
Summary balance sheet and operating data for Heroes as of December 31,
1997 and 1996 and for the years then ended follows:
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Balance sheet data:
Current assets $1,450,000 $1,402,000
Noncurrent assets 805,000 927,000
---------- ----------
$2,255,000 $2,329,000
========== ==========
Current liabilities $ 474,000 $ 495,000
Partners' capital 1,781,000 1,834,000
---------- ----------
$2,255,000 $2,329,000
========== ==========
Operating data:
Gross receipts $1,844,000 $1,864,000
========== ==========
Net income $ 558,767 $ 642,000
========== ==========
</TABLE>
Note 6 - Employment Agreements:
The Company has employment agreements with certain officers and
employees. Amounts due are as follows:
Year Ending December 31,
<TABLE>
<S> <C>
1998 $ 234,000
1999 125,000
-----------
$ 359,000
===========
</TABLE>
F-11
<PAGE>
Note 7 - Stockholders' Equity:
Warrants - In December 1997, the Company again extended the
expiration date of the outstanding Class A common stock warrants to
June 30, 1998 from the original expiration date of September 23, 1995.
The exercise price was reduced from $4.00 to $2.80 per warrant in
December 1996, with each warrant continuing to entitle the exercising
holder to receive the increased amount of 2.8 shares of the Company's
common stock. A total of 894,928 Class A Warrants remain unexercised
at December 31, 1997. The Class A Warrants are subject to redemption
at $.10 per Class A Warrant on 30 days' prior written notice if the
closing bid price of the Company's common stock equals or exceeds
$32.70 per share for any 20 trading days within a period of 30
consecutive trading days ending on the fifth day prior to the date of
the notice of redemption.
The Underwriter's Warrants (pursuant to an IPO) were amended, in 1996,
to provide for the right to purchase up to an aggregate of 1,500,000
shares of common stock at a price of $.10 per share if exercised prior
to November 6, 1997 (or $1.00 per share if exercised thereafter
through September 23, 1998) and up to an aggregate of 70,000 Class A
Warrants at $.165 each. The Class A Warrants issuable upon exercise of
the Underwriter's Warrants cannot be redeemed by the Company. The
Underwriter's Warrants grant to the holders thereof certain rights of
registration for the securities issuable upon exercise of the
Underwriter's Warrants. The Underwriter's Warrants were exercised in
full in October 1997, although the Company did not deposit the payment
thereof or issue the shares and Class A Warrants thereunder until
March 1998.
In February 1997, the Company authorized the issuance and sale of up
to 13,000,000 Class D Warrants. Each Class D Warrant entitles the
exercising holder to receive one share of the Company's common stock
upon payment of a $.10 per Class D Warrant purchase price and a $.50
per share exercise price. After giving effect to Class D Warrants
issued and exercised through December 31, 1997, a total of 10,185,000
Class D warrants remained reserved at December 31, 1997.
Stock Option Plan - The Board of Directors of the Company adopted the
1993 Stock Option Plan (the "Stock Option Plan") in April 1993, which
became effective in August 1993. The Stock Option Plan provides for
grants of options to key employees (including officers), non-employee
directors and consultants to purchase up to 53,571 shares of common
stock which are intended to qualify either as incentive stock options
("ISOs") within the meaning of Section 422 of the Internal Revenue
Code, as amended, or as options which are not intended to meet the
requirements of such section.
The exercise price of all options granted under the Stock Option Plan
must be at least equal to the fair market value of the Company's
common stock on the date of grant (at least 110% of the fair market
value in the case of an ISO granted to a holder of 10% or more of the
Company's outstanding common shares). The maximum exercise period for
which options may be granted is ten years from the
F-12
<PAGE>
date of grant (five years in the case of an ISO granted to a holder of
10% or more of the Company's outstanding common shares).
Through December 31, 1997, 49,500 options had been granted under the
Stock Option Plan, of which 42,500 options were exercised and 5,000
lapsed in 1997. The remaining 2,000 outstanding options provide for an
exercise price of $14.375 per share, are currently exercisable and
expire on November 1, 2005. No options were granted in 1997 under the
Stock Option Plan.
Shares Reserved for Issuance of Common Stock - Shares of common stock
reserved for issuance by the Company as of December 31, 1997 upon
exercise of options and warrants were as follows:
<TABLE>
<S> <C>
Class A Warrants 2,505,798
Underwriter's Warrants for:
Common stock 1,500,000
Class A Warrants 196,000
Class D Warrants 10,185,000
Stock option plan 11,071
Stock award plan 1,000,000
----------
Total 15,397,869
==========
</TABLE>
The number of shares issuable have been adjusted pursuant to
anti-dilution provisions of the respective warrant agreements for the
effects of the Company's 3-for-1 stock split in 1993, the 1994
issuance of the Class B Warrants and Class C Warrants, to reflect
voluntary amendments of the terms of the Underwriter's Warrants, to
reflect the Company's 1-for-10 reverse stock split in 1996, and to
reflect anti-dilution adjustments relating to the authorization of the
issuance of 13,000,000 Class D Warrants.
Reverse Stock Split - Effective November 7, 1996, following approval
by the Company's shareholders, the Company effectuated a one-for-ten
reverse stock split, which has been retroactively reflected in the
accompanying financial statements.
Stock Award Plan - In December 1996, and subsequently amended in
December 1997, the Board of Directors adopted a stock award plan (the
"Stock Award Plan") pursuant to which, subject to the achievement of
certain targets, the Board of Directors is given the authority to
grant, to such members of the Board, executive officers, key employees
and consultants to the Company as may be determined by the Board, the
right to purchase up to an aggregate of 1,000,000 shares of common
stock of the Company at a nominal price for a limited period of time.
Up to 250,000 shares of common stock may be awarded from time to time
if and after the Company receives gross proceeds of $2,000,000 on or
before December 31, 1997 from issuances of equity
F-13
<PAGE>
securities of the Company, and up to an additional 250,000 shares of
common stock may be awarded from time to time if and after the Company
receives additional gross proceeds (over and above the first
$2,000,000) of $2,200,000 or more, on or before December 31, 1998,
from issuances of equity securities of the Company. Up to an
additional 250,000 shares of common stock may be awarded from time to
time if and after the Company achieves a positive cash flows from
operations for any two consecutive fiscal quarters, and up to an
additional 250,000 shares of common stock may be awarded time to time
if and after the Company achieves an operating profit for any two
consecutive fiscal quarters. In the event and to the extent that any
person to whom any such award may be granted shall fail to timely
purchase the subject shares of common stock, then such shares will
again become available for award under this plan.
The Company received gross proceeds in excess of $2,000,000 from
issuances of equity securities between the date of the adoption of the
Stock Award Plan and December 31, 1997, thereby permitting the award
of up to 250,000 shares of common stock of the Company under the first
threshold stated above. As of this date, no awards from such 250,000
shares have been made.
Note 8 - Related Party Transactions:
Lease of Skylands Park to the Team - The Company entered into a
long-term lease (the "Stadium Lease") for the use of Skylands Park
with Heroes, the owner of the Team, which is a Class "A" minor league
affiliate of the St. Louis Cardinals and a member of the New York-Penn
League (the "League"). Under the terms of the Stadium Lease, the
Company is required to make available to Heroes a minor league
baseball stadium for the Team's home games. The Stadium Lease
commenced June 1, 1994 and expires September 30, 2008. Under the
Stadium Lease, Heroes is obligated to pay rent of $1,100 per game
scheduled to be played at Skylands Park subject to adjustment under
certain circumstances. Pursuant to this lease, the Company derived
rental income of approximately $42,000 in 1997 and $37,000 in 1996.
Such rent is subject to a 10% increase effective at the beginning of
each of the 2001 and 2005 minor league baseball seasons. Heroes will
retain all admission revenues from Team games (except certain revenues
from skyboxes that will be retained by the Company) and the net
concession revenues generated on the dates of Team games. The Company
will operate and retain all revenues derived from parking facilities.
Revenues received from sign rentals and advertising in Skylands Park
are divided 80% to Heroes and 20% to the Company. Heroes will be
required to pay for, among other things, game staff personnel (such as
ushers), security and medical personnel, and the cost of utilities
pro-rated according to use.
Heroes may terminate the Stadium Lease after the minor league baseball
seasons of 2003, 2004, 2005, 2006 and 2007 during the period from
October 1 through November 30 if the average paid attendance for the
immediately preceding baseball season was less than 900 people per
game and the Team did not realize an operating profit in its previous
fiscal year. The Stadium Lease will automatically terminate, and
Heroes will be required to pay specified damages to the Company, if
the League is disbanded and under certain other circumstances. Heroes
may voluntarily cancel the Stadium Lease by paying a lump sum equal to
75% of the remaining outstanding rent (based upon an assumed $35,000,
rent per year).
F-14
<PAGE>
The amount due from Heroes for the Team's share of utilities, and
signage, netted with Team merchandise sold in the Company's sporting
goods store and certain loans from Heroes of $30,000 approximated
$7,000 at December 31, 1997 and is included in other assets.
Note 9 - Income Taxes:
Deferred income taxes reflect the net effects of temporary differences
between the amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The temporary
differences arise principally from net operating loss carryforwards
and certain accruals and result in a deferred tax asset of
approximately $1,484,000 at December 31, 1997 and $1,192,000 at
December 31, 1996.
A valuation allowance is provided when it is more likely than not that
some portion of the deferred tax asset will not be realized. The
Company has determined, based on the Company's recurring net losses
from operations and lack of a continuing substantial revenue stream,
that a full valuation allowance is appropriate at December 31, 1997
and 1996.
A reconciliation of the provision (benefit) for income taxes computed
at the federal statutory rate of 34% and the effective tax rate of
income (loss) before income taxes is as follows:
<TABLE>
<CAPTION>
Year Ended
December 31,
---------------------------
1997 1996
---- ----
<S> <C> <C>
Computed tax benefit on net loss
at federal statutory rate $ (281,000) $ (295,000)
State income tax, net of federal income
tax effect (49,000) (52,000)
Tax effect of net operating losses not
currently usable 330,000 347,000
----------- -----------
Provision (benefit) for income taxes $ -- $ --
=========== ===========
</TABLE>
The significant components of the Company's deferred tax assets as of
December 31, 1997 are summarized below:
<TABLE>
<S> <C>
Net operating loss tax carryforwards $1,332,000
Accrued interest 84,000
Accrued compensation - officers and directors 68,000
----------
1,484,000
Valuation allowance (1,484,000)
----------
$ --
==========
</TABLE>
F-15
<PAGE>
The Company has available at December 31, 1997 net operating loss
carryforwards totaling approximately $3,356,000 that may be applied
against future federal taxable income. The loss carryforwards will
expire through 2012. Certain losses are subject to limitation by the
provisions of Section 382 of the Internal Revenue Code due to a more
than 50% change in ownership which occurred through the sale of common
stock.
Note 10 - Stock Based Compensation:
The Stock Option Plan (see Note 7) provides for the granting of either
incentive stock options or non-qualified stock options to purchase
shares of the Company's common stock to officers, directors and key
employees responsible for the direction and management of the Company
and to non-employee consultants and independent contractors.
As required by SFAS 123, the Company has determined the pro forma
information as if the Company had accounted for stock options granted
under the fair value method of SFAS 123. The Black Scholes option
pricing model was used with the following weighted-average
assumptions; risk-free rate of 6.0%; expected common stock market
price volatility factor of 2.81; and an expected life of the options
of eight years. The fair value of options granted was $.3125. No
options were granted in 1997. The pro forma effect on net loss and net
loss per share would have been as follows as of December 31:
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Net loss:
As reported $ 825,220 $ 867,380
Pro forma $ 825,220 $ 889,000
Basic and diluted loss per share:
As reported $0.37 $0.72
Pro forma $0.37 $0.73
</TABLE>
Note 11 - Subsequent Event:
Ladies Professional Baseball - In February 1998, the Company entered
into a three-year lease agreement, commencing in 1998, with Ladies
Professional Baseball. Pursuant to the agreement, the New Jersey
Diamonds (the "Diamonds"), a league-owned team, will play its regular
season home games, approximately 28, at the Stadium during the months
of July through September. The Diamonds will pay rent of approximately
$37,000. The Company will retain the proceeds for parking and alcohol
revenue, and a portion of the food revenue.
Note 12 - Event Subsequent to Date of Auditors' Report:
Investment in Joint Venture Corporation - In March 1998, the Company
purchased a 50% interest in a corporate joint venture to develop a
resort golf facility. The Company has committed to fund a total of
$175,000 to this venture, of which $41,000 was advanced through
December 31, 1997 for feasibility studies.
F-16
<PAGE>
MILLENNIUM SPORTS MANAGEMENT, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
------------ -----------
(Unaudited) (Note 1)
------------ -----------
<S> <C> <C>
ASSETS
PROPERTY AND EQUIPMENT, AT COST,
LESS ACCUMULATED DEPRECIATION $ 12,634,199 $ 12,799,986
CASH 528,244 115,295
INVENTORIES 62,886 85,170
INVESTMENT IN LIMITED PARTNERSHIP, AT EQUITY 386,561 485,555
INVESTMENT IN JOINT VENTURE 175,000 41,000
RECEIVABLE - MINOR LEAGUE HEROES 8,800 6,616
OTHER ASSETS 71,169 61,064
------------ ------------
$ 13,866,859 $ 13,594,686
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Amounts due insiders, pursuant to
Chapter 11 proceedings $ 117,265 $ 339,609
Accounts payable and accrued expenses 263,256 250,110
Accrued interest 63,542 209,297
Accrued compensation - officers and directors 170,775 170,775
------------ ------------
Total Liabilities 614,838 969,791
------------ ------------
STOCKHOLDERS' EQUITY:
Preferred stock, no par value; 500,000 shares
authorized, none issued - -
Common stock, no par value, stated value $0.01
per share; 20,000,000 shares authorized
7,166,169 and 4,353,607 shares issued in 1998
and 1997, respectively 716,617 435,361
Additional paid-in capital 18,743,263 17,182,135
Accumulated deficit (6,207,859) (4,992,601)
------------ ------------
Total Stockholders' Equity 13,252,021 12,624,895
------------ ------------
$ 13,866,859 $ 13,594,686
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
F-17
<PAGE>
MILLENNIUM SPORTS MANAGEMENT, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Six months ended June 30, Three months ended June 30,
---------------------------------------- ------------------------------
1998 1997 1998 1997
---------- ---------- -------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Stadium and facility rentals and
admissions $ 126,525 $ 132,033 $ 99,380 $ 106,155
Retail sales 73,490 94,880 58,419 78,618
Other 7,486 12,519 7,477 12,500
---------- ---------- -------- ---------
Totals 207,501 239,432 165,276 197,273
---------- ---------- -------- ---------
COSTS OF SALES AND SERVICES:
Costs of stadium operations 101,444 95,746 69,531 75,324
Costs of retail sales 35,368 68,383 22,998 53,553
Selling, general and administrative 372,990 399,996 192,898 224,603
Stock compensation to officers and
directors (Note 4) 734,375 - 734,375 -
Depreciation 182,550 183,672 91,278 91,836
---------- ---------- -------- ---------
1,426,727 747,797 1,111,080 445,316
---------- ---------- -------- ---------
LOSS BEFORE INTEREST EXPENSE (1,219,226) (508,365) (945,804) (248,043)
INTEREST EXPENSE (INCOME), NET (3,968) 49,558 (4,518) 21,962
---------- ---------- -------- ---------
NET LOSS $ (1,215,258) $ (557,923) $ (941,286) $ (270,005)
========== ========== ======== =========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 6,054,907 1,333,611 6,991,378 1,492,768
========== ========== ======== =========
BASIC AND DILUTED LOSS PER
COMMON SHARE $ (0.20) $ (0.42) $ (0.13) $ (0.18)
========== ========== ======== =========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
F-18
<PAGE>
MILLENNIUM SPORTS MANAGEMENT, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 1997
(Unaudited)
<TABLE>
<CAPTION> Common Stock
---------------------- Additional
Number Paid-in Accumulated
of Shares Amount Capital Deficit Total
--------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1997 4,353,607 $ 435,361 $ 17,182,135 $ (4,992,601) $ 12,624,895
Issuance of common stock upon exercise of:
Underwriter warrants 1,500,000 150,000 - - 150,000
Class A warrants 115,844 11,584 104,260 - 115,844
Class D warrants 925,000 92,500 370,000 - 462,500
Issuance of common stock upon conversion of
debt 116,490 11,649 237,195 - 248,844
Stock compensation to officers and directors - - 734,375 734,375
Common stock issued to officers and directors 155,228 15,523 23,284 - 38,807
Issuance of Class D Warrants - - 80,464 - 80,464
Issuance of Class A Warrants - - 11,550 - 11,550
NET LOSS - - - (1,215,258) (1,215,258)
--------- --------- ------------ ------------ ------------
BALANCES, JUNE 30, 1998 7,166,169 $ 716,617 $ 18,743,263 $ (6,207,859) $ 13,252,021
========= ========= ============ ============ ============
</TABLE>
F-19
<PAGE>
MILLENNIUM SPORTS MANAGEMENT, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six months ended June 30,
--------------------------------------
1998 1997
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,215,258) $ (557,923)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization 182,550 183,672
Stock compensation awarded to officers and directors 734,375 -
Common stock issued for services rendered - 375
Changes in operating assets and liabilities:
Inventory 22,284 24,475
Other assets 17,711 (65,898)
Accounts payable and accrued expenses (132,609) 152,719
------------ -----------
Net cash flows from operating activities (390,947) (262,580)
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net disbursements of restricted cash - -
Purchases of property and improvements (16,763) (7,190)
Investment in limited partnership (134,000) -
Distribution from limited partnership 98,994 30,469
------------ -----------
Net cash flows from investing activities (51,769) 23,279
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES -
Proceeds from notes payable - 75,000
Repayments of creditors' notes payable and amount due insiders (3,500) (52,163)
Proceeds from issuance of common stock upon exercise
of warrants, net of costs 578,344 115,861
Proceeds from issuance of common stock, net of costs 188,807 212,500
Proceeds from issuance of warrants 92,014 42,489
Deferred offering costs - (38,090)
------------ -----------
Net cash flows from by financing activities 855,665 355,597
------------ -----------
NET CHANGE IN CASH 412,949 116,296
CASH, BEGINNING OF PERIOD 115,295 8,600
------------ -----------
CASH, END OF PERIOD $ 528,244 $ 124,896
============ ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 145,755 $ 23,480
============ ===========
Income taxes paid $ - $ -
============ ===========
Issuance of common stock upon conversion of
outstanding debt $ 248,844 $ -
============ ===========
</TABLE>
F-20
<PAGE>
MILLENNIUM SPORTS MANAGEMENT, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION:
The balance sheet at the end of the preceding fiscal year has been
derived from the audited balance sheet contained in Millennium Sports
Management, Inc.'s (the "Company's") Annual Report on Form 10KSB for
the year ended December 31, 1997 (the "10KSB") and is presented for
comparative purposes. All other financial statements are unaudited.
In the opinion of management, all adjustments, which include only
normal recurring adjustments necessary to present fairly the financial
position, results of operations and cash flows for all periods
presented, have been made. The results of operations for interim
periods are not necessarily indicative of the operating results for the
full year.
Footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
omitted in accordance with the published rules and regulations of the
Securities and Exchange Commission. These financial statements should
be read in conjunction with the financial statements and notes thereto
included in the 10KSB.
NET INCOME (LOSS) PER COMMON SHARE In February 1997, the Financial
Accounting Standards Board issued Statement of Financial Accounting
Standards 128, Earnings Per Share ("SFAS 128") which is effective for
financial statements for both interim and annual periods ending after
December 31, 1997. The Company adopted SFAS 128 in the fourth quarter
of 1997. SFAS 128 replaces the presentation of primary and fully
diluted earnings per share with basic and diluted earnings per share.
Basic earnings per share is calculated based on the weighted average
number of common shares outstanding during the period and excludes all
dilution. Diluted earnings per share is calculated by using the
weighted average number of common shares outstanding, while also giving
effect to all dilutive potential common shares that were outstanding
during the period. Such dilutive potential common shares have been
excluded since the effect would be anti-dilutive, due to net losses for
all periods presented. SFAS 128 had no impact on the loss per share
for the three and six months ended June 30, 1997.
RECLASSIFICATION Certain amounts previously reported have been
reclassified to conform to current year presentation.
F-21
<PAGE>
MILLENNIUM SPORTS MANAGEMENT, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 2 - ORGANIZATION, PROCEEDINGS UNDER CHAPTER 11 AND SUBSEQUENT OPERATIONS:
ORGANIZATION AND DEVELOPMENT The Company operates a regional sports
entertainment and recreation center in Sussex County, New Jersey, known
as the Skylands Park Sports and Recreation Center (the "Complex"). The
Complex includes a professional baseball stadium ("Skylands Park") used
for sports and other entertainment events, and other adjacent
recreational and commercial facilities (the "Related Facilities") that
include, among other things, a sports apparel and collectibles store, a
wholesale and retail sporting goods outlet, batting cages, and a video
parlor.
During the six months ended June 30, 1998, the years ended December 31,
1997 and 1996 and since inception, the Company has generated only
limited amounts of revenues from the events held at Skylands Park and
the operation of the Related Facilities and, as a result, the Company
incurred significant net losses during such periods. Management
expects that revenues from the rental of Skylands Park to its primary
tenants will not be significant. Instead, management expects that the
Company will generate revenues primarily from the rental of skyboxes
and advertising signs in Skylands Park, the rental of Skylands Park for
certain other sports and entertainment events, concession sales, and
the operation of the Related Facilities in the Complex. Accordingly,
the Company's ability to generate significant additional revenues will
be dependent upon, among other things, its ability to generate future
attendance at events and the success of its other commercial
operations.
Management believes that the Company may need to obtain additional
liquid resources to enable it to sustain operations beyond 1998.
Therefore, management expects that to sustain future operations, the
Company will need to obtain additional financing through the exercise
of its remaining outstanding warrants or the issuance of other equity
securities. Although management continues to explore various financing
alternatives, the Company does not have any commitments with respect to
any additional financing.
Chapter 11 Filing and Confirmation of Plan of Reorganization The
Company's Plan of Reorganization (the "Plan") was confirmed by the
Company's creditors and the United States Bankruptcy Court on April 13,
1995 (the "Confirmation Date"). Since the Confirmation Date, the
Company has paid the unsecured prepetition liabilities pursuant to the
terms of a secured promissory note (the "Creditors' Note"). The
Creditors' Note bore interest on the unpaid principal balance at the
prime rate plus 3%. The difference between the interest paid and the
interest accrued became due on April 26, 1998. The Company has set
aside sufficient funds to make such
F-22
<PAGE>
MILLENNIUM SPORTS MANAGEMENT, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
final payment under the Creditors' Note, and intends to make such
payment upon final reconciliation of the amount due.
Claims of "insiders" (generally, former directors and executive
officers of the Company and certain of their affiliates) of
approximately $339,000 as of the Confirmation Date (including accrued
salaries and loans and advances made to the Company) has been reduced,
through the issuance of common stock, to approximately $117,000 as of
June 30, 1998, and may be paid from time to time after payment in full
of the Creditors' Note, as the cash flow of the Company may permit;
however, each insider has the option to elect to be paid in shares of
common stock of the Company valued at the then current market price of
such common stock as reported on "NASDAQ," and approximately $222,000
of such claims has been paid in such manner through June 30, 1998.
Equity interests, including interests of stockholders and warrant
holders, were not altered or impaired under the terms of the Plan.
However, the terms of the Plan prohibit the Company from paying
dividends until all payments required under the Plan have been made.
Pursuant to SOP 90-7, the Company was not required to adopt
"freshstart" reporting (and, as a result, revalue all of its assets and
liabilities) since the holders of the Company's existing voting stock
immediately prior to confirmation held the same relative voting
interests after confirmation. In addition, since the Company will be
paying all of its prepetition liabilities at their original principal
amounts, the Company did not recognize any material gain or loss as a
result of the confirmation of the Plan.
NOTE 3 - STOCKHOLDERS' EQUITY:
In December 1997 , the Company again extended the expiration date of
the outstanding Class A common stock warrants to June 30, 1998 from the
original expiration date of September 23, 1995, at which time the
exercise price was reduced from $4.00 to $2.80 per warrant, with each
warrant continuing to entitle the exercising holder to receive the
increased amount of 2.8 shares of the Company's common stock. In April
1998, such expiration date was further extended to September 30, 1998.
A total of 923,775 Class A Warrants remain unexercised at June 30,
1998. The Class A Warrants are subject to redemption at $.10 per Class
A Warrant on 30 days' prior written notice if the closing bid price of
the Company's common stock equals or exceeds $32.70 per share for any
20 trading days within a period of 30 consecutive trading days ending
on the fifth day prior to the date of the notice of redemption.
F-23
<PAGE>
MILLENNIUM SPORTS MANAGEMENT, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 4 - STOCK AWARD PLAN
On April 29, 1998, pursuant to the Company's stock award plan adopted
in December 1996 (the "Stock Award Plan"), the Company granted the
right to purchase a total of 250,000 shares of stock at $.25 per share
to members of the Company's Board of Directors. In accordance with
generally accepted accounting principles, a non-cash charge to earnings
of $734,375 was recorded as compensation expense, representing the
difference between the exercise price and the fair market value
per share on the date of grant for the full award of 250,000 shares. As
of June 30, 1998 and the date of this report, rights to purchase
155,228 of such shares have been exercised, and rights to purchase
94,772 shares remain outstanding.
NOTE 5 - SUBSEQUENT EVENT:
In July 1998, the Ladies Professional Baseball league ("LPB") which is
a secondary tenant of Skylands Park, canceled all further league games
for the balance of 1998, including the remaining 20 home games for 1998
of the LPB's New Jersey franchise, which were to be played at Skylands
Park. The Company is uncertain if LPB will satisfy the remaining lease
payments, consisting of the second half of payments for 1998 and all of
1999 and 2000.
F-24
<PAGE>
No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus, and, if given or made, such information or representations may not
be relied upon as having been authorized by the Company or by the Underwriter.
Neither the delivery of this Prospectus not any sale made hereunder shall under
any circumstances create any implication that there has been no change in the
affairs of the Company since the date hereof. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any securities
offered hereby by anyone in any jurisdiction in which such offer or solicitation
is not authorized or in which the person making such offer or solicitation is
not qualified to do so or to anyone to whom it is unlawful to make such offer of
solicitation.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Additional Information .................................................... 3
Prospectus Summary ........................................................ 4
Risk Factors .............................................................. 9
The Company ............................................................... 15
Use of Proceeds ........................................................... 16
Dividend Policy ........................................................... 16
Capitalization ............................................................ 17
Market Price of Common Stock .............................................. 18
Selected Financial Data ................................................... 19
Plan of Operations and Management's Discussion
and Analysis of Financial Condition
and Results of Operations ................................................ 20
Business .................................................................. 27
Management ................................................................ 37
Certain Transactions ...................................................... 42
Principal Shareholders .................................................... 44
Description of Securities ................................................. 45
Shares Eligible for Future Sale ........................................... 49
Legal Matters ............................................................. 50
Experts ................................................................... 50
Index to Financial Statements ............................................. F-1
</TABLE>
MILLENNIUM SPORTS
MANAGEMENT, INC.
1,012,000 SHARES OF COMMON
STOCK ISSUABLE UPON EXERCISE OF
OUTSTANDING CLASS D COMMON
STOCK PURCHASE WARRANTS
2,585,954 SHARES OF COMMON
STOCK ISSUABLE UPON EXERCISE OF
OUTSTANDING CLASS A COMMON
STOCK PURCHASE WARRANTS
Prospectus
________, 1998
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
The certificate of incorporation and by-laws of the registrant provide that
the Company shall indemnify officers and directors to the fullest extent allowed
by the New Jersey General Corporation Law, as it now exists and as it may be
amended. In general, New Jersey law grants a corporation the power to indemnify
officers and directors (and former officers and directors in respect of actions
taken while serving as an officer or director) against expenses and liabilities
in connection with any proceeding against such officer or director relating to
acts or omissions in such capacity, if the officer or director acted in good
faith and in a manner reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal proceeding, the
officer or director had no reasonable cause to believe that the subject conduct
was unlawful. New Jersey law further permits additional rights of
indemnification (to the extent permitted or not prohibited by other applicable
law) if so provided under the corporation's certificate of incorporation or
by-laws, except that no indemnification is permitted if it is determined by
final judgment that the subject acts or omissions were in breach of the
officer's or director's duty of loyalty to the corporation or its shareholders,
or were not in good faith or involved a knowing violation of law, or resulted in
receipt by the officer or director of an improper personal benefit. The
Company's certificate of incorporation contains a provision expressly adopting
this most expansive form of indemnification.
Pursuant to Section 7 of the September 24, 1993 Underwriting Agreement (in
connection with the registrant's initial public offering of Common Stock and
Class A Warrants), A.S. Goldmen & Co., Inc. ("Goldmen"), as underwriter, agreed
to indemnify the registrant, its directors, and certain of its officers and
controlling persons, in respect of any losses or claims arising out of any
information provided by such underwriter for use in the offering materials
relating to such initial public offering.
Item 25. Other Expenses of Issuance and Distribution.
<TABLE>
<CAPTION>
<S> <C>
SEC registration fee .........................................$ 5,200*
NASDAQ listing fee ..............................................7,500*
Registrar and Transfer Agent's fees..............................2,500*
Printing and engraving expenses.................................10,000*
Blue Sky fees and expenses......................................10,000*
Legal fees and expenses.........................................50,000*
Accountant's fees and expenses..................................25,000*
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Miscellaneous ...................................................5,000*
--------
Total.........................................................$115,200*
========
</TABLE>
- ----------
* All or a substantial portion of these expenses were previously paid in
connection with prior registrations made by the registrant.
Item 26. Recent Sales of Unregistered Securities.
In the past three years, the registrant has made the following sales of
unregistered securities, all of which sales were exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) thereof or as
otherwise indicated herein. As in the Prospectus forming a part of this
registration statement, all share amounts and per share dollar prices stated
herein have been adjusted to reflect a 1-for-10 reverse stock split in respect
of the Common Stock, effected in November 1996.
From time to time, the Company has issued stock options under its 1993
Stock Option Plan to directors, officers and employees of the Company. The total
number of options granted was 49,500, of which 42,500 have been exercised, 5,000
have lapsed, and 2,000 remain outstanding.
In August 1995, in a private placement transaction pursuant to Regulation S
promulgated under the Securities Act, the Company issued to three investors an
aggregate of 69,789 shares of Common Stock at a price of approximately $23.10
per share, yielding gross proceeds of approximately $1,612,120, and net proceeds
of approximately $1,500,000.
In November 1995, the Company issued 2,400 shares of Common Stock to a
creditor of the Company, in satisfaction of $60,000 in accounts payable owed by
the Company to such creditor.
In November 1995, pursuant to the Company's outstanding employment
agreement with Robert H. Stoffel, Jr. (the Chief Financial Officer and Chief
Accounting Officer of the Company), the Company issued to Mr. Stoffel 2,000
shares of Common Stock in consideration of services previously rendered by Mr.
Stoffel to the Company.
In April 1996, further to the Company's employment agreement with Mr.
Stoffel, the Company issued to Mr. Stoffel an additional 1,500 shares of Common
Stock in consideration of services previously rendered by Mr. Stoffel to the
Company, and an additional 3,230 shares of Common Stock in payment of accrued
but unpaid compensation owed to Mr. Stoffel for services rendered in 1995.
Also in April 1996, the Company issued 2,420 shares of Common Stock to an
employee for services rendered to the Company.
From time to time subsequent to January 1, 1998, the Company has issued a
total of 78,390 shares of Common Stock in payment of insiders' claims as defined
under the Company's
II-2
<PAGE>
Plan of Reorganization. The issuance of such shares was exempt from registration
pursuant to Section 1145 of the United States Bankruptcy Code.
Item 27. Exhibits and Financial Statement Schedules.
Designation
of Exhibit Description of Exhibit
- ------------ ----------------------
3.1 Amended and Restated Certificate of Incorporation of the Company. (5)
3.2 Certificate of Amendment of Certificate of Incorporation of the
Company, regarding a 1-for-1.4 reverse stock split effected in August
1993. (5)
3.3 Certificate of Amendment of Certificate of Incorporation of the
Company, regarding an increase in the Company's authorized capital in
January 1994. (5)
3.4 Certificate of Amendment of Certificate of Incorporation of the
Company, regarding a 1-for-10 reverse stock split effected in
November 1996. (5)
3.5 Certificate of Amendment of Certificate of Incorporation of the
Company, regarding the name change to "Millennium Sports Management,
Inc." (5)
3.6 Second Amended By-Laws of the Company. (5)
4.1 Specimen Common Stock Certificate. (4)
4.2 Form of Warrant Agreement between the Company and Continental Stock
Transfer & Trust Company ("Continental"), including form of Class A
Warrant therein. (1)
4.3 Notification letter to Class A Warrantholders regarding the extension
of the expiration date of the Class A Warrants, the adjustments
arising by reason of the issuance of Class D Warrants, and a further
voluntary reduction of the exercise price under the Class A Warrants.
(4)
4.4 Notification letter to Class A Warrant holders regarding the further
extension of the expiration date of the Class A Warrants. (6)
4.5 Form of Warrant Agreement between the Company and Continental,
including form of Class D Warrant therein. (5)
4.6 Notification letter to Class D Warrant holders regarding the further
extension of the expiration date of the Class D Warrants. (6)
5.1 Opinion of Greenberg Traurig Hoffman Lipoff Rosen & Quentel as to the
legality of the securities being offered.
10.1 Stock Option Plan. (5)
II-3
<PAGE>
10.2 $125,000 Loan Agreement between the Company and Barry Gordon. (5)
10.3 $125,000 Loan Agreement between the Company and Marc Klee. (5)
10.4 $100,000 Promissory Note from the Company to Robert A. Hilliard. (5)
10.5 $140,000 Promissory Note from the Company to Bruce Starr. (5)
10.6 $6,000 Promissory Note from the Company to John C. Ertmann. (5)
10.7 Amended Employment Agreement between the Company and Robert H.
Stoffel, Jr.
10.8 First Amended Plan of Reorganization of the Company. (2)
10.9 Creditors' Note, issued pursuant to the First Amended Plan of
Reorganization. (3)
10.10 Employment Agreement dated October 28, 1996 between the Company and
Barry M. Levine. (5)
10.11 Amendment to Employment Agreement between the Company and Robert A.
Hilliard. (5)
10.12 1996 Stock Award Plan. (5)
10.13 Amendment No. 1 to 1996 Stock Award Plan. (7)
10.14 Stadium Lease Agreement between the Company and Ladies League
Baseball. (8)
10.15 Amendment to Stadium Lease Agreement between the Company and Ladies
League Baseball. (8)
11. Computation re: Per Share Earnings. (9)
16.1 Letter on change in certifying accountant. (5)
23.1 Consent of Wiss & Company, LLP.
23.2 Consent of Greenberg Traurig Hoffman Lipoff Rosen & Quentel (included
in Exhibit 5.1).
27 Financial Data Schedules. (5)
- ----------
(1) Incorporated by reference, filed as an exhibit to Amendment No. 2 to the
Company's Registration Statement on Form SB-2 filed on August 12, 1993.
(2) Incorporated by reference, filed as an exhibit to the Company's report on
Form 10-KSB filed on April 28, 1995.
(3) Incorporated by reference, filed as an exhibit to Post-Effective Amendment
No. 1 to the Company's Registration Statement (SEC File No. 33-79930) filed
on July 14, 1995.
(4) Incorporated by reference, filed as an exhibit to pre-effective Amendment
No. 1 to this Registration Statement, filed on December 16, 1996.
(5) Incorporated by reference, filed as an exhibit to the Company's report on
Form 10-KSB filed on March 31, 1998.
(6) Incorporated by reference, filed as an exhibit to the Company's report on
Form 8-K filed on April 29, 1998.
(7) Incorporated by reference, filed as an exhibit to Post-Effective Amendment
No. 2 to this Registration Statement, filed on April 30, 1998.
(8) Incorporated by reference, filed as an exhibit to Post-Effective Amendment
No. 3 to this Registration Statement, filed on August 27, 1998.
(9) Incorporated by reference, filed as an exhibit to Post-Effective Amendment
No. 4 to this Registration Statement, filed on Octber 13, 1998.
II-4
<PAGE>
Item 28. Undertakings.
The undersigned Registrant hereby undertakes as follows:
(a) To file, during any period in which the Registrant offers or sells
securities, a post-effective amendment(s) to this registration
statement:
(1) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(2) To reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the registration statement; and
(3) To include any additional or changed material information with
respect to the plan of distribution;
(b) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering; and
(c) For determining liability under the Securities Act, the Registrant
will treat each post-effective amendment as a new registration
statement of the securities offered, and the offering of the
securities at that time to be the initial bona fide offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 24, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
For purposes of determining any liability under the Securities Act of 1933,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
II-5
<PAGE>
For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company has
duly caused this Post-Effective Amendment No. 5 to Registration Statement to be
signed on its behalf by the undersigned, hereunto duly authorized, in New York,
New York on the 29th day of October, 1998, and hereby certifies that it has
reasonable grounds to believe that it meets all of the requirements for filing
on Form SB-2.
MILLENNIUM SPORTS MANAGEMENT, INC.
By: /s/ Barry M. Levine
------------------------------
Barry M. Levine, President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 5 to Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Barry M. Levine President, Chief Executive October 29, 1998
Barry M. Levine Officer, and Director
/s/ Robert H. Stoffel, Jr. Vice President, Chief Financial October 29, 1998
- -------------------------- Officer, Chief Accounting
Robert H. Stoffel, Jr. Officer, and Director
/s/ Barry J. Gordon Director October 29, 1998
- --------------------------
Barry J. Gordon
/s/ Marc H. Klee Director October 29, 1998
- --------------------------
Marc H. Klee
</TABLE>
<PAGE>
SKYLANDS PARK MANAGEMENT, INC.
POST-EFFECTIVE AMENDMENT NO. 5 TO
REGISTRATION STATEMENT ON FORM SB-2
INDEX OF EXHIBITS
Designation
of Exhibit Description of Exhibit
- ---------- ----------------------
3.1 Amended and Restated Certificate of Incorporation of the Company. (5)
3.2 Certificate of Amendment of Certificate of Incorporation of the
Company, regarding a 1-for-1.4 reverse stock split effected in August
1993. (5)
3.3 Certificate of Amendment of Certificate of Incorporation of the
Company, regarding an increase in the Company's authorized capital in
January 1994. (5)
3.4 Certificate of Amendment of Certificate of Incorporation of the
Company, regarding a 1-for-10 reverse stock split effected in
November 1996. (5)
3.5 Certificate of Amendment of Certificate of Incorporation of the
Company, regarding the name change to "Millennium Sports Management,
Inc." (5)
3.6 Second Amended By-Laws of the Company. (5)
4.1 Specimen Common Stock Certificate. (4)
4.2 Form of Warrant Agreement between the Company and Continental Stock
Transfer & Trust Company ("Continental"), including form of Class A
Warrant therein. (1)
4.3 Notification letter to Class A Warrantholders regarding the extension
of the expiration date of the Class A Warrants, the adjustments
arising by reason of the issuance of Class D Warrants, and a further
voluntary reduction of the exercise price under the Class A Warrants.
(4)
4.4 Notification letter to Class A Warrant holders regarding the further
extension of the expiration date of the Class A Warrants. (6)
4.5 Form of Warrant Agreement between the Company and Continental,
including form of Class D Warrant therein. (5)
4.6 Notification letter to Class D Warrant holders regarding the further
extension of the expiration date of the Class D Warrants. (6)
<PAGE>
5.1 Opinion of Greenberg Traurig Hoffman Lipoff Rosen & Quentel as to the
legality of the securities being offered.
10.1 Stock Option Plan. (5)
10.2 $125,000 Loan Agreement between the Company and Barry Gordon. (5)
10.3 $125,000 Loan Agreement between the Company and Marc Klee. (5)
10.4 $100,000 Promissory Note from the Company to Robert A. Hilliard. (5)
10.5 $140,000 Promissory Note from the Company to Bruce Starr. (5)
10.6 $6,000 Promissory Note from the Company to John C. Ertmann. (5)
10.7 Amended Employment Agreement between the Company and Robert H.
Stoffel, Jr.
10.8 First Amended Plan of Reorganization of the Company. (2)
10.9 Creditors' Note, issued pursuant to the First Amended Plan of
Reorganization. (3)
10.10 Employment Agreement dated October 28, 1996 between the Company and
Barry M. Levine. (5)
10.11 Amendment to Employment Agreement between the Company and Robert A.
Hilliard. (5)
10.12 1996 Stock Award Plan. (5)
10.13 Amendment No. 1 to 1996 Stock Award Plan. (7)
10.14 Stadium Lease Agreement between the Company and Ladies League
Baseball. (8)
10.15 Amendment to Stadium Lease Agreement between the Company and Ladies
League Baseball. (8)
11. Computation re: Per Share Earnings (9)
16.1 Letter on change in certifying accountant. (5)
23.1 Consent of Wiss & Company, LLP.
23.2 Consent of Greenberg Traurig Hoffman Lipoff Rosen & Quentel (included
in Exhibit 5.1).
27 Financial Data Schedules. (5)
- ----------
(1) Incorporated by reference, filed as an exhibit to Amendment No. 2 to the
Company's Registration Statement on Form SB-2 filed on August 12, 1993.
(2) Incorporated by reference, filed as an exhibit to the Company's report on
Form 10-KSB filed on April 28, 1995.
(3) Incorporated by reference, filed as an exhibit to Post-Effective Amendment
No. 1 to the Company's Registration Statement (SEC File No. 33-79930) filed
on July 14, 1995.
<PAGE>
(4) Incorporated by reference, filed as an exhibit to pre-effective Amendment
No. 1 to this Registration Statement, filed on December 16, 1996.
(5) Incorporated by reference, filed as an exhibit to the Company's report on
Form 10-KSB filed on March 31, 1998.
(6) Incorporated by reference, filed as an exhibit to the Company's report on
Form 8-K filed on April 29, 1998.
(7) Incorporated by reference, filed as an exhibit to Post-Effective Amendment
No. 2 to this Registration Statement, filed on April 30, 1998.
(8) Incorporated by reference, filed as an exhibit to Post-Effective Amendment
No. 3 to this Registration Statement, filed on August 27, 1998.
(9) Incorporated by reference, filed as an exhibit to Post-Effective Amendment
No. 4 to this Registration Statement, filed on October 13, 1998.
<PAGE>
Exhibit 5.1
GREENBERG TRAURIG
200 Park Avenue
New York, New York 10166
October 29, 1998
Millennium Sports Management, Inc.
Ross' Corner
U.S. Highway 206 and County Route 565
P.O. Box 117
Augusta, New Jersey 07822-0117
Re: Post-Effective Amendment No. 5 to
Registration Statement on Form SB-2
Millennium Sports Management, Inc.
Registration No. 333-90
Gentlemen:
We refer to the public offering of the following securities (collectively,
the "Securities") of Millennium Sports Management, Inc., a New Jersey
corporation (the "Company"), as described in Post-Effective Amendment No. 5 to
Registration Statement on Form SB-2 being filed with the Securities and Exchange
Commission on or about the date hereof, as same may subsequently be amended from
time to time (the "Registration Statement"):
1. Up to 1,012,000 shares of common stock, no par value (the "Common
Stock"), of the Company, issuable upon exercise of the Class D Warrants
described in the Registration Statement; and
2. Up to 2,585,954 shares of Common Stock issuable upon exercise of the
923,555 outstanding Class A Warrants described in the Registration Statement.
In furnishing our opinion, we have examined copies of the Registration
Statement under the Securities Act of 1933, as amended. We have conferred with
officers of the Company and have examined the originals or certified, conformed
or photostatic copies of such records of the Company, certificates of officers
of the Company, certificates of public officials, and such other documents as we
have deemed relevant and necessary under the circumstances as the basis of the
opinion expressed herein. In all such examinations, we have assumed the
authenticity of all documents submitted to us as originals or duplicate
originals, the conformity to original documents of all such document copies, the
authenticity of the respective originals of such latter
<PAGE>
Millennium Sports Management, Inc.
August 26, 1998
Page 2
documents, and the correctness and completeness of such certificates. Finally,
we have obtained from officers of the Company such assurances as we have
considered necessary for the purposes of this opinion.
Based upon and subject to the foregoing and such other matters of fact and
questions of law as we have deemed relevant in the circumstances, and in
reliance thereon, it is our opinion that, when and if:
(a) The Registration Statement shall have become effective, as the
same may hereafter be amended; and
(b) The applicable purchase price for the Class D Warrants, and the
applicable exercise price of the Class A Warrants or Class D Warrants (as
the case may be), described in the Registration Statement shall have been
paid;
then and upon the happening of each of the events set forth in paragraph (a) and
(b) above:
The subject Securities, upon execution and delivery of proper certificates
therefor, will be duly authorized, validly issued and outstanding, fully
paid and nonassessable shares of Common Stock and warrants of the Company,
as the case may be.
The undersigned hereby consent to the use of their name in the Registration
Statement and in the Prospectus forming a part thereof, to references to this
opinion contained therein under the caption of such Prospectus entitled "Legal
Matters," and to the inclusion of this opinion in the Exhibits to the
Registration Statement.
Very truly yours,
GREENBERG TRAURIG
By: /s/ Shahe Sinanian
------------------------
Authorized Signatory
<PAGE>
EXHIBIT 10.7
------------
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT (this "Agreement"), entered into as of this ____ day of
October, 1998, by and between MILLENNIUM SPORTS MANAGEMENT, INC., a New Jersey
corporation having offices at 94 Championship Place, U.S. Highway 206 and County
Route 565, P.O. Box 117, Augusta, New Jersey 07822-0117 (the "Company"), and
ROBERT H. STOFFEL, JR., an individual residing at 18 Valley Way, Mendham, New
Jersey 07945 (the "Employee");
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Company is engaged in the business of operating a regional sports
entertainment and recreation center, including a 4,300 seat baseball stadium,
indoor recreation center, sporting goods store, and related facilities; and
WHEREAS, the Employee has heretofore been, and is currently, employed and
serving as a Vice President and the Chief Financial Officer of the Company
pursuant to an employment agreement which is due to expire on October 31, 1998;
and
WHEREAS, to promote the ongoing business of the Company, the Company desires
to assure itself of the continued right to the Employee's services on the terms
and conditions of this Agreement; and
WHEREAS, the Employee is willing and able to render his services to the
Company on the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereby agree as follows:
1. Nature of Employment.
--------------------
(a) Subject to the terms and conditions of this Agreement, the Company
shall, throughout the term of this Agreement, retain the Employee, and the
Employee shall render services to the Company, in the capacity and with the
title of Vice President and Chief Financial Officer of the Company. In such
capacity, the Employee shall have and exercise responsibility for (i) overseeing
all financial and accounting matters relating to the Company and its business
and operations, (ii) participating in corporate planning and development
strategy for the Company, (iii) advising on and participating and assisting in
corporate finance and shareholder relations matters relating to the Company, and
(iv) such additional duties as may be assigned to the Employee from time to time
by the President of the Company and/or by the Board o f
<PAGE>
Directors of the Company (the "Board"). The Employee may be given additional
titles and related responsibilities (including, without limitation, as Secretary
of the Company) as determined by the Board, and the Employee shall perform such
duties and responsibilities without requirement of additional compensation.
(b) Throughout the period of his employment hereunder, the Employee shall:
(i) devote his full business time, attention, knowledge and skills, faithfully,
diligently and to the best of his ability, to the active performance of his
duties and responsibilities hereunder on behalf of the Company; (ii) observe and
carry out such reasonable rules, regulations, policies, directions and
restrictions as may be established from time to time by the Board, including but
not limited to the standard policies and procedures of the Company as in effect
from time to time; and (iii) do such traveling as may reasonably be required in
connection with the performance of such duties and responsibilities; provided,
--------
however, that the Employee shall not be assigned to regular duties that would
- -------
reasonably require him to relocate his permanent residence from that first set
forth above.
(c) Anything contained in paragraph 2(b) above to the contrary
notwithstanding, the Employee may (i) devote portions of this personal time to
community and charitable activities, so long as same does not interfere with the
performance of the Employee's duties and responsibilities hereunder, and (ii)
make passive investments of his personal funds (including, without limitation,
in securities of publicly traded entities), so long as such investments do not
otherwise constitute or entail a violation of paragraph 6 below.
2. Term of Employment.
------------------
(a) Subject to prior termination in accordance with paragraph 2(b) below,
the term of this Agreement and the Employee's employment hereunder shall
commence on November 1, 1998 and shall continue through and including December
31, 1999, and shall thereafter automatically renew for additional terms of one
(1) year each unless either party gives written notice of termination to the
other party not less than ninety (90) days prior to the end of any term (in
which event this Agreement shall terminate effective as of the close of such
term).
(b) This Agreement:
(i) may be terminated upon mutual written agreement of the Company
and the Employee;
(ii) may be terminated at the option of the Employee, upon fourteen
(14) days' prior written notice to the Company, in the event that the Company
shall (A) fail to make any payment to the Employee required to be made under the
terms of this Agreement within thirty (30) days after payment is due, (B) fail
to perform any other material covenant or agreement to be performed by it
hereunder or take any action prohibited by this Agreement, and fail to cure or
remedy same within thirty (30) days after written notice thereof to the Company,
or (C) for any reason discontinue substantially all of its business operations
for any period in excess of six (6) consecutive months;
2
<PAGE>
(iii) may be terminated at the option of the Company, upon written
notice to the Employee, "for cause" (as hereinafter defined);
(iv) may be terminated at the option of the Company in the event of
the "permanent disability" (as hereinafter defined) of the Employee; or
(v) shall automatically terminate, without requirement of any
notice, upon the death of the Employee.
(c) As used herein, the term "for cause" shall mean and be limited to:
(i) any willful and material breach of this Agreement (including, without
limitation, the covenants contained in paragraph 6 below) by the Employee which
in any case is not fully corrected within thirty (30) days after written notice
of same from the Company to the Employee; (ii) gross neglect by the Employee of
his duties and responsibilities hereunder; (iii) any fraud, criminal misconduct,
breach of fiduciary duty, dishonesty, or gross and willful misconduct by the
Employee in connection with the performance of his duties and responsibilities
hereunder; (iv) the Employee being legally intoxicated during business hours or
while on call, or being habitually drunk or addicted to drugs (provided that
this shall not restrict the Employee from taking physician-prescribed medication
in accordance with the applicable prescription); (v) the commission by the
Employee of any felony or crime of moral turpitude, the making by the Employee
of any material written or verbal statements which are intentionally disparaging
to or derogatory of the Company, or any other action by the Employee which may
materially impair or damage the reputation of the Company; or (vi) habitual
breach by the Employee of any of the material provisions of this Agreement
(regardless of any prior cure thereof).
(d) As used herein, the term "permanent disability" shall mean, and be
limited to, any physical or mental illness, disability or impairment that
prevents the Employee from continuing the performance of his normal duties and
responsibilities hereunder for a period in excess of six (6) consecutive months.
For purposes of determining whether a "permanent disability" has occurred under
this Agreement, the written determination thereof by two (2) qualified
practicing physicians selected and paid for by the Company (and reasonably
acceptable to the Employee) shall be conclusive.
(e) Upon any termination of this Agreement as hereinabove provided, the
Employee (or his estate or legal representatives, as the case may be) shall be
entitled to receive any and all unpaid Base Salary appropriately prorated to and
as of the effective date of termination (based on the number of days elapsed
prior to the date of termination), any other amounts then due and payable to the
Employee hereunder, and any bonus (prorated, if applicable) thereafter payable
pursuant to paragraph 3(b) below. All such payments shall be made on the next
applicable payment date therefor (as provided in paragraph 3 below) following
the effective date of termination. Such payments shall constitute all amounts to
which the Employee shall be entitled hereunder upon termination of this
Agreement.
3
<PAGE>
3. Compensation and Benefits.
-------------------------
(a) Base Salary. As compensation for his services to be rendered
-----------
hereunder, the Company shall pay to the Employee a base salary at the rate of
Seventy-Eight Thousand ($78,000) Dollars per annum (the "Base Salary"), which
shall be payable in periodic installments in accordance with the standard
payroll practices of the Company in effect from time to time, and shall be
subject to withholding and deduction for federal, state and local taxes,
unemployment insurance, social security and other legally required withholdings.
At the sole and absolute discretion of the Board, such Base Salary may be
reviewed and upwardly adjusted at any time and from time to time.
(b) Bonus Plan. Within a reasonable time after the date hereof, the
----------
Company (acting through or with the approval of the Board) shall establish a
bonus plan for the benefit of its management and/or directors, on such terms and
conditions as the Board may approve in its discretion; provided, however, that
-------- -------
any and all payments under such plan shall be subject to, and shall only be
payable out of, any positive cash flow from operations in the Company's fiscal
year ending December 31, 1999. Nothing herein contained shall be deemed to
guarantee or assure that any payments will be made to the Employee under such
plan, except that, unless this Agreement is terminated "for cause," the Employee
shall be entitled to receive, if, as, when and to the extent that any payment
under such plan is made to the President of the Company, an amount equal to such
payment made to the President of the Company. Any such payment to the Employee
shall be made regardless of any expiration or termination of this Agreement,
provided that (i) no payment shall be required if this Agreement is terminated
"for cause," and (ii) if this Agreement is otherwise terminated prior to
expiration, any such payment shall be prorated based on the number of days in
calendar 1998 that the Employee was employed hereunder.
(c) Fringe Benefits. The Company shall also make available to the
---------------
Employee, throughout the period of his employment hereunder, such benefits and
perquisites as are generally provided by the Company to its executive employees,
including but not limited to eligibility for participation in any group
insurance plan, pension plan, profit-sharing plan, retirement savings plan,
401(k) plan, or other such benefit plan or policy which may presently be in
effect or which may hereafter be adopted by the Company for the benefit of its
executive employees; provided, however, that nothing herein contained shall be
-------- -------
deemed to require the Company to adopt or maintain any particular plan or
policy.
(d) Expenses. Throughout the period of the Employee's employment
--------
hereunder, the Company shall also reimburse the Employee, upon presentment by
the Employee to the Company of appropriate records, receipts and vouchers
therefor, for any reasonable out-of-pocket business expenses incurred by the
Employee in connection with the performance of his duties and responsibilities
hereunder; provided, however, that no reimbursement shall be required to be made
-------- -------
for any expense which is not properly deductible (in whole or in part) by the
Company for income tax purposes, or for any expense item which has not
previously been approved if and to the extent required in accordance with the
Company's standard policies and procedures in effect from time to time.
4
<PAGE>
4. Vacation, etc.
--------------
(a) The Employee shall be entitled to take, from time to time, up to
three (3) weeks of paid vacation per year, to be taken at such times as shall be
mutually convenient to the Employee and the Company, and so as not to interfere
unduly with the conduct of the business of the Company.
(b) The Employee shall further be entitled to paid holidays, personal
days and sick days in accordance with the Company's standard policies and
procedures in effect from time to time.
5. Company Property.
----------------
(a) The Employee hereby acknowledges and confirms that all ideas and
other developments or improvements conceived by the Employee, whether alone or
with others, during the period of his employment hereunder (whether or not
during working hours), that are within the scope of the Company's business
operations or that relate to any business of any type conducted or proposed to
be conducted by the Company, constitute the exclusive property of the Company.
The Employee shall assist the Company as required in order to establish, confirm
and evidence the Company's ownership of such ideas, developments and
improvements, and shall execute and deliver any and all such agreements,
instruments and other documents as may be necessary or appropriate in connection
therewith.
(b) Upon termination of this Agreement under any circumstances, and
otherwise upon request of the Company, the Employee shall immediately return all
property of the Company utilized by the Employee in rendering services
hereunder, to the extent in the Employee's possession or under his control.
6. Restrictive Covenants.
---------------------
(a) The Employee hereby acknowledges and agrees that (i) the business
contacts, customers, suppliers, know-how, trade secrets, marketing techniques,
promotional methods and other aspects of the business of the Company have been
and are of value to the Company, and have provided and will hereafter provide
the Company with substantial competitive advantage in the operation of its
business, and (ii) by reason of his employment with the Company, he will have
detailed knowledge and will possess confidential information concerning the
business and operations of the Company. The Employee hereby further acknowledges
that his business skills are not uniquely suited to businesses of the type
conducted by the Company, and that, if required, he could readily adapt and
utilize such skills in one or more other types of businesses.
(b) The Employee shall not, directly or indirectly, for himself or
through or on behalf of any other person or entity:
5
<PAGE>
(i) at any time, divulge, transmit or otherwise disclose or cause to
be divulged, transmitted or otherwise disclosed, any business contacts, customer
or supplier lists, know-how, trade secrets, marketing techniques, promotional
methods, contracts or other confidential or proprietary information of the
Company of whatever nature, whether now existing or hereafter created or
developed (provided, however, that for purposes hereof, information shall not be
considered to be confidential or proprietary if (A) it is a matter of common
knowledge or public record, (B) it is generally known in the industry, or (C)
the Employee can demonstrate that such information was already known to the
recipient thereof other than by reason of any breach of any obligation under
this Agreement or any other confidentiality or non-disclosure agreement); and/or
(ii) at any time during the period from the date hereof through and
including the date of the termination of the Employee's employment with the
Company, and for an additional period of one (1) year thereafter, (A) invest,
carry on, engage or become involved, either as an employee, agent, advisor,
officer, director, stockholder (excluding passive ownership of not more than 5%
of the outstanding shares of a publicly held corporation if such ownership does
not involve managerial or operational responsibility), manager, partner, joint
venturer, participant or consultant, in any business enterprise (other than the
Company and/or its affiliates, successors or assigns) which is located or
operating in Sussex County, New Jersey and/or any county contiguous thereto, and
derives any material revenues from any type of sports-related business engaged
in by the Company or any of its affiliates at the time that the Employee
proposes to become involved in such other business enterprise, and/or (B) induce
or attempt to induce any employee of the Company to leave the employ of the
Company, or in any way interfere with the Company's relationship with any of its
employees; provided, however, that the restrictions pursuant to clause (A) of
-------- -------
this paragraph 6(b)(ii) shall not thereafter be applicable in the event that,
and from and after such time as, (x) the Company terminates the Employee's
employment other than "for cause," or (y) this Agreement is terminated by reason
of any election by the Company not to renew this Agreement in accordance with
paragraph 2(a) above.
(c) The Employee and the Company hereby acknowledge and agree that any
breach by the Employee, directly or indirectly, of the foregoing restrictive
covenants will cause the Company irreparable injury for which there is no
adequate remedy at law. Accordingly, the Employee expressly agrees that, in the
event of any such breach or any threatened breach hereunder by the Employee,
directly or indirectly, the Company shall be entitled, in addition to any and
all other remedies available, to seek and obtain injunctive and/or other
equitable relief to require specific performance of or prevent, restrain and/or
enjoin a breach under the provisions of this paragraph 6.
(d) In the event of any dispute under or arising out of this paragraph 6,
the prevailing party in such dispute shall be entitled to recover from the non-
prevailing party or parties, in addition to any damages and/or other relief that
may be awarded, its reasonable costs and expenses (including reasonable
attorneys' fees) incurred in connection with prosecuting or defending the
subject dispute.
6
<PAGE>
7. Non-Assignability.
-----------------
In light of the unique personal services to be performed by the Employee
hereunder, it is acknowledged and agreed that any purported or attempted
assignment or transfer by the Employee of this Agreement or any of his duties,
responsibilities or obligations hereunder shall be void.
8. Notices.
-------
Any notices, requests, demands or other communications required or
permitted under this Agreement shall be in writing and shall be deemed to have
been given (a) when delivered personally, (b) one (1) day after being deposited
for overnight delivery with a recognized overnight delivery service, with all
charges prepaid or billed to the account of the sender and properly addressed as
hereinafter provided, or (c) three (3) days after being mailed by postpaid
certified mail, return receipt requested, addressed to the party being notified
at the address of such party first set forth above, or at such other address as
such party may hereafter have designated by notice; provided, however, that any
-------- -------
notice of change of address shall not be effective until its receipt by the
party to be charged therewith. Copies of any notices or other communications to
the Company shall simultaneously be sent by first class mail to Greenberg
Traurig, 200 Park Avenue, New York, New York 10166, Attention: Shahe Sinanian,
Esq.
9. General.
-------
(a) Neither this Agreement nor any of the terms or conditions hereof may
be waived, amended or modified except by means of a written instrument duly
executed by the party to be charged therewith. Any waiver or amendment shall
only be applicable in the specific instance, and shall not constitute or be
construed as a waiver or amendment in any other or subsequent instance. No
failure or delay on the part of either party in respect of any enforcement of
obligations hereunder shall in any manner affect such party's right to seek or
effect enforcement at any other time or in respect of any other required
performance.
(b) Neither this Agreement nor any rights or obligations hereunder may be
assigned (other than by the Company by operation of law) by either party without
the express prior written consent of the other party.
(c) The captions and paragraph headings used in this Agreement are for
convenience of reference only, and shall not affect the construction or
interpretation of this Agreement or any of the provisions hereof.
(d) This Agreement, and all matters or disputes relating to the validity,
construction, performance or enforcement hereof, shall be governed, construed
and controlled by and under the laws of the State of New Jersey.
7
<PAGE>
(e) This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective heirs, executors, administrators,
personal representatives, successors and permitted assigns.
(f) This Agreement may be executed in counterparts, each of which shall
be deemed to be an original hereof, but all of which together shall constitute
one and the same instrument.
(g) Except for any legal or judicial proceeding which may be brought for
injunctive and/or any other equitable relief as contemplated by paragraph 6(c)
above, any dispute involving the interpretation or application of this Agreement
shall be resolved by final and binding arbitration before one or more
arbitrators designated by the American Arbitration Association in New Jersey.
The award of such arbitrator(s) may be enforced in any court of competent
jurisdiction. The prevailing party in any action or proceeding hereunder shall
be entitled to an award for its costs and reasonable attorneys' fees in
connection with such action or proceeding, and the arbitrator(s) in any
arbitration hereunder shall be empowered and directed to make such an award in
his, her or their discretion.
(h) This Agreement constitutes the sole and entire agreement and
understanding between the parties hereto as to the subject matter hereof, and
supersedes all prior discussions, agreements and understandings of every kind
and nature between them as to such subject matter.
(i) This Agreement is intended for the sole and exclusive benefit of the
parties hereto and their respective heirs, executors, administrators, personal
representatives, successors and permitted assigns, and no other person or entity
shall have any right to rely on this Agreement or to claim or derive any benefit
herefrom absent the express written consent of the party to be charged with such
reliance or benefit.
(j) If any provision of this Agreement is held invalid or unenforceable,
either in its entirety or by virtue of its scope or application to given
circumstances, such provision shall thereupon be deemed modified only to the
extent necessary to render same valid, or not applicable to given circumstances,
or excised from this Agreement, as the situation may require; and this Agreement
shall be construed and enforced as if such provision had been included herein as
so modified in scope or application, or had not been included herein, as the
case may be.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of
the date first set forth above.
MILLENNIUM SPORTS MANAGEMENT, INC.
By: /s/ Barry M. Levine
-------------------
Barry M. Levine, President
/s/ Robert H. Stoffel, Jr.
-------------------------------
Robert H. Stoffel, Jr.
9
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EXHIBIT 23.1
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CONSENT OF INDEPENDENT AUDITORS
-------------------------------
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form SB-2 (Post-Effective Amendment No. 5) of our
report dated February 25, 1998 (except as Note 12 for which the date is March
11, 1998) relating to the financial statements of Millennium Sports Management,
Inc. (formerly Skylands Park Management, Inc.) which appears in such Prospectus.
We also consent to the reference to us under the caption "Experts" in such
Prospectus.
WISS & COMPANY, LLP
Woodbridge, New Jersey
October 29, 1998
