UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
(X) Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended December 31, 1999
( ) For the transition period from __________ to __________
Commission file number: 000-26865
INTERNET SPORTS NETWORK, INC.
(Exact name of small business issuer as specified in its charter)
FLORIDA 65-0704152
(State or other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
225 Richmond Street West, Suite 403, Toronto, Ontario, Canada, M5V 1W2
(Address of principal executive offices) (Zip Code)
(416) 599-8800 / (416) 599-8228
(Issuer's telephone/facsimile numbers, including area code)
Check whether the issuer: (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the issuer was required
to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
------- -------
The issuer had 24,518,000 shares of common stock outstanding as of
DECEMBER 31, 1999.
1
INTERNET SPORTS NETWORK, INC.
INDEX
PART I. FINANCIAL INFORMATION
Page No.
--------
Item 1. Financial Statements
Comparative Unaudited Consolidated Balance Sheets 3
as at December 31, 1999 and March 31, 1999
Comparative Unaudited Consolidated Statements of 4
Operations for the Three and Nine Months Ended December
31, 1999 and the Three and Nine Months Ended January 31, 1999.
Comparative Unaudited Consolidated Statements of 6
Cash Flows for the Nine Months Ended December 31,
1999 and the Nine Months Ended January 31, 1999.
Notes to the Unaudited Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of 17
Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk 22
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 22
Item 2. Changes in Securities and Use of Proceeds 22
Item 3. Defaults Upon Senior Securities 22
Item 4. Submission of Matters to a Vote of Security Holders 22
Item 5. Other Information 22
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits 22
(b) Reports on Form 8-K 22
2
PART I - FINANCIAL INFORMATION
ITEM 1
INTERNET SPORTS NETWORK, INC.
CONSOLIDATED BALANCE SHEET
(unaudited) (unaudited)
December 31, March 31,
1999 1999
ASSETS
Current
Cash and cash equivalents $ 518,000 $ 2,928,000
Receivables, net 404,000 182,000
Prepaid royalties (note 4) 2,000,000 -0-
Prepaid expenses 155,000 29,000
------------ ------------
3,077,000 3,139,000
Equipment, net (note 3) 400,000 84,000
Prepaid royalties (note 4) 3,000,000 -0-
Deferred charges (note 4) 14,213,000 -0-
Other deferred charges 47,000 -0-
Purchased intangibles, net (note 2) 11,060,000 9,637,000
Goodwill, net (note 2) 3,929,000 3,855,000
------------ ------------
$ 35,726,000 $ 16,715,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable $ 321,000 $ 171,000
Accrued liabilities 393,000 137,000
Accrued consulting fees 200,000 -0-
Deferred revenue 255,000 -0-
Accrued prize commitments 350,000 31,000
Loan payable and accrued interest (note 5) 1,048,000 -0-
------------ ------------
2,567,000 339,000
Convertible promissory note (note 6) 5,000,000 -0-
Deferred income taxes (note 8) 3,929,000 3,855,000
------------ ------------
11,496,000 4,194,000
------------ ------------
Commitments (notes 4 and 10)
Shareholders' equity (note 7)
Common stock and additional paid-in capital, $0.001 par value
50,000,000 shares authorized
24,518,000 outstanding (March 31, 1999 - 17,841,000) 52,601,000 17,127,000
Share subscription receivable for 534,000 shares subscribed (294,000) -0-
Deferred compensation (8,695,000) (449,000)
Accumulated deficit (19,382,000) (4,157,000)
------------ ------------
24,230,000 12,521,000
------------
$ 35,726,000 $ 16,715,000
============ ============
3
INTERNET SPORTS NETWORK, INC.
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS
(unaudited) (unaudited) (unaudited) (unaudited)
Nine Months Nine Months Three Months Three Months
Ending Ending Ending Ending
December 31, January 31, December 31, January 31,
1999 1999 1999 1999
REVENUE $ 3,616,000 $ 84,000 $ 1,755,000 $ 15,000
-----------------------------------------------------------------
EXPENSES
Prize commitments and other direct costs 2,036,000 132,000 1,116,000 58,000
Salaries and benefits 1,790,000 241,000 869,000 106,000
Consulting fees 1,020,000 370,000 504,000 324,000
Advertising 299,000 323,000 71,000 20,000
General and administrative 1,705,000 232,000 609,000 25,000
Depreciation 141,000 10,000 76,000 3,000
Amortization of purchased intangibles 5,590,000 -0- 2,150,000 -0-
Amortization of goodwill 2,065,000 -0- 780,000 -0-
Options granted for services provided 1,531,000 -0- 386,000 -0-
Amortization of stock compensation 3,853,000 -0- 2,003,000 -0-
Amortization of deferred charges 633,000 -0- 408,000 -0-
Financing fees 147,000 -0- 147,000 -0-
Recapitalization and due diligence costs 96,000 496,000 -0- 496,000
-----------------------------------------------------------------
Total expenses 20,906,000 1,804,000 9,119,000 1,032,000
-----------------------------------------------------------------
Net loss before income taxes (17,290,000) (1,720,000) (7,364,000) (1,017,000)
Deferred income tax recovery (2,065,000) -0- (780,000) -0-
-----------------------------------------------------------------
Net loss and comprehensive loss (15,225,000) (1,720,000) (6,584,000) (1,017,000)
=================================================================
NET LOSS PER SHARE $ (0.78) $ (0.25) $ (0.32) $ (0.12)
=================================================================
WEIGHTED AVERAGE SHARES OUTSTANDING 19,637,000 7,008,000 20,817,000 8,444,000
=================================================================
4
INTERNET SPORTS NETWORK, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(Unaudited)
Common
Stock and
Additional
Number Paid in Deferred Accumulated
Of Shares Capital Compensation Deficit Total
--------- ------- ------------ ------- -----
Balance at March 31, 1999 17,841,000 17,127,000 (449,000) (4,157,000) 12,521,000
Shares issued on acquisition of Ultimate
Sports Publishing 125,000 750,000 -0- -0- 750,000
Shares issued in acquisition of Innovation
Partners Inc. 616,000 4,066,000 -0- -0- 4,066,000
Shares issued for cash 1,053,000 1,708,000 -0- -0- 1,708,000
Shares issued for promotion rights 4,299,000 13,234,000 -0- -0- 13,234,000
Shares issued in exchange for service 50,000 88,000 -0- -0- 88,000
Shares issued for subscription receivable 534,000 294,000 -0- -0- 294,000
Options related to deferred compensation -0- 12,099,000 (12,099,000) -0- -0-
Options granted for services provided -0- 1,531,000 -0- -0- 1,531,000
Warrants issued for promotion and financing -0- 1,806,000 -0- -0- 1,806,000
Amortization of deferred compensation
Related to stock options -0- -0- 3,853,000 -0- 3,853,000
Share issuance costs -0- (102,000) -0- -0- (102,000)
Net loss -0- -0- -0- (15,225,000) (15,225,000)
--------------------------------------------------------------------------------
Balance at December 31, 1999 24,518,000 52,601,000 (8,695,000) (19,382,000) 24,524,000
--------------------------------------------------------------------------------
Less share subscription receivable (294,000)
----------------
Total Shareholders' Equity at December 31, 1999 24,230,000
----------------
5
INTERNET SPORTS NETWORK, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited) (unaudited)
Nine Months Ended Nine Months Ended
December 31, 1999 January 31, 1999
----------------- ----------------
OPERATING ACTIVITIES
Net loss $ (15,225,000) $ (1,720,000)
Adjustment to reconcile net loss to
net cash used in operating activities:
Depreciation 141,000 10,000
Amortization of purchased intangibles 5,590,000 -0-
Amortization of goodwill 2,065,000 -0-
Options granted for service 1,531,000 -0-
Amortization of stock compensation 3,853,000 -0-
Amortization of deferred charges 780,000 -0-
Shares issued for services 88,000 340,000
Deferred income tax recovery (2,065,000) -0-
Changes in other operating assets and liabilities:
(Increase) decrease in receivables (198,000) 26,000
(Increase) decrease in prepaid expenses (126,000) 25,000
Increase in prepaid royalties (5,000,000) -0-
Increase (decrease) in accounts payable (200,000) 11,000
Increase in accrued liabilities 800,000 88,000
Increase in deferred revenue 255,000 -0-
--------------------------------------
Net cash used in operating activities (7,711,000) (1,220,000)
--------------------------------------
INVESTING ACTIVITIES
Purchase of Ultimate Sports Publishing (860,000) -0-
Purchase of Sportsbuff (1,000,000) -0-
Cash acquired with Sportsbuff 36,000 -0-
Purchase of intangibles (60,000) -0-
Purchase of equipment (421,000) (11,000)
--------------------------------------
Net cash used in investing activities (2,305,000) (11,000)
--------------------------------------
FINANCING ACTIVITIES
Proceeds from sale of capital stock, net of share issuance costs
$ 102,000 (1998 - $ 4,000) 1,606,000 1,364,000
Proceeds from convertible promissory note 5,000,000 -0-
Proceeds from loan payable 1,250,000 -0-
Payment of loan payable (250,000) -0-
--------------------------------------
Net cash provided by financing activities 7,606,000 1,364,000
--------------------------------------
Net increase (decrease) in cash and cash equivalents (2,410,000) 133,000
Cash and cash equivalents:
Beginning of period 2,928,000 9,000
--------------------------------------
End of period $ 518,000 $ 142,000
======================================
6
INTERNET SPORTS NETWORK, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (CONT'D)
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS:
(unaudited) (unaudited)
Nine Months Ended Nine Months Ended
December 31, 1999 January 31, 1999
----------------- ----------------
INVESTING ACTIVITIES
Net assets of Ultimate Sports Publishing acquired for shares $ (750,000) -0-
Net assets of Sportsbuff acquired for shares (4,066,000) -0-
Goodwill on Sportsbuff (2,138,000) -0-
Deferred Tax on Sportsbuff 2,138,000 -0-
FINANCING ACTIVITIES
Shares issued on acquisition of Ultimate Sports Publishing 750,000 -0-
Shares issued on acquisition of Sportsbuff 4,066,000 -0-
Shares issued for subscription receivable 294,000 -0-
Deferred compensation 12,099,000 -0-
Shares issued for promotion rights 13,234,000 -0-
Cash interest paid $ 10 -0-
========================================
Cash taxes paid $ -0- -0-
========================================
7
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the three- and
nine-month periods ended December 31, 1999 are not necessarily
indicative of the results that may be expected for the year ended
March 31, 2000.
The balance sheet at March 31, 1999 has been derived from the
audited financial statements at that date but does not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statements.
The comparative figures shown in the consolidated statement of
operations and comprehensive loss and consolidated statement of
cash flows are for the periods ending January 31, 1999. The
comparative fiscal period started on May 1, 1998, while the
current fiscal year started on April 1, 1999, as a result of the
Company changing its year end from April 30 to March 31 as part of
the recapitalization in January of 1999. These comparative figures
are comparable to those that would be presented for the periods
ending December 31, 1998 as there is no significant seasonal
impact, except for the acquisition costs of $496,000 which relate
to transactions in January, 1999. The comparative results have not
been recast to December 31, 1998 as it is not practical, and would
not provide significant additional information.
The Company has incurred a loss of $15,225,000 for the nine months
ended December 31, 1999, expects to continue to incur losses into
the future and has a working capital deficiency as at December 31,
1999 of $1,490,000 after deducting the prepaid royalty amount.
These conditions raise substantial doubt regarding the Company's
ability to continue as a going concern. The Company's ability to
continue as a going concern is dependent upon, among other things,
the ability of the Company to raise additional financing. These
consolidated financial statements do not include any adjustments
to the amounts and classification of assets and liabilities that
might be necessary should the Company be unable to continue as a
going concern.
PURCHASED INTANGIBLES AND GOODWILL
Purchased intangibles consist primarily of software, licenses,
customer lists, trademarks and contest agreements. Purchased
intangibles of approximately $11,060,000 are stated net of total
accumulated amortization of $6,181 ,000 at December 31, 1999 in
the accompanying consolidated balance sheet. Purchased intangibles
are being amortized on a straight-line basis principally over two
years.
Goodwill of approximately $3,929,000 is stated net of total
accumulated amortization of $2,301,000 at December 31, 1999 in the
accompanying consolidated balance sheet. Goodwill is being
amortized on a straight-line basis principally over two years.
8
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES (CONT'D....)
EQUIPMENT
Equipment is recorded at cost. Amortization is provided over the
estimated useful life of the asset using the declining balance
basis at the following rates:
Computer software 100%
Office equipment and furniture 20%
Computer equipment 30%
NOTE 2. BUSINESS COMBINATIONS
Effective June 22, 1999, the Company acquired certain assets of
National Publisher Services consisting of the Ultimate Sports
Publishing division.("Ultimate Sports"). Ultimate Sports publishes
annual sports magazines.
Effective June 30, 1999, the Company acquired 100% of the shares
of Innovation Partners Inc, (d/b/a Sportsbuff), ("Sportsbuff").
The business of Sportsbuff is to conduct and administer sports
contest services for its clients.
The transactions are summarized as follows:
=============================================================================================
As at As at
June 22, 1999, June 30, 1999,
Ultimate Sports Sportsbuff
---------------------------------------------------------------------------------------------
Net assets acquired at fair values:
Working capital $ -0- $ (314,000)
Equipment -0- 36,000
Purchased intangibles 1,610,000 5,344,000
Goodwill -0- 2,138,000
Deferred income taxes -0- (2,138,000)
------------ -----------
$ 1,610,000 $ 5,066,000
------------ ------------
Funded by:
Cash $ 860,000 $ 1,000,000
Shares of common stock 750,000 4,066,000
----------- -----------
$ 1,610,000 $ 5,066,000
=============================================================================================
Purchased intangibles related to the acquisition of Sportsbuff
consists of developed contest software, licenses, participant
lists, customer lists, trademarks and domain names.
Purchased intangibles related to the acquisition of Ultimate
Sports consist of trademarks, customer contracts, client lists,
and domain names.
9
NOTE 3. EQUIPMENT
Equipment consists of the following:
==================================================================
DECEMBER 31,
1999
------------------------------------------------------------------
Computer equipment and software $ 428,000
Office equipment and furniture 144,000
--------------
572,000
Less accumulated depreciation (172,000)
--------------
Equipment, net $ 400,000
==================================================================
NOTE 4. DEFERRED CHARGES AND PREPAID ROYALTIES
BEER.COM
On August 1, 1999, the Company entered into a five year agreement
for the promotion rights to be the exclusive contest provider for
Beer.com. In exchange for this exclusive agreement, the Company is
granting Beer.com 1,000,000 common shares over the five year term.
All 1,000,000 shares have been placed in escrow. 200,000 shares
are owing at the start of each year of the contract, and
distributed to Beer.com on each anniversary date of the contract.
The minimum share obligation under this agreement (200,000 shares)
have been recorded at the market value of the shares as at August
1, 1999 ($6.75 per share) as a deferred charge, and is being
amortized over a one year period.
SPORTSLINE.COM
On December 21, 1999, the Company entered into a four year
agreement for the promotion rights for services for
SportsLine.com, Inc. ("SportsLine"). In exchange for this
agreement, the Company has granted SportsLine 4,099,000 common
shares, and a Warrant to acquire up to 1,033,000 common shares at
an exercise price of $2.90 per share. The shares have been
recorded at the market value of the shares at December 21, 1999
($2.90 per share), and the Warrant has been recorded at its fair
value estimated at the date of grant using a Black-Scholes option
pricing model ($1.56 per share underlying the Warrant) as a
deferred charge, and is being amortized over the four year period.
Shares issued to Beer.com $ 1,350,000
Shares issued to SportsLine 11,884,000
Warrants issued to SportsLine 1,612,000
-----------
Total Deferred Charges 14,846,000
Less Accumulated Amortization (633,000)
-----------
$ 14,213,000
===========
The SportsLine Agreement calls for minimum royalty payments as
follows:
Year 1 $ 2,000,000
Year 2 3,000,000
Year 3 5,000,000
Year 4 7,000,000
-------------
$ 17,000,000
=============
10
NOTE 4. DEFERRED CHARGES AND PREPAID ROYALTIES (CONT'D)
The Company has prepaid the minimum royalty for each of the first
two years of the agreement, totaling $5,000,000. Amortization of
the current year's prepaid royalty is equal to the greater of (a)
the amount calculated by using a straight line amortization over
the twelve month period of the prepaid royalty, or (b) the amount
that would be otherwise payable based on the actual royalty
calculation. To the extent that the cumulative royalty payable for
the respective twelve month period exceeds the prepaid royalty
amount for that period the net excess is expensed in the period
and is due to SportsLine through an incremental cash payment
In the event that the Company raises over $10,000,000 through a
public sale of its common stock, the Company is required to pay
SportsLine an amount equal to the lesser of (a) the next 12 month
minimum royalty amount, or (b) 20% of the proceeds from the public
sale of common stock. Any such payment will be treated as a
prepayment towards the minimum royalty amounts payable.
NOTE 5. LOAN PAYABLE
The loan payable is for a principal amount of $1,000,000 with
interest calculated at 10% per annum. The loan is unsecured, and
the principal and accrued interest are due on March 31, 2000.
NOTE 6 CONVERTIBLE PROMISSORY NOTE
On December 21, 1999 the Company issued a Convertible Promissory
Note ("Note") for $5,000,000, convertible at the holders option
into common stock of the Company at a conversion price of $2.90
per share. The Note bears interest at the rate of 5% per annum,
payable at maturity. The note has a term of four years. The Note
can be converted into shares at the Company's option following a
public offering providing gross proceeds to the Company of not
less than $20,000,000, having an initial per share price to the
public of not less than $5.00 per share.
NOTE 7. SHAREHOLDERS' EQUITY
COMMON STOCK COMMON
NUMBER STOCK AND
OF SHARES PAID-IN CAPITAL
(`000's) ($000's)
---------------------------------------------------------------------------------------------
BALANCE MARCH 31, 1999 17,841 17,127
Shares issued for cash 1,053 1,708
Shares issued for subscription receivable 534 294
Shares issued on acquisition of Sportsbuff 616 4,066
Shares issued on acquisition of Ultimate Sports 125 750
Shares issued in exchange for promotion rights 4,299 13,234
Shares issued for services 50 88
Deferred compensation related to stock options - 12,099
Options granted for services - 1,145
Warrants granted for promotion rights - 1,806
Warrants granted for service - 386
Share issuance costs - (102)
---------------------------------------------------------------------------------------------
BALANCE DECEMBER 31, 1999 24,518 52,601
=============================================================================================
11
NOTE 7. SHAREHOLDERS' EQUITY (CONT'D...)
STOCK OPTIONS
Generally, options are granted by the Company's Board of Directors
at an exercise price of not less than the fair market value of the
Company's common stock at the date of grant. Options are generally
granted with a term of five years from the date of issuance.
Option vesting is varied ranging from the date of issuance to 3
years.
STOCK OPTION ACTIVITY
The following table summarizes the Company's stock option
activity:
=======================================================================================
NUMBER OF WEIGHTED AVERAGE
SHARES (`000'S) EXERCISE PRICE
---------------------------------------------------------------------------------------
Balance at March 31, 1999 3,365 $ 1.52
Options granted and assumed 4,035 $ 2.36
Options cancelled (735) $ 4.15
Options exercised (575) $ 0.40
------
December 31, 1999 6,090 $ 1.87
=======================================================================================
The following table summarizes information about options
outstanding and options exercisable at December 31, 1999:
==============================================================================================
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
--------------------------------------------------------- -----------------------------------
WEIGHTED AVERAGE
OPTIONS REMAINING CONTRACTUAL OPTIONS WEIGHTED AVERAGE
EXERCISE PRICE OUTSTANDING LIFE EXERCISABLE EXERCISE PRICE
-------------- ----------- ---- ----------- --------------
$ 0.40 1,850 4.6 years 783 $ 0.40
1.75 2,785 3.8 years 2,455 1.75
3.00 580 4.8 years 117 3.00
3.25 20 2.7 years 20 3.25
4.00 335 4.6 years -0- 4.00
4.08 100 4.5 years 13 4.08
4.54 150 4.4 years -0- 4.54
4.76 15 4.5 years 5 4.76
5.00 25 1.4 years 25 5.00
6.00 204 4.6 years 66 6.00
6.25 1 0.9 years 1 6.25
7.00 25 1.4 years 25 7.00
----------------------------------------------------------------------------------------------
$ 0.40 - 7.00 6,090 4.2 years 3,510 $ 1.65
==============================================================================================
12
NOTE 7. SHAREHOLDERS' EQUITY (CONT'D...)
WARRANT ACTIVITY
The following table summarizes the Company's warrant activity:
========================================================================================
NUMBER OF WEIGHTED AVERAGE
WARRANTS (`000'S) EXERCISE PRICE
----------------------------------------------------------------------------------------
Balance at March 31, 1999 - -
Warrants granted 1,343 $ 3.17
Warrants cancelled - -
Warrants exercised - -
----- ----------
December 31, 1999 1,343 $ 3.17
=======================================================================================
The following table summarizes information about warrants
outstanding and warrants exercisable at December 31, 1999:
===============================================================================================
WARRANTS OUTSTANDING WARRANTS EXERCISABLE
-------------------- --------------------
WEIGHTED AVERAGE
WARRANTS REMAINING CONTRACTUAL WARRANTS WEIGHTED AVERAGE
EXERCISE PRICE OUTSTANDING LIFE EXERCISABLE EXERCISE PRICE
-------------- ----------- ---- ----------- --------------
$ 2.18 80 1.8 years 80 $ 2.18
2.90 1,063 2.0 years 1,063 2.90
5.00 200 1.9 years 200 5.00
-----------------------------------------------------------------------------------------------
$ 2.18 - 5.00 1,343 2.0 years 1,343 $ 3.17
===============================================================================================
DEFERRED COMPENSATION
The Company recorded aggregate deferred compensation of $8,695,000
during the nine months ended December 31, 1999. The amount
recorded represents the difference between the grant price and the
fair value of the Company's common stock for shares subject to
options granted during the period. Options granted below fair
market value and the associated weighted average exercise price
per share were 2,300 and $1.15 during the period. The amortization
of deferred compensation is charged to operations over the vesting
period of the options, which ranges from 15 months to 3 years.
Total amortization recognized in the nine months ending December
31, 1999 was $3,853,000
13
NOTE 7. SHAREHOLDERS' EQUITY (CONT'D...)
PRO FORMA DISCLOSURE
The Company follows the intrinsic value method in accounting for
its stock options. Had compensation cost been recognized based on
the fair value at the date of grant, the pro forma amounts of the
Company's net loss and net loss per share for the nine months
ended December 31, 1999 would have been as follows:
Net loss as reported $(15,225)
Net loss - pro forma $(15,936)
Basic and diluted loss per share as reported $ (0.78)
Basic and diluted loss per share - pro forma $ (0.81)
The fair value for each option granted was estimated at the date
of grant using a Black-Scholes option pricing model, assuming no
expected dividends and the following weighted average assumptions:
Average risk-free interest rates 5.0%
Average expected life (in years) 5.0
Volatility factor 98.5%
The weighted average fair value of options granted during the nine
month period was $5.08.
NOTE 8. INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income
tax purposes.
A reconciliation of the combined federal and state income tax
expense to the Company's income tax expense is as follows:
=============================================================================================
DECEMBER 31,
1999
---------------------------------------------------------------------------------------------
Tax recovery at combined federal and state rates $ (5,515,000)
Higher effective rate attributable to income taxes of other countries $ (1,782,000)
Tax effect of expenses that are not deductible for income tax purposes 5,832,000
Valuation allowance 1,465,000
-------------
$ -
=============================================================================================
14
NOTE 8. INCOME TAXES (CONT'D...)
At December 31, 1999, the Company had net operating loss
carryforwards of approximately $5,967,000. Substantially all of
these carryforwards relate to the Canadian subsidiaries and will
begin to expire at various times starting in 2004.
Significant components of the Company's deferred income tax assets
are approximately as follows:
=============================================================================================
DECEMBER 31,
1999
---------------------------------------------------------------------------------------------
Net operating loss carryforwards $ 5,967,000
============
Total deferred income tax assets $ 2,588,000
Valuation allowance for deferred income tax assets (2,588,000)
------------
Net deferred income tax assets $ -
=============================================================================================
A continuity of the valuation allowance is as follows:
=============================================================================================
DECEMBER 31,
1999
---------------------------------------------------------------------------------------------
Balance at March 31, 1999 $ 1,123,000
Valuation allowance on deferred income tax asset 1,465,000
-------------
Closing balance $ 2,588,000
=============================================================================================
Deferred income tax credits at December 31, 1999 reflect the
differences between the financial reporting and tax values of the
purchased intangibles. The deferred tax recovery in the
consolidated statement of operations and comprehensive loss
relates to the amortization of the deferred income tax liability
which resulted from the Company's acquisitions of Sportsmark,
Pickem and Sportsbuff.
NOTE 9. RELATED PARTY TRANSACTIONS
During the nine months ended December 31, 1999, the Company paid
or accrued approximately $46,000 of consulting fees for financial
services provided a former director of the Company. Total
compensation paid to directors for their duties as employees of
the Company during the nine months ended December 31, 1999 was
$95,000. Also, $16,000 of wages and $60,000 termination payment
was paid to the Company's former Chief Executive Officer and
former director.
15
NOTE 10. COMMITMENTS
The Company leases premises and office equipment under the terms
of operating leases. The leases provide for future minimum annual
lease payments as follows:
2000 $ 187
2001 73
2002 18
2003 5
2004 and thereafter -
---------------
$ 283
===============
NOTE 11. SEGMENT AND GEOGRAPHIC INFORMATION
The Company operates in two operating segments across domestic and
international markets, contest management and publishing.
International sales, including export sales from the United States
to Canada, represented approximately 14% of net sales for the nine
months ended December 31, 1999. No other foreign country or
geographic area accounted for more than 10% of net sales in any of
the periods presented. There were no transfers between geographic
areas during the period ended December 31, 1999. Capital assets
and purchased intangibles in the United States equal approximately
$50,000. The remaining capital assets and purchased intangibles
are in Canada.
The Company entered into the publishing segment through its
acquisition of Ultimate Sports Publishing in June, 1999 (Note 2).
There have been no material changes in assets relating to the
publishing segment since that time.
Contest
Management Publishing Total
---------- ---------- -----
Revenue $ 2,565,000 $1,051,000 $ 3,616,000
Amortization of purchased intangibles 5,172,000 419,000 5,591,000
Amortization of Goodwill 2,065,000 0 2,065,000
Expenses 3,346,000 774,000 4,120,000
----------- ----------- -------------
$(8,018,000) $ (142,000) (8,160,000)
----------- -----------
Corporate Expenses 9,130,000
-------------
Net loss before tax $(17,290,000)
=============
Contest management revenues are earned primarily from fees from
consumers who pay to enter sports contests (58% of contest
management sector revenues) and fees from companies that license
the contest applications (42% of contest management sector
revenues). Publishing revenues are earned primarily from newstand
sales (89% of publishing revenues) and advertising within the
publications (11% of publishing revenues).
16
PART I - FINANCIAL INFORMATION
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition and
Results of Operations contains forward-looking statements, which involve
risks and uncertainties. The Company's actual results could differ materially
from those anticipated in these forward-looking statements. Factors that
might cause or contribute to such differences include, among others,
competitive pressures, the growth rate of the Internet, constantly changing
technology and market acceptance of the Company's products and services.
The Company undertakes no obligation to publicly release the result of any
revisions to these forward-looking statements, which may be made to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events. The following discussion also should be read in
conjunction with the Company's Consolidated Financial Statements and Notes
thereto included elsewhere in this Report.
RECENT DEVELOPMENTS
In December 1999, the Company entered into a four-year agreement with
SportsLine.com, Inc. ("SportsLine") to develop contests and games for the
Fantasy Sports Channel of SportsLine's CBS SportsLine Web site. SportsLine.com,
Inc. (NASDAQ: SPLN) is at the leading edge of media companies providing
Internet sports content, community and e-commerce on a global basis.
SportsLine's content includes more than one million pages of multimedia sports
information, entertainment and merchandise. Founded in 1994 as SportsLine USA,
Inc., the Company changed its name to SportsLine.com, Inc. in November 1999.
Its flagship Internet sports service (http://cbs.sportsline.com) was renamed
CBS SportsLine in March of 1997 as part of an exclusive promotional and content
agreement with CBS Sports. SportsLine.com, Inc. produces the official league
Web sites for Major League Baseball, the PGA TOUR and NFL Europe League, and
serves as the primary sports content provider for America Online, Netscape and
Excite.
SportsLine invested $5 million in the Company in consideration for a
convertible promissory note (the "Note") delivered by the Company and which
is convertible into 1,722,240 shares of the Company's Common Stock, and
received an additional 4,098,742 shares of the Company's Common Stock
pursuant to a four-year Promotion Agreement. In addition, the Company will
make guaranteed minimum payments of $17 million to SportsLine over the four
year period of the Promotion Agreement, of which $5 million was paid upon
effectiveness of the Promotion Agreement, and ISN will share revenue from
advertising and promotions with regard to the CBS SportsLine Fantasy Channel.
The Company also issued to SportsLine a warrant (the "Warrant") initially
exercisable for up to 1,033,296 shares of Common Stock at a price of $2.90
per share. The Note and the Warrant are subject to anti-dilution protections.
Pursuant to the purchase agreement under which the note and warrant were
issued (the "Purchase Agreement"), the Company has agreed to fix the size of
its Board of Directors at seven members and to take all steps necessary to
elect or cause the election of two directors designated by the Reporting
Person, who initially are Mark Mariani and Andrew Sturner. The Purchase
Agreement also contains certain negative covenants which, among other things,
restrict the Company's power to issue or sell securities of the Company,
enter into any transaction which would require disclosure pursuant to Rule
404 of Regulation S-K under the Securities Act of 1933, merge the Company
with another entity, sell assets, acquire other businesses, liquidate or
dissolve the Company, create or fill a vacancy on the Board of Directors of
the Company, enter into a joint venture with another entity, or amend the
Company's Articles of Incorporation or Bylaws in certain respects. In
addition, the Purchase Agreement grants SportsLine, subject to certain
conditions, preemptive rights to subscribe for and purchase the same
percentage of the securities offered by the Company in an offering, as the
percentage of the outstanding securities of the Company held by the
SportsLine at the time of the offering. The Purchase Agreement also provides
SportsLine the right to require the Company to register under federal and
state securities laws its securities of the Company.
In December 1999, ISN entered into a three year agreement with Active Fitness
Communications Corp. to provide contests and games for Active Fitness's
destination site Actfit.com and its affiliated websites.
17
RESULTS OF OPERATIONS
OVERVIEW
ISN was originally incorporated on April 28, 1997 in Nevada for the purpose
of providing interactive, computer sports entertainment through the Internet.
The Company has a limited operating history on which to evaluate its
prospects. The risks, expense, and difficulties encountered by start up
companies must be considered when evaluating ISN's prospects.
The operating expenses of ISN cannot be predicted with certainty. They will
depend on several factors, including the amount of marketing expenses, the
acceptance of the Company's services in the market, competition for such
services, and the acquisition activities of the Company. Management may be
able to control the timing of such expenses in part by speeding up or slowing
down marketing development and distribution activities and acquisition
strategies.
From its inception in April 1997 to date, ISN has incurred costs associated
with the development of its internet sports entertainment products, probable
markets and business. ISN incurred costs for conducting test marketing for
its products and received revenues as a result. The test marketing consisted
of advertising, processing membership applications and analysis of responses.
During the period, ISN purchased computer and telecommunication equipment as
necessary to conduct its operations.
ISN financed its expenditures primarily through the sale of its common stock
and issuance of convertible debt. Since inception through December 31, 1999,
the company issued approximately 12,962,000 common shares for net cash
consideration of approximately $10,784,000, and $5,000,000 in convertible
debt.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The Company has incurred losses since inception and has an accumulated
deficit of $19,382,000 to December 31, 1999. The Company anticipates that it
will continue to generate financial losses for the forseeable future. In the
event the Company is unsuccessful in securing outside capital, it will be
required to curtail or cease operations altogether. Under United States
Generally Accepted Auditing Statements substantial doubt exists regarding the
ability of the Company to continue as a going concern.
It is the intention of management to raise the additional capital through the
sale of additional capital stock of the Company, although there can be no
assurance that ISN will be able to obtain such funds.
The Company's primary cash requirements are for operating activities and
acquisition activities. Cash used in operating activities for the 9 month
period ending December 31, 1999 was $7,711,000 (as compared to $1,220,000 for
the 9 month period ending January 31, 1999) related primarily to infrastructure
costs required to manage the continued growth of the Company and the
pre-payment of royalties to SportsLine.com totaling $5,000,000. The increase in
cash used in operating activities was due to the staffing of the operation to
grow the business. Total headcount as at January 31, 1999 was 9 as compared to
48 as at December 31, 1999. Cash used in acquisition activities for the 9 month
period ending December 31, 1999 was $1,860,000. Since inception, the Company
has funded its capital requirements by financing activities, primarily through
the sale of its equity securities, and convertible debt.
Capital expenditures (excluding acquisitions) during the 9 months ended
December 31, 1999 were $421,000 as compared to $11,000 for the 9 months ended
January 31, 1999. Capital expenditures were primarily for computer technology
to manage the contest management strategy. From inception to December 31,
1999 the Company has spent $496,000 on capital equipment. ISN has no
significant commitments to acquire equipment in the future. Overall, capital
expenditures, including those anticipated as a result of acquisition
activity, during the year ending March 31, 2000 are anticipated to
approximate $1,000,000.
The Company operates in an extremely competitive industry and it will require
substantial capital from external sources in order to complete the execution
of its business plan. The Company anticipates that it will continue to
generate financial losses for the foreseeable future. In the event the
Company is unsuccessful in securing outside
18
capital, it may be required to curtail or cease operations altogether. As a
result, substantial doubt exists regarding the ability of the Company to
continue as a going concern.
The Company's management believes that an additional $3,000,000 in funds and
the revenues generated by its operations will be sufficient to fund its
operations for the next twelve months under the current plan of operations.
Additional funding will be required for further acquisition activity,
depending on the cash component of the purchase price of any contemplated
acquisitions. It is expected that such funds will be obtained by the sale of
additional capital stock of the Company, although there can be no assurance
that ISN will be able to obtain such funds.
Beyond the next twelve month period, the Company will require working capital
to fund operations during the off peak months (June to August). Excluding
acquisition activity, the funds required would be approximately $2 million.
Any additional capital requirements would be due to acquisition activities,
or modifications to the current growth plans.
During the three month period ending December 31, 1999 the Company received
$1,000,000 for a promissory note which is due March 31, 2000. The note earns
interest at a rate of 10% per annum, and is unsecured. The Company also
repaid a $250,000 note payable during the quarter.
RESULTS OF OPERATIONS
AMORTIZATION. The purchased intangibles and goodwill before amortization
related to the acquisitions of Sportsmark Group, Pickem Sports, Ultimate
Sports Publishing and SportsBuff totaled $23,377,000. Amortization for the
nine months ending December 31, 1999, was $7,656,000. The purchased
intangibles and goodwill related to the acquisition of Ultimate Sports
Publishing and SportsBuff during the nine months ending December 31, 1999
totaled $9,092,000. The Company is amortizing purchased intangibles and
goodwill over 24 months. These intangibles include trademarks, software
licenses and intellectual properties.
The Company expects to continue to acquire companies and assets that can
benefit its business and subscriber base. Currently, ISN is reviewing
potential acquisition targets that could provide complementary games and
contests as well as new customers for the Company's existing games.
NINE MONTHS ENDED DECEMBER 31, 1999 (UNAUDITED) AS COMPARED TO THE NINE
MONTHS ENDED JANUARY 31, 1999 (UNAUDITED).
REVENUE. The Company generated revenue of $3,616,000 for the period ending
December 31, 1999 as compared to revenues of approximately $84,000 for the
period ending January 31, 1999. The increase in revenues was primarily
attributable to the inclusion of the operating results of Sportsmark,
Ultimate Sports Publishing, Sportsbuff and Pickem in the first half of
calendar 1999. Growth in revenue was also attributable to sales generated
by the increased sales staff.
OPERATING EXPENSES BEFORE AMORTIZATION AND OTHER NON-CASH CHARGES. Total
operating expenses before amortization and other non-cash charges were
$6,849,000 as compared to approximately $1,298,000 in the period ended
January 31, 1999, for an increase of $5,551,000. Approximately $3,064,000 of
this increase was attributable to the acquisitions of Sportsmark, Pickem
Sports, Ultimate Sports Publishing and SportsBuff. The overall increase is
described in more detail below:
PRIZES AND OTHER DIRECT COSTS. Expenses associated with providing prizes for
contests and other direct costs increased to $2,036,000 from approximately
$132,000 in the period ended January 31, 1999. Approximately $595,000 of the
increased costs in the current year were the result of publishing costs
associated with the magazine publications. A further $500,000 pertains to
development costs associated with additional content from Active Fitness for
the Sportsrocket.com site. The remaining increase is the result of the costs
associated with the direct operating costs of the contests, and prizing
commitments for the 1999-2000 National Football League, National Hockey
League and National Basketball Association season contests. Prize commitments
increased approximately $400,000 over the prior period, primarily for the
SportsBuff national football contest.
19
GENERAL AND ADMINISTRATIVE. Salaries and benefits increased $1,549,000 to
$1,790,000 from $241,000 in the nine month period ending January 31, 1999,
while consulting fees increased by $650,000 to $1,020,000 from $370,000 in
the prior year period. These increases were the result of additional
personnel and staff, mainly from the acquisitions of Sportsmark, Pickem
Sports, Ultimate Sports Publishing and SportsBuff, and consultants hired for
financial services, game development, web design and for other services.
Salaries and benefits for the nine months ended December 31, 1999 also
includes $110,000 in severance costs associated with the closing of ISN's
Vancouver offices. Advertising expenses decreased $24,000 to $299,000 from
$323,000 in the prior year period. This decrease is mainly due to a
significant initial promotion run by the Company in September and October
1998, and a shift in advertising strategy to utilize the free offline
newspaper space from our contests. Other general and administrative costs
increased by $1,473,000, which resulted from the increase in offices, staff
and operations. Travel and other expenses increased $300,000 to $405,000 as a
result of an increase in sales staff, increased sales efforts and financing
activities. Legal and accounting fees increased by $268,000 as a result of
costs associated with the preparation of the Company's Form 10 and the
agreement with SportsLine.com, Inc. Interest and bank charges increased by
$73,000 to $84,000 as a result of fees and interest on loan facilities.
Occupancy and telephone costs at December 31, 1999 were $234,000. Other
general and administrative costs were $232,000 for the nine months ending
January 31, 1999.
AMORTIZATION OF PURCHASED INTANGIBLES, GOODWILL AND OTHER. Amortization of
purchased intangibles was $5,590,000 and amortization of goodwill was
$2,065,000 for the nine months ended December 31, 1999 compared to no
amortization of such amounts in the prior year period. The amortization was
related to the purchases of Sportsmark, Pickem Sports, Ultimate Sports
Publishing and SportBuff. The Company is amortizing the cost of these
acquisitions over 24 months.
Depreciation was $141,000 in the nine months ended December 31, 1999 as
compared to $10,000 for the prior year. The increase is due to the
acquisition of equipment throughout the period.
The Company amortized $3,853,000 of costs related to stock based compensation
resulting from stock options granted to officers, employees and directors.
The compensation expense was calculated as the difference between the option
exercise price and the share price of the Company's common stock as reported
by the OTC/BB at the date of issuance. The options may be exercised at prices
between $0.40 to $6.00 and vest over periods ranging from 17 to 36 months.
The Company is amortizing the expense relating to the options over their
vesting periods. Also, the Company expensed $96,000 of acquisition costs
related to the purchase of SportsBuff and Ultimate Sports Publishing, as well
as due diligence costs associated with potential transactions that were not
completed.
The Company recognized a $1,531,000 expense for 800,000 stock options
granted to consultants in lieu of compensation for services provided to the
Company. This amount was calculated using the Black-Scholes options pricing
model. The options may be exercised between $4.00 and $5.00 per share.
NET LOSS FROM OPERATIONS. The Company experienced a loss of $15,225,000 after
the benefit of deferred taxes of $2,065,000 for the period ended December 31,
1999 as compared to a loss of $1,720,000 for the period ended January 31,
1999. Loss per share in the period ended December 31, 1999 was $ (.78)
compared to $ (.25) in the prior year period.
THREE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED) AS COMPARED TO THE THREE
MONTHS ENDED OCTOBER 31, 1998 (UNAUDITED).
REVENUE. The Company generated revenue of $1,755,000 for the three month
period ending December 31, 1999 as compared to revenues of approximately
$15,000 for the three month period ending January 31, 1999. The increase in
revenues was largely attributable to the inclusion of the operating results
of Sportsmark, Ultimate Sports Publishing, Sportsbuff and Pickem in the
current fiscal period, and growth as a result of increased sales staff.
OPERATING EXPENSES BEFORE AMORTIZATION AND OTHER NON-CASH CHARGES. Total
operating expenses before amortization and other non-cash charges were
$3,169,000 as compared to approximately $533,000 in the period ended January
31, 1999, for an increase of $2,636,000. Approximately $1,132,000 of this
increase
20
was attributable to the acquisitions of Sportsmark, Pickem Sports, Ultimate
Sports Publishing and SportsBuff. The overall increase is described in more
detail below:
PRIZES AND OTHER DIRECT COSTS. Expenses associated with providing prizes for
contests and other direct costs increased to $1,116,000 from $58,000 in the
period ended January 31, 1999. Approximately $500,000 of the increased costs
in the current year was the result of development costs associated with
additional content from Active Fitness for the Sportsrocket.com site. The
remaining increase is the result of the costs associated with the direct
operating costs of the contests, and ISN prizing commitments for the
1999-2000 hockey and basketball season contests. Prize commitments increased
approximately $100,000 over the prior period.
GENERAL AND ADMINISTRATIVE. Salaries and benefits increased $763,000 to
$869,000 from $106,000 in the three month period in the prior year, while
consulting fees increased by $180,000 to $504,000 from $324,000 in the prior
year period. These increases were the result of additional personnel and
staff, mainly sales and production staff and those employees from the
acquisitions of Sportsmark, Pickem Sports, Ultimate Sports Publishing and
SportsBuff, and consultants hired for financial services, game development,
and for other services. Salaries and benefits for the three months ended
December 31, 1999 also includes $88,000 in relocation costs associated with
moving certain employees to other locations. Advertising expenses increased
$51,000 to $71,000 from $20,000 in the prior year period. This increase is
due to the acquisitions of SportsBuff and Sportsmark, and mostly pertains to
the advertising of contests that ISN did not operate in the prior year. Other
general and administrative costs increased by $584,000, which includes
increased travel and other expenses which increased $139,000 to $149,000 as a
result of an increase in sales staff, increased sales efforts and financing
activities. Occupancy, telephone and legal and accounting costs for the three
months ending December 31, 1999 were $198,000. The majority of legal and
accounting fees relate to costs associated with preparing regulatory filings.
Interest expense and bank charges equaled $77,000 for the quarter, mostly
relating to financing fees for loans payable. Other general and
administrative costs were $25,000 for the three months ending January 31,
1999.
AMORTIZATION OF PURCHASED INTANGIBLES, GOODWILL AND OTHER. Amortization of
purchased intangibles was $2,150,000 and amortization of goodwill was
$780,000 for the three months ended December 31, 1999 compared to no
amortization of such amounts in the prior year period. The amortization was
related to the purchases of Sportsmark, Pickem Sports, Ultimate Sports
Publishing and SportBuff. The Company is amortizing the cost of these
acquisitions over 24 months.
Depreciation was $76,000 in the three months ended December 31, 1999 as
compared to $3,000 for the prior year. This increase is due to the
acquisition of equipment throughout the year.
The Company amortized $2,003,000 of costs related to stock based compensation
resulting from stock options granted to officers, employees and directors.
The compensation expense was calculated as the difference between the option
exercise price and the share price of the Company's common stock as reported
by the OTC/BB at the date of issuance. The options may be exercised at prices
between $0.40 to $6.00 and vest over periods ranging from 17 to 36 months.
The Company is amortizing the expense relating to the options over their
vesting periods. In the period ending January 31, 1999 the Company expensed
$496,000 of acquisition costs related to the recapitalization of the Company
through the transaction with Birchtree Capital.
The Company recognized a $386,000 expense for 200,000 stock options granted
to consultants in lieu of compensation for services provided to the Company.
This amount was calculated using the Black-Scholes options pricing model. The
options may be exercised at $5.00 per share.
NET LOSS FROM OPERATIONS. The Company experienced a loss of $6,584,000 after
the benefit of deferred taxes of $780,000 for the three month period ended
December 31, 1999 as compared to a loss of $1,017,000 for the three month
period ended January 31, 1999. Loss per share in the period ended December
31, 1999 was $ (.32) compared to $ (.12) in the prior year period.
TOTAL ASSETS. The total assets of ISN as of December 31, 1999 totaled
$35,726,000 compared to $16,715,000 at March 31, 1999. The increase in total
assets was attributable to the increase in deferred charges as a result of
the shares issued to SportsLine and Interbrew for their respective contracts,
which
21
resulted in a net in crease in assets of $14,213,000. Further increase in
assets is a result of the pre-payment of $5,000,000 related to the minimum
royalty owing for the next two years under the terms of the SportsLine
agreement. In addition, purchased intangibles and goodwill of $9,092,000
resulting from the acquisition of SportsBuff and Ultimate Sports Publishing
have impacted the assets of the Company since March 31, 1999. These increases
are offset by operating losses and amortization costs during the period.
PART I - FINANCIAL INFORMATION
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
NOT APPLICABLE
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
To the knowledge of management, there is no material litigation pending
or threatened against the Company.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
RECENT SALES OF UNREGISTERED SECURITIES.
In December, 1999, shares totaling 4,098,742 were issued in accordance
with the agreement with SportsLine. See "Recent Developments".
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS:
Exhibit 3(ii) - Amended Bylaws of Internet Sports Network,
Inc.
Exhibit 10 - Agreement with SportsLine.com, Inc. Attached
as Exhibits as follows:
Exhibit 10(a): Purchase Agreement
Exhibit 10(b): Note
Exhibit 10(c): Warrant
Exhibit 10(d): Letter Agreement
Exhibit 27 - Financial Data Schedule
(b) REPORTS ON FORM 8-K:
8-k filed on November 29, 1999, regarding the resignation
of Stephen Sadler and Albert Gnat from the board of
directors
8-k filed on December 10, 1999, regarding the resignation
of Ken Crema as chief executive officer.
8-k filed on December 10, 1999, regarding the resignation
of David Samuel from the board of directors.
22
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
INTERNET SPORTS NETWORK, INC.
(Registrant)
Date: February 11, 2000 /s/ Andy DeFrancesco
------------------------------------
ANDY DEFRANCESCO
Chairman and President
23