Edgar Filing: TEAM SPORTS ENTERTAINMENT INC

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-QSB

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

For Quarter Ended: June 30, 2002

Commission File Number: 0-23100

TEAM SPORTS ENTERTAINMENT, INC.
(Exact name of small business issuer as specified in its charter)

Delaware 22-2649848
(State of Incorporation) (IRS Employer ID No)

13801 Reese Blvd West, Suite 150, Huntersville, NC 28078
(Address of principal executive office)

(704) 992-1290
(Issuer's telephone number)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ].

The number of shares outstanding of registrant's common stock, par value $.0001
per share, as of June 30, 2002 was 62,568,312.

Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X].

TEAM SPORTS ENTERTAINMENT, INC. AND SUBSIDIARY

INDEX

Page
No.
Part I. Unaudited Financial Information

Item 1.Condensed Consolidated:
Balance Sheet - June 30, 2002 3

Statements of Operations - 4
Three and Six Months Ended June 30, 2002 and 2001 and Development Stage,
from inception (May 15, 2001), through June 30, 2002

Statement of Stockholders' Equity - 5
Six Months ended June 30, 2002

Statements of Cash Flows - 6
Three and Six Months Ended June 30, 2002 and 2001 and Development Stage,
from inception (May 15, 2001), through June 30, 2002

Notes to Financial Statements - 7-10
Six Months ended June 30, 2002 and 2001

Item 2.Managements Discussion and Analysis of Plan of Operation 11-14

Part II. Other Information 15-16

TEAM SPORTS ENTERTAINMENT, INC. AND SUBSIDIARY

Condensed Consolidated Balance Sheet
June 30, 2002
(Unaudited)

Assets

Current assets
Cash and cash equivalents ............................ $ 272,563
Marketable equity securities ......................... 27,142
Inventory ............................................ 2,033,125
Prepaid expenses and other assets .................... 112,500

------------
Total current assets ................................... 2,445,330
Property and equipment:
Race car designs and manufacturing equipment ......... 1,673,400
Office furniture and computer equipment .............. 154,274
------------
1,827,674
Less accumulated depreciation ........................ (19,857)
------------
Net property and equipment ......................... 1,807,817
Goodwill, net .......................................... 2,810,627

------------
$ 7,063,774
============

Liabilities and Stockholders' Equity

Current liabilities
Accounts payable and accrued expenses ................ $ 324,111
Current portion of capital lease payable ............. 38,382
Deferred revenue ..................................... 100,000
------------
Total current liabilities .............................. 462,493
Capital lease payable, less current portion ............ 6,857

Stockholders' equity
Preferred stock; $2.75 par value; authorized 2,000,000
shares; no shares issued and outstanding ........... -
Common stock, $.0001 par value; authorized 500,000,000
shares; issued and outstanding 62,568,312 shares .... 6,257
Paid-in capital ...................................... 15,571,214
Accumulated deficit .................................. (8,983,047)
------------
Total stockholders' equity ............................. 6,594,424
------------
$ 7,063,774
============

TEAM SPORTS ENTERTAINMENT, INC. AND SUBSIDIARY

Condensed Consolidated Statements of Operations
Three and Six Months Ended June 30, 2002 and 2001 and Development Stage
fromInception (May 15,2001) through June 30, 2002
(unaudited)

From inception
(5/15/2001)
through
Three Months Ended June 30, Six Months Ended June 30, June 30, 2002
2002 2001 2002 2001 (Note A)

Sales and revenues ................................ $ - $ 7,945 $ - $ 28,31$ -
Cost of goods sold ................................ - 3,096 - 9,536 -
------------ ------------ ------------ ------------ ------------
Gross profit .................................... - 4,849 - 18,774 -
Selling, general and administrative
expense ......................................... 1,486,447 329,684 2,256,411 436,857 3,062,459
------------ ------------ ------------ ------------ ------------
Loss from operations .......................... (1,486,447) (324,835) (2,256,411) (418,083) (3,062,459)
Other income (expense):
Interest and other income ....................... 3,031 28,210 12,676 31,099 5,735
Interest expense ................................ (4,343) - (6,148) - (8,180)
Unrealized gain (loss) on marketable
equity securities ............................. (858) (8,000) (16,858) 68,000 -
------------ ------------ ------------ ------------ ------------
Total other income ............................ (2,170) 20,210 (10,330) 99,099 (2,445)
------------ ------------ ------------ ------------ ------------
Loss before income taxes and
discontinued operations ......................... (1,488,617) (304,625) (2,266,741) (318,984) (3,064,904)
Income tax expense ................................ - - - - -
------------ ------------ ------------ ------------ ------------
Loss from continuing operations .................. (1,488,617) (304,625) (2,266,741) (318,984) (3,064,904)
------------ ------------ ------------ ------------ ------------
Discontinued operations:
Earnings (loss) from operations of
discontinued operations ....................... - 572 - (1,380,770) -

------------ ------------ ------------ ------------ ------------
Earnings (loss) from discontinued
operations ..................................... - 572 - (1,380,770) -
------------ ------------ ------------ ------------ ------------
Net earnings (loss) .............................. $ (1,488,617) $ (2,266,741) $ (1,699,754) $ (3,064,904)
============ ============ ============ ============ ============
Net earnings (loss) per share,
basic and diluted
Continuing operations .......................... $ (0.02) $ (0.04) $ (0.01) $ (0.05)
Discontinued operations ........................ - - - (0.03) -
------------ ------------ ------------ ------------ ------------
$ (0.02) $ (0.01) $ (0.04) $ (0.04) $ (0.05)
============ ============ ============ ============ ============

Weighted average shares outstanding
Basic and diluted .............................. 62,568,312 46,639,141 62,518,588 38,846,832 62,465,968
============ ============ ============ ============ ============

See accompanying notes to condensed consolidated financial statements

TEAM SPORTS ENTERTAINMENT, INC. AND SUBSIDIARY

Condensed Consolidated Statement of Stockholders' Equity
Six Months Ended June 30, 2002
(Unaudited)

Stock
Common Stock Paid-in Subscription Accumulated
Shares Par Value Capital Receivable Deficit Total

Balance, December 31, 2001 ..... 62,468,312 $ 6,247 $15,533,724 $ (350,000) $(6,716,306) $ 8,473,665

Exercise common stock warrants . 100,000 10 37,490 - - 37,500
Collection of stock subscription - - - 350,000 - 350,000
Net loss ....................... - - - - (2,266,741) (2,266,741)
----------- ----------- ----------- ----------- ----------- -----------
Balance, June 30, 2002 ......... 62,568,312 $ 6,257 $15,571,214$ - $(8,983,047) $ 6,594,424
=========== =========== =========== =========== =========== ===========

See accompanying notes to condensed consolidated financial statements.

TEAM SPORTS ENTERTAINMENT, INC. AND SUBSIDIARY

Condensed Consolidated Statements of Cash Flows
Six Months Ended June 30, 2002 and 2001 and Development Stage
from Inception (May 15, 2001), through June 30, 2002
(Unaudited)
From inception
(5/15/2001)
through
June 30, 2002
2002 2001 (Note A)

Cash flows from operating activities

Net earnings (loss) ......................................... $(2,266,741) $(1,699,754) $(3,064,904)
Adjustments to reconcile net earnings (loss) to net
cash used by operating activities:
Loss from discontinued operations, net of tax ............. - 1,380,770 -
Depreciation and amortization ............................. 12,789 26,150 142,062
Unrealized loss (gain) from marketable securities ......... 16,858 (68,000) -
Common stock issued for services .......................... - 15,000 -
Change in assets and liabilities (excluding
effects of acquisitions):
Accounts receivable ..................................... - 225 -
Inventory ............................................... (2,033,125) 7,990 (2,033,125)
Prepaid expenses and other assets ....................... (62,500) 6,824 -
Accounts payable and accrued expenses ................... (538,155) (90,343) 97,120
Deferred revenue ........................................ 100,000 - -
----------- ----------- -----------
Net cash used by operating activities ....................... (4,770,874) (421,138) (4,858,847)
----------- ----------- -----------

Cash flows from investing activities
Collections of notes receivable - officer ................. - 226,331 -
Acquisition of Maxx Motorsports, Inc., net of cash acquired - (45,213) 1,290
Proceeds from short-term investments ...................... - 133,669 -
Capital expenditures ...................................... (2,276) (6,570) (1,748,457)
----------- ----------- -----------
Net cash provided by (used in) investing activities ......... (2,276) 308,217 (1,747,167)
----------- ----------- -----------

Cash flows from financing activities
Proceeds from exercise of warrants ........................ 37,500 - -
Proceeds from issuance of common stock .................... - 7,244,250 -
Collection of notes receivable ............................ 350,000 240,000 -
Funds advanced from parent ................................ - - 6,825,971
Repayment of capital lease obligation ..................... (17,532) - (30,457)
Funds transferred from (to) discontinued operations ....... - 7,216 -
----------- ----------- -----------
Net cash provided by financing activities ................... 369,968 7,491,466 6,795,514
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents from
continuing operations ..................................... (4,403,182) 7,378,545 189,500
Cash and cash equivalents, beginning of period
from continuing operations ................................ 4,675,745 - -
----------- ----------- -----------
Cash and cash equivalents, end of period .................... $ 272,563 $ 7,378,545 $ 189,500
=========== =========== ===========

See accompanying notes to condensed consolidated financial statements.

TEAM SPORTS ENTERTAINMENT, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
Six Months Ended June 30, 2002 and 2001
(Unaudited)

A. ACCOUNTING POLICIES

The financial statements included in this report have been prepared by
Team Sports Entertainment, Inc. (the "Company" or "Team Sports")
pursuant to the rules and regulations of the Securities and Exchange
Commission for interim reporting and include all adjustments
(consisting only of normal recurring adjustments) that are, in the
opinion of management, necessary for a fair presentation. These
financial statements have not been audited.

Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles
generally accepted in the United States have been condensed or omitted
pursuant to such rules and regulations for interim reporting. The
Company believes that the disclosures contained herein are adequate to
make the information presented not misleading. However, these financial
statements should be read in conjunction with the financial statements
and notes thereto included in the Company's Annual Report for the year
ended December 31, 2001, which is included in the Company's Form 10-KSB
for the year ended December 31, 2001. The financial data for the
interim periods presented may not necessarily reflect the results to be
anticipated for the complete year.

Certain reclassifications of the amounts presented for the comparative
period have been made to conform to the current presentation.

The consolidated financial statements include the accounts of Team
Sports and its wholly owned subsidiary, Maxx Motorsports, Inc. ("Maxx")
and its wholly owned subsidiary, Team Racing Auto Circuit, LLC
("TRAC"). All significant intercompany balances and transactions have
been eliminated in consolidation. Maxx, through its wholly owned
subsidiary, TRAC, plans to own, operate and sanction an automotive
racing league designed to provide content for television and tracks
while expanding the existing base of racing fans. Accordingly, the
operations of Maxx and TRAC are presented as those of a development
stage enterprise, from its inception, May 15, 2001, as prescribed by
Statement of Financial Accounting Standards No. 7, "Accounting and
Reporting by Development Stage Enterprises." The separate operations of
Team Sports are not included as a development stage enterprise. The
Company follows the AICPA SOP 98-5, "Reporting on the Costs of Start-Up
Activities" in accounting for its start-up activities.

On May 15, 2001, Team Sports changed its name from Logisoft Corp. to
Team Sports Entertainment, Inc.

On May 15, 2001 the Company acquired all of the common stock of Maxx
Motorsports, Inc., a South Carolina corporation, in a tax-free stock
exchange for 7,750,000 shares of the Company's common stock. In
addition, as a part of this agreement, the Company issued 3,300,000
shares of its common stock in exchange for $450,000 of Maxx's
liabilities and other obligations to third parties that were
instrumental to the transaction. In addition, the Company completed the
sale of its wholly owned subsidiaries, Logisoft Computer Products Corp.
("LCP") and eStorefronts.net Corp. ("eStorefronts"), who created global
and localized Internet solutions for both traditional and pure
e-business companies, to a group of its shareholders in exchange for
12,000,000 shares of the Company's common stock, which were cancelled.
The operations from these business segments have been classified as
discontinued operations in the accompanying financial statements.

INVENTORY. Inventory consists of the costs incurred on the Racing Car
Design and Construction Agreement with Riley & Scott Race Car
Engineering and other related costs. Costs are stated at the lower of
cost or market on a first-in, first-out basis.

REVENUE. Recognition of revenue from race sanction agreements is
deferred until the event occurs and is recognized ratably over the
period covered by the agreement.

B. RECENTLY ADOPTED ACCOUNTING STANDARDS

On January 1, 2002, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 141, "Business Combinations" and SFAS
No. 142, "Goodwill and Other Intangible Assets." As a result, the
Company stopped recording the amortization of goodwill as a charge to
earnings during the first quarter of 2002. In addition, the Company is
required to conduct an annual review of goodwill and intangible assets
for potential impairment. The Company is in the development stage and
accordingly utilized projections from its business plan in order to
complete its review and, based upon this review did not have to record
a charge to earnings for an impairment of goodwill as a result of these
new standards.

Effective January 1, 2002, the Company also adopted SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets," which
replaces SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and Long-Lived Assets to be Disposed Of." SFAS No. 144 provides
updated guidance concerning the recognition and measurement of an
impairment loss for certain types of long-lived assets, expands the
scope of a discontinued operation to include a component of an entity
and eliminates the exemption to consolidation when control over a
subsidiary is likely to be temporary. The adoption of this new standard
did not have a material impact on the Company's financial position,
results of operations or cash flows.

C. INVENTORY AND COMMITMENTS

On October 22, 2001, TRAC entered into a Racing Car Design and
Construction Agreement with Riley & Scott Race Car Engineering. The
agreement required payments aggregating $1,515,000 during Phase I,
which was 23 weeks, and included design, tooling, prototype
construction and aero tooling. Phase II of the agreement commenced
after completion of Phase I and was planned to be completed in 58
weeks. Phase II was based upon production of 100 Racing Cars, at a cost
of approximately $109,000 each, plus the cost of engines. The agreement
also provides for the contractor to be the sole provider of most repair
service. Phase I of the agreement was completed during March 2002 and
Phase II of the agreement commenced in April 2002. At June 30, 2002,
the Company had incurred total costs of $2,033,125, which amount is
included in inventory, for cars, engines and associated equipment, of
which amount, $1,768,125 was paid and $265,000 was included in accounts
payable at June 30, 2002. See "Note E - Subsequent Events."

D. RELATED PARTY TRANSACTIONS

During the six months ended June 30, 2002, the Companies had various
transactions with related parties, primarily its board members and
officers. The following is a summary of those transactions:

Consulting expenses ............. $900,502
Director fees ................... 51,000
Reimbursed aircraft expenses .... 60,491
Deferred revenue for Team Atlanta 100,000

E. SUBSEQUENT EVENTS

As of August 14, 2002, the Company had approximately $1.8 million in
accounts payable and less than $20,000 in cash. Of the $1.8 million in
accouunts payable, $1.5 million relates to the production of the TRAC
racing cars. In the event TRAC's inaugural season is 2004, the car
production payments would be resheduled. The Company has been
seeking to raise additional cash, as debt or equity, to fund its
operations, but to date has been unsuccessful. As a result of
non-payment by the Company, Riley & Scott has stopped production of
TRAC's racing cars. The Company will continue to seek to raise cash to
continue its operations and complete its business plan, but there can
be no assurances it will be able to do so. If the Company is unable to
raise the required cash in the next few weeks, it may be forced to
terminate its operations and not continue as a going concern.
Even if the Company is successful in raising the required funds, it may
be forced to delay its races until the 2004 season.

On August 6, 2002 the Company announced that Mr. Miller ceased serving
as both the Company's Chief Executive Officer and Director. Although
the terms of his departure have not been resolved, Mr. Miller retained
the right to purchase Team Atlanta, subject to the completion and
acceptance of definitive purchase agreements, as well as other
ancillary matters.

TRAC is presently negotiating with a national network to televise its
races. There are numerous material issues to be resolved in the
negotiations and there can be no assurances that an agreement will be
reached.

On August 16, 2002 the Company received notice that Mr. Pritchett
resigned his position as both the Company's President and Director.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION

From time to time, the Company may publish forward-looking statements
relative to such matters as anticipated financial performance, business
prospects, technological developments and similar matters. The Private
Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements. All statements other than statements of
historical fact included in this section or elsewhere in this report
are, or may be deemed to be, forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Exchange Act of 1934. Important factors that could cause actual
results to differ materially from those discussed in such
forward-looking statements include, but are not limited to, the
following: the Company's current liquidity crisis as described below;
changes in the economy or in specific customer industry sectors;
changes in customer procurement policies and practices; changes in
product manufacturer sales policies and practices; the availability of
product and labor; changes in operating expenses; the effect of price
increases or decreases; the variability and timing of business
opportunities including acquisitions, alliances, customer agreements
and supplier authorizations; the Company's ability to realize the
anticipated benefits of acquisitions and other business strategies; the
incurrence of debt and contingent liabilities in connection with
acquisitions; changes in accounting policies and practices; the effect
of organizational changes within the Company; the emergence of new
competitors, including firms with greater financial resources than the
Company; adverse state and federal regulation and legislation; and the
occurrence of extraordinary events, including natural events and acts
of God, fires, floods and accidents.

On May 15, 2001, the Company completed the acquisition of Maxx. Maxx,
through its wholly owned subsidiary, TRAC plans to develop, own,
operate, and sanction an automotive racing league (the "League")
designed to provide content for television and tracks while expanding
the existing base of racing fans. TRAC will initially consist of
multi-car teams, strategically positioned in major North American
television markets located near major motorsport venues. Each team will
represent the city or state where it is located. The initial TRAC
racing season, planned to start in the second quarter of 2003, will
consist of a regular season race schedule, an all-star race, and a
Championship Race. TRAC will incorporate the use of aerodynamically
similar cars, fuel-injection engines and other innovative competition
standards intended to increase parity among the teams without
diminishing the entertainment value.

TRAC's business plan contemplates entering into Operating Agreements
with up to ten third parties (the "Local Operators") to be
identified by TRAC with respect to the local operations of a TRAC
racing team but reserves the right to operate one or more teams
itself. TRAC's liquidity crisis imperils its business

plan,as discussed below. Each Local Operator will pay a fee to TRAC to
obtain the right to operate the team in its market. TRAC also hopes to
generate revenues from national television, radio and other media
agreements (including rights fees and/or revenue sharing from sales of
advertising time), sales of national corporate sponsorships for the
League and for League events (such as the Championship Race), sales of
sponsorships of the teams for the races and license fees from sales of
officially licensed merchandise. Finally, TRAC hopes to receive fees
from additional operators to obtain the right to operate additional
teams that may be organized beyond the original 10 teams ("expansion
fees"). In addition to the rights fee payable to TRAC, TRAC expects to
require each Local Operator to bear substantially all local expenses
of operating the team, including the costs of all personnel (other
than drivers) necessary to operate the team; drivers will be employees
of TRAC and assigned to the teams. TRAC expects to enter into a lease
for each racing venue. TRAC expects to require the Local Operator to
be responsible for performing substantially all local operations of
the team, including presenting its home races, marketing the team and
selling tickets for the races, maintenance and repair of the cars, and
payments under the leases for its racing venue. The rights to all
local and national revenues will be owned by TRAC but the Local
Operators will be entitled to retain all or a significant portion of
certain local revenues (e.g., local ticket sales and local
sponsorships) and to share in certain national revenues (e.g.,
television and radio licensing fees, national sponsorship and
merchandise licensing revenue) and in the expansion fees paid to TRAC.

Through standardization of racing cars, TRAC hopes to create a racing
environment in which each car is capable of winning and the fans will
be focused on drivers, race-day strategies and crew performance,
rather than technological advantages. We expect that our races will be
shortened from the 4-5 hour window of current stock car races to a
window that is more consistent with traditional team sports. Our
business plan contemplates that cars will be based on silhouettes of
popular American sport cars, will be approximately 900 pounds lighter
than a NASCAR Winston Cup car and will have considerably more
down-force, which should result in better handling, more passing and
more intense racing than the other forms of oval-based stock car
racing.

TRAC hopes that certain characteristics of its league will tap into
a new potential fan base for motorsports.The traditional stock car fan
base is less than 20% of the U.S. population, is generally
concentrated in rural areas of the United States and has lower income
levels than the fans of major team sports. TRAC's league format will
put focus on city/regional affinities and provide a business model not
currently present in motorsports. We expect that our marketing and
positioning efforts, our competitive standards, our visually appealing
cars, and our business model should appeal to a portion of the broader
audience of sports fans, which generally is more affluent and more
appealing to national advertisers than the traditional stockcar
motorsports audience.

Our cars have been designed and developed by Riley & Scott Race Car
Engineering as described below, and the prototypes have now been
completed. As part of the development process our cars have been
tested twice at the Langley Air Force Full Scale Wind Tunnel. The cars
have also been tested successfully on multiple oval tracks and
successfully crash-tested at C.A.P.E. in Indianapolis, Indiana. We
have not yet formalized any definitive Operating Agreements with any
team owners, although we have signed a non-binding letter of intent
for Team Carolina and a letter of agreement with William Miller to own
and operate Team Atlanta. The Company has also signed a contract with
Moag & Company, an experienced sports team broker, to seek potential
owners of the remaining teams.

TRAC announced in April 2002 an agreement in principle with Speedway
Motorsports to race at five of their facilities. If team owner/operator
agreements are entered into for ten markets, TRAC's inaugural season is
expected to include two events each at Atlanta Motor Speedway, Bristol
Motor Speedway, Las Vegas Motor Speedway, Lowe's Motor Speedway in
Charlotte and Texas Motor Speedway in Fort Worth. The remaining five
locations will be announced when arrangements have been completed.

There can be no assurance that TRAC will be successful in entering into
Operating Agreements with 10 Local Operators, in entering into a
national television contract on satisfactory terms or in launching in
2003. See below.

In October 2001, the Company entered into an agreement with one of
motorsports' most respected design and manufacturing companies to
develop the race cars to be used during TRAC's first season. Riley &
Scott Race Car Engineering, the company that has produced championship
designs in virtually every major form of motorsports, will design and
manufacture approximately 100 cars at their manufacturing facility in
Indianapolis, Indiana. The cars will be high-performance, muscle cars
designed to race competitively on a variety of oval tracks. The cars
will be designed with high safety standards and will be designed
distinctively for the purpose of creating visual appeal to attract a
broader demographic audience to stock car racing. The agreement between
TRAC and Riley & Scott required payments aggregating approximately
$1,515,000 during Phase I, which was 23 weeks and included design,
tooling, prototype construction and aero tooling. Phase II of the
agreement commenced after completion of Phase I and was planned to be
completed within 58 weeks. Phase II was based upon production of 100
racing cars, at a cost of approximately $109,000 each, plus the cost of
engines. TRAC has the right, by notice to Riley & Scott, to reduce the
number of cars to be produced during Phase II, but at an increased
price per car. The agreement also provides for Riley & Scott to be the
sole provider of most major repair services. Phase I was financed by
the Company's cash on hand; Phase II was expected to be funded by cash
on hand and fees expected to be received under Operating Agreements
expected to be entered into with Local Operators.

During March 2002, TRAC completed payment to Riley & Scott for Phase I
of the agreement. Prototypes of the three cars successfully completed
their first track testing at Indianapolis Raceway Park on April 16,
2002 and the prototypes were unveiled to the public on April 24, 2002.
Phase II of the agreement commenced during April 2002 and at June 30,
2002, costs aggregating $2,010,781 for cars and engines had been
incurred. Of this amount, $265,000 is included in accounts payable at
June 30, 2002 and the balance has been paid. However, as a result of
the Company's lack of cash as described below, the Company has fallen
further behind in payments to Riley & Scott and as a result Riley &
Scott has stopped production of TRAC's cars.

During the six months ended June 30, 2002, the Company used $4,770,874
in cash flow in their operating activities; investing activities used

$2,276 in cash flow; and financing activities provided $369,968 in cash
flow, resulting in a net decrease in cash of $4,403,182, leaving a cash
balance of $272,563 at June 30, 2002. During the quarter ended June 30,
2002, the Company made payments of $2,010,781 on Phase II of the
agreement with Riley & Scott, including payments for engines.

Selling, general and administrative expense includes a charge for
$480,000 which is the amount the Company had prepaid Mr. Miller for
compensation for the ten month period beginning July 2002. As a result
of Mr. Miller's departure from the Company, it is presently
evaluating its options to pursue return of a portion of the prepayment.

The Company has been seeking to raise additional cash,as debt or
equity, to fund its operations, but to date has been unsuccessful.
As a result of non-payment by the Company, Riley & Scott has stopped
production of TRAC's racing cars. The Company will continue to
seek to raise cash to continue its operations and complete its business
plan, but there can be no assurances it will be able to do so. If the
Company is unable to raise the required cash in the next few weeks,
it may be forced to terminate its operations. Even if the Company
is successful in raising the required funds, it may be forced to
delay its races until the 2004 season.

The Company has included $100,000 in deferred revenue relating
to the payment by Mr. Miller for the rights to Team Atlanta.

The operations of Maxx and TRAC are presented as those of a
development stage enterprise, from its inception, May 15, 2001. The
separate operations of Team Sports are not included as a development
stage enterprise.

DISCONTINUED OPERATIONS

As a part of the acquisition of Maxx, the Company was required to sell
its interest in its wholly owned subsidiaries, LCP and eStorefronts to
a group of its shareholders in exchange for 12,000,000 shares of its
common stock. This transaction was also completed on May 15, 2001 and
the shares were cancelled.

During the six months ended June 30, 2001, the Company had a loss in
the amount of $1,380,770 from operations of the discontinued
operations.

PART II - OTHER INFORMATION

ITEM 5. OTHER INFORMATION

On August 6, 2002 the Company announced that Bill
Miller is no longer the Company's Chief Executive
Officer or a Director of the Company's Board.

On August 16, 2002 the Company received notice that
Jon Pritchett had resigned as the Company's
President and as a Director of the Company's Board.

ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits - Not applicable
(b) Reports on Form 8-K - Not applicable

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.

TEAM SPORTS ENTERTAINMENT, INC.

Date: August 19, 2002 By: /s/ Terry Washburn
------------------------------------
Terry Washburn
Chief Financial Officer and
Principal Accounting Officer

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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In connection with the accompanying Condensed Consolidated Financial Statements
on Form 10-QSB of Team Sports Entertainment, Inc. for the three and six month
periods ended June 30, 2002 (the "Periodic Report"), I, Terry Hansen , Acting
Chief Executive Officer, and I, Terry Washburn, Chief Financial Officer of the
Company, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my
knowledge, the Periodic Report fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information
contained in the Periodic Report fairly presents, in all material respects, the
financial condition and results of operations of the Company.

Date: August 19, 2002 By: /s/ Terry Hansen
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Terry Hansen
Acting Chief Executive Officer

Date: August 19, 2002 By: /s/ Terry Washburn
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Terry Washburn
Chief Financial Officer