U.S. Securities and Exchange Commission
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
VIVA GAMING & RESORTS INC.
--------------------------
(Name of Small Business Issuer in its charter)
Florida 65-0609891
------- ----------
(State of incorporation) (I.R.S. Employer Identification No.)
3753 Howard Hughes Parkway
Suite 200
Las Vegas, NV 89109
- ------------- -----
(Address of principal executive offices) (Zip Code)
Issuer's Telephone Number: (702)262-6477
-------------
Securities to be registered pursuant to 12(b) of the Act:
None
----
Securities to be registered pursuant to 12(g) of the Act:
Common Stock, $.001 Par Value
-----------------------------
(Title of Class)
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page No.
--------
PART I
<S> <C> <C>
Item 1. Description of Business.............................................................. 3
Item 2. Description of Property.............................................................. 7
Item 3. Directors, Executive Officers and Significant Employees.............................. 8
Item 4. Remuneration of Directors and Officers............................................... 9
Item 5. Security Ownership of Management and Certain Security
Officers............................................................................. 11
Item 6. Interest of Management and Others in Certain Transactions............................ 12
Item 7. Securities Being Offered............................................................. 13
PART II
Item 1. Market Price of and Dividends on the Registrant's
Common Equity and Other Shareholder Matters.......................................... 15
Item 2. Legal Proceedings.................................................................... 15
Item 3. Changes in and Disagreements with Accountants........................................ 16
Item 4. Recent Sales of Unregistered Securities.............................................. 16
Item 5. Indemnification of Directors and Officers............................................ 17
PART FS
Financial Statements................................................................. 18
PART III
Item 1. Index to Exhibits.................................................................... E-1
</TABLE>
-2-
<PAGE>
The information contained in this registration statement about us and
our business and operations contains "forward-looking statements." Such
statements consist of any statement other than a recitation of historical fact
and can be identified by the use of forward-looking terminology such as "may,"
"expect," "anticipate," "estimate" or "continue" or the negative thereof or
other variations thereon or comparable terminology. You are cautioned that all
forward-looking statements are necessarily speculative, and there are certain
risks and uncertainties that could cause actual events or results to differ
materially from those referred to in such forward looking statements. We do not
have a policy of updating or revising forward- looking statements and thus it
should not be assumed that silence by our management over time means that actual
events are bearing out as estimated in such forward looking statements.
PART I
------
ITEM 1. DESCRIPTION OF BUSINESS
General
References in this registration statement to VIVA, us, we and our are
to VIVA GAMING & RESORTS INC.
We have no obligation to file this Form 10-SB registration statement
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). We are registering our common stock on this Form 10-SB registration
statement on a voluntary basis, so that we can meet the criteria for continued
listing of our common stock on the OTC Bulletin Board. Commencing on the
effective date of this registration statement, we will become obligated to file
reports in accordance with Section 13 of the Exchange Act. We believe that these
filings, together with the visibility that continued listing on the Bulletin
Board will provide, are in the best interest of our shareholders and the
investment community.
Organization
We were incorporated in Florida on December 9, 1997, under the name
Watt Comm International, Inc. Effective April 1, 1998, we entered into an
agreement to acquire all of the outstanding shares of Watt Shop Communications
Ltd., a retailer of wireless products and provider of telecommunications
services in Western Canada. Watt Shop is related to us by common control. In
April 1999, by mutual consent of the parties, our agreement to acquire the
shares of Watt Shop was rescinded. As a result, we reconveyed the shares of Watt
Shop we acquired under the agreement and returned to our treasury the 1,500,000
shares of our common stock issued in connection with the agreement. On May 11,
1999, we changed our name to VIVA GAMING & RESORTS.COM, INC., and on October 12,
1999, we changed our name to VIVA RESORTS & GAMING INC.
-3-
<PAGE>
Except as described in the preceding paragraph, we have not been
involved in any bankruptcy, receivership or similar proceeding, nor have we been
involved in any material reclassification, merger, consolidation, or purchase or
sale or a significant amount of assets not in the ordinary course of business.
Planned Operations
Following rescission of our stock purchase agreement to acquire The
Watt Shop, management undertook to identify various industries in which to seek
an operating business to serve as our core operations. Management identified the
casino gaming industry as exhibiting strong potential for reasons including:
o the increasing popularity of casino gaming in the United States;
o the recent world-wide expansion of casino gaming;
o the lack of experienced gaming management; and
o the vast financial market associated with the casino gaming industry.
Following an evaluation of relevant circumstances, we concluded that we
could create a viable and successful business by acquiring or developing and
managing casino gaming operations that are either undervalued or evidence a high
rate of profitability, and by providing consulting and managerial services
relating to the management and operation of those facilities. The business model
that we have created requires us to identify and recruit strong managerial
talent in the casino and gaming industry. The successful implementation of our
business model will enable us to generate revenues from:
o casino management and participation fees;
o consulting fees;
o activities conducted by businesses acquired by us; and
o appreciation from equity acquired in connection with project
participation.
In furtherance of our business model:
o We have entered into an agreement to employ Martin R. Gross as
our President and Chief Executive Officer. Mr. Gross has over
20 years experience in the gaming and hotel industries,
including executive management positions with properties
including the MGM Grand, The Mirage and the Flamingo Hilton.
He also led the financial turnaround of prominent Las Vegas
hotel/casinos including Four Queens Hotel and Casino, Maxim
Hotel and Casino and Riviera Hotel & Casino.
o John D. Lee has become a member of our board of directors. Mr.
Lee is a practicing attorney in Nevada, actively engaged in
providing legal services in areas including gaming,
entertainment law and real estate development.
-4-
<PAGE>
o We have engaged two independent consultants to provide us with
advice and consultation in connection with our efforts to own
and operate gaming properties world-wide, including securing
related financing.
o In November 1999, we entered into a Memorandum of
Understanding with Wagon Wheel Resorts, Casinos and
Entertainment Inc. which provides that we develop and operate
a full-service casino facility on behalf of the Roseau River
First Nation, to be located approximately 60 miles south of
Winnipeg, Canada. Following our review of applicable
government regulations, we have determined that completion of
the project is not economically feasible unless and until
changes are made to existing regulations governing First
Nation gaming in Manitoba, Canada. We will continue to monitor
government policy to determine the future of casino operations
in Manitoba.
o In November 1999, we entered into a Memorandum of
Understanding with Onion Lake First Nation, for us to design,
develop and operate a newly-planned casino facility in
Alberta, Canada, and to manage the facility for at least five
years. Following our review of applicable government
regulations, we have determined that completion of the project
is not economically feasible unless changes are made to
existing revenue-sharing regulations. We are actively
participating in negotiations with regulatory authorities
designed to modify existing regulations so that this project
might become economically viable.
o We have engaged Las Vegas Internet Partners to design, develop
and manage our web site. Our web site, with a URL at
www.vivagaming.com, became operational in November 1999.
o In February 2000, we engaged a consultant to represent us in
gaining access to Indian gaming operations in California.
Since the recent approval of gaming facilities in California,
it is anticipated that approximately 50 Class III gaming
facilities will become operational over the next several
years. We are seeking consulting or managerial agreements from
operators of these facilities, and we recently submitted a
proposal, through our consultant, for engagement by an
established casino in Northern California.
o In March 2000, we organized a Nevada limited liability company
to operate a full-service Day Cruise to Nowhere gaming
facility. We are currently the sole member of the LLC. The LLC
proposes to sell membership interests in the LLC to fund the
LLC's plans to operate the Cruise to Nowhere. While sale of
membership interests will likely reduce our equity ownership
of the LLC to less than 50%, we also expect to generate
revenues from managerial services to be rendered. The LLC has
entered into a five-year lease with the Port of Corpus
Christi, Texas, to lease a six acre parcel of property in Port
Aransas that will serve to allow passengers access to the
Cruise to Nowhere. All gaming will take place at sea, at least
nine miles outside the territorial boundaries of Texas. The
LLC is obligated to make monthly lease payments commencing
July 1, 2000, at an initial rent of $3,200 per month. Until
such time as the LLC obtains equity or debt financing, the
Company may, but is not obligated to, advance funds to the LLC
to enable it to meet its current obligations.
We have not yet engaged in any revenue-producing activities, nor are we
a party to any binding agreements that will generate revenues. However, we
continue to seek and evaluate various opportunities consistent with our business
model that we believe will, over time, allow us to become profitable and enhance
shareholder values. Due to our lack of revenue-production to date, and our lack
of contractual commitments to generate revenue, there is no basis at this time
for investors to make an informed determination as to the prospects for our
future success. For similar reasons, our auditors have included in their report
covering our financial statements for the years ended December 31, 1999 and
1998, that there is substantial doubt about our ability to continue as a going
concern.
To date, we have funded our operations through a combination of
borrowings and the sale of our equity securities. In early 2000, we completed
the sale of units consisting of a total of 120,000 shares of stock and 80,000
warrants, resulting in net proceeds to us of approximately $430,000. We are
seeking to raise approximately an additional $2,500,000 prior to completion of
this phase of financing. The sale of these shares was and will be effected
off-shore, pursuant to SEC rules, regulations and interpretations, including
Regulation S. During February and March 2000, we received gross proceeds of
$800,000 in connection with subscriptions we received for 192,000 shares and
128,000 warrants.
-5-
<PAGE>
We believe that the funds presently available to us will enable us to
sustain operations for a period of at least 12 months. Thereafter, to the extent
that we are unable to generate revenues from operations sufficient to cover our
operating costs, we will be required to seek additional funding. There is no
assurance additional financing, if required, will be available to us upon
acceptable terms.
Competition
We will compete with numerous casinos and gaming management companies,
many of which have far greater financial and other resources than we do. Many of
these companies have established histories and relationships in the gaming
industry that enable them to attract talent, manage gaming and hotel facilities
and financing. Moreover, proven track records are of paramount consideration in
selecting managerial talent. While our management team has significant
experience in the casino industry, we, as a company, have no proven track record
in the casino and hotel industry. There is no assurance that we will be able to
successfully compete in this industry.
Government Regulations
Casino operations are subject to numerous state, local and provincial
regulations, the compliance with which could have a significant impact upon our
proposed operations. Gaming is considered by all jurisdictions as a privilege,
not a right. Each state and Canadian province, as well as many Native American
jurisdictions, have their own gaming laws and regulatory agencies. Depending
upon the degree of regulatory enactment, the level of scrutiny and governing
bodies differ, both as to application of rules and approvals necessary in order
to operate.
In order for any individual or legal entity to do business as a gaming
company, most jurisdictions require that an application be completed and filed
with the applicable gaming commission. This application must be submitted by the
individual or legal entity which encompasses detailed information involving
personal histories and financial information over the last five years. The
application process is currently taking between six months and two years to be
completed. The range in times reflects the complexity of the applicant's
background. Applicants that have previously held licenses can generally be
approved quicker than those that have not previously been licensed. An
applicant's behavior and compliance with the applicable regulatory requirements
of a jurisdiction will generally be considered at the time of application, and,
thereafter, the failure to follow existing gaming regulations in one
jurisdiction may have a detrimental effect on gaming privileges in a
jurisdiction that the applicant is already licensed in. Each Gaming Board
charges the applicant a fee for the application and also the costs associated
with the investigation of the applicant. The amount of fees and costs varies
from jurisdiction to jurisdiction. No applicant can do business as a gaming
company in a jurisdiction until such time as the applicable Gaming Board has
approved the applicant.
-6-
<PAGE>
Employees
We currently have one full-time employee - Mr. Martin Gross. As
prospects and circumstances warrant, we will engage additional full-time and
part-time employees, as well as consultants, to perform required services.
Availability of Additional Information
We have filed this registration statement on Form 10-SB under the
Exchange Act. This registration statement does not contain all of the
information contained in the exhibits filed with it. Statements contained in
this registration statement as to the content of any contract or other document
referred to are not necessarily complete. In each instance, we refer you to the
copy of the contracts or other documents filed as exhibits to this registration
statement, and these statements are qualified in their entirety by reference to
the contract or document.
The registration statement, including all exhibits, may be inspected
without charge at the SEC's Public Reference Room at 450 Fifth Street, N.W.
Washington, D.C. 20549, and at the SEC's regional offices located at Seven World
Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of these materials
may also be obtained from the SEC's Public Reference at 450 Fifth Street, N.W.,
Room 1024, Washington D.C. 20549, upon the payment of prescribed fees. You may
obtain information on the operation of the Public Reference Room by calling the
SEC at 1- 800-SEC-0330.
The registration statement, including all exhibits, has been filed with
the SEC through the Electronic Data Gathering, Analysis and Retrieval system.
Following the effective date of the registration statement, we will become
subject to the reporting requirements of the Exchange Act and in accordance with
these requirements, will file annual, quarterly and special reports, and other
information with the SEC. We also intend to furnish our shareholders with annual
reports containing audited financial statements and other periodic reports as we
think appropriate or as may be required by law. This registration statement and
other filings made by us with the SEC through its Electronic Data Gathering,
Analysis and Retrieval Systems are publicly available through the SEC's site on
the World Wide Web located at http//www.sec.gov.
ITEM 2. DESCRIPTION OF PROPERTY
We currently lease approximately 315 square feet of office space at
3753 Howard Hughes Parkway, Las Vegas, Nevada. The lease, which commenced on
August 15, 1999 and terminates on July 31, 2000, requires us to pay monthly
rental of $2,650. Upon expiration of the lease we intend to renew our current
lease or, should circumstances warrant, seek additional space in Las Vegas.
-7-
<PAGE>
ITEM 3. DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT
EMPLOYEES
The following table contains the names, ages and positions of our
executive officers and directors. Directors will be elected at our annual
meeting of shareholders and serve for one year or until their successors are
elected and qualify. Officers are elected by the board, and their terms of
office are, except to the extent governed by employment contract, at the
discretion of the board.
<TABLE>
<CAPTION>
Director
Name Age Position Since
- ---- --- -------- -----
<S> <C> <C> <C>
Robert Sim 46 Chairman of the Board 1999
Rosemarie Sim 43 Secretary and Director 1999
Martin R. Gross 43 Chief Executive Officer
President and Director 1999
John D. Lee 45 Director 1999
</TABLE>
Robert Sim, our founder, served as our President from December 7, 1997
to April 30, 1999, as a director since December 7, 1997 and as our Chairman of
the Board since April 30, 1999. Mr. Sim served as a director of International
Thunderbird Gaming Co. from October 1992 until August 1995. He has also served
as a director of Jaguar Gaming Corporation, a publicly-held company from March
1998 to June 1999. For the preceding five years, Mr. Sim has also participated,
as founder, officer, director and/or partner, of approximately 20
privately-held, service-oriented businesses in Canada. These businesses operate
in such areas as electrical services, fire alarm services and night club
operations.
Rosemarie Sim has served as our Secretary and a director since April
30, 1999. She is the spouse of Robert Sim and, since 1985, has managed marketing
and promotion for the Robert Sim group of companies. Since November 1998, Ms.
Sim has also served as President of 619,712 Saskatchewan Ltd., the operator of
Habano's, a cigar and martini club located in Regina, Saskatchewan.
Martin R. Gross has served as our President since June 1999. From
September 1998 until June 1999, Mr. Gross acted as an independent gaming
consultant. From June 1998 to September 1998, he served as Acting General
Manager for the Maxim Hotel and Casino in Las Vegas, Nevada, where he analyzed
that company's condition and provided his advise in areas of operations,
controls, marketing programs and financial status. From January 1996 until June
1998 he was General Manager of Four Queens Hotel and Casino/Riviera Gaming
Management, where he supervised all operations of this 700 room, 32,000 square
foot casino. From April 1992 until June 1998 Mr. Gross also served as Vice
President of Riviera Gaming Management and Vice President of Sales and
Marketing/Special Events, Riviera Hotel and Casino in Las Vegas, Nevada, where
he administered all sales revenue operations for the 2,100 room hotel, 100,000
-8-
<PAGE>
square foot casino. Mr. Gross was a member of the management team engaged to
revitalize Riviera Hotel and Casino following its Chapter 11 bankruptcy filing.
Mr. Gross' career in the gaming industry also includes executive positions with
the Alexis Park Resort Hotel, The Mirage, the MGM Grand Hotel Corp./Bally's, the
Frontier Hotel & Casino and the Flamingo Hilton Hotel & Casino, all located in
Las Vegas, Nevada. Mr. Gross received a bachelor of science degree in Hotel
Administration from the University of Nevada , Las Vegas, in 1979.
John Lee has served as a member of our board of directors since July
1999. In 1981, Mr. Lee founded and continues to serve as managing attorney for
John Doechung, Chtd., a Nevada professional corporation. Mr. Lee practices in
the fields of general and complex litigation, immigration, real estate
development, gaming and entertainment law.
There are no family relationships between any of our directors,
executive officers and/or directors, nominees therefore or significant
employees, except that Robert Sim and Rosemarie Sim are husband and wife.
Involvement in Certain Legal Proceedings.
During the past five years, none of the following events have occurred
which are material to the evaluation of the ability or integrity of any of our
directors, executive officers or persons nominated to become directors or
executive officers:
(1) a petition under the Bankruptcy Act or any state insolvency law was
filed by or against, or a receiver, fiscal agent or similar officer was
appointed by a court for the business or property of such person, or any
partnership in which he was general partner at or within two years before the
time of such filing, or any corporation or business association if which he was
an executive officer at or within two years before the time of such filing;
and/or
(2) such person was convicted in a criminal proceeding (excluding
traffic violations and other minor offenses).
ITEM 4. REMUNERATION OF DIRECTORS AND OFFICERS
Summary Compensation Table
The following table sets forth information relating to all compensation
awarded to, earned by or paid by us during each of the preceding three fiscal
years to: (a) our Chief Executive Officer; and (b) each of our executive
officers who earned more than $100,000 during the fiscal year ended December 31,
1999:
<TABLE>
<CAPTION>
Fiscal Other Annual LTIP All Other
Name and Principal Position Year Salary Bonus Compensation Options/ (#) Payouts Compensation
- --------------------------- ---- ------- ----- ------------ ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Martin Gross, CEO 1999 $97,500 - - 300,000 - -
1998 - - - - - -
1997 - - - - - -
</TABLE>
Option Grants in Last Fiscal Year
The following table sets forth information concerning our grant of
options to purchase shares of our common stock and SARs during the fiscal year
ended December 31, 1999 to (a) our Chief Executive Officer; and (b) each of our
executive officers who earned more than $100,000 during the fiscal year ended
December 31, 1999.
<TABLE>
<CAPTION>
Percent of
Number of Total Options/
Securities SARs Granted
Underlying To Employees Exercise Or
Options/SARs In Fiscal Base Price
Name Granted (#) Year ($/Sh) Expiration Date
---- ----------- ---- ------ ---------------
<S> <C> <C> <C> <C> <C>
Martin Gross, CEO 300,000 26% $3.35 12/28/2001
</TABLE>
Option Exercises and Holdings
The following table contains information with respect to the exercise
of options to purchase shares of common stock during the fiscal year ended
December 31, 1999 to (a) our Chief Executive Officer; and (b) each of our
executive officers who earned more than $100,000 during the fiscal year ended
December 31, 1999.
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Shares Unexercised In-The-Money
Acquired Options/SARs Options/SARs
On Value At FY-End (#) At FY-End ($)
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
---- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Martin Gross, CEO - - 300,000/-0- $450,000/-0-
</TABLE>
Long-Term Incentive Plans Awards in Last Fiscal Year
<TABLE>
<CAPTION>
Number Performance Estimated Future Payouts Under
of Shares or Other Non-Stock Price-Based Plans
Units or Period Until -------------------------------
Other Rights Maturation Threshold Target Maximum
Name (#) or Payout ($or #) ($or #) ($ or #)
---- -------------------- --------- ------------------- ----------
<S> <C> <C> <C> <C> <C>
Martin Gross, CEO - - - - -
</TABLE>
Compensation of Directors
There are no standard arrangements pursuant to which our directors are
compensated for any services provided as director. No additional amounts are
payable to our directors for committee participation or special assignments.
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements
-9-
<PAGE>
Except as set forth below, there are no employment contracts,
compensatory plans or arrangements, including payments to be received from us,
with respect to any of our directors or executive officers which would in any
way result in payments to any such person because of his or her resignation,
retirement or other termination of employment with us, any change in control of
us, or a change in the person's responsibilities following such a change in
control.
On June 15, 1999, we entered into a three year employment agreement to
employ Martin Gross as our Chief Executive Officer. Under the agreement, we have
agreed to pay Mr. Gross salary at the rate of $180,000 per year and a bonus
equal to 1% of our annual gross revenues. We also agreed to issue options to
purchase 300,000 shares of our common stock, exercisable at $3.35 per share
until December 28, 2001. We also granted Mr. Gross 300,000 stock appreciation
rights that enable him to exercise the stock options granted to him, and to
receive cash or shares, or a combination of both, equal in value to the excess
of the fair market value of one share as of the date of exercise, over the
option exercise price, multiplied by the number of shares in respect of which
the stock appreciation right is exercised. In the event Mr. Gross' employment is
terminated during the initial three years of the agreement, without cause, we
are obligated to pay him his base salary for the remainder of such three year
period.
Incentive and Non-Qualified Stock Option Plan
On October 8, 1999 our board of directors and a majority of our
shareholders adopted the 1999 Stock Option Plan.
We believe the plan will work to increase the employees', consultants'
and employee directors' proprietary interest in VIVA and to align more closely
their interests with the interests of our shareholders. We also believe the plan
will assist us in attracting and retaining the services of experienced and
highly qualified professionals.
We have reserved an aggregate of 1,500,000 shares of our common stock
for issuance upon exercise of options granted under the plan. Our board of
directors or a committee of the board administers the plan including, without
limitation, the selection of persons who will be granted options under the plan,
the type of options to be granted, the number of shares subject to each option
and the option price.
The plan authorizes the issuance of incentive stock options - those
qualified under Section 422A of the Internal revenue Code of 1986 - and
non-qualified stock options. Our officers, directors, key employees and
consultants will be eligible to receive non-qualified options under the plan.
Only our officers, directors and employees who are employed by us or any
subsidiary are eligible to receive incentive options. In conjunction with all or
part of the options granted under the plan, stock appreciation rights may be
granted at the time of the grant and in the case of non-qualified options, the
SAR may also be granted after the time of grant.
Incentive options granted under the plan must provide for an exercise
price of not less than 100% of the fair market value of the underlying shares on
the date of the grant, but the exercise price of any incentive option granted to
an eligible employee owning more than 10% of our common stock must be at lease
110% of such fair market value as determined on the date of
-10-
<PAGE>
the grant. No plan option may be exercisable more than ten years after the date
of its grant and , in the case of an incentive option granted to an optionee who
holds greater than 10% of our shares, no more than five years after the date of
the grant. The exercise price of the non-qualified options may not be not less
than 55% of the fair market value of the underlying shares on the date of the
grant.
The per share price of shares subject to options granted under the plan
may be adjusted in the event of certain changes in our capitalization. All plan
options are nonassignable and nontransferable, except by will of by the laws of
descent and distribution, and during the lifetime of the optionee, may be
exercised only by such optionee. Options are subject to early termination upon
termination of employment, death or disability of the optionee. Options are also
subject to cash redemption in the event we undergo a change in control.
The board of directors may amend, alter, or discontinue the plan to the
extent it deems appropriate in our best interests, but no amendment, alteration
or discontinuation may impair the rights of an optionee under an option or a
recipient of a SAR theretofore granted. In addition, no such amendments shall be
made without the approval of our shareholders, to the extent such approval is
required by law or agreement. Unless the plan shall theretofore have been
discontinued, the plan will terminate on October 7, 2009.
As of December 31, 1999 options to purchase 1,155,000 shares and
300,000 SARs have been granted under the plan.
ITEM 5. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN
SECURITY HOLDERS
The following table sets forth, as of March 31, 2000, information known
to us relating to the beneficial ownership of our common stock by:
o each person who is the beneficial owner of more than five
percent of our outstanding common stock;
o each director;
o each executive officer; and
o all executive officers and directors as a group.
As of March 31, 2000, there were 6,934,400 shares of our common stock
issued and outstanding. Except as to the beneficial ownership of shares issuable
upon exercise of options, the table does not give effect to:
o the issuance of up to 1,500,000 shares upon exercise of
options under our stock option plan, 1,155,000 of which have
been awarded;
o our issuance of up to 89,600 shares in the event of the
exercise of outstanding warrants, 25,000 of which have been
exercised; or
o our obligation to issue 192,000 shares and warrants to
purchase 128,000 shares pursuant to $800,000 in subscriptions
received during February and March 2000
Unless otherwise indicated, the address of each beneficial owner in the
table set forth below is care of VIVA Gaming & Resorts Inc., 3753 Howard Hughes
Parkway, Suite 200, Las Vegas, Nevada.
-11-
<PAGE>
We believe that all persons named in the table have sole voting and
investment power with respect to all shares of common stock reflected as being
beneficially owned by them. Rosemarie Sim is the spouse of Robert Sim. Each
disclaims beneficial ownership of the shares owned by the other.
Under securities laws, a person is considered to be the beneficial
owner of securities he owns and that can be acquired by him within 60 days upon
the exercise of options, warrants, convertible securities or other
understandings. Beneficial assumes that options, warrants or convertible
securities that are held by a named person, but not those held by any other
person, and which are exercisable within 60 days of the date of this prospectus,
have been exercise or converted.
<TABLE>
<CAPTION>
Amount of Percentage
Name of Beneficial of
Beneficial Owner Ownership of Stock Class
---------------- ------------------ -----
<S> <C> <C>
Robert Sim 640,000 9.1%
Rosemarie Sim 360,000 5.1%
Martin Gross 330,000 4.6%
John D. Lee 110,000 1.6%
All Executive Officers
and Directors as a Group
(4 persons) 1,440,000 19.0%
</TABLE>
Change of Control.
There are currently no arrangements known to us, which will or in the
future could, result in a change of control of VIVA.
ITEM 6. INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN
TRANSACTIONS
Except as set forth below, and in connection with employment agreements
described elsewhere in this registration statement, there have been no material
transactions, series of similar transactions, currently proposed transactions,
or series of similar transactions, to which we were or are to be a party, in
which the amount involved exceeded $60,000 and in which any of our directors or
executive officers, any security holder who is known by us to own of record or
beneficially more than five percent of our common stock, any promoter, or any
member of the immediate family of any of the foregoing persons, had a material
interest.
During the fiscal year ended December 31, 1998, we loaned $112,500 to
Robert Sim, who, at the time, was one of our officers and directors. The loan
was evidenced by a promissory note due and payable on December 31, 1999. In
December 1998, the note was modified to provide for the payment of interest at
the rate of 6% per year. Outstanding principal and interest on the note was
repaid in June 1999.
-12-
<PAGE>
During the years ended December 31, 1998 and 1999:
o Robert Sim, an officer and director, advanced various
operating expenses on our behalf, the outstanding balances of
which were $13,840 and $108,546 at December 31, 1998 and 1999,
respectively;
o management services were provided to us by Archie Sim and
Curtis Sim, the brother and son, respectively, of Robert Sim,
each of whom is a shareholder of ours. Management fees of
$30,000 were outstanding at December 31,1998, and were settled
by the issuance of an aggregate of 750,000 shares in February
1999;
o R&R Gaming Consultants, Inc., a company controlled by Robert
Sim, advanced various operating expenses on our behalf, the
outstanding balance of which was $1,369 at December 31, 1999;
and
o we received $67,228 and $4,446 from Watt Shop Communication
Ltd., a company in which Robert Sim has a beneficial interest,
during the years ended December 31, 1998 and 1999,
respectively. Mr. Sim was assigned Watt Shop's right to
payment, the outstanding balance of which was $71,674 at
December 31, 1999.
While we do not anticipate that we will enter into additional
related-party transactions, and have not adopted any corporate policies for
entering into transactions with affiliated parties,
o we are subject to Section 617.0832 of the Florida Business
Corporation Law which requires that transactions between VIVA
and one or more of its directors be approved by disinterested
directors, be approved by VIVA's shareholders or be fair to
VIVA; however,
o we are not subject to Section 617.0901 of the Florida Business
Corporation Law which places additional limitations and
restrictions on certain business transactions with affiliated
parties.
Members of our management team, other than Mr. Gross, are not employed
by us on a full-time basis. They are involved in other business activities and
may, in the future become involved in other businesses. If a specific business
opportunity becomes available, such persons may face a conflict in selecting
between our business and their other business interests. We have not and do not
intend in the future to formulate a policy for the resolution of such conflicts.
ITEM 7. SECURITIES BEING OFFERED
The following discussion does not give effect to:
o the exercise of 4,000 warrants; or
o our obligation to issue 192,000 shares and 128,000 warrants to
purchase 128,000 shares, in connection with $800,000 in
subscriptions received by us during February and March 2000.
Common Stock
We are authorized to issue 100,000,000 shares of common stock, par
value $.001 per share, of which 6,934,400 shares are issued and outstanding as
of the date of this registration statement. The issued and outstanding shares of
common stock are fully paid and non-assessable. Holders of our shares are
entitled to one vote per share on each matter submitted to a vote at a meeting
of shareholders. Holders of our common stock do not have cumulative voting
rights or preemptive rights and there are no redemption or conversion privileges
attached thereto. Holders of our common stock are entitled to receive ratably
such dividends as may be declared by the board of directors and to participate
ratably in the distribution of any assets legally available for distribution
with respect to our common stock. We do not expect to pay dividends for the
foreseeable future.
-13-
<PAGE>
Preferred Stock
Our articles of incorporation authorize us to issue up to 10,000,000
shares of undesignated, blank check preferred stock, par value $.10, in such
series and bearing such voting, dividend, conversion, liquidation and other
rights and preferences as the board of directors may determine. As of December
31, 1999, no shares of preferred stock are issued or outstanding.
We have no present intent to issue shares of preferred stock. The
future issuance of preferred stock could dilute our ownership by existing common
stock holders and could be used to inhibit a hostile takeover.
Warrants
In connection with our January 2000 off-shore private placement, we
issued common stock purchase warrants to purchase a total of 89,600 shares of
our common stock. Each warrant, which is not freely transferable, entitles the
owner to purchase one share, until January 14, 2001, for an exercise price of
$6.25. None of the warrants have been exercised.
Transfer Agent
The transfer agent for our common stock is Interstate Transfer Company,
6084 S. 900 E., Suite 101, Salt Lake City, Utah 84121, telephone number
(801) 281-9746.
Shares Eligible For Future Sale
As of March 31, 2000, we had outstanding an aggregate of 6,934,400
shares of our common stock. Of the total outstanding shares, 6,500,000 shares
are freely tradable without restriction or further registration under the
Securities Act. The remaining 434,400 shares will be eligible for resale on
various dates in 2000 and 2001 under Rule 144.
Under Rule 144, a person (or persons whose shares are aggregated) who
has beneficially owned restricted securities for at least a year, including the
holding period of any prior owner except an affiliate, is generally entitled to
sell within any three month period a number of our shares that does not exceed
1% of the number of outstanding shares. Sales under Rule 144 are also subject to
certain manner of sale provisions, notice requirements and the availability of
current public information about us. Any person (or persons whose shares are
aggregated) who is not deemed to have been an affiliate of ours at any time
during the three months preceding a sale, and who has beneficially owned shares
for at least two years (including any period of ownership of preceding
non-affiliated holders), may sell such shares under Rule 144(k) without regard
to the volume limitations, manner-of-sale provisions, public information
requirements or notice requirements.
Sales of our shares pursuant to Rule 144 could have a depressive effect
on the market price of our stock.
-14-
<PAGE>
PART II
-------
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER STOCKHOLDER MATTERS
Our shares are traded over-the-counter and quoted on the OTC Electronic
Bulletin Board under the symbol "VIGA". The reported high and low bid prices for
our common stock are shown below for the period from inception of trading in May
1999 through March 31, 2000. The closing bid price on April 4, 2000 is
also shown. The quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commissions, and may not represent actual transactions.
<TABLE>
<CAPTION>
Period High Low
------ ---- ---
<S> <C> <C>
May 14, 1999 - June 30, 1999 $12.625 $8.00
July 1, 1999 - September 30, 1999 $11.375 $2.00
October 1, 1999 - December 31, 1999 $5.4375 $2.875
January 1, 2000 - March 31, 2000 $12.875 $4.50
April 4, 2000 $4.8125
</TABLE>
As of December 31, 1999, there were approximately 106 holders of record
of our common stock.
We have never paid cash dividends on our common stock. We intend to
keep future earnings, if any, to finance the expansion of our business, and we
do not anticipate that any cash dividends will be paid for the foreseeable
future. The future dividend policy will depend on our earnings, capital
requirements, expansion plans, financial condition and other relevant factors.
The SEC has adopted regulations which generally define a "penny stock"
to be any equity security that has a market price of less than $5.00 per share,
subject to certain exceptions. Depending on market fluctuations, our common
stock would be considered a "penny stock". As a result, it may be subject to
rules that impose additional sales practice requirements on broker/dealers who
sell these securities to persons other than established customers and accredited
investors. For transactions covered by these rules, the broker-dealer must make
a special suitability determination for the purchase of our securities. In
addition he must receive the purchaser's written consent to the transaction
prior to the purchase. He must also provide certain written disclosures to the
purchaser. Consequently, the "penny stock" rules may restrict the ability of
broker/dealers to sell our securities, and may negatively affect the ability of
holders of our shares to resell them.
ITEM 2. LEGAL PROCEEDINGS
We are not a party to any pending legal proceeding and none or our
directors, executive officers or affiliates is a party adverse to us or has a
material interest adverse to us in any proceeding.
-15-
<PAGE>
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Not Applicable.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
The following sets forth information relating to all previous sales by
us which were not registered under the Securities Act:
In July 1998, we issued 3,750,000 shares of our common stock, at a
price of $0.04 per share, to 44 investors pursuant to Rule 504 of Regulation D
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
resulting in net proceeds to us of approximately $112,500. No general
solicitation or advertising was used in connection with this transaction. The
certificates evidencing the shares did not bear a legend restricting their
transferability under the Securities Act. Each purchaser had access to financial
and other information about us and was afforded the opportunity to ask questions
of us concerning our operations and the terms of the offering. Each purchaser
represented that he was acquiring the shares for investment purposes.
In May 1998, we issued 1,500,000 shares to four non-U.S. persons in
connection with our acquisition of all of the issued and outstanding shares of
Watt Shop Communications Ltd. This transaction was effected outside the United
States, to non-U.S. persons, and was either (a) not subject to the registration
provisions of Federal securities laws or (b) was exempt from the registration
requirements thereof pursuant to the provisions of Regulation S. In April 1999,
we mutually agreed with the selling shareholders of Watt Shop to the rescind the
acquisition. As a result, we canceled the 1,500,000 shares we issued to Watt
Shop shareholders, and reconveyed to the selling shareholders, Watt Shop shares
that we acquired.
In February 1999, we converted unpaid current liabilities amounting to
$110,000 into 2,750,000 shares, at a price of $0.04 per share, to 5 creditors
(two of whom were our affiliates or family members of affiliates). These shares
were issued pursuant to the requirements of Rule 504 of Regulation D promulgated
under the Securities Act. No general solicitation or advertising was used in
connection with this transaction. The certificates evidencing the shares did not
bear a legend restricting their transferability under the Securities Act. The
creditors had access to financial and other information about us and was
afforded the opportunity to ask questions of us concerning our operations and
the terms of the debt conversion.
In September 1999 we issued an aggregate of 200,000 shares of common
stock to a firm for consulting services. This was an "offshore" transaction,
effected outside the United States, to a non-U.S. person, and was either (a) not
subject to the registration provisions of Federal securities laws or (b) was
exempt from the registration requirements thereof pursuant to the provisions of
Regulation S. The purchasers had access to financial and other information about
us and was afforded the opportunity to ask questions of us concerning our
operations and the terms of the share issuance. The purchaser represented that
he was acquiring the shares for investment purposes and the documentation
evidencing the transaction contained the disclosure
-16-
<PAGE>
required by Regulation S. The certificates evidencing the shares that were
issued contained a legend restricting their transferability absent registration
under the Securities Act or the availability of an applicable exemption from
registration.
In November 1999 we issued an aggregate of 100,000 shares of Common
Stock to a firm for consulting services. This was an "offshore" transaction,
effected outside the United States, to a non-U.S. person, and was either (a) not
subject to the registration provisions of Federal securities laws or (b) was
exempt from the registration requirements thereof pursuant to the provisions of
Regulation S. The purchasers had access to financial and other information about
us and was afforded the opportunity to ask questions of us concerning our
operations and the terms of the share issuance. The purchaser represented that
he was acquiring the shares for investment purposes and the documentation
evidencing the transaction contained the disclosure required by Regulation S.
The certificates evidencing the shares that were issued contained a legend
restricting their transferability absent registration under the Securities Act
or the availability of an applicable exemption from registration.
In January 2000, we issued 20 units, each unit consisting of 6,000
shares and warrants to purchase 4,000 shares, for an aggregate purchase price of
$500,000 or $25,000 per unit. The units were sold to 16 non-U.S. persons. In
connection with this transaction, we also issued 14,400 shares and 9,600
warrants to non-U.S. finders who assisted us in identifying the purchasers of
units. This was an "offshore" transaction, effected outside the United States,
to non-U.S. persons, and was either (a) not subject to the registration
provisions of Federal securities laws or (b) was exempt from the registration
requirements thereof pursuant to the provisions of Regulation S. The purchasers
had access to financial and other information about us and was afforded the
opportunity to ask questions of us concerning our operations and the terms of
the share issuance. Each purchaser represented that he was acquiring the shares
for investment purposes and the documentation evidencing the transaction
contained the disclosure required by Regulation S. The certificates evidencing
the shares that were issued contained a legend restricting their transferability
absent registration under the Securities Act or the availability of an
applicable exemption from registration.
We have never utilized an underwriter for an offering of our
securities. Other than the securities mentioned above, we have not issued or
sold any securities during the preceding three years.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Florida Business Corporation Act permits the indemnification of
directors, employees, officers and agents of Florida corporations. Our articles
of incorporation and bylaws provide that we indemnify our directors and officers
to the fullest extent permitted by the Business Corporation Act. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers or persons controlling us pursuant to the
foregoing provisions, we are advised that, in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Securities Act and is therefore unenforceable.
-17-
<PAGE>
As authorized by the Florida Business Corporation Law, our articles of
incorporation provide that none of our directors shall be personally liable to
us or our shareholders for monetary damages for breach of fiduciary duty as a
director, except liability for:
o any breach of the director's duty of loyalty to our company
or its shareholders;
o acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law;
o unlawful payments of dividends or unlawful stock redemptions
or repurchases; and
o any transaction from which the director derived an improper
personal benefit.
This provision limits our rights and the rights of our shareholders to
recover monetary damages against a director for breach of the fiduciary duty of
care except in the situations described above. This provision does not limit our
rights or the rights of any shareholder to seek injunctive relief or rescission
if a director breaches his duty of care. These provisions will not alter the
liability of directors under federal securities laws.
PART F/S
Following are our audited financial statements, including the
independent auditors' report, the balance sheets as of December 31, 1999 and
1998 and the related statements of operations, changes in stockholders' deficit
and cash flows for the years then ended and for the period from December 9, 1997
(inception) to December 31, 1999.
-18-
<PAGE>
VIVA GAMING & RESORTS INC.
(Formerly Viva Gaming & Resorts.com Inc.)
(A Development Stage Company)
TABLE OF CONTENTS
DECEMBER 31, 1999 AND 1998
PAGE
----
INDEPENDENT AUDITOR'S REPORT F-2
FINANCIAL STATEMENTS
Balance Sheets F-3
Statements of Operations F-4
Statements of Stockholders' Deficit F-5
Statements of Cash Flows F-6-F-7
Notes to the Financial Statements F-8-F-15
F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To The Board of Directors and Stockholders
Viva Gaming & Resorts Inc.
(Formerly Viva Gaming & Resorts.com Inc.)
Fort Lauderdale, Florida
We have audited the accompanying balance sheets of Viva Gaming & Resorts Inc. (a
development stage company) as of December 31, 1999 and 1998, and the related
statements of operations, stockholders' deficit and cash flows for the years
ended December 31, 1999 and 1998, and from December 9, 1997 (inception) to
December 31, 1999. The 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 Viva Gaming & Resorts Inc. as
of December 31, 1999 and 1998, and the results of its operations and cash flows
for the years then ended and for the period from December 9, 1997 (inception) to
December 31, 1999, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As more fully described in Note 2, the Company
has incurred significant losses since inception. This condition raises
substantial doubt about the Company's ability to continue as a going concern.
The Company's continued existence is dependent upon its ability to raise
additional capital and to successfully market and sell its services. The
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the outcome of this
uncertainty.
GOLDSTEIN LEWIN & CO.
Boca Raton, Florida
April 3, 2000
F-2
<PAGE>
<TABLE>
<CAPTION>
VIVA GAMING & RESORTS INC.
(Formerly Viva Gaming & Resorts.com Inc.)
(A Development Stage Company)
BALANCE SHEETS
ASSETS
DECEMBER 31,
--------------------------------------------
1999 1998
----------------- ------------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 3,290
Loan Advance 115,366
Prepaid Expenses 177,500
Other Current Assets 4,101
----------------- ------------------
Total Current Assets 184,891 115,366
PROPERTY AND EQUIPMENT, Net 11,188
----------------- ------------------
Total Assets $ 196,079 $ 115,366
================= ==================
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts Payable $ 47,710 $ 183,323
Accrued Liabilities 10,393 9,253
Advances from Shareholders and Officers 293,134
----------------- ------------------
Total Current Liabilities 351,237 192,576
----------------- ------------------
COMMITMENTS
STOCKHOLDERS' DEFICIT
Preferred Stock, Par Value $0.10 Per
Share; Authorized 10,000,000 Shares;
Issued and Outstanding - 0 - Shares
Common Stock, Par Value $0.001 Per
Share; Authorized 100,000,000 Shares 6,740 3,750
Common Stock - To be Issued 60,000
Unearned Consulting Fee (60,000)
Additional Paid-in Capital 1,131,210 108,750
Deficit Accumulated During the Development Stage (1,293,108) (189,710)
----------------- ------------------
(155,158) (77,210)
----------------- ------------------
$ 196,079 $ 115,366
================= ==================
</TABLE>
The Accompanying Notes are an Integral
Part of These Financial Statements
F-3
<PAGE>
<TABLE>
<CAPTION>
VIVA GAMING & RESORTS INC.
(Formerly Viva Gaming & Resorts.com Inc.)
(A Development Stage Company)
STATEMENTS OF OPERATIONS
Period From
December
Year Ended 9, 1997
December 31, (inception)
-------------------------------------- to December
1999 1998 31, 1999
---------------- ---------------- ----------------
<S> <C> <C> <C>
REVENUE $ $ $
---------------- ---------------- ----------------
EXPENSES
Consultants 77,178 100,165 177,343
Depreciation 558 558
Interest 1,153 1,153
Legal and Accounting 19,532 6,157 25,689
Payroll and Related Costs 113,761 34,057 147,818
Office and Administration 100,173 46,189 146,362
Regulatory, Transfer and Fees 15,808 2,508 18,316
Stock Based Compensation 675,450 675,450
Travel, Entertainment and Promotion 100,438 4,371 104,809
---------------- ---------------- ----------------
1,102,898 194,600 1,297,498
---------------- ---------------- ----------------
Loss from Operations Before
Other Income (Expense) (1,102,898) (194,600) (1,297,498)
---------------- ---------------- ----------------
OTHER INCOME (EXPENSE)
Foreign Exchange (3,366) 2,024 (1,342)
Interest 2,866 2,866 5,732
---------------- ---------------- ----------------
Total Other Income (Expense) (500) 4,890 4,390
---------------- ---------------- ----------------
Net Loss $ (1,103,398) $ (189,710) $ (1,293,108)
================ ================ ================
Weighted Average Shares of Common
Stock Outstanding 6,232,027 3,750,000 5,400,164
---------------- ---------------- ----------------
Loss Per Share - Basic and Diluted $ (0.18) $ (0.05) $ (0.24)
================ ================ ================
</TABLE>
The Accompanying Notes are an Integral
Part of These Financial Statements
F-4
<PAGE>
<TABLE>
<CAPTION>
VIVA GAMING & RESORTS INC.
(Formerly Viva Gaming & Resorts.com Inc.)
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' DEFICIT
Deficit
Common Unearned Additional Accumulated During
Common Stock Stock to be Consulting Paid-in the Development
Shares Amount Issued Fees Capital Stage
------ ------ ------ ---- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Initial Capitalization on
June 30, 1998 for Cash 3,750,000 $ 3,750 $ $ $ 108,750 $
Net Loss (189,710)
------------- -------------- ------------- ------------- -------------- ----------------
Balance as of December 31, 1998 3,750,000 3,750 108,750 (189,710)
Shares Issued for:
Settlement of Accounts Payable 2,750,000 2,750 107,250
Consulting Services 200,000 200 199,800
Consulting Services 40,000 40 60,000 (60,000) 39,960
Stock Options Granted to
Non-Employees for Services 675,450
Net Loss (1,103,398)
------------- -------------- ------------- ------------- -------------- ----------------
Balance as of December 31, 1999 6,740,000 $ 6,740 $ 60,000 $(60,000) $ 1,131,210 $ (1,293,108)
============= ============== ============= ============= ============== ================
</TABLE>
The Accompanying Notes are an Integral
Part of These Financial Statements
F-5
<PAGE>
<TABLE>
<CAPTION>
VIVA GAMING & RESORTS INC.
(Formerly Viva Gaming & Resorts.com Inc.)
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Period From
December
Year Ended 9, 1997
December 31, (inception)
------------------------------------- to December
1999 1998 31, 1999
---------------- --------------- ------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (1,103,398) $ (189,710) $ (1,293,108)
Adjustments to Reconcile Net
Loss to Net Cash Provided By (Used in)
Operating Activities:
Depreciation Expense 558 558
Compensation Cost of Stock Options 675,450 675,450
Issuance of Common Shares for Services 62,500 62,500
Change in Assets and Liabilities:
Increase in Prepaid Expenses and
Other Current Assets (4,101) (4,101)
Increase (Decrease) in Accounts
Payable and Accrued Liabilities (24,473) 192,576 168,103
---------------- ---------------- ----------------
Net Cash Provided By
(Used in) Operating Activities (393,464) 2,866 (390,598)
---------------- ---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of Property and Equipment (11,746) (11,746)
---------------- ---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the Issuance of
Common Stock 112,500 112,500
Advances to Stockholder (115,366) (115,366)
Proceeds from Note Payable 112,500 112,500
Repayment of Note Payable (112,500) (112,500)
Advances from Shareholders and Officers 293,134 293,134
Repayment of Shareholder Advance 115,366 115,366
---------------- ---------------- ----------------
Net Cash Provided By (Used in)
Financing Activities 408,500 (2,866) 405,634
---------------- ---------------- ----------------
</TABLE>
The Accompanying Notes are an Integral
Part of These Financial Statements
F-6
<PAGE>
<TABLE>
<CAPTION>
VIVA GAMING & RESORTS INC.
(Formerly Viva Gaming & Resorts.com Inc.)
(A Development Stage Company)
STATEMENTS OF CASH FLOWS (CONTINUED)
Period From
December
Year Ended 9, 1997
December 31, (inception)
------------------------------------ to December
1999 1998 31, 1999
-------------- -------------- ---------------
<S> <C> <C> <C>
Increase (Decrease) in Cash
and Cash Equivalents $ 3,290 $ $ 3,290
-------------- -------------- --------------
Cash and Cash Equivalents:
Beginning
-------------- -------------- --------------
Ending $ 3,290 $ 3,290
============== ============== ==============
SUPPLEMENTARY DISCLOSURE OF
CASH FLOW INFORMATION:
Cash Paid for Interest $ $ 1,153 $ 1,153
============== ============== ==============
SUPPLEMENTARY DISCLOSURE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
Issuance of Common Stock
for Services $ 240,000 $ $ 240,000
============== ============== ==============
Issuance of Common Stock for
Repayment of Accounts Payable $ 110,000 $ $ 110,000
============== ============== ==============
Stock Options Granted to
Non-Employees for Services $ 675,450 $ $ 675,450
============== ============== ==============
</TABLE>
The Accompanying Notes are an Integral
Part of These Financial Statements
F-7
<PAGE>
VIVA GAMING & RESORTS INC.
(Formerly Viva Gaming & Resorts.com Inc.)
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
- ------------------
Viva Gaming & Resorts Inc. (formerly Viva Gaming & Resorts.com Inc.) (the
"Company") was incorporated under the laws of the State of Florida on December
9, 1997. The Company is currently engaged in the management and development of
gaming assets in North America and plans to seek acquisitions of casino
properties in niche markets during fiscal 2000. The Company was originally
established to engage in the sale and rental of wireless telecommunication
services and equipment, through the operation of retail outlets, primarily in
Western Canada. As of December 31, 1999, the Company was in the development
stage, planned operations have not commenced and its activities were limited to
negotiating the acquisition of existing gaming outlets.
In May 1999, the Company changed its name from Watt Comm International, Inc. to
Viva Gaming & Resorts.com Inc. In addition, the number of preferred stock shares
increased from 3,000,000 to 10,000,000 shares.
In October 1999, the Company changed its name from Viva Gaming & Resorts.com
Inc. to Viva Gaming & Resorts Inc.
Use of Estimates
- ----------------
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 the disclosures of
contingent assets and liabilities at the date of the financial statement and the
reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
Cash and Cash Equivalents
- -------------------------
For purposes of the statement of cash flows, the Company considers cash and
highly liquid investments purchased with an original maturity of three months or
less to be cash equivalents.
Property and Equipment
- ----------------------
Property and Equipment are stated at cost and depreciated on the straight-line
basis over the assets' estimated useful lives.
F-8
<PAGE>
VIVA GAMING & RESORTS INC.
(Formerly Viva Gaming & Resorts.com Inc.)
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Net Loss per Share
- ------------------
Basic and diluted net loss per share represents net loss divided by the weighted
average number of shares outstanding for the period.
Fair Value of Financial Instruments
- -----------------------------------
The carrying amount of cash, prepaid expenses, accounts payable and advances
from shareholders and officers approximate fair value because of the short
maturity of the instruments and the provision, if any, for what management
believes to be adequate reserves for potential losses.
Long-Lived Assets
- -----------------
The Company reviews for the impairment of long-lived assets whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. An impairment loss would be recognized when estimated future
cash flows expected to result from the use of the asset and its eventual
disposition is less than its carrying amount.
Accounting for Stock-Based Compensation
- ---------------------------------------
Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation ("SFAS No. 123") establishes the use of fair value based method of
accounting for stock-based compensation arrangements, under which compensation
cost is determined using the fair value of stock-based compensation determined
as of the grant date, and is recognized over the periods in which the related
services are rendered.
The Company accounts for non-employee stock-based awards in which services are
the consideration received for the equity instruments issued in accordance with
SFAS No. 123 and Emerging Issues Task Force No. 96-18, Accounting for Equity
Instruments that are Issued to Other than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services.
As permitted under SFAS No. 123, the Company has elected not to adopt the fair
value based method of accounting for its stock based compensation plan but to
account for such compensation using the intrinsic value method under the
provisions of Accounting Principles Board (APB) Opinion No. 25.
F-9
<PAGE>
VIVA GAMING & RESORTS INC.
(Formerly Viva Gaming & Resorts.com Inc.)
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
NOTE 2: GOING CONCERN
The financial statements have been presented on the basis that the Company is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company reported a net loss
of $189,710 since inception to December 31, 1998, and a net loss of $427,948 for
the year ended December 31, 1999. In February 2000, the Company issued 20 units
consisting of 6,000 shares and warrants to purchase up to 4,000 shares in a
private placement, for an aggregate purchase price of $500,000. In March 2000,
the Company entered an offering period for another private placement of common
shares and warrants to purchase common shares in order to raise an additional
$2,500,000 (Note 10). Although the Company has raised some additional capital,
the Company's continued existence is dependent upon its ability to successfully
market and sell its services. The financial statements do not include any
adjustments to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classifications of liabilities that
may result from the outcome of this uncertainty.
NOTE 3: PREPAID EXPENSES
Prepaid expenses resulted from the issuance of 240,000 shares of common stock,
valued at $1 per share, to consultants under agreements to provide business
development services through December 2000. An additional 60,000 shares is to be
issued in the first quarter of 2000, under one of these agreements. Amounts
related to the shares to be issued have been recorded as a reduction of equity.
The prepaid expenses are to be amortized over the life of the consulting
agreements.
NOTE 4: PROPERTY AND EQUIPMENT
Property and equipment consists of the following at December 31, 1999:
<TABLE>
<CAPTION>
Lives
In Years
--------
<S> <C> <C>
Furniture $ 10,411 7
Computer Equipment 1,335 3
-------------
11,746
Less: Accumulated Depreciation 558
-------------
$ 11,188
=============
</TABLE>
F-10
<PAGE>
VIVA GAMING & RESORTS INC.
(Formerly Viva Gaming & Resorts.com Inc.)
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
NOTE 5: CAPITAL STRUCTURE
Preferred Stock
- ---------------
The Company has 10,000,000 shares of preferred stock (par value $0.10)
authorized. The Board has the authority to issue the shares in one or more
series and to fix the designations, preferences, powers and other rights as it
deems appropriate. No shares of preferred stock have been issued.
Common Stock
- ------------
The Company has 100,000,000 shares of common stock (par value $0.001)
authorized. Common stock has one vote per share for the election of directors
and all other matters submitted to a vote of stockholders. Shares of common
stock do not have cumulative voting, preemptive, redemption or conversion
rights.
During 1999, the Company issued 240,000 shares of common stock for services
(Note 3).
The Company has reserved 1,560,000 shares of common stock for issuance under the
stock option plan and for issuance under a consulting agreement (Notes 2 and 6).
NOTE 6: STOCK OPTIONS
In October, 1999, the Board of Directors and majority shareholders approved the
1999 Stock Option Plan (the "Plan") with 1,500,000 shares of common stock
reserved for the grant of incentive stock options, non-qualified stock options,
or stock appreciation rights to officers, directors, employees, and consultants
of the Company, its subsidiaries, and affiliates. The option price per share of
common stock purchasable under a non-qualified stock option will not be less
that 55% of the fair market value of the common stock subject to the stock
option on the date of grant. The option price per share of common stock
purchasable under an incentive stock option will not be less than 100% of the
fair market value of the common stock subject to the stock option on the date of
grant. The committee designated by the Board of Directors fixes the term of the
stock option, but no incentive stock option is exercisable more than ten years
after the date the stock option is granted.
Pursuant to the Plan, the Company granted 855,000 non-qualified stock options,
300,000 incentive stock options, and 300,000 stock appreciation rights to
certain employees and independent contractors. The stock options are immediately
exercisable for a period of two years and enable the holders to purchase shares
of the Company's common stock at exercise prices ranging from $3.35 and $5.25.
The stock appreciation rights permit the holder, upon surrendering all of the
related stock options to receive cash, common stock, or a combination thereof,
in an amount equal to 100 percent of the difference between the market price and
the option price.
F-11
<PAGE>
VIVA GAMING & RESORTS INC.
(Formerly Viva Gaming & Resorts.com Inc.)
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
NOTE 6: STOCK OPTIONS (CONTINUED)
For the year ended December 31, 1999, the Company recorded stock compensation
expense, resulting from the issuance of non-qualified stock options to
non-employees of $675,450.
A summary of the status of the Company's stock options as of December 31, 1999
and the changes during the year is presented below:
<TABLE>
<CAPTION>
1999
-------------------------------------------
WEIGHTED
AVERAGE
EXERCISE
STOCK OPTIONS SHARES PRICE
----------------- -----------------
<S> <C> <C>
Outstanding at Beginning of Year 0 $ 0
Granted 1,155,000 3.71
Exercised
Forfeited
----------------- -----------------
Outstanding at December 31 1,155,000 $ 3.71
================= =================
</TABLE>
The following table summarizes information about incentive and non-qualified
stock options outstanding at December 31, 1999:
<TABLE>
<CAPTION>
Outstanding Exercisable
-------------------------------------------- ---------------------------
Weighted
Number Average Weighted Number Weighted
Range of Outstanding Remaining Average Exercisable Average
Exercise at December Contractual Exercise at December Exercise
Prices 31, 1999 Life Price 31, 1999 Price
- -------- -------------- ------------ ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Incentive Stock Options
$3.35 300,000 2 $ 3.35 300,000 $ 3.35
Non-Qualified Stock Options
$3.35 - $5.25 855,000 2 3.84 855,000 3.84
</TABLE>
F-12
<PAGE>
VIVA GAMING & RESORTS INC.
(Formerly Viva Gaming & Resorts.com Inc.)
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
NOTE 6: STOCK OPTIONS (CONTINUED)
The Company applied Accountant's Principles Board Opinion No. 25 in accounting
for its plans. Accordingly, no compensation cost has been recognized for the
incentive stock options granted to employees under its stock option plan in its
statements of operations. Had the Company recorded a charge for the fair value
of options granted consistent with SFAS No. 123, the pro forma amounts for net
income and basic and diluted loss per share are as indicated below:
<TABLE>
<CAPTION>
Year Ended Inception Through
1999 December 31, 1999
------------------ -----------------
<S> <C> <C>
Net Loss as Reported $ (1,103,398) $ (1,293,108)
Pro Forma $ (1,382,398) $ (1,572,108)
Basic and Diluted Net Loss Per Share:
As Reported $ (0.18) $ (0.24)
Pro Forma $ (0.22) $ (0.29)
</TABLE>
The weighted average fair value of options granted to employees was $0.93 in
1999. The fair value of each option was estimated at the date of grant using the
Black-Scholes option pricing model with the following weighted average
assumptions: risk free interest rate of 6.61%, dividend yield of 0%, an expected
life of two years, and a volatility factor of 55.06%.
NOTE 7: INCOME TAXES
The deficit accumulated during the development stage (inception through December
31, 1999) of approximately $1,293,000 is comprised of approximately $618,000
which is to be capitalized for income tax purposes as accumulated start-up
costs, and is to be amortized over a sixty month period when operations commence
and the deficit caused by the recording of compensation cost of stock options of
approximately $675,000 which is not recognized for tax purposes until exercised.
The Company has recorded a valuation allowance of approximately $485,000 with
respect to any future tax benefits arising from the amortization of the start-up
costs and the granting of the options due to the uncertainty of their ultimate
realization. During the year the valuation allowance increased by $428,000.
NOTE 8: ADVANCES FROM SHAREHOLDERS AND OFFICERS
During the year, certain shareholders and officers made advances to the Company.
The outstanding balance as of December 31, 1999 and 1998 was $293,134 and $0,
respectively. The advances are non-interest bearing and due on demand.
F-13
<PAGE>
VIVA GAMING & RESORTS INC.
(Formerly Viva Gaming & Resorts.com Inc.)
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
NOTE 8: ADVANCES FROM SHAREHOLDERS AND OFFICERS (CONTINUED)
During 1998, the Company entered into a loan agreement with an officer of the
corporation for $112,500. In June 1999, the loan was repaid in full.
During 1999 and 1998, a director and an officer paid various operating expenses
for the Company. The outstanding balance as of December 31, 1999 and 1998 was
$4,678 and $13,840, respectively, which was included in accounts payable and
accrued liabilities.
NOTE 9: COMMITMENTS
Employment Agreement
- --------------------
The Company has entered into an employment agreement (the "Agreement") with an
individual to act as the President and Chief Executive Officer of the Company.
The Agreement is effective June 15, 1999 and continues through June 15, 2002. At
the end of this term, the Agreement shall automatically renew for successive
one-year terms, unless cancelled by either party. In the initial year, the
Company is obligated to pay the President a base salary of $180,000. For any
renewal terms of the Agreement, this base salary will be adjusted based on
performance. In addition to the base salary, the President is eligible for an
annual bonus of one percent of the gross revenues of the Company. Management
fees aggregate $107,443, $0, and $107,443 for the years ended December 31, 1999
and 1998, and the period from December 9, 1997 (inception) to December 31, 1999,
respectively.
Operating Leases
- ----------------
The Company has entered into a noncancelable operating lease for the facility in
Nevada. The lease provides for monthly base rents plus general service expenses.
The lease expires on July 31, 2000. Subsequent to December 31, 1999, the Company
entered into a noncancelable lease for land located in Corpus Christi, Texas to
operate day cruises. This lease provides for monthly base rent plus tax,
operating expenses and other additional charges. The lease expires in May 2005
(Note 10).
Future minimum lease payments under the noncancelable operating leases for each
of the years subsequent to December 31, 1999 are as follows:
<TABLE>
<CAPTION>
Years Ending December 31,
-------------------------
<S> <C> <C>
2000 $ 46,845
2001 38,400
2002 38,400
2003 38,400
2004 38,400
Thereafter 12,800
------------------
$ 213,245
==================
</TABLE>
F-14
<PAGE>
VIVA GAMING & RESORTS INC.
(Formerly Viva Gaming & Resorts.com Inc.)
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
NOTE 9: COMMITMENTS (CONTINUED)
Rent expense aggregated $18,293, $5,400, and $23,693 for the years ended
December 31, 1999 and 1998, and the period from December 9, 1997 (inception) to
December 31, 1999, respectively.
NOTE 10: SUBSEQUENT EVENTS
Private Placement
- -----------------
In January 2000, the Company offered units consisting of shares and warrants to
purchase additional shares of its $0.001 par value common stock in a private
placement. In connection with this private placement, the Company issued 120,000
shares of common stock and 80,000 warrants to purchase additional shares of
common stock. The Company also issued 14,400 shares and 9,600 warrants as a fee
for assistance in this private placement. Net proceeds of $430,000 were received
from this private placement.
In March 2000, the Company offered units consisting of shares and warrants to
purchase additional shares of its $0.001 par value common stock in a private
placement. The Company is offering up to 50 units at a purchase price of $50,000
per unit, for a total of $2,500,000. Each unit consists of 12,000 shares of the
Company's common stock and 8,000 options to purchase 8,000 shares of common
stock. As of March 31, 2000, the Company had placed $800,000 in shares.
Lease Agreement
- ---------------
In March 2000, the Company entered into a five-year lease agreement (the
"Lease") with the Port of Corpus Christi that covers a six-acre parcel of land
located at Harbor Island. The Company has plans to develop and operate day
cruises that will entertain a minimum of 1,500 adult passengers daily. The
monthly fee for the lease is $3,200.
Limited Liability Company Formation
- -----------------------------------
In March 2000, the Company formed Corpus Christi Day Cruises, LLC in the state
of Nevada. The LLC was formed to operate the Lease noted above.
Consulting Agreement
- --------------------
In February 2000, the Company entered into a six-month consulting agreement with
an individual. The consulting agreement requires a monthly fee of $5,000.
F-15
<PAGE>
PART III
--------
ITEM 1. INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description of Document
- ------- -----------------------
<S> <C>
3.1 Articles of Incorporation, as amended (1)
3.2 Articles of Amendment changing name and authorized capital (1)
3.3 Articles of Amendment changing name (1)
3.4 By-Laws (1)
10.1 1999 Stock Option Plan (1)
10.2 Employment Agreement with Martin Gross (1)
10.3 Office Lease Covering Las Vegas, Nevada Office (1)
10.4 Memorandum of Understanding for Roseau River Project (1)
10.5 Memorandum of Understanding for Onion Lake Project (1)
27 Financial Data Schedule (2)
</TABLE>
- --------------
(1) Previously filed
(2) Filed herewith
E-1
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act
of 1934, the Registrant caused this Amendment to Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
VIVA GAMING & RESORTS INC.
By: /s/ Robert Sim
------------------------
Robert Sim, Chairman
Date: April 10, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
FINANCIAL STATEMENTS OF VIVA GAMING & RESORTS INC. FOR THE YEAR ENDED DECEMBER
31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 3,290
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 184,891
<PP&E> 11,746
<DEPRECIATION> (558)
<TOTAL-ASSETS> 196,079
<CURRENT-LIABILITIES> 351,237
<BONDS> 0
0
0
<COMMON> 1,137,950
<OTHER-SE> (1,293,108)
<TOTAL-LIABILITY-AND-EQUITY> 196,079
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (1,103,398)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,103,398)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,103,398)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,103,398)
<EPS-BASIC> (0.18)
<EPS-DILUTED> (0.18)
</TABLE>
