FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-14724
ARNOX CORPORATION
(Exact name of Issuer as specified in its charter)
Delaware 59-3453156
(other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
1612 N. Osceola Avenue
Clearwater, Florida 33755
(Address of principal offices)
(813) 443-3434
(Issuer's telephone number, including area code)
Indicate by check mark whether the Issuer (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Issuer was required to file
such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
State the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
dates.
Title of Each Class Outstanding at September 30, 1997
Common Stock, $0.001 Par Value
3,439,247 Shares subject to 11.4642
reverse split approved by stockholders
July 7, 1997
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION PAGE
ITEM 1 Financial Statements
Consolidated Balance Sheets as of September 30, 1997
and September 30, 1996 3
Consolidated Statements of Income for the Nine Month
Periods Ended September 30, 1997 and September 30, 1996. 4
Consolidated Statements of Cash Flow for the Nine Month
Periods Ended September 30, 1997 and September 30, 1996. 5
Notes to Financial Statements 6
ITEM 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II OTHER INFORMATION 9
SIGNATURES 9
ARNOX CORPORATION
(a Dormant State Company)
Consolidated Balance Sheet
September 30, 1997 and September 30, 1996
(unaudited)
09/30/97 09/30/96
Assets
Organization Cost $ 0 $ 0
Total Assets 0 0
Liabilities and Shareholder's Equity
Stockholders' Equity
Common Stock par value at $.001 per share
10,000,000 shares authorized,
3,439,247.00 shares issued and outstanding 0 0
Additional Paid in Capital 12,794 3,439
Retained Earnings (Deficit) (12,794) (3,439)
______ _______
Total Shareholders' Equity 0 0
______ _____
Total Liabilities and Shareholders Equity $ 0 $ 0
========= ========
See accompanying notes to financial statements
ARNOX CORPORATION
(a Dormant State Company)
Consolidated Statements of Operations
for the nine month ending September 30, 1997 and September 30,
1996
(unaudited)
1997 1996*
09/30/97 09/30/96
_______ ________
Revenues $ 0 $ 0
Expenses
Administrative Expenses $5,979 $3,439
Filing Fees $ 0 $ 0
Net Income/Loss for the year $(5,979) $(3,439)
========= ========
See accompanying notes to financial statements
ARNOX CORPORATION
(a Dormant State Company)
Consolidated Statements of Cash Flows
for nine months ended September 30, 1997 and 1996
(unaudited)
For Nine Months Ended
09/30/97 09/30/96
Cash Flows from Operating Activities
Net Income $ (5,979) (3,439)
Net Cash Provided (used) /
By Operating Activities 0 0
Expenses Paid by Capston 5,979 3,439
Net Increase (Decrease) in Cash 0 0
Cash at Beginning of Period 0 0
Cash at End of Period $ 0 $ 0
===== ==
See accompanying notes to financial statements
ARNOX CORPORATION
(A Dormant State Company)
September 30, 1997
Note 1. HISTORY OF THE COMPANY
ARNOX Corporation, (A Dormant State Company), was incorporated
on October 17, 1983, under the laws of the State of Delaware.
The Company conducted an initial public offering of its Common
Stock in October, 1985 and in connection with an application to
list its Common Stock on the NASDAQ system, the Company also
registered its Common Stock pursuant to Section 12(g) of the
Securities Exchange Act of 1934. The Company's Common Stock
remained listed on the NASDAQ system until April 25, 1989.
On September 11, 1989, the Company filed a voluntary petition
under Chapter 11 of the Bankruptcy ACT (Case No. 89-97155) in
the U.S. Bankruptcy Court for the District of New Jersey. On
December 18, 1989, the Company's case under Chapter 11 was
voluntarily converted into a case under Chapter 7 of the
Bankruptcy Act. As a result of the voluntary conversion of the
Company's bankruptcy case, all assets of the Company were
transferred to the Trustee in Bankruptcy on the conversion date
and the Company ceased all operations. Subsequently, the Trustee
in Bankruptcy effected an orderly liquidation of corporate assets
and used the proceeds to repay the Company's creditors. On July
12, 1994 the Company's case under Chapter 7 was closed by an
order of the Court and the Trustee in Bankruptcy was discharged.
As a result of the Bankruptcy, the Company has no assets,
liabilities, management or ongoing operations and has not engaged
in any business activities since December 18, 1989.
Note 2. RESTORATION OF CORPORATE STATUS
On June 10, 1996, acting in its capacity as the holder of 884
shares (0.026%) of the Company's common stock, and without first
receiving the consent, approval or authorization of any other
person associated with the Company, Capston Network Company
effected a renewal, revival and restoration of the Company's
certificate of incorporation pursurant to Section 312 of the
General Corporation Law of Delaware. Thereafter, Capston filed a
10-K for the years ending December 31, 1989-1995, and a Proxy
Statement seeking approval and ratification of its actions, along
with authorization to seek a suitable business combination
transaction. This proxy statement was ultimately distributed to
the Company's stockholders and the proposals therein were
approved by the holders of a majority of the Company's issued and
outstanding shares.
Under the terms of the original Proxy Statement, Capston was
authorized to seek a suitable business combination transaction on
behalf of the Company and to submit the terms of any proposed
business combination transaction to the Company's stockholders
for their approval. Capston did not receive and was not entitled
to receive any equity interest in the Company as a result of it's
actions prior to the date of the Proxy Statement. Moreover,
Capston was not entitled to reimbursement for any expenses
incurred by it on behalf of the Company except to the extent
that the terms of a business combination transaction provided for
the reimbursement of such expenses. However, because Sally Fonner
is both the President of ARNOX and Capston, prior Staff
Accounting Bulletins require under generally accepted accounting
the treatment of debiting the expenses with corresponding credit
to paid-in capital. Future expenses of Capston or others will
be treated this way. These expenses are actual cash expenditures
and do not reflect any costs associated with the operation of
Capston nor any personnel time or cost.
Note 3. FUTURE EXPENSES
Capston will continue to extend administrative expenses to keep
ARNOX current with its reporting requirements, keeping the
Corporation in good standing, any required proxy solicitation or
acquisition efforts. These amounts should not exceed $50,000 in
out-of-pockets costs. In addition, as approved, and as a result
of a suitable acquisition, additional fees paid for by issuance
of equity position would be for: (i) Capston of 300,000 shares,
(ii)up to 11,500,000 shares for an acquisition(s) and (iii) up
to 5% of the acquisition for a finder's fee .
Item 2. Management Discussion and Analysis of Financial Condition
and Results of Operations.
Financial Condition
As a result of its 1989 Bankruptcy, the Company has no
assets, liabilities, or ongoing operations and has not engaged in
any business activities since September 1989. The Company had no
operations during the year ended December 31, 1996 and no
material assets or liabilities as of December 31, 1996. The
reported loss from operations in 1996 resulted solely from
expenses incurred by Capston on behalf of the Company in
connection with the restoration of the CompanyOs corporate
charter and the preparation and filing of certain reports
required under the Securities Exchange Act of 1934. It is the
intention of management to seek stockholder approval of a Revised
Plan whereby the Company will be restructured as a Oclean public
shellO for the purpose of effecting a business combination
transaction with a suitable privately-held company that has both
business history and operating assets, although there can be no
assurance that management will be successful in its effforts to
negotiate such a transaction.
Results of Operations
For the past one and an half years, the Company has been
actively seeking an acquisition of assets, property or business
that may benefit the Company and its stockholders. While these
efforts have not resulted in a suitable business combination
transaction, the CompanyOs experience during this period confirms
that demand for well structured clean public shells is strong.
Over the last eight months, the Company has been evaluated by a
number of potential acquisition candidates. In each case,
however, the Company has been rejected as unsuitable because (1)
the Capital structure of the Company was not suitable, (2)
Capston lacked the authority to negotiate a binding transaction
for the Company, and (3) any proposed business combination would
entail the cost and delay of preparing a business combination
proxy statement and holding an additional stockholders meeting
with no assurance that the proposed business combination would be
approved by the stockholders. Therefore, it became clear that
Capston needed to propose a revised plan to the stockholders.
Management intends to seek stockholder approval of the Revised
Plan described elsewhere herein at the earliest practicable date.
Plan of Operation.
The Company has not engaged in any material operations or had
any revenues from operations during the two preceeding years.
The Company's plan of operation for the next twelve months is to
continue to seek the acquisition of assets, property or business
that may benefit the Company and its stockholders. Because the
Company has no resources, management anticipates that to achieve
any such acquisition, the Company will be required to issue
shares of its common stock as the sole consideration for such
acquisition.
During the next twelve months, the Company's only foreseeable
cash requirements will relate to maintaining the Company in good
standing or the payment of expenses associated with reviewing or
investigating any potential business venture, which are
anticipated to be advanced by Capston as loans to the Company.
Because the Company has not identified any such venture as of the
date of this Registration Statement, it is impossible to predict
the amount of any such loans. However, any loans from Capston
will be on terms no less favorable to the Company than would be
available from a commercial lender in an arm's length
transaction. As of the date of this Annual Report on Form 10-K,
the Company has not begun seeking any acquisition.
Capston will continue to extend administrative expenses to
keep ARNOX current with its reporting requirements, keeping the
Corporation in good standing, any required proxy solicitation or
acquistion efforts. Management anticipates that Capston, will
advance minor administrative expenses up to approximately
$5,000.*These amounts should not exceed $50,000 in out-of-pockets
costs. In addition, if approved, additional costs associated
with a business combination paid for by issuance of equity
position would be for: (i) Capston of 300,000 shares, (ii)up to
11,500,000 shares for an acquisition(s) and (iii) up to 5% of
the acquisition for a finder's fee. In the event that additional
funding is required in order to keep the Company in good standing
and/or to review or investigate any potential merger or
acquisition candidate, the Company may attempt to raise such
funding through a private placement of its common stock to
accredited investors.
At the present time, management has no plans to offer or sell
any securities of the Company. However, at such time as the
Company may decide to engage in such activities, management may
use any legal means of conducting such offer or sale, including
registration with the appropriate federal and state regulatory
agencies and any registration exemptions that may be available to
the Company under applicable federal and state laws.
Because the Company is not currently making any offering of
its securities, and does not anticipate making any such offering
in the foreseeable future, management does not believe that Rule
419 promulgated by the Securities and Exchange Commission under
the Securities Act of 1933, as amended, concerning offerings by
blank check companies, will have any effect on the Company or any
activities in which it may engage in the foreseeable future.
PART II - OTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS
NONE
ITEM 2.CHANGES IN SECURITIES
AS OF SEPTEMBER 25, 1997, LUMIERE SECURITIES RECEIVED
CLEARANCE TO MAKE A MARKET IN ARNOX UNDER THE TRADING
SYMBOL ARXC.
ITEM 3.DEFAULTS ON SENIOR SECURITIES
NONE
ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On June 13, 1997, the Registrant sent to its stockholders a
Notice of Special Meeting and Proxy Statement which described a
number of proposals relating to a plan of reorganization proposed
by Capston Network Company (OCapstonO), a stockholder of the
Company. Subsequently, on July 7, 1997, a Special meeting of the
Stockholders was held and all of the proposals were approved by a
majority vote of the Stockholders. The principal proposals
approved by the stockholders were:
1. To elect a person designated by Capston to serve as the sole
member of the Board of Directors until the next annual Meeting of
stockholders, or until her successor is elected and qualified;
2. To consider and vote upon a proposed Amendment to the
Company's Certificate of Incorporation that will effect a reverse
split of all issued and outstanding shares of Common Stock in the
ratio of one (1) share of new Common Stock for each 11.4642
shares presently outstanding so that immediately thereafter the
Company will have a total of 300,000 shares issued and
outstanding;
3. To consider and vote upon a proposal to issue 300,000 shares
of Common Stock to persons designated by Capston as compensation
for services rendered in connection with the implementation of
the Revised Plan;
4. To consider and vote upon a proposal which will give the
Board of Directors authority to pay an in-kind Finder's Fee to
unrelated third party finders who introduce the Company to a
suitable acquisition prospect.
5. To consider and vote upon a proposal that will give the Board
of Directors discretionary authority to (i) change the Company's
name and (ii) issue up to 11,500,000 shares of Common Stock to
unrelated third parties, all without prior stockholder approval,
in connection with a business combination transaction of the type
contemplated by the Revised Plan; and
6. To consider and vote upon a proposed Amendment to the
Company's Certificate of Incorporation that will increase the
authorized capital stock of the Company to 25,000,000 shares of
$0.01 par value Common Stock and 5,000,000 shares of $0.01 par
value Preferred Stock.
ITEM 5.OTHER INFORMATION
NONE
ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits None
B. Reports on Form 8-K None
SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
ARNOX Corporation
/S/
Sally A. Fonner
Chief Executive Officer
Dated: September 30, 1997
/S/
Sally A. Fonner
Chief Financial Officer
Dated: September 30, 1997
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