<PAGE>
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended: October 31, 1997
[ ] Transition Report Under Section 13 or 15(d) of the Exchange Act
Commission File Number: 33-14576-D
ARENA GROUP, INC.
(Exact name of small business Registrant as specified in its charter)
Nevada 87-0453842
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5 Clancy Lane South
Rancho Mirage, California 92270
(Address of principal executive offices)
(760) 346-5961
(Registrant's telephone number)
Check whether the Registrant: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the Registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
[Item - 1] Yes [ X ] No [ ]; [Item - 2] Yes [ X ] No [ ]
APPLICABLE ONLY TO CORPORATIONS
State the number of shares outstanding of each of the Registrant's classes of
common equity as of the latest practical date:
994,225 shares of its $0.001 par value common stock constitutes the only
class of common equity that the Registrant had outstanding as of December 1,
1997.
Transitional Small Business Disclosure Format (check one) Yes [ ] No [X]
Page 1
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PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements (of a development stage enterprise).
The following financial statements constitute Interim Financial Statements which
are unaudited as of the Registrant's most recent fiscal quarter ending October
31, 1997. In addition, the Statement of Operations and the Statement of Cash
Flows for the most recent quarterly period and for the comparable quarter of the
preceding fiscal year are also presented. These unaudited financial statements
are presented in accordance with the requirements of a development stage
enterprise and, therefore, also provide cumulative amounts from the date of
inception in addition to a Statement of Stockholders' Equity which is also
presented from the date of inception.
These interim financial statements include all adjustments which in the opinion
of management are necessary in order to make the financial statements not
misleading. Furthermore, the interim financial statements have been prepared by
the Registrant pursuant to the rules and regulations of the Securities and
Exchange Commission and certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted.
The reader should also refer to the accompanying footnotes to these interim
financial statements and to the Registrant's audited financial statements and
footnotes thereto, which are contained in the Registrant's Form 10-KSB Report
for the fiscal year ended July 31, 1997.
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ARENA GROUP, INC.
(a development stage company)
Unaudited Balance Sheet
October 31, 1997
ASSETS
Current Assets
Cash in Bank ........................................ $ 7,857
--------
TOTAL ASSETS ................................................. $ 7,857
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable .................................... $ 1,045
--------
Stockholders' Equity:
Common Stock, $.001 par value, 50,000,000
shares authorized, 994,225 shares
issued and outstanding ....................... 994
Capital in excess of par value ...................... 13,756
Deficit accumulated during the development
stage ........................................ (7,938)
--------
TOTAL STOCKHOLDERS' EQUITY ................................... $ 6,812
--------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ................... $ 7,857
========
The accompanying notes are an integral part of these financial statements.
Page 3
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<TABLE>
<CAPTION>
ARENA GROUP, INC.
(a development stage company)
Unaudited Statements of Operations
From the
start of a
development
The 3 Month The 3 Month stage company
Period Ended Period Ended through
Oct. 31, 1997 Oct. 31, 1996 Oct. 31, 1997
--------------- --------------- ---------------
<S> <C> <C> <C>
Revenue ................................. $ - $ - $ -
-------- -------- --------
Expenses:
Office expenses ................ 163 - 201
Travel & Lodging ............... 423 - 423
Office overhead & related ...... 809 - 809
Public company costs ........... 1,453 - 1,927
Legal & auditing fees .......... 4,000 - 4,000
Filing and Registration ........ - - 578
-------- -------- --------
Total Expenses .......................... $ 6,848 $ - $ 7,938
-------- -------- --------
NET OPERATING LOSS ...................... $ (6,848) $ - $ (7,938)
======== ======== ========
LOSS PER SHARE .......................... $ (0.01) $ - $ (0.01)
======== ======== ========
SHARES USED TO COMPUTE LOSS
PER SHARE ...................... 994,225 779,940 994,225
======== ======== ========
The accompanying notes are an integral part of these financial statements.
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</TABLE>
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<TABLE>
<CAPTION>
ARENA GROUP, INC.
(a development stage company)
Unaudited Statement of Stockholders' Equity
Deficit
Capital Accumulated
Common Stock in Excess During the Total
----------------------------- of Development Stockholders'
Shares Amount Par Value Stage Equity
------------- -------------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
At commencement of the
Development Stage,
July 31, 1996 ......... 779,940 $ 780 $ (1,030) $ - $ (250)
------- ------ -------- -------- -------
Common Stock issued for
cash at $.07 per
share, July 1997 ...... 214,285 214 14,786 - 15,000
Net Loss for the
year ended
July 31, 1997 - - - (1,090) (1,090)
------- ------ -------- -------- -------
BALANCE .......... 994,225 994 13,756 (1,090) 13,660
------- ------ -------- -------- -------
Net Loss for the
quarter ended
October 31, 1997 - - - (6,848) (6,848)
------- ------ -------- -------- -------
BALANCE .......... 994,225 $ 994 $ 13,756 $ (7,938) $ 6,812
======= ====== ======== ======== =======
The accompanying notes are an integral part of these financial statements.
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</TABLE>
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<TABLE>
<CAPTION>
ARENA GROUP, INC.
(a development stage company)
Unaudited Statements of Cash Flows
From the
commencement of
a development
For the Three For the Three stage company
Months Ended Months Ended through
October 31, 1997 October 31, 1996 October 31, 1997
---------------- ---------------- ----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss from operations ........ $ (6,848) $ - $ (7,938)
Increase in accounts
Payable ................. 367 - 795
-------- ------- --------
Net Cash Used In Operating
Activities .............. (6,481) - (7,143)
======== ======= ========
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from sale of
common stock ............ - - 15,000
-------- ------ --------
Net Cash Provided By
Financing Activities .... - - 15,000
-------- ------ --------
NET INCREASE (DECREASE) IN CASH ......... (6,481) - 7,857
Cash at beginning of period ............. 14,338 - -
-------- ------ --------
CASH AT END OF PERIOD ................... $ 7,857 $ - $ 7,857
======== ====== ========
The accompanying notes are an integral part of these financial statements.
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</TABLE>
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ARENA GROUP, INC.
(a development stage company)
Notes to Unaudited Financial Statements
NOTE 1 - ACCOUNTING POLICIES AND OTHER DISCLOSURES
The condensed unaudited financial statements included in this Form 10-QSB Report
have been prepared by the Registrant, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. These financial
statements have been prepared to provide information with respect to the interim
three month periods ending October 31, 1997 and 1996, at a time when the
Registrant is a development stage enterprise. The Registrant is seeking to enter
into a business reorganization, principally through the issuance of its common
stock, with a business venture or a business entity which is currently
successful or has the potential to be successful. The ability for the Registrant
to achieve success in this effort is contingent on finding an entity desiring to
enter into such a reorganization. The Registrant can give no assurance that an
entity can be located which desires to enter into such a reorganization.
Furthermore, due to its limited capital, the Registrant may not be able to
continue to seek a desirable entity for any prolonged period of time unless
additional capital is obtained.
The Registrant was incorporated under the laws of the state of Nevada on March
6, 1987 under the name of Coronado Ventures, Inc. In October of 1988 each of the
Registrant's two current officers and directors, namely Lloyd T. Rochford and
Denny W. Nestripke, acquired 41% and 19%, respectively, of the Registrant's then
issued and outstanding common stock. Mr. Rochford paid $3,250 and Mr. Nestripke
paid $1,500 in cash consideration to the selling shareholders. Subsequently, on
November 13, 1989, a registration statement filed by the Registrant with the U.
S. Securities and Exchange Commission was declared "effective" and $50,000 was
raised through the sale of approximately 71,500 shares of "after-split" common
stock. Additional information regarding the Registrant's activities from its
date of incorporation through July 31, 1996 can be located as a part of
Registrant's Form 10-KSB Report for the year ended July 31, 1997.
The accounting policies followed by the Registrant and other pertinent financial
statement disclosures are contained in the footnotes accompanying the
Registrant's audited financial statements for its fiscal year ended July 31,
1997. Those financial statements are contained in the Registrant's Form 10-KSB
Report which was filed with the Securities and Exchange Commission at or about
September 24, 1997.
NOTE 2 - CURRENT CAPITALIZATION OF THE REGISTRANT
On July 22, 1997, by a Written Consent Resolution representing a vote of 61% of
the Registrant's shareholders, the Registrant changed its name to Arena Group,
Inc. and approved a one for seven [ 1 for 7 ] reverse split of the Registrant's
common stock. The herein presented financial statements reflect, in all
respects, the Registrant's common stock as adjusted for the reverse split. With
the additional issuance for cash of 214,285 shares of the Registrant's post
split common stock during July of 1997, the Registrant presently has 994,225
shares of common stock issued and outstanding. The Registrant again requests the
reader to review the Registrant's Report on Form 10-KSB for the year ended July
31, 1997, which provides a more detailed discussion relative to the Registrant's
outstanding common stock.
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PART I - FINANCIAL INFORMATION
ITEM 2. - PLAN OF OPERATION
Because the Registrant did not have any revenue, either from operations or
otherwise, since becoming a development stage enterprise, Item 2 of Part I, will
be presented in the form of a Plan of Operation rather than in the format of
management's analysis and discussion of its business operations.
The reader should realize that the Registrant's plan of operation may contain
statements regarding the Registrant's expectations of its future operations.
Such statements, which include the potential of the Registrant entering into a
plan of reorganization by making an acquisition of an existing operating
company, as well as certain other statements made in this Item 2 of Part I,
could constitute forward looking information within the meaning of the Private
Securities Litigation Reform Act of 1995. The Registrant has no reason to
believe that its expectations are not drawn from reasonable assumptions within
the bounds of its knowledge and experience. Nevertheless, there can be no
assurance given by the Registrant that the actual results will not differ
materially from the expectations expressed herein.
In seeking to locate another entity or operating assets which the Registrant can
acquire though a form of reorganization, there are matters which may affect the
Registrant to a greater degree than other corporations. These matters relate to
normal operating conditions with which the Registrant must contend, but which
would not result in the same degree of influence being exerted upon other
corporations. These factors which would relate directly to the Registrant are
factors which the reader should consider as being explicitly focused on the
Registrant and which could cause expectations to differ significantly upon their
occurrence. A list of those factors, which are not intended to be all-inclusive,
are as follows: 1) changes in federal and/or state securities laws; 2) changes
in federal and/or state income tax laws relating to tax free or tax deferred
reorganizations; 3) economic conditions and their associated impact on the
equity security markets would particularly influence an entity such as the
Registrant; 4) a change in the Registrant's management; and 5) the Registrant's
ability to sufficiently capitalize itself for an undeterminable future period of
time and allowing the Registrant to continue to pursue a reorganization as
described herein.
During the first quarter of the prior year, the Registrant, its prior directors
having resigned before such time, was effectively without any leadership.
Consequently, the Registrant was inactive and did not engage in any business
activities. Therefore, the Registrant has not made any comparisons between the
activities of the Registrant from the prior year to the current year.
During the Registrant's three months period ending October 31, 1997,
approximately 65% of its $6,848 operating loss was expended to bring the
Registrant current in its reporting requirements with the Securities and
Exchange Commission. This procedure included the audit of its financial
statements (which are included in the Registrant's Form 10-KSB Report) and in
requesting legal assistance which culminated with the Registrant's listing on
the O T C Electronic Bulletin Board. The trading symbol assigned to the
Registrant is "AREE." The business of acquiring other entities through a
corporate reorganization is laden with numerous details resulting in certain
costs which could change dramatically from one entity to another. Since the
filing of its Form 10-KSB Report with the SEC, the Registrant undertook to meet
with several entities which had expressed an interest in a potential business
reorganization or entering into an agreement for a tax free exchange. Even
though these discussions are still very preliminary, and any disclosure thereof
at this time could only result in unwarranted conjectures by unrelated parties,
the Registrant has incurred certain related costs. It appears inevitable that as
the Registrant follows through with discussions with these entities, costs will
remain a constant drain on the Registrant's resources.
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The Registrant is not able to estimate the actual dollar amount that will or
could be incurred by the Registrant is this regard. Nevertheless, it is the
consensus of management, that unless an immediate reorganization were to occur,
it will become necessary for the Registrant to seek additional finances to fund
its plan to locate a potential reorganization candidate. The Registrant's
current business activities may be referred to as those of a "blind check" or
"blind pool" entity. There exists a particular dislike by regulatory entities
for these types of entities, and even though not illegal, the likelihood of the
Registrant undertaking any type of a public offering would be prohibitive. Thus,
the Registrant will need to look for private capital through the sale of its
common stock in those states where the Registrant would be allowed to undertake
such isolated transactions. The Registrant believes that sufficient capital
exists to maintain the company operational through the end of 1997 and into the
first month or two of 1998. By that time the Registrant intends to have a plan
formulated for raising additional capital, if the Registrant has not been able
to enter into a reorganization.
One of the issues which the reader may find appropriate for the Registrant to
discuss, is referred to what has become known as the "year 2000 issue." Stated
very briefly for those not familiar with this issue as follows:
Computer systems which are older models or operate under older software programs
have not been programed to identify the turn of the century and the year 2000
will appear as the last two digits of the year. If not appropriately programed,
2000 would be read by the software as the year 1900, which is obviously
incorrect. However, the costs of changing the year 1900 to the year 2000 may
involve problems of enormous magnitude. The actual difficulty involved in making
such a transition may or may not be known; nevertheless, one potential result is
that the Registrant could incur a tremendous financial obligation if the company
acquired through a reorganization has not addressed this issue in its business
activities.
Due to the fact that the Registrant is currently not engaged in an active trade
or business, the "year 2000 issue" is immaterial. At the present time for the
Registrant to provide any further information regarding the effects of a
potential business reorganization with such an entity would only be conjecture
at this time. If, however, a business or operating assets are acquired by the
Registrant, then the "year 2000 issue" will need to be assessed by management of
the Registrant, if such has not already been undertaken by the business or
management of the operating assets acquired.
Management highly recommends to its shareholders, or prospective shareholders,
that any evaluation of the Registrant be based on its current merits and not on
conjecture as to possibilities which may arise at some unknown future date.
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PART II - OTHER INFORMATION
The information required to be presented pursuant to Item 1 through Item 5 of
Part II of this Form 10-QSB Report is either not applicable or would be answered
by "no" or "none." Thus, in accordance with the instructions to Form 10-QSB, any
further reference to these items has been omitted.
Item 6 (a) - Index to Exhibits:
Location Exhibit Description of Exhibit
(E) 2 Order of the Court to dissolve subsidiary corporations
(B) 3(i).1 Initial Articles of Incorporation
(C) 3(i).2 Amended Articles of Incorporation dated January 5, 1990
(E) 3(i).3 Amended Articles of Incorporation dated August 5, 1997
(B) 3(ii).1 Initial By-Laws
(D) 3(ii).2 By-Laws dated July 2, 1991
(E) 22.1 Form of the Written Shareholder Consent
(E) 22.2 Notice of Shareholder Action
(E) 22.3 Information Statement
(E) 22.4 Transmittal Form
(A) 27 Financial Data Schedule
Legend to location of Exhibits
(A) Located within this Report following the Signature Page and in Exhibit
number order.
(B) Incorporated by reference to a Registration Statement filed on Form S-18;
File Number 33-23314 in the Denver Regional Office of the SEC.
(C) Incorporated by reference to a Form 10-Q Report for the quarter ended
December 31, 1989.
(D) Incorporated by reference to a Form 10-K Report for the year ended June 30,
1991.
(E) Incorporated by reference to a Form 10-KSB Report for the year ended July
31, 1997.
Item 6 (b) - No Reports on Form 8-K were filed by the Registrant for the period
covered by this report.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ARENA GROUP, INC.
/s/ Lloyd T. Rochford Dated: December 5, 1997
- ---------------------
Lloyd T. Rochford,
Chief Executive Officer
/s/ Denny W. Nestripke Dated: December 5, 1997
- ----------------------
Denny W. Nestripke,
Chief Financial Officer
Page 11
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EXHIBIT 27 - Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-01-1997
<PERIOD-END> OCT-31-1997
<CASH> 7,857
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,857
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,857
<CURRENT-LIABILITIES> 1,045
<BONDS> 0
0
0
<COMMON> 994
<OTHER-SE> 5,818
<TOTAL-LIABILITY-AND-EQUITY> 7,857
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,848
<LOSS-PROVISION> (6,848)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,868)
<EPS-PRIMARY> 0.000
<EPS-DILUTED> 0.000
</TABLE>
