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FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended: July 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from --------- to -----------
Commission file number: 33-14576-D
ARENA GROUP, INC.
(Name of Registrant)
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
(760) 346-5961
(Current Address and Telephone Number of the Registrant)
Weststar Group, Inc.
2200 Sunrise Boulevard
Rancho Cordova, California 95670
(Former Name and Address of Registrant)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act: None
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
nd (2) has been subject to such filing requirements for the past 90 days.
(1) Yes [ X ] No [ ] (2) Yes [ X ] No [ ]
State Registrant's revenues for its most recent fiscal year. $0.00
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days:
As of the date of this Report, the Registrant is not aware of any recent market
transactions in the Registrant' securities. The Registrant's common stock is not
listed on any stock exchange nor is it listed on an electronic over-the-counter
quotation system. Furthermore, the Registrant is not aware of any quotation of
the Registrant's common stock that is being given by any broker/dealer.
Indicate the number of shares outstanding of each class of the Registrant's
common stock.
The Registrant has only one class of common stock outstanding. As of the latest
practicable date, being September 2, 1997, 994,225 shares of the Registrant's
$0.001 par value common stock were outstanding, which takes into consideration
the one for seven (1 for 7) reverse split of the Registrant's common stock,
which became effective on September 2, 1997.
DOCUMENTS INCORPORATED BY REFERENCE
None of the documents referred to by this Item are incorporated by reference.
Transitional Small Business Disclosure Format (check one): Yes [ ]; No [ X ]
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2
PART - I
ITEM 1.
DESCRIPTION OF BUSINESS
The Registrant was incorporated under the laws of the state of Nevada on March
6, 1987, as Coronado Ventures, Inc., with a business purpose of seeking an
entity with a potential for a successful business future. The Registrant filed a
Form S-18 Registration Statement (the "Offering") with the U. S. Securities and
Exchange Commission ("SEC"), which was declared "Effective" on November 13,
1989. Pursuant to the Offering a total of one million units were sold with each
unit comprising one share of common stock and three warrants. The warrants
subsequently expired before any warrants were exercised.
Between December 1989 and June 1990, the Registrant acquired 100% of the issued
and outstanding shares of Tahoeview Cablevision, Inc. ("Tahoeview"), for which
it issued shares of its common stock. (Please refer to Exhibit 20 of this Report
for the document entitled "Information Statement" which provides a description
of the stock splits which have occurred in Registrant's common stock.) As a
result of this acquisition, the Registrant entered into the cable television
system business in northern California and changed its name to Weststar Group,
Inc.
In May of 1991, the Registrant, through a wholly owned subsidiary, Weststar
Group North ("WGN") acquired all the tangible and intangible assets of several
cable television systems located in eastern Montana. The Registrant issued
shares of its common stock and through WGN obtained a $3,000,000 revolving
credit loan from a financial institution, of which approximately $2,300,000 went
to the sellers of the assets acquired by WGN.
Upon expiration of the revolving credit loan in 1993, WGN was not able to obtain
a renewal thereof due to prior defaults of the loan provisions. As a result of
Tahoeview and WGN not being able to present an acceptable financing plan to its
creditors, a suit was filed in U. S. District Court (the "Court"), naming
Tahoeview and WGN as defendants and requesting the appointment of a Permanent
Receiver for the purpose of liquidating Tahoeview and WGN. The Registrant was
never involved in the action filed in the Court nor with any activities of the
Permanent Receiver. On July 31, 1996, pursuant to a decree of the Court, the
Receivership was ordered closed and both Tahoeview and WGN were ordered to
dissolve as corporate entities.
During the period that the proceedings of the Permanent Receiver were taking
place in the Court, the Registrant's directors and officers resigned their
positions. Upon the complete liquidation and dissolution of the Registrant's two
subsidiaries, in July of 1996, the Registrant no longer had any assets or
indebtedness and was without any business operations.
In July of 1997, Lloyd T. Rochford and Denny W. Nestripke, both prior
shareholders of the Registrant combined their efforts to become elected as
directors of the Registrant and to find another business venture which the
Registrant could acquire or with which the Registrant could enter into a
reorganization. (Please refer to Item 4 - Submission of Matters to a Vote of
Security Holders of this Report for a description of the actions taken by Mr.
Rochford and Mr. Nestripke.)
At the present time the Registrant is seeking to acquire, principally through
the issuance of its common stock in some form of a reorganization, a business
venture or a business entity (such venture(s) or entity(ies) shall hereinafter
be referred to as the "Target Company" or "Target Companies") which is currently
successful or has the potential to be successful. The ability for the registrant
to achieve success in this effort is contingent, in part, on the desire of the
Target Company to enter into such an arrangement with the Registrant as opposed
to having the Target Company file a registration statement with the SEC,
inasmuch as the Registrant is primarily offering the Target Company an
alternative to becoming a public entity without the requirement of filing a
registration statement.
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The Registrant will be subject to applicable state and federal rules and
regulations in undertaking the acquisition of a Target Company. On a federal
level, an example of such regulations are found under the Securities Exchange
Act of 1934 and the Registrant's obligation to report under Item 2. Acquisition
of Assets, of Form 8-K. The Registrant is not in a position to assess the degree
of difficulty that compliance with this requirement would cause for the Target
Company and suggests that the reader consult with their legal counsel to obtain
further information relative to this reporting requirement.
The Registrant does not have any full or part-time employees and is being
managed by its officers and directors, who have not made any specific time
commitment relative to finding a Target Company with which the Registrant could
commence negotiating an acquisition or reorganization.
ITEM 2.
DESCRIPTION OF PROPERTY
The Registrant does not own any real or personal property. The Registrant has no
office facilities and at the present time is utilizing the address of Mr. Lloyd
T. Rochford, its President, located in Rancho Mirage, California. Management
does not intend to seek other office arrangements at this time because
management does not believe it necessary nor would it serve any useful purpose.
Any clerical, record keeping, accounting and other similar functions will be
undertaken by Mr. Denny W. Nestripke, the Registrant's secretary/treasurer from
his residence. As a general overhead charge for office supplies, telephone,
postage and other such related items, $250 will be paid to Mr. Nestripke
monthly, commencing with the month of September.
The Registrant has not established any policies or other criteria which will be
utilized by management in seeking a Target Company. Consequently, it is at
management's discretion as to the nature or type of business that a Target
Company may be engaged in or conducting.
ITEM 3.
LEGAL PROCEEDINGS
All legal proceedings relative to the receivership in which the Registrant's
former subsidiaries were involved, were ordered closed by the Court on July 31,
1996. The Registrant had no part in those proceedings and was not named in any
action with respect thereto. The Registrant, its officers, directors, affiliates
or owners of more than 5% of the Registrant's common stock are not a part of any
known legal proceedings or threatened legal proceedings.
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ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Pursuant to a Written Shareholder Consent with a record date of June 22, 1997,
and in accordance with the Nevada Revised Statues, a majority of 61% of the
Registrant's shareholders voted in favor of:
1) Electing Lloyd T. (Tim) Rochford and Denny W. Nestripke as directors.
2) Changing the Registrant's year end to July 31.
3) Engaging the firm of Hansen, Barnett & Maxwell, as auditors.
4) Changing the Registrant's name to Arena Group, Inc.
5) Effecting a 1 for 7 reverse split of the Registrant's common stock.
The Registrant has sent to all shareholders of record on or about August 27,
1997 an "Information Statement" which describes in greater detail the items
listed above and the reasons that management deemed these items to be important
to undertake.
Additionally, being submitted as Exhibits to this Report are the following:
Exhibit 3 - Amended Articles of Incorporation changing the Registrant's name.
Exhibit 22 - Form of the Written Shareholder Consent
- Notice of Shareholder Action
- Information Statement
- Transmittal Form
PART - II
ITEM 5.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
As of the date of this Report, there is not a public trading market for the
Registrant's common stock. All warrants which were issued as a part of the
Registrant's public offering in 1989 have expired. No other warrants, options or
other securities convertible into shares of common stock are outstanding. Other
than shares of common stock that may be issued in conjunction with an
acquisition or reorganization by or of the Registrant, as described in Item 1 of
this Report, the Registrant does not, at the present time, have any intention to
issue additional shares of common stock.
After the one for seven (1 for 7) reverse split which is referred to under Item
4 of this Report, the Registrant will have 994,225 shares of common stock issued
and outstanding which are held by 77 shareholders of record. During the last two
fiscal years the Registrant has not declared any cash dividends on its common
stock and it is not anticipated that the Registrant shall declare any cash
dividends on its common stock within the foreseeable future.
Recent Sale of Securities Without Registration
Immediately after the current board of directors were elected, the Registrant
sold 214,285 post-split (1,500,000 pre-split) shares of its common stock at
$0.07 per share post-split ($0.01 pre-split) for total cash proceeds of $15,000.
These shares were sold to 2 individuals, in a private sale, namely, Mr. Lloyd T.
Rochford, the Registrant's President and a director (174,285 post-split shares)
and Mr. Robert Morley, an existing shareholder of the Registrant (40,000
post-split shares) who is further identified in Item 11 Security Ownership of
Certain Beneficial Owners and Management, of this Report. In claiming an
exemption from registration, the Registrant relied upon Section 4(2) of the
Securities Act of 1933 in that the sale did not involve a public offering.
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ITEM 6.
PLAN OF OPERATION - A DEVELOPMENT STAGE COMPANY
Statements regarding the Registrant's expectations as to its future operations
and the potential of making an acquisition of a Target Company as well as
certain other statements made in this Form 10-KSB Report, constitute forward
looking information within the meaning of the Private Securities Litigation
Reform Act of 1995. Although the Registrant believes that its expectations are
based on reasonable assumptions within the bounds of its knowledge and
experience, there can be no assurance that actual results will not differ
materially from the expectations expressed herein.
In addition to matters affecting the Registrant in general, factors which could
cause expectations to differ are, but not limited to, the following: 1) changes
in federal and/or state securities laws; 2) changes in federal and/or state
income tax laws relating to tax free reorganizations; 3) economic conditions and
their associated impact on equity security markets; 4) management of the
Registrant is comprised of individuals that have the ability to locate a Target
Company and 5) Registrant's ability to continue to have sufficient capital
available to continue into an undeterminable future period of time in order to
seek and find a Target Company.
Historical Events
The Registrant has not conducted any business operations, other than those
engaged in by its former subsidiaries. As a result, for approximately three
years the Registrant has been inactive and has not generated any revenue from
any sources. Furthermore, the Registrant has been without management, including
a functioning board of directors, for approximately the same period of time.
These facts have resulted in a significant dormancy with respect to any
operations or other activities of any kind.
Not until the recent election of a board of directors and the Registrant's
limited sale of unregistered securities, has there been any leadership in the
Registrant's management and funds available to conduct any sort of business.
With the infusion of capital, the Registrant has been able to bring its
reporting and filing requirements current, not only with respect to the SEC but
also with state authorities.
The Registrant has elected to change its fiscal year end to correspond with the
date that, for accounting purposes, the Registrant entered into a "development
stage" or became a "start-up" company. Furthermore, the Registrant has been able
to obtain an audit report on its financial statements which provides additional
credibility to the Registrant's future endeavors.
Anticipated Future Events
During the next twelve months, management has set some goals which it believes
are attainable and which it believes will not exceed its current available cash
position. The goals have been quantified in the following discussion.
Management believes that it is a detriment to the Registrant that its common
stock is not traded on the over-the-counter market. The current illiquidity
characterized by the Registrant's securities represents a negative aspect of
ownership. However, given the ability to sell their securities, shareholders may
elect to hold their security position in the Registrant with the hope of an
increase in the per share price of the common stock. As a part of the
development of an over-the-counter market, the Registrant will need to develop
sufficient interest in the Registrant's securities to encourage broker/dealers
to participate through being a "market maker" in those securities.
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The Registrant has reverse split its common stock in an attempt to retain a
fairly decent perception of the Registrant's total market capitalization (total
outstanding shares multiplied by the price per share). Management's goal is to
first provide an ability for shareholders to obtain liquidity for their shares
rather than focusing on optimizing the price per share of its common stock. In
order to accomplish this task, management will be contacting principals of
broker/dealers in an effort to interest them in the Registrant's future
potential and as a result, cause such broker/dealers to submit a quotation for
listing of the Registrant's common stock on the OTC Electronic Bulletin Board.
In addition to providing a marketplace for the Registrant's common stock,
management intends to promote the availability of the Registrant to potential
Target Companies by utilizing managements' prior experience in the securities
market to contact individuals who either have a potential interest as a Target
Company or who know of Target Companies. The actual results that these efforts
will achieve in locating a Target Company is purely speculative.
If a Target Company is found, it is the Registrant's intent to enter
into a Plan and Agreement of Reorganization with such Target Company to
formalize an acquisition or reorganization. In some instances the Target Company
may itself be a development stage company and to effect a viable reorganization,
it may require that the Registrant engage in capital raising activities through
the sale of its common stock. Consideration should also be given to the fact
that if the Target Company has net earnings and a good potential for continued
earnings, a dilution of the current shareholder's percentage ownership in the
Registrant is a highly likely result.
The investigation of a Target Company and the negotiation, drafting and
execution of relevant agreements, disclosure documents and other instruments
which may need to be prepared, will require management to devote a substantial
amount of time and attention to such efforts. It will also require the
Registrant to incur substantial costs for payment of accountants, attorneys and
others, which may include management due to its extraordinary time commitment.
Unless an arrangement is reached with the Target Company, the Registrant will
most likely need to raise additional capital through the sale of its common
stock in order to complete any arrangement with a Target Company.
Management is not able to determine the length of time or the resources that
will ultimately be needed before any type of an acquisition or reorganization
between the Registrant and a Target Company will occur. The Registrant has not
employed anyone during each of its last two fiscal years and it is considered
highly unlikely that any employees will be hired during the current fiscal year.
Liquidity and Capital Resources
As of approximately September 2, 1997, the Registrant had cash assets of
approximately $13,500 and no accrued liabilities. The Registrant has principally
incurred costs as they relate to the filing of reports that are needed for the
Registrant to become current in its reporting requirements with the SEC. Further
costs may be incurred for legal, accounting and other related matters in an
attempt to produce a publicly traded market for the Registrant's common stock.
Even though it is not anticipated that these costs will exceed the Registrant's
current liquid position, no assurance can be given to that effect. Also, as
additional time commitments are being given to the Registrant by management, it
would be anticipated that out-of-pocket costs, which the Registrant has agreed
to reimburse, may increase and as a result, require that the Registrant issue
shares of its equity securities or enter into a debt arrangement with management
to satisfy those obligations.
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ITEM 7.
FINANCIAL STATEMENTS
Commencing on the following page, the Registrant has presented its financial
statements as of July 31, 1997, and from July 31, 1996 (date of inception)
through July 31, 1997. Included as a part of these financial statements is the
Registrant's independent certified public accountants' opinion with respect to
these financial statements. Additionally, by a vote of 61% of the Registrant's
shareholders, a reverse split in the Registrant's common stock was approved
whereby one (1) share of the common stock reflecting the Registrant's new name,
Arena Group, Inc. will be issue for seven (7) shares of the Registrant's common
stock which reflects the Registrant's prior name of Weststar Group, Inc. The
financial statements contained on the following pages reflect the "new Arena
Group, Inc." shares (or adjusted for the 1 for 7 reverse split) in all cases.
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REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders
Arena Group, Inc.
We have audited the balance sheet of Arena Group, Inc., formerly Weststar Group,
Inc. (a development stage company) as of July 31, 1997 and the related
statements of operations, stockholders' equity, and cash flows for the period
from July 31, 1996 (date of inception) through July 31, 1997. These financial
statements are the responsibility of management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit 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 audit provides 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 Arena Group, Inc. as of July
31, 1997, and the results of its operations, stockholders' equity and its cash
flows for the period from July 31, 1996 (date of inception) through July 31,
1997, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has accumulated a deficit during the
development stage which raises substantial doubt about the Company's ability to
continue as a going concern. Management's plans regarding this matter are also
described in Note 2. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
HANSEN, BARNETT & MAXWELL
Salt Lake City, Utah
September 15, 1997
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ARENA GROUP, INC.
(a development stage company)
Balance Sheet
July 31, 1997
ASSETS
Current Assets
Cash in Bank......................................... $ 14,338
-----------
TOTAL ASSETS.................................................. $ 14,338
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable..................................... $ 678
-----------
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..... (1,090)
-----------
TOTAL STOCKHOLDERS' EQUITY.................................... $ 13,660
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.................... $ 14,338
===========
The accompanying notes are an integral part of these financial statements.
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ARENA GROUP, INC.
(a development stage company)
Statement of Operations
From the
Start of a
Development
For the Year Stage Company
Ended Through
July 31, 1997 July 31, 1997
-------------- -------------
Revenue............................ $ - $ -
--------- ---------
Expenses:
Office expenses.............. 38 38
Public company costs......... 474 474
Filing and Registration...... 578 578
--------- ---------
Total Expenses.................... 1,090 1,090
--------- ---------
NET OPERATING LOSS................ $ (1,090) $ (1,090)
========= =========
LOSS PER SHARE.................... $ (0.00) $ (0.00)
========= =========
SHARES USED TO COMPUTE LOSS
PER SHARE................ 994,225 994,225
========= =========
The accompanying notes are an integral part of these financial statements.
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<TABLE>
<CAPTION>
ARENA GROUP, INC.
(a development stage company)
Statement of Stockholders' Equity
Deficit
Capital in Accumulated
Common Stock 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, JULY 31, 1997.... 994,225 $ 994 $ 13,756 $ (1,090) $ 13,660
======= ======= ========= ======== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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ARENA GROUP, INC.
(a development stage company)
Statements of Cash Flow
From the
Start of a
Development
For the Year Stage Company
Ended Through
July 31, 1997 July 31, 1997
-------------- --------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss from operations................. $ (1,090) $ (1,090)
Increase in accounts
payable............................. 428 428
--------- ----------
Net Cash Used In Operating
Activities............................... (662) (662)
--------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from sale of
common stock........................ 15,000 15,000
--------- ---------
Net Cash Provided By Financing
Activities............................... 15,000 15,000
--------- ---------
NET INCREASE IN CASH......................... 14,338 14,338
Cash at beginning of period.................. - -
--------- ---------
CASH AT END OF PERIOD......................... $ 14,338 $ 14,338
========= =========
The accompanying notes are an integral part of these financial statements.
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ARENA GROUP, INC.
(a development stage company)
Notes to the Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Corporate History
Arena Group, Inc. (the "Registrant") was incorporated in February of 1987 under
the laws of the state of Nevada as Coronado Ventures, Inc. During the period
commencing in 1990 through 1992, the Registrant acquired Tahoeview Cablevision,
Inc. ("Tahoe") and Weststar Group North ("North") and changed its name to
Weststar Group, Inc. Subsequently, Tahoe and North became subject to a
bankruptcy proceeding, which, on July 31, 1996, was concluded by an Order and
Judgment from the Court regarding the Final Distribution of Proceeds of Sale of
Assets by the Receiver. The Registrant was not named as a defendant in the
bankruptcy and was not involved in any manner, except that it was the sole
shareholder of Tahoe and North.
The conclusion of the aforementioned proceedings resulted in the Registrant
emerging without any business operations and being deemed to be a new entity for
financial statement reporting purposes. As such, the Registrant is considered to
be a development stage company. Pursuant to the Order and Judgment of the Court,
Tahoe and North were ordered dissolved and therefore, only the operations of the
Registrant since July 31, 1996 (the "Date of Inception") are included in the
accompanying financial statements.
In July of 1997, a majority of the Registrant's shareholders approved a change
in the Registrant's name to Arena Group, Inc. and approved a reverse stock split
of 1 new share for 7 of the existing shares. Since the Date of Inception, the
Registrant has not engaged in any business operations and only during the fourth
quarter of its fiscal year ended July 31, 1997, did it conduct organizational
and limited capital raising activities. The Registrant intends to focus in the
future on searching for business ventures which can be acquired through the
issuance of the Registrant's securities, rather than by a cash purchase.
Financial Instruments
The Registrant has established a policy to consider all highly liquid debt
instruments purchased with an original maturity of three months or less to be
cash equivalents.
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, liabilities and equity at the date of the
financial statements and the amounts of expenses reported during the periods
presented. Actual results could differ from those estimates.
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14
ARENA GROUP, INC.
(a development stage company)
Notes to the Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes
The Registrant has incurred no income tax liability from the Date of Inception
to its year ended July 31, 1997. The Registrant recognizes a deferred tax asset
or liability from temporary differences between the basis of assets and
liabilities reported for financial statement purposes and federal income tax
purposes, and for the effect of net operating loss carry forwards. At July 31,
1996, the Registrant had a net operating loss in the amount of $1,090 which may
be used during a future period and if not used, will expire in 2012.
The Registrant has provided a valuation allowance against the resulting deferred
tax asset. The deferred tax asset consists of the following at July 31, 1997:
Net operating loss carry forward.................... $ 371
Total Deferred Tax Assets.................. 371
-------
Valuation Allowance................................. (371)
Net Deferred Tax Asset..................... -0-
Result of Operations per Common Share
The results of operations as presented on a per common share basis is reflected
in the accompanying Statement of Operations by using the total number of post
split common shares outstanding as of the Registrant's fiscal year ended July
31, 1997. Inasmuch as the Registrant is a development stage company and did not
conduct any business operations during the period presented, using the number of
common shares outstanding as of the Registrant's year end provides a more
comparable and conservative approach to the per share computation for the
current and in future periods.
NOTE 2 - UNCERTAINTY - GOING CONCERN
The Registrant's continued existence is dependent upon its ability to maintain
sufficient cash reserves, inasmuch as the Registrant has no business operations
which are revenue producing. The Registrant's ability to meet its obligations
are based on the amount of capital raised during the fourth quarter of its July
31, 1997 fiscal year end. Of the $15,000 raised through the sale of 214,285
shares of post-split common stock, the Registrant has expended $1,090. It is
expected that the Registrant will use additional funds before being current in
its reporting obligations with the Securities and Exchange Commission. Such
reporting obligations require an ongoing expenditure without producing any
offsetting revenue.
Management of the Registrant have expressed confidence in their ability to
minimize the amount of time required to locate a business venture which can be
acquired through the issuance of the Registrant's securities. Additionally,
Management has represented that their personal financial position is
sufficiently liquid and they have committed to make a cash infusion into the
Registrant, if necessary, in the form of debt or equity.
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15
ITEM 8.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART - III
ITEM 9.
DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS AND CONTROL PERSONS
Prior to the election of directors and the subsequent appointment of officers
pursuant to a Written Shareholder Consent with a record date of June 22, 1997,
the Registrant was without a director or officer and had been in such
circumstances since January of 1995. Pursuant to the aforementioned Consent, Mr.
Rochford and Mr. Nestripke, both of which had been shareholders of the
Registrant since its initial public offering, received votes of shareholders
totaling 61% of shares eligible to vote for their election to the board of
directors. The term of directorship is determined by the Registrant's by-laws
and is for the period of one year and longer, if no other individual is
qualified and elected to serve in the capacity of a director. The positions of
president, secretary and treasurer are held at the discretion of the
Registrant's board of directors, for such period as it deems advisable.
Lloyd T. Rochford; age 51; director and President (Chief Executive Officer)
In February of 1989, Mr. Rochford founded Magnum Petroleum, Inc. ("Magnum") and
served as a director and as its Chief Executive Officer through the end of 1995.
Commencing in January of 1996 through June of 1997, Mr. Rochford served as
Magnum's Chairman of the Board of Directors. Magnum is engaged in the
exploration for and the production of oil and gas and is listed on the American
Stock Exchange. Since his resignation from Magnum, Mr. Rochford has pursued his
own personal business interests.
Denny W. Nestripke; age 50; director and Secretary/Treasurer
(Chief Financial Officer)
Mr. Nestripke, a graduate of the University of Utah with a Bachelor of Science
degree - Accounting, is a certified public accountant licensed in California and
Utah. From September of 1992 through September of 1995, Mr. Nestripke served as
the controller for Magnum. In September of 1995, after Magnum made a substantial
acquisition and relocated its corporate offices to Texas, Mr. Nestripke resigned
from Magnum and has since then primarily been engaged in managing his own
personal investments.
Neither director has: 1) had any bankruptcy petition filed by or against any
business of which either of them was a general partner or executive officer, at
the time of the bankruptcy or within a two year prior thereafter; 2) been
convicted in a criminal proceeding or been subject to a pending criminal
proceeding; 3) in any court of competent jurisdiction, been subject to any
order, judgment, or decree, permanently or temporarily enjoined, barred,
suspended or otherwise limited in their involvement in any type of business,
securities or banking activities, which was not subsequently reversed, suspended
or vacated; and 4) been found in violation of a federal or state securities or
commodities law, by a court of competent jurisdiction, the Commission or the
Commodity Futures Trading Commission, which was not subsequently reversed,
suspended or vacated.
<PAGE>
16
ITEM 10.
EXECUTIVE COMPENSATION
As previously described under Item 9. of this Report, the Registrant has not had
any individual serve as an executive officer for the past two years. The
Registrant's Chief Executive Officer, who resigned during January of 1995, was
not paid any compensation during the periods which would include the
Registrant's past three years. Consequently, there has been no compensation
awarded to, earned by or paid to any executives who would be required to report
such compensation pursuant to Item 402 of Regulation S-B. As a result, and in
accordance with the instructions to Item 402 of Regulation S-B, the Registrant
has omitted all compensation tables from this Report.
Furthermore, no compensation is expected to be paid to either Mr. Rochford or
Mr. Nestripke during the Registrant's current fiscal year, ending July 31, 1998,
except for the monthly amount of $250 being paid to Mr. Nestripke, for purposes
of offsetting the cost of general office supplies, telephone, copies, postage
and other such similar items.
ITEM 11.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners:
The table below lists those individuals or entities known to the Registrant to
be the beneficial owners of five percent [5%] or more of the Registrant's voting
securities. The amounts presented below are represented in post-split shares of
which there are 994,225 shares outstanding.
The Registrant does not have any options, warrants, rights or other conversion
privileges outstanding. Thus, the number of shares stated in the following table
includes all shares which any of these individuals own or have a right to
acquire within sixty days of the date of this report.
None of the individuals named below hold any shares pursuant to a voting trust
or similar agreement and no arrangements exists which may result in a change in
control of the Registrant.
Name and Address Amount and Nature
of the of Beneficial Percent
Title of Class Beneficial Owner Owner of Class
- -------------- ---------------- ----------------- --------
Common Stock Lloyd T. Rochford 176,862 17.8 %
5 Clancy Lane South
Rancho Mirage, CA
Common Stock Denny W. Nestripke 113,769 11.4 %
P. O. Box 4190
Palm Desert, CA
Common Stock Robert Morley 82,857 8.3 %
1600 Quail Ridge Lane #65
Roseville, CA
Common Stock Stanley McCabe 75,714 7.4 %
5922 South Atlantic Place
Tulsa, OK
<PAGE>
17
Security Ownership of Management:
The table below lists those individuals who are directors and executive officers
of the Registrant, and provides a total by such individuals as a group, current
as of the most recent practicable date.
Name and Address Amount and Nature
of the of Beneficial Percent
Title of Class Beneficial Owner Owner of Class
- -------------- ---------------- ------------------ --------
Common Stock Lloyd T. Rochford 176,862 17.8 %
5 Clancy Lane South
Rancho Mirage, CA
Common Stock Denny W. Nestripke 113,769 11.4 %
P. O. Box 4190
Palm Desert, CA
-----------------------------------------------------------
As a Group (2) individuals 290,631 29.2 %
-----------------------------------------------------------
ITEM 12.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In July of 1997, the Registrant sold 214,285 shares of its post-split common
stock to two individuals at a cash price of $0.07 per share. One of these
individuals was Mr. Rochford, an officer and director of the Registrant, who
purchased 174,285 shares for a total of $12,200 in cash consideration. The other
individual was Mr. Morley who, after his purchase of 40,000 shares of post-split
common stock, owns a combined total of 82,857 shares or 8.3 % of the total
common shares outstanding. Mr. Morley paid $2,800 in cash consideration for
these shares. Both of these transactions were not undertaken on an independent
basis and could not be considered as arms-length transactions. These shares have
not been registered and the Registrant has not given these individuals any
rights which would allow them to compel the Registrant to register these shares.
Consequently, the resale of the securities thus acquired is subject to a current
registration statement being in effect with respect to these shares or that an
exemption from registration, such as Rule 144 promulgated under of the
Securities Act of 1933, as amended, be available.
<PAGE>
18
ITEM 13.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K
No reports on Form 8-K have been filed during the last quarter of the period
being covered by this report.
Fllowing is an Index of Exhibits as called for by this Item of the Registrant's
Form 10-KSB Report.
Index of Exhibits:
- ------------------
Location Exhibit Description of Exhibit
(A) 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
(A) 3(i).3 Amended Articles of Incorporation filed August 5, 1997
(B) 3(ii).1 Initial By-Laws
(D) 3(ii).2 By-Laws dated July 2, 1991
(A) 22.1 Form of the Written Shareholder Consent
(A) 22.2 Notice of Shareholder Action
(A) 22.3 Information Statement
(A) 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
<PAGE>
19
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act; the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ARENA GROUP, INC.
By: /s/ Lloyd T. Rochford
---------------------
Lloyd T. Rochford
Chief Executive Officer
Date: September 10, 1997
By: /s/ Denny W. Nestripke
----------------------
Denny W. Nestripke
Chief Financial Officer
Date: September 10, 1997
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
By: /s/ Lloyd T. Rochford
---------------------
Lloyd T. Rochford
Director
Date: September 10, 1997
By: /s/ Denny W. Nestripke
----------------------
Denny W. Nestripke
Director
Date: September 10, 1997
<PAGE>
20
EXHIBIT 2
FORM OF ORDER OF THE COURT TO DISSOLVE SUBSIDIARY CORPORATIONS
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
STATE STREET BANK AND TRUST
COMPANY,
Plaintiff
v. C.A. No. 94-12257-NG
WESTSTAR GROUP NORTH, INC.
AND TAHOEVIEW CABLEVISION
INC.,
Defendants
ORDER AND JUDGMENT
------------------
This matter having come before the Court on the Final Report and Petition to
Close Receivership of Robert J. Maccini (the "Receiver"), Permanent Receiver in
the above-captioned matter, and the Court being satisfied that Notice of the
filing of said Final Report and Petition to Close Receivership has been given to
all interested parties in this proceeding, with no objections having been filed,
it is hereby
ORDERED, ADJUDGED AND DECREED
-----------------------------
1. The Receiver's Final Report and all acts, doings, compensation and
disbursements of said Receiver are hereby approved, confirmed and ratified;
2. The Receiver is hereby authorized to prepare and file final tax returns on
behalf of defendants Weststar Group North, Inc. and Tahoeview Cablevision, Inc.
and to distribute any cash remaining in the Receivership Estate after said
filings to State Street Bank and Trust Company on account of its claim;
3. The Receiver is hereby authorized to abandon all Defendants' books and
records and remaining Receivership Assets;
4. The Receiver is hereby discharged and released, and his Bond ordered
cancelled;
5. The Receivership is hereby closed;
6. Defendant corporations are hereby ordered dissolved and the Receiver is
directed to forward a copy of this Order to the Office of the Secretary of the
State of Nevada; and
7. Notice of this Order is to be given to all creditors and interested parties
as set forth on Exhibit A attached hereto.
PER ORDER
/s/-----------------------
ENTER:
/s/-------------------
Clerk
Dated: July 31, 1996
<PAGE>
21
CERTIFICATION
TO: Amy L. Mower, Esq.
Bruce Gladstone, Esq.
Cameron & Mittleman
56 Exchange Terrace
Providence, RI 02906
I hereby certify that on the 29th day of July, 1996, a true copy of the within
Order and Judgment of Robert J. Maccini, Permanent Receiver was served upon
counsel of record listed above by first class mail, postage, prepaid.
/s/
---------------------------
Robert M. Duffy
<PAGE>
22
EXHIBIT 3(i).3
Amended Articles of Incorporation Changing the Registrant's Name
Filed August 5, 1997
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
WESTSTAR GROUP, INC.
Pursuant to the applicable provisions of the Nevada Business Corporations Act,
the undersigned Corporation adopts the following Articles of Amendment to its
Articles of Incorporation by stating the following:
FIRST: The present name of the Corporation is Weststar Group, Inc.
SECOND: The following amendment to its Articles of Incorporation was adopted by
a majority vote of shareholders of the Corporation on July 22, 1997 in the
manner prescribed by Nevada law.
1. Article I is amended as follows:
ARTICLE I - CORPORATE NAME The name of the corporation (hereinafter
referred to as the "Corporation") is Arena Group, Inc.
THIRD: The number of shares of the Corporation outstanding and entitled to vote
at the time of the adoption of said amendment was 6,959, 818 shares.
FOURTH: The number of shares voted for such amendment was 4,216,950 or 61
percent of the shares entitled to vote and the number voted against such
amendment was none, abstaining none.
DATED this 1st day of August, 1997.
Attest: WESTSTAR GROUP, INC.
/s/ /s/
- -------------------------- By:-------------------------------
Denny W. Nestripke, Secretary Lloyd T. Rochford, President
<PAGE>
23
VERIFICATION
The undersigned being first duly sworn deposes and says that the undersigned is
the Secretary of Weststar Group, Inc. and that the undersigned has read the
Articles of Amendment and knows the contents thereof and that the same contains
a truthful statement of the amendment duly adopted by the shareholders of the
Corporation.
Dated: August 1, 1997
/s/
------------------------------
Denny W. Nestripke, Secretary
ACKNOWLEDGMENT
State of California
County of Riverside
On 8-1-97 before me, Kathleen Jones, Notary Public, personally appeared Lloyd T.
Rochford and Denny W. Nestripke, personally known to me to be the persons whose
names are subscribed to the within instrument and acknowledged to me that they
executed the same in their authorized capacities, and that by their signatures
on the instrument the persons or the entity upon behalf of which the persons
acted, executed the instrument.
WITNESS my hand and official seal.
/s/
------------------------------
Signature of Notary
<PAGE>
24
EXHIBIT 22.1
Form of the Written Shareholder Consent
WRITTEN CONSENT OF STOCKHOLDER
OF WESTSTAR GROUP, INC.
Shares being voted hereby
-----------------
This written consent is being given pursuant to the Nevada Revised Statues, as
amended; Chapter 78.320 Stockholders' meetings: consent for actions taken
without meeting.
WHEREAS all of the Company's business operations, consisting of operating cable
television systems or stations had heretofore been conducted by the Company's
two wholly owned subsidiaries, Weststar Group North, Inc. and Tahoeview
Cablevision, Inc. (collectively, the "Subsidiaries"); and
WHEREAS the failure of the Subsidiaries to comply with certain loan provisions
resulted in a complaint being filed in the United States District Court,
District of Massachusetts [C.A. No. 94-12257-NG] (hereinafter referred to as the
"Court"), by State Street Bank and Trust Company as Plaintiff and the
Subsidiaries as Defendants; and
WHEREAS upon the Court's appointment of Robert J. Maccini, as the Receiver for
the Subsidiaries for the purpose of conducting the Subsidiaries operations or to
orderly cease such operations if advisable, the resignation of the Company's
directors, along with those of the Company's officers, commenced; and
WHEREAS on July 31, 1996, with respect to only the Subsidiaries, the Court
Ordered, Adjudged and Decreed that: 1) the Receiver is discharged and released;
2) the Subsidiaries are ordered dissolved; and 3) the Receivership is closed;
and
WHEREAS the Company has since the aforementioned date not commenced any business
operations, is not engaged in any type of business venture, is devoid of
directors and has experienced a substantial change in the ownership of the
Company's common stock; and
WHEREAS the Company does not have any assets, including cash, with which to seek
a business, to commence its reporting requirements relative to its status as a
"public company" and to inform the Company's shareholders of the Company's
current status; and
<PAGE>
25
WHEREAS the undersigned is a shareholder of the Company and has joined with
other shareholders of the Company with the desire to reorganize the Company and
to elect a new current board of directors.
NOW, THEREFORE, having knowledge of the information presented above and in an
effort to accomplish the reorganization of the Company and again provide
direction and leadership to the Company, the undersigned does hereby vote its
shares of the Company's common stock held by the undersigned as of this 22nd day
of July, 1997, to accomplish the following:
FOR
---
The election of Lloyd T. (Tim) Rochford and Denny W. Nestripke as directors
of the Company and to serve in such capacity and to exercise all rights and
powers as enumerated by the Nevada Revised Statues, as amended, the Company's
Articles of Incorporation and the Company's bylaws, for the period of one year
and thereafter continue to hold such directorship and discharge the duties
associated with such directorship until a successor has been duly qualified and
elected (or appointed pursuant to Chapter 78.355 of the Nevada Revised Statues,
as amended).
FOR
---
Changing the Company's year end to July 31, and to submit such a request to
the IRS.
FOR
---
The Company to engage the certified public accounting firm of Hansen,
Barnett & Maxwell, to audit its financial statements for the years ended July
31, 1996 and 1997.
FOR
---
Amending the Company's Articles of Incorporation to change the name of the
Company to Arena Group, Inc. or some derivative thereof, as determined in the
sole discretion of the newly elected directors.
FOR
---
A recapitalization of the Company's common stock whereby one (1) share of
Arena Group, Inc. would be issued for each seven (7) shares of Weststar Group,
Inc.
Signature of the Undersigned Stockholder
Date:
---------------------
<PAGE>
26
EXHIBIT 22.2
Notice of Shareholder Action
WESTSTAR GROUP, INC.
5 Clancy Lane South
Rancho Mirage, California 92270
NOTICE OF SHAREHOLDER ACTION
To the Shareholders of Weststar Group, Inc.
Pursuant to written shareholder consents ("Shareholder Consent") obtained from a
majority of the shareholders of Weststar Group, Inc. (the "Company"), the
following resolutions were adopted, approved and acted upon:
1] The Company's Articles of Incorporation were amended to change the name of
the Company to Arena Group, Inc.
2] A recapitalization of the Company's issued and outstanding shares of $0.001
par value common stock (the "Weststar Shares"), pursuant to which the Weststar
Shares will be reverse split or consolidated, on a 1-for-7 basis, whereby
shareholders will be entitled to receive one (1) share of the Company's Arena
Group, Inc. common stock (the "Arena Shares") for each seven (7) Weststar Shares
now held.
3] The election of Lloyd T. Rochford and Denny W. Nestripke as directors of the
Company to serve for the period of one year, in accordance with the provisions
of the Company's Articles of Incorporation and its bylaws and until their
successors are elected and qualified.
4] To affirm the appointment of the independent certified public accounting firm
of Hansen, Barnett & Maxwell as the Company's auditors.
5] To support the change of the Company's fiscal year end to July 31, commencing
with the period ended July 31, 1996, for financial reporting purposes and to
petition the Internal Revenue Service to allow for a similar change for tax
purposes.
Only Shareholders of Record at the Close of Business on July 22, 1997, (The
"Record Date") Were Entitled to Vote on the above Resolutions. Shareholders
Holding in Excess of Fifty Percent (50%) of the Issued and Outstanding Common
Stock on the Record Date Voted in Favor of the above Resolutions.
Sincerely,
/s/ Lloyd T. Rochford
-----------------
Director & Chief Executive Officer
Rancho Mirage, California
Dated: August 27, 1997
<PAGE>
27
EXHIBIT 22.3
Information Statement
Arena Group, Inc.
(Formerly: Weststar Group, Inc.)
5 Clancy Lane South
Rancho Mirage, California 92270
INFORMATION STATEMENT
- ---------------------
This Information Statement ("Information Statement") is being furnished to the
shareholders of the Company in connection with certain action which the Company
has taken pursuant to the written consent of shareholders of the Company
("Shareholder Consent") who held in excess of 50% of the Company's issued and
outstanding common stock on July 22, 1997 (the "Record Date"). This Information
Statement is first being mailed to shareholders on or about August 27, 1997. The
following resolutions are to take effect as soon as reasonable and possible
after the Record Date. The specific items on which action was taken are
enumerated below. Following this list, a discussion is provided with respect to
these and other matters which have occurred, relative to the Company.
1] The Company's Articles of Incorporation were amended to change the name of
the Company to Arena Group, Inc.
2] A reverse split of the Company's issued and outstanding shares of $0.001 par
value common stock (the "Weststar Shares"), pursuant to which the Weststar
Shares will be reverse split or consolidated on a 1-for-7 basis, whereby
shareholders will be entitled to receive one (1) share of the Company's Arena
Group, Inc. common stock (the "Arena Shares") for each seven (7) Weststar
Shares.
3] The election of Lloyd T. Rochford and Denny W. Nestripke as directors of the
Company to serve for the period of one year in accordance with the provisions of
the Company's Articles of Incorporation and its bylaws and until their
successors are elected and qualified.
4] To affirm the appointment of the independent certified public accounting firm
of Hansen, Barnett & Maxwell as the Company's auditors.
5] To support the change of the Company's fiscal year end to July 31, commencing
with the period ended July 31, 1996, for financial reporting purposes and to
petition the Internal Revenue Service to allow for a similar change for tax
purposes.
HISTORY OF THE COMPANY
- ----------------------------
(Reference made to the number of shares of common stock represent the actual
number of shares issued at that particular point in time. Parenthetically the
number of Arena Shares are provided.)
The Company was incorporated under the laws of the state of Nevada on March 6,
1987, as Coronado Ventures, Inc. The Company's principal business purpose was to
seek an entity with ongoing business activity which appeared to management to be
an attractive acquisition for the Company. Not having accomplished this business
purpose by October of 1988, Lloyd T. Rochford and Denny W. Nestripke (who were
elected as the Company's two directors in July of 1997, pursuant to the
Shareholder Consent) acquired 41% and 19% of the Company's common stock,
respectively, from existing shareholders. Additionally, Mr. Nestripke replaced
existing management and was appointed as the Company's sole director.
<PAGE>
28
Under Mr. Nestripke's direction, the Company filed a Form S-18 Registration
Statement (the "Offering") with the U. S. Securities and Exchange Commission
("SEC"), which was declared "Effective" on November 13, 1989. Pursuant to the
Offering a total of one million units were sold publicly, each unit comprised of
one share of common stock and three warrants, with each warrant allowing the
holder thereof to purchase an additional share of common stock. The expiration
date of the warrants, sold as a part of the unit, occurred prior to any warrants
being exercised.
On December 21, 1989, the Company acquired 75% of the issued and outstanding
shares of Tahoeview Cablevision, Inc., a California corporation ("Tahoeview"),
in exchange for 8,000,000 shares (571,429 Arena Shares) of the Company's common
stock. As part of the acquisition agreement, Mr. Nestripke returned 92% of the
common stock, which he owned, to the Company for cancellation. Thus, the
shareholders of Tahoeview owned 88% of the Company's then issued and outstanding
common stock. Additionally, within the ensuing six months the Company took the
following action: a) acquired the remaining 25% of Tahoeview by assuming a note
payable and issuing an additional 740,000 shares (52,857 Arena Shares) of common
stock, of which Mr. Rochford received 370,000 shares (26,429 Arena Shares); b)
amended the Company's Articles of Incorporation to change its name to Weststar
Group, Inc.; and c) reduced its outstanding shares of common stock through a
1-for-2 reverse split (reference to shares of common stock subsequent to this
reverse split are referred to as the "Weststar Shares").
Tahoeview was the operator of cable television systems in northern California in
1989 (the "California System"), when the Company acquired Tahoeview as a wholly
owned subsidiary. Tahoeview had entered into a contract with an affiliated
corporation (the "Tahoeview Contract") which provided management services to
Tahoeview for the California System and to other unrelated operators of cable
television systems. The Tahoeview Contract encompassed all stages of the
California System's cable television operations and required the payment of a
management fee by Tahoeview which was based on 10% of gross operating revenues
from the California System.
The Company formed a wholly owned subsidiary corporation, Weststar Group North
("WGN"), which on May 31, 1991 consummated a transaction for the purchase of all
the tangible and intangible assets of several cable television systems located
within Flathead and Darby County, Montana (the "Montana System"). In summary,
the acquisition costs of the Montana System included the issuance of 453,218
Weststar Shares and the payment of approximately $2.3 million, which was
financed through a $3.0 million revolving credit loan obtained from a financial
institution. WGN entered into an agreement similar to the Tahoeview Contract to
provide for management services and all other stages of the Montana System's
cable television operations.
The revolving credit loan which was entered into at the time of the purchase of
the Montana System allowed for the borrowing of up to $3,000,000 and had an
expiration date of May 31, 1993. However, by March of 1993 this loan was
considered to be in default due to certain loan covenants which required that
certain minimum levels of subscribers be reached and in that certain income to
debt ratio requirements were higher than called for by the revolving credit
loan. In January of 1994, two of the Company's three directors resigned their
positions as both officers and directors. Shortly thereafter, the financial
institution making the revolving credit loan filed suit in a U. S. District
Court (the "Court"), naming the Company's two subsidiaries, Tahoeview and WGN as
defendants and requesting that a Permanent Receiver be appointed to liquidate
the assets of those corporations in payment of the outstanding debt. In March of
1995, the Company's remaining sole director resigned his position inasmuch as
the Permanent Receiver was conducting the operations and disposition of the
assets of both Tahoeview and WGN. On July 31, 1996 the Court, among other
things, Ordered, Adjudged and Decreed that: a) the actions of the Permanent
Receiver be approved, confirmed and ratified; b) the Permanent Receiver prepare
and file the final tax return for Tahoeview and WGN; c) the Receivership be
closed and the Permanent Receiver be discharged and released; and d) that both
Tahoeview and WGN be ordered dissolved as corporate entities with a copy of the
Order of the Court filed with the Secretary of the State of Nevada. The Company
was never involved in this action of the Permanent Receiver. Upon the
liquidation and dissolution of the Company's two subsidiaries, the Company was
left without any operations.
<PAGE>
29
With the closing of the Receivership, the Company no longer had any assets nor
was the Company indebted to anyone. The last elected board of directors of the
Company had resigned and had not appointed anyone to replace them. Due to the
previous relationship that Mr. Rochford and Mr. Nestripke had with the Company,
they combined their efforts in soliciting a Shareholder Consent from
shareholders holding a majority of the Company's outstanding shares. Pursuant to
the Shareholder Consent, the following action was authorized:
1] The Company's Articles of Incorporation were amended to change the name of
the Company to Arena Group, Inc.; 2] a recapitalization of the Company's issued
and outstanding shares of $0.001 par value common stock (the "Weststar Shares"),
pursuant to which the Weststar Shares will be reverse split or consolidated, on
a 1-for-7 basis, whereby shareholders will be entitled to receive one (1) share
of the Company's Arena Group, Inc. common stock (the "Arena Shares") for each
seven (7) Weststar Shares now held; 3] the election of Lloyd T. Rochford and
Denny W. Nestripke as directors of the Company to serve for the period of one
year, in accordance with the provisions of the Company's Articles of
Incorporation and its bylaws and until their successors are elected and
qualified; 4] to affirm the appointment of the independent certified public
accounting firm of Hansen, Barnett & Maxwell as the Company's auditors; and 5]
to support the change of the Company's fiscal year end to July 31, commencing
with the period ended July 31, 1996, for financial reporting purposes and to
petition the Internal Revenue Service to allow for a similar change for tax
purposes.
ELECTION OF A BOARD OF DIRECTORS
- ------------------------------------------
As previously described, Mr. Rochford and Mr. Nestripke have had a prior
relationship with the Company. Due to this prior interest in the Company and the
combined number of Weststar Shares owned by them (approximately 29%), they
mutually agreed to use their best efforts in an attempt to revitalize the
Company and in so doing, seek to bring value to the Weststar Shares. To
accomplish this goal, the election of Mr. Rochford and Mr. Nestripke as
directors of the Company was of prime importance. In addition to their ownership
percentage in the Company, both individuals have had considerable experience
working with public corporations.
As a part of the Shareholder Consent, Mr. Rochford and Mr. Nestripke were placed
on the ballot as the nominees to fill the vacant position as directors of the
Company. The term of their directorship will continue until the next annual
shareholders' meeting of the Company and until their successors are duly elected
and qualified. Neither Mr. Rochford nor Mr. Nestripke have been subject to any
legal proceedings during the past five years and they, nor any business in which
they are or were involved, has filed a petition for bankruptcy. Certain
biographical information with respect to these two directors of the Company
follows:
Lloyd T. Rochford: In February of 1989, Mr. Rochford founded Magnum Petroleum,
Inc. ("Magnum") and served as a director and as its Chief Executive Officer
through the end of 1995. Magnum is engaged in the exploration for and the
production of oil and gas, having commenced operations with approximately
$150,000 in equity capital. During his leadership, Mr. Rochford focused on
building Magnum's assets and equity, primarily through acquisitions of proved
oil and gas properties and the sale of equity securities. In November of 1993,
Magnum became listed on the American Stock Exchange, where its common stock is
currently traded. Pursuant to an acquisition during the second half of 1995, Mr.
Rochford relinquished his position as Chief Executive Officer and became
Magnum's Chairman of the Board of Directors, in which position he served through
June of 1997. Mr. Rochford resigned his position from Magnum at that time to
pursue personal business interests, which in part, include his current position
with the Company.
<PAGE>
30
Denny W. Nestripke: Mr. Nestripke, a graduate of the University of Utah with a
Bachelor of Science degree - Accounting, is a certified public accountant
licensed in California and Utah. Mr. Nestripke started his own certified public
accounting firm in 1979, having an emphasis on corporations during their
development stage, small publicly held corporations and those corporations which
have a responsibility to file reports with the U. S. Securities and Exchange
Commission. Since Magnum's inception, it has been one of Mr. Nestripke's
clients. In September of 1992, Mr. Nestripke became a full-time employee of
Magnum serving in the position of Magnum's controller. In September of 1995, Mr.
Nestripke resigned from Magnum after Magnum made a substantial acquisition of a
Texas corporation and relocated its corporate offices to Texas. Since September
of 1995 through the present, Mr. Nestripke has primarily been engaged in
managing his own personal investments.
CHANGE OF THE COMPANY'S NAME
- ------------------------------------
The Shareholder Consent allowed for an amendment to the Company's Articles of
Incorporation for the purpose of changing the Company's name to Arena Group,
Inc. Accordingly, the name of the Company has been changed to Arena Group, Inc.
by filing an amendment to the Articles of Incorporation with the Secretary of
State of Nevada which was accepted on August 5th, 1997. The newly elected
directors of the Company placed this proposal on the Shareholder Consent and
recommended a vote in favor of this proposal for the following reasons:
1] To avoid any confusion on the part of any shareholder as to which common
shares of the Company that they actually own. The possibility of confusion can
arise if after the reverse split there is not a significant identifying
characteristic to distinguish the before split shares with the after split
shares. A change in the Company's name would provide such an attribute.
2] to avoid any question on the part of potential future investors that a
purchase of the Company's common stock constitutes a purchase of "after-split"
shares; by providing the Company with a new name, such concerns would be
eliminated.
3] to avoid the stigma that might be attached to the Company's former name due
to the foreclosure previously discussed in this Information Statement.
4] the name of Arena Group, Inc. is sufficiently generic, so as to not lead
anyone to think that the Company is engaged in any specific type of business, or
to withhold any investor's interest, merely through name association.
REVERSE SPLIT OF THE COMPANY'S COMMON STOCK
- -------------------------------------------------------
The Shareholder Consent allowed for the board of directors to adopt resolutions
providing for a reverse split of the Company's common stock whereby the issued
and outstanding Weststar Shares were reverse split, or consolidated, on a
1-for-7 basis, so that shareholders will receive one (1) Arena Share for each
seven (7) Weststar Shares. No fractional shares will be issued in connection
with this reverse split and any fractional shares will be rounded down to the
nearest whole number; except that no shareholder will be eliminated in that
shares will not be reduced below one share. Pursuant to this Recapitalization,
the 6,959,818 issued and outstanding Weststar Shares (which includes the common
stock purchased by Mr. Rochford and Mr. Morley) will number approximately
994,267 Arena Shares being issued and outstanding. Certain individuals may have
an interest in knowing that after the reverse split, the Arena Shares have been
assigned a new CUSIP number, [ 040042-10-3 ].
The reverse split will have no other resulting effect or any modification of the
rights of shareholders. There may be a resulting change within the Stockholders'
Equity section of the Company's financial statements; however, such change will
only result in an "accounting adjustment" and will not have any direct effect on
an individual shareholder's investment or their tax basis in such investment.
For purposes of transactions in the Company's shares, the board of directors
have selected the close of business on August 29, 1997 as the last day for the
Company's transfer agent to issue Weststar Shares and effective with the start
of business on September 2, 1997, transactions or the transfer of certificates
by the Company's transfer agent will be in the form of Arena Shares.
<PAGE>
31
A vote in favor of the reverse split, which was just previously discussed, was
proposed by both Mr. Rochford and Mr. Nestripke and they recommended a vote in
favor thereof for the following reasons:
1] Inasmuch as it is the intent of the Company to seek a new business venture
through purchase by issuance of its common stock as consideration, the reverse
split is intended to permit the Company to issue to the shareholders of the
potentially sought after new business venture, sufficient shares in order to
finalize such a purchase without the necessity of issuing a substantially large
number of the Company's authorized but unissued Arena Shares.
[2] by reducing the number of Arena Shares needed to consummate the purchase of
a business venture, the Company hopes to avoid the perceived depressive effect
that a large number of outstanding Arena Shares may have on the public market.
[3] as a further advantage, the reverse split will make available approximately
six million additional authorized but unissued Arena Shares which will provide
increased flexibility in structuring possible future financing, in taking
advantage of future business opportunities such as additional acquisitions, and
in meeting corporate needs as they arise, all without the delay and expense of
calling a meeting of shareholders to consent to increases in authorized capital.
[4] it is ultimately the goal of the Company to have the Company's securities
listed on the National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ"), or on a national or regional stock exchange.
Management believes that such listings can more readily be accomplished with a
higher priced stock and, since the reverse split will reduce the number of
outstanding shares, it should have the effect of increasing the price of those
shares in the over-the-counter market.
In order to effectuate the reverse split, each shareholder will be entitled to
submit their stock certificate to the Company's transfer agent, Cottonwood Stock
Transfer (the "Transfer Agent"), 5899 South State Street, Salt Lake City, Utah
84107, and be issued in exchange therefor, an Arena Share certificate for the
certificates being surrendered. The Company will bear the cost of such exchange
upon the following conditions:
1] The Transmittal Form which is made a part of this mailing is fully completed,
returned and in the possession of the Transfer Agent before September 26, 1997;
2] the Company will pay for only one certificate per registered owner. Each
additional certificate requested for the same registered owner must be
accompanied by a check payable to Cottonwood Stock Transfer in the amount of $15
per additional certificate to be issued.
In order to achieve management's intent as part of the Company's name change and
to eliminate confusion when entering into any transactions in the Company's
securities, management urges that shareholders cooperate in the surrender and
exchange of their existing certificates. Nevertheless, shareholders are under no
legal obligation or requirement to exchange their certificates.
AFFIRM THE APPOINTMENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
- ------------------------------------------------------------------------
In order for management to put into effect their plan of action and to use their
best efforts in an attempt to revitalize the Company and in seeking to bring
value to the Company's securities, it will become necessary for the Company to
bring its reporting requirements with the SEC current. The Company is required
on an annual basis to have its financial statements audited and submitted to the
SEC as part of a Form 10-KSB Report. The board of directors have selected the
independent certified public accounting firm of Hansen, Barnett & Maxwell
("HBM") to conduct the audit of its annual financial statements as required to
bring its reporting requirements with the SEC current. The board of directors
selected HBM because of this firm is well acquainted with the reporting
requirements of public corporations and transactions as described in this
Information Statement. The selection of HBM was voted upon by shareholders as a
part of the Shareholder Consent.
<PAGE>
32
SUPPORT THE CHANGE OF THE COMPANY'S FISCAL YEAR END
- -----------------------------------------------------------
The Company had previously reported on its operations with a fiscal year which
ended on June 30. During the period that the events described in the HISTORY OF
THE COMPANY occurred and concluding with the final Order and Judgment of the
Court entered on July 31, the Company has experienced a change of control, as
well as a change in its business operations and in effect is considered for
accounting purposes as a "development stage company". Prior to July 31, 1996,
the Company had been conducting its business operations through its two
subsidiary corporations. During 1994, the Company relinquished management
control to the Court appointed Permanent Receiver.
Subsequent to July 31, 1996, the Receivership was closed and the Permanent
Receiver was discharged and released. The Company, never having been involved in
the Receivership, was left without any business operations. The Company is
currently involved in development stage activities, which include its
reorganization efforts, raising capital and searching for other business
opportunities. A change in the Company's year end to conform to the beginning of
its current development stage activities appears to present an accurate picture
of the results of those activities
OTHER INFORMATION RELATIVE TO THE COMPANY
- ----------------------------------------------
As previously stated, the Company has retained HBM for the purpose of auditing
its annual financial statements. The Company intends to provide to shareholders
a copy of its audited financial statements, when completed. It is estimated that
the completion of the audit and the dissemination of the financial statements
will be concluded within thirty days of the date of this Information Statement.
No compensation has been paid to either director and Mr. Rochford, as Chief
Executive Officer of the Company, has not received any compensation for any past
services nor is it anticipated that he will receive any compensation during the
current year. In order to provide funding to the Company to allow the Company to
proceed as described in the Information Statement, Mr. Rochford and Robert
Morley purchased 1,500,000 Arena Shares from the Company at a price of one mill
($0.001) per share, in July of 1997. The Company's securities are currently not
being quoted nor is the Company aware of any shares being traded on the over-the
- -counter market. Furthermore, the Company has no assets and any value which
could be prescribed to the Company would come from its intrinsic value as a
public entity. Consequently, the purchase of the Arena Shares was not deemed to
be at a favorable or preferential price, even though the transaction was not
negotiated at arms length.
The following table sets forth as of August 25, 1997, the name and the number of
Arena Shares held of record or beneficially owned by individuals who are
directors or executive officers of the Company and those who held of record, or
were known by the Company to own beneficially, more than 5% of the approximately
994,225 issued and outstanding Arena Shares.
Name & Address of Amount and Nature Percent
Title of Class Beneficial Owner of Beneficial Owner of class
-------------- ----------------- ----------------- --------
Common Stock Lloyd T. Rochford
5 Clancy Lane South
Rancho Mirage, CA 176,862 17.8 %
Common Stock Denny W. Nestripke
P. O. Box 4190
Palm Desert, CA 113,769 11.4 %
Common Stock Robert Morley
1600 Quail Ridge East Lane #65
Roseville, CA 82,857 8.3 %
Common Stock Stanley McCabe
5922 South Atlantic Place
Tulsa, OK 75,714 7.6 %
<PAGE>
33
**********
Directors and Executive Officers
Name & Address of Amount and Nature Percent
Title of Class Beneficial Owner of Beneficial Owner of class
-------------- ----------------- ------------------- --------
Common Stock Lloyd T. Rochford 176,862 17.8 %
Common Stock Denny W. Nestripke 113,769 11.4 %
------- ------
Officers & Directors as a group = 2 persons 290,635 29.2 %
======= ======
The Company's securities are presently not quoted on the over-the-counter market
nor are they listed on any securities exchange. Since the time that the
Company's subsidiary corporations were placed into receivership, the Company has
not been aware of any transactions in its securities, except for certain private
sales which have occurred between individuals or entities. The Company has not
been a party to any of these transactions, except for those set forth and
described in the Information Statement. It is the intent of management, when the
Company becomes current in its reporting requirements with the SEC, to solicit
interest in the Company from Broker/Dealers willing to submit a quotation and to
list the Company on the National Association of Securities Dealers' OTC Bulletin
Board. The Company has 77 shareholders of record as of the date of this
Information statement.
Since its inception, the Company had not declared any cash dividends and doesn't
anticipate declaring any cash dividends within the foreseeable future.
Management of the Company is not aware of any other matters that are of a
significant nature and should be brought to the attention of shareholders.
ARENA GROUP, INC.
/s/ Lloyd T. Rochford
---------------------
By: Lloyd T. Rochford
Director and Chief Executive Officer
Attachments:
1] NOTICE OF SHAREHOLDER ACTION
2] TRANSMITTAL FORM
<PAGE>
34
EXHIBIT 22.4
Transmittal Form
TRANSMITTAL FORM
This Transmittal Form along with the stock certificates attached thereto and
listed in the appropriate section below, are being sent by registered mail or by
any other carrier who, in the case of loss or theft, is providing adequate
insurance to cover the value of the stock certificates attached hereto.
[ Neither the Company nor the Transfer Agent assumes any liability for loss,
theft or otherwise with respect to the non-delivery of any certificates being
transmitted to the Transfer Agent pursuant to this Transmittal Form or pursuant
to the Company's desire to have shareholders exchange their stock certificates
for certificates being issued to reflect the Company's name change or reverse
split of its common stock ]
TO:
Cottonwood Stock Transfer
5899 South State Street
Salt Lake City, UT 84107
Attached hereto are stock certificates bearing the Company's name as "Coronado
Ventures, Inc." These certificates are either currently registered in the name
of the individual or entity in who's name the new certificate as identified
below will be issued OR the certificate has been appropriately endorsed and
Medallion Signature Guaranteed. Each submitted certificate is further identified
below:
Shares Registered Owner Certificate Number
------- -------------------- -----------------------
Attached hereto are stock certificates bearing the Company's name as "Weststar
Group, Inc." These certificates are either currently registered in the name of
the individual or entity in who's name the new certificate as identified below
will be issued OR the certificate has been appropriately endorsed and Medallion
Signature Guaranteed. Each submitted certificate is further identified below:
Shares Registered Owner Certificate Number
-------- -------------------- -------------------------
Please issue one certificate of Arena Group, Inc. registered to the individual
or entity listed below. The shares represented by the Arena Group, Inc.
certificate have been computed by use of the following formula:
[14 shares of Coronado Ventures, Inc. equals 1 share of Arena Group, Inc.]
[ 7 shares of Weststar Group, Inc. equals 1 share of Arena Group, Inc.]
Based on the above formula, please issue shares of Arena
-------------------------
Group, Inc. to the individual or entity identified below:
Name:
Street Address:
City, State, Zip Code:
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<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> AUG-01-1996
<PERIOD-END> JUL-31-1997
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0
0
<COMMON> 994
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