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: January 31, 1998
[ ] 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 as of March 9, 1998.
Transitional Small Business Disclosure Format (check one) Yes [ ] No [X]
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
The following unaudited financial statements as of January 31, 1998 and for the
three and six month periods then ended and for the same three and six month
periods of the prior year are included as part of the Registrant's Form 10-QSB
Report for the second quarter of its fiscal year ended July 31, 1998. These
financial statements have been prepared by the Registrant pursuant to the rules
and regulations of the Securities and Exchange Commission and therefore, certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted.
In the opinion of management, all adjustments which are necessary in order for
these financial statements not to be misleading, have been made and therefore,
the Registrant's financial position, results of operations, cash flows and
stockholder's equity, are presented fairly for the periods presented. These
financial statements should be read in conjunction with their accompanying
footnotes and with the Registrant's audited financial statements and footnotes
contained in the Registrant's Form 10-KSB Report for the fiscal year ended July
31, 1997.
Page 2 of 11
<PAGE>
ARENA GROUP, INC.
(a development stage company)
Unaudited Balance Sheet
January 31, 1998
ASSETS
Current Assets
Cash in Bank ..................................... $ 6,032
-------
TOTAL ASSETS ........................................... $ 6,032
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable ................................. $ 500
-------
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 ...................................... (9,218)
TOTAL STOCKHOLDERS' EQUITY ............................. 5,532
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ............. $ 6,032
=======
The accompanying notes are an integral part of these financial statements.
Page 3 of 11
<PAGE>
<TABLE>
<CAPTION>
ARENA GROUP, INC.
(a development stage company)
Statement of Operations
[unaudited]
From the
start of a
development
The Three Month The Six Month The Three Month The Six Month stage company
Period Ended Period Ended Period Ended Period Ended through
Jan. 31, 1998 Jan. 31, 1998 Jan. 31, 1997 Jan. 31, 1997 Jan. 31, 1998
--------------- ------------- --------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Revenue .................................... $ - $ - $ - $ - $ -
------- -------- ------- -------- -------
Expenses:
Office expenses .................... 12 175 - - 213
Travel & Lodging ................... 508 931 - - 931
Office overhead & related .......... 750 1,559 - - 1,559
Public company costs ............... 10 1,463 - - 1,937
Legal & auditing fees .............. - 4,000 - - 4,000
Filing and Registration ............ - - - - 578
Total Expenses ............................. $ 1,280 $ 8,128 $ - $ - 9,218
------- -------- ------- -------- -----
NET OPERATING LOSS ......................... $(1,280) $ (8,128) $ - $ - $ (9,218)
======= ======== ======= ======== =======
LOSS PER SHARE ............................. $ (0.00) $ (0.01) $ - $ - $ (0.01)
======= ======== ======= ======== =======
SHARES USED TO COMPUTE LOSS
PER SHARE .......................... 994,225 994,225 779,940 779,940 994,225
The accompanying notes are an integral part of these financial statements.
</TABLE>
Page 4 of 11
<PAGE>
<TABLE>
<CAPTION>
ARENA GROUP, INC.
(a development stage company)
Statement of Stockholders' Equity
[unaudited]
Deficit
Capital Accumuldated
Common Stock in Excess During the Total
-------------------------- of Develoopment 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
$.07 per share cash
per share, July 1997 ..... 214,285 214 14,786 - 15,000
Net Loss for the
year ended
July 31, 1996 ............ - - - (1,090) (1,090)
--- ---- ------- ------ -------- -------- -------
BALANCE ............. 994,225 $ 994 $ 13,756 $ (1,090) $13,660
======= ====== ======== ======== =======
Net Loss for the
period ended
January 31, 1998 ........ - - - (8,128) (8,128)
------- ------ -------- ------- -------
October 31, 1996
BALANCE .............. 994,225 $ 994 $ 13,756 $ (9,218 $ 5,532
======= ====== ======== ======== =======
The accompanying notes are an integral part of these financial statements.
</TABLE>
Page 5 of 11
<PAGE>
<TABLE>
<CAPTION>
ARENA GROUP, INC.
(a development stage company)
Statements of Cash Flow
[unaudited]
From the
commencement of
a development
For the Six For the Six stage company
Months Ended Months Ended through
January 31, 1998 January 31, 1997 January 31, 1998
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss from operations ........... $ (8,128) $ - $ (9,218)
-------- ---- --------
Increase in accounts
Payable ...................... 178) - 250
-------- --------
Net Cash Used In Operating
Activities .................. (8,306) - (8,968)
-------- --------
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 ............ (8,306) - 6,032
--------- ---- --------
Cash at beginning of period ................ 14,338 - -
--------- ---- --------
CASH AT END OF PERIOD ...................... $ 6,032 $ - $ 6,032
========= ==== ========
The accompanying notes are an integral part of these financial statements.
</TABLE>
Page 6 of 11
<PAGE>
ARENA GROUP, INC.
(a development stage company)
Notes to Unaudited Financial Statements
NOTE 1 - ACCOUNTING POLICIES AND OTHER DISCLOSURES
The condensed 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 for the purpose of providing comparative information with respect to
the interim three and six month periods ending January 31, 1998, and 1997.
From the date of the Registrant's commencement of a development stage company on
July 31, 1996 through July 22, 1997, the Registrant conducted limited business
operations. Commencing with the fourth quarter of the fiscal year ending July
31, 1997, the Registrant commenced conducting such business activities as needed
in anticipation of the election of a board of directors. Inasmuch as the
Registrant is a development stage company seeking to acquire a business
operation, the Registrant is an inactive corporation and as such, the amounts
stated herein may not be useful for analyzing purposes. Therefore, these
financial statements should not be considered indicative of the results to be
expected for the entire year nor for future corresponding periods.
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 has previously been filed with the Securities and Exchange
Commission.
NOTE 2 - COMMON STOCK ISSUED AND OUTSTANDING
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. At the same time 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. was issued for seven (7) shares of the Registrant's
common stock held under its previous name. The herein presented financial
statements reflect, in all respects, the Registrant's common stock as adjusted
for the 1 for 7 reverse split.
The Registrant issued 214,285 shares of its post split common stock during July
of 1997. These shares were issued for a total cash consideration of $15,000. Of
the total 214,285 shares, 174,285 shares were issued to one of the Registrant's
directors and 40,000 shares were issued to an individual who, after such
issuance, holds 8.3% of the Registrant's total issued and outstanding common
stock.
Page 7 of 11
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 2. PLAN OF OPERATION
Because the Registrant did not have any revenue, either from operations or
otherwise, since it became 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 be aware that the Registrant's plan of operation contains
statements regarding expectations of future operations which include a potential
reorganization with an existing operating company. Such statements and other
statements contained under Item 2 of Part I of this Form 10-QSB Report,
constitutes 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, no assurance is being
given by the Registrant that the actual results will not differ materially from
the expectations expressed herein.
The Registrant's goal is to reorganize with another entity or to acquire
operating assets from an existing entity. In attempting to accomplish this goal,
the Registrant is aware of certain existing risks which it assumes in its quest.
These risks are described 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 which have an
impact on the security markets, which relate to equity ownership of
corporations; 4) a probable change in the Registrant's management; and 5) the
Registrant's ability to meet its cash flow needs.
During the second quarter of the prior year, the Registrant did not conduct any
business activity. During the second quarter of the current year, the Registrant
has attempted to reach its goal of locating another entity or to acquire
operating assets from an existing entity through a reorganization. Inasmuch as
the Registrant was not engaged in such activities during the second quarter of
the prior year, a comparison of the Registrant's financial statements of the
current period with the same period of the prior year, may not be meaningful to
the reader.
During the Registrant's first quarter of its current year, approximately 65% of
its $6,848 operating loss was attributable to meeting its reporting requirements
with the Securities and Exchange Commission. During the second quarter of its
current year, all of its operating loss of $1,280 was attributable to the
Registrant reaching its goal, as described above, and therefore its operating
loss is substantially less.
The Registrant's common stock is listed on the O T C Electronic Bulletin Board
having the trading symbol of " A R E E ". The Registrant has not been made aware
of any sizeable volume of its common stock being traded and believes that the
trading activities in its common stock to be minimal, until a corporate
reorganization is imminent. At such time the Registrant will advise its
shareholders and the public in general through the release of a press bulletin.
It is not the intent of the Registrant to imply that the trading activity of its
common stock will increase at such time or that the price of its common stock
will increase. Such factors are based on the economics of supply and demand in
combination with the risks set forth previously.
Page 8 of 11
<PAGE>
Management of the Registrant has met with representatives of several entities
which have expressed an interest in a potential tax free business
reorganization. However, none of these discussions have resulted in the
Registrant entering into an agreement or a letter of intent. Management is not
in a position to forecast the likelihood of a reorganization occurring in the
foreseeable future and discourages shareholders as well as non shareholders from
conjecturing as to when or if such a reorganization will occur.
The Registrant has depleted over one half of the capital which it raised prior
to the end of its last fiscal year end and has no other sources of revenue other
than the sale of its common stock. Unless a reorganization were to occur in the
very near future, it will become necessary for the Registrant to seek additional
finances to fund its goal of entering into a business combination or other form
of reorganization. Due to the fact that the Registrant is presently not engaged
in a business operation precludes the Registrant from seeking additional
financing through a "public offering". Thus, it will be necessary for the
Registrant to seek capital through the sale of its common stock to a small
select number of individuals in those states where the Registrant would be
allowed to undertake such isolated transactions. At the present time, management
believes that sufficient capital exists to continue to operate in the manner
which it has been operating, through the end of its fiscal year, ending July 31,
1998.
An issue which does not effect the Registrant at the present time but which may
become relevant if a reorganization were to occur, is known as the "year 2000
issue". Stated very briefly for those not familiar with this issue, is the
follow:
Computer systems which are older models or operate under older software
programs, have not been programed in such a matter that the turn of the century,
"the year 2000", which results in two zeros appearing as the two digits on the
far right of that year. If not appropriately programed, this year 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 know; 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.
Page 9 of 11
<PAGE>
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.
Page 10 of 11
<PAGE>
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: March 11, 1998
- --------------------- --------------
Lloyd T. Rochford,
Chief Executive Officer
/s/ Denny W. Nestripke Dated: March 11, 1998
- ---------------------- --------------
Denny W. Nestripke,
Chief Financial Officer
Page 11 of 11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> JAN-31-1998
<CASH> 6,032
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,032
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,032
<CURRENT-LIABILITIES> 500
<BONDS> 0
0
0
<COMMON> 994
<OTHER-SE> 5,532
<TOTAL-LIABILITY-AND-EQUITY> 6,032
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,280
<LOSS-PROVISION> (1,280)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,280)
<EPS-PRIMARY> 0.000
<EPS-DILUTED> 0.000
</TABLE>
