SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-KSB
XX Annual Report Pursuant to Section 13 or 15(d) of the Securities and Exchange
Act of 1934 for the fiscal year ended April 30, 1996.
Transition report pursuant to Section 13 of 15(d) of the Securities Exchange
Act of 1934 for transition period from ________ to _______.
Commission File No. 33-19324
STAR RESOURCES, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-0223079
(State or other jurisdiction of (I.R.S. Employer incorporation or organization)
Identification No.)
5420 LBJ Freeway Suite 540 Dallas, Texas 75240
(Address of principal executive offices)
Registrant's telephone number, including area code: (214) 770-2255
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant has (1) filed all reports
required to be filed by Section 12 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) been subject to such
filing requirements for the past 90 days.
Yes x No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-B is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB.
Issuer's revenues for its most recent fiscal year were $0.
As of July 26, 1996, there was no active market for the Registrant's common
stock, and no determinable market price. As of July 26, 1996, there were
41,426,186 shares of common stock, par value $.0001, outstanding.
STAR RESOURCES, INC. - FORM 10-KSB-A FOR YEAR ENDED 4/30/96
<PAGE>
PART I
Item 1. Business
On April 30, 1995, Star Resources, Inc. (the "Company") was in the
broadcast communications business. The Company owned through a subsidiary, New
View Broadcasting, Inc. ("New View"), a 74.5% beneficial interest in a UHF
television station in Charleston, South Carolina. See "Channel 36 - WBNU-TV-36".
On May 1, 1995, the Company agreed to transfer to Lawrence E. Steinberg all
the outstanding stock of its wholly owned subsidiary, New View Broadcasting,
Inc., a South Carolina corporation ("New View"). New View owns a television
station in Charleston, South Carolina. The subsidiary comprises all of the
revenue producing assets of the Company. The Company also transferred a judgment
held by the Company against Gerald Arthur, former officer and director of the
Company, and Christopher Arthur, former director and stockholder of the Company.
As consideration for the subsidiary stock and the judgment, Mr. Steinberg agreed
to release the Company from indebtedness in the amount of approximately
$1,682,095, an amount approximately equal to or greater than the value of the
assets transferred. Following these transactions, Star's only assets were a
minimal amount of cash.
The value of New View and its assets was determined by the Board of
Directors of the Company, which consists of Mr. Steinberg, Michael A. Hershman
and Arnold E. Baynard. The Company has not obtained an appraisal of New View or
its assets. In its consideration of the transfer, and of the fairness of the
transaction to the Company's stockholders, the Board of Directors of the Company
considered, in addition to the value of New View, the following factors. First,
New View was losing approximately $35,000 per month. Mr. Steinberg was advancing
funds to New View to cover the losses; the continued operations of the
television station owned by New View was dependent upon continuing advances by
Mr. Steinberg. The Company had guaranteed such advances. Second, in connection
with the advances made to cover the losses, Mr. Steinberg had a lien on all the
stock of New View and all the assets of New View. The Company was not in a
position to repay Mr. Steinberg in the amounts advanced. Finally, the Company
had attempted to attract investors to New View or its assets on a reasonable
basis, but had been unable to do so. In light of the foregoing, the Company's
Board of Directors believed an arrangement that would permit Mr. Steinberg to
acquire the New View stock in exchange for the release of the indebtedness owed
by the Company to be fair to the Company's stockholders.
On June 1, 1995, the Company purchased 600,000 shares of common stock,
$.001 par value, of Preferred/telecom, Inc., a Delaware corporation
("Preferred/telecom"). On August 1, 1995, the Board of Directors of the Company
approved the distribution of those shares of Preferred/telecom, Inc. as a
dividend to the shareholders of the Company. The record date for the dividend
was August 14, 1995 and the dividend was paid approximately ten days thereafter.
See Item 5. Market for Registrant's Common Stock and Related Stockholder Matters
STAR RESOURCES, INC. - FORM 10-KSB-A FOR YEAR ENDED 4/30/96
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Employees
At April 30, 1996, the Company had no employees due to the transfer of New
View Broadcasting, Inc. discussed above.
Item 2. Properties
The executive offices of the Company are located at Two Lincoln Centre,
Suite 540, 5420 LBJ Freeway, L.B. 56, Dallas, Texas 75240.
Item 3. Legal Proceedings
In Case No. 393CV-1355P; Star Resources, Inc. vs. Gerald Arthur,
Christopher T. Arthur, John J. Navin, D. Russell Thomas, Brain A. Hussain,
Thomas, Hussain & Associates was awarded a $250,000 judgment against Gerald
Arthur and Christopher T. Arthur. The Company had previously settled this case
with other defendants for cash and the return of Company stock to the Company
for cancellation. Messrs. Arthur and Arthur are former officers, directors, and
stockholders of the Company. Messrs. Thomas, Hussain, and Thomas, Hussain &
Associates are the former outside auditors and accountants for New View
Broadcasting, Inc. This judgment was assigned to Lawrence E. Steinberg on May 1,
1995. See Note 3 to the financial statements.
Item 4. Submission of Matters to a Vote of Security Holders
On July 1, 1995, the holders of a majority of Star stock approved, by
written consent, the reduction in the par value of Star's common stock from
$.001 to $.0001.
PART II
Item 5. Market for Registrant's Common Stock and Related Stockholder Matters
Market Information
There is currently no active market for the Company's common stock;
however, the Company has been carried on the O-T-C information board.
As of April 30, 1996, there were 774 holders of record of the Common Stock.
Holders of Common Stock are entitled to dividends when, as and if declared
by the Board of Directors out of funds legally available therefor. The Company
has never paid cash dividends on its Common Stock and management intends, for
the immediate future, to retain any earnings for the operation and expansion of
the Company's business. Any future determination regarding the payment of
dividends will depend upon results of operations, capital requirements, the
financial condition of the Company and such other factors that the Board of
Directors of the Company may consider. If the Company issues preferred stock,
the Board of Directors will have the
STAR RESOURCES, INC. - FORM 10-KSB-A FOR YEAR ENDED 4/30/96
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right to establish the rights, designations and preferences thereof,including
preferences as to payment of dividends and liquidation proceeds.
On June 15, 1995, Preferred/telecom, Inc. filed a form S-1 Registration
Statement with the Securities and Exchange Commission relating to the
distribution by the Company of 600,000 shares of common stock , $.001 par value
of Preferred/telecom owned by the Company, as a dividend to the holders of
record of the Company's common stock. The Dividend Shares, which represent 8.5%
of the issued and outstanding Common Stock of Preferred/telecom, were
distributed by mail within approximately ten days of Securities and Exchange
Commission approval on the basis of one share of Preferred/telecom common stock
for each 69 shares of Star Common Stock held by the Company's stockholders. The
Registration Statement became effective on August 14, 1995. Holders of Common
Stock of the Company were not assessed or charged for the Dividend Shares. A
prospectus of Preferred/telecom explaining the business of Preferred/telecom and
the dividend was mailed to each shareholder of the Company along with a stock
certificate for the dividend shares.
Item 6. Management's Discussion and Analysis of Financial Conditions and Results
of Operations
Results of Operations
Year Ended April 30, 1996 as compared to year ended April 30, 1995
For the year ended April 30, 1996, the Company had no revenue compared to
revenue from advertising sales and related production of $1,285,254 for the year
ended April 30, 1995. This decrease in revenue was due to the Company's transfer
of New View Broadcasting, Inc. to the majority stockholder as discussed above.
For the year ended April 30, 1996, the Company had expenses of $2393, which
consisted entirely of general and administrative expenses compared to expenses
of $1,811,972 for the year ended April 30, 1995. For the year ended April 30,
1996, the Company incurred a loss of $301,309 on the disposition of its
investment in New View Broadcasting, Inc. compared to other income of $103,844
for the year ended April 30, 1995. See Notes 3 and 9 to the financial statements
.
Year Ended April 30, 1995 as compared to year ended April 30, 1994
For the year ended April 30, 1995, the Company had revenue from advertising
sales and related production of $1,285,254 compared to $552,697 revenue for the
year ended April 30, 1994. This increase in revenues of over two hundred percent
is due to the advertisers in the market realizing the value offered by
advertising on WBNU TV 36 and the station's increasing ratings and viewer
awareness.
General and Administrative expenses include office supplies, postage and
delivery charges, printing expense, repairs and maintenance, registrar and
transfer fees, utilities and other miscellaneous accounts. These expenses were
higher for 1995 than 1994 due to the Company's increasing overhead related to
increasing revenues. Interest
STAR RESOURCES, INC. - FORM 10-KSB-A FOR YEAR ENDED 4/30/96
<PAGE>
is primarily interest accrued on loans from the principal stockholder of the
Company plus vendor finance charges. Programming expense is the monthly fee to
Showplace Broadcasting , Inc. plus the amortization of broadcast rights for
films and syndicated programming. Broadcast rights are amortized on a straight
line basis over the contract period. See note 2 to the financial statements.
Salaries and wages increased primarily due to a change in the company's
compensation of its sales staff . Advertising and promotion increased due to
more aggressive marketing of the station . Most of these charges were arranged
on a barter basis. Agency commissions increased due to advertising revenue
increases. During the year, the Company maintained a provision for doubtful
accounts in the amount management believed sufficient to cover possible
uncollectible accounts. Legal and accounting fees were higher for the year ended
April 30, 1995 than the year ended April 30, 1994 due to the conclusion of
litigation the Company had instituted. Accounting services were provided the
Company from an entity owned by the majority stockholder (See note 6 to the
financial statements). Since the Company has not generated any taxable income,
no provision for federal income taxes is made (See note 5 to the financial
statements). For the year ended April 30, 1995, the Company's net loss from
operations was $82,890 less than for the year ended April 30, 1994. For the year
ended April 30, 1995, the Company recognized revenue of $103,750 from the
cancellation of a contract the Company had entered into for the purchase of
another television station (See note 9 to the financial statements).
Liquidity and Capital Resources
The Company has incurred significant losses during and after the
development stage and has been dependent on stockholder loans to fund negative
cash flow from operations. The Company's total liabilities exceeded its total
assets at April 30, 1995 by $1,386,055. On May 1, 1995, the principal
stockholder released Star Resources, Inc. from its indebtedness to him in
exchange for all the capital stock of New View Broadcasting, Inc. and the
transfer to the stockholder of the judgment obtained against Mr. Gerald Arthur.
See notes 1, 3, and 7 to the financial statements. Substantially all operating
losses have been incurred in the operation of New View Broadcasting, Inc. Star
Resources, Inc. plans to continue to pursue its original purpose of acquiring
privately held enterprises believed to have growth potential .
Item 7. Financial Statements
The Financial Statements as of and for the year ended April 30, 1996 are
found following the signature pages to this Report.
PART III
Item 8. Directors, Executive Officers and Key Employees of Registrant
The following table contains information concerning the Company's
directors, executive officers and key employees. It is expected that these
persons will serve in
STAR RESOURCES, INC. - FORM 10-KSB-A FOR YEAR ENDED 4/30/96
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these offices until the next annual meeting or until their respective successors
are elected and qualified.
LAWRENCE E. STEINBERG, age 60, Chairman of the Board of Directors,
President, and Chief Executive Officer, has been engaged in the private practice
of law in Dallas, Texas, since 1960. Since April, 1994, he has been "of counsel"
to the law firm of Jenkens & Gilchrist, a Professional Corporation. Prior to
that time he was a shareholder in the law firm of Johnson & Steinberg, P.C.
(formerly Seeligson & Steinberg, P.C.) and its predecessors for over 20 years.
The firm and its predecessor, Steinberg & Solomon, have acted as legal counsel
to Star. Since April 1994, Mr. Steinberg has been a secretary and a director of
LoneStar Hospitality Corporation.
ARNOLD E. BAYNARD, age 66, is a Vice President of the Company and is the
General Manager of WBNU-TV-36. Prior to joining the Company, and since 1990, Mr.
Baynard was the General Manager of WUJM Radio in Charleston, South Carolina.
From 1980 to 1990, Mr. Baynard owned and operated two highly rated restaurants
in Charleston, and owned and operated MAP Advertising, a Charleston advertising
and promotion agency. Mr. Baynard has worked in the radio business in various
sales and management capacities since 1950. He studied textile engineering at
North Carolina State University, Raleigh, North Carolina, in 1951, and attended
the Charlotte School of Broadcasting, Announcing and Public Relations,
Charlotte, North Carolina, in 1954.
MICHAEL A. HERSHMAN, age 41, is Vice President and Treasurer of the
Company. Mr. Hershman, a Certified Public Accountant, also served as the
Executive Vice President of Eagle Equity Management, Inc., a company providing
real estate and investment management services, during 1991 and 1992, and has
been its President since December 1992. Lawrence E. Steinberg is the sole
shareholder of Eagle Equity Management, Inc. From 1986 until 1991, Mr. Hershman
was a partner in a firm providing real estate brokerage and management services.
Mr. Hershman received a Bachelors degree in Accounting from the University of
Texas at Austin in 1977.
Board of Directors and Committees of the Board
During the year ended April 30, 1996 the Board of Directors held no
meetings and took action by unanimous written consent on four occasions. There
were no committee meetings during the year.
The Company has no standard arrangements to compensate the directors for
service in that capacity other than reimbursing them for expenses incurred in
attending board meetings.
Item 9. Executive Compensation
The Company qualifies as a "small business issuer" as defined by Item 10
(a)(1) of Regulation S-B, and is providing disclosure in this item pursuant to
Item 402 (a)(1)(i) of Regulation S-K.
STAR RESOURCES, INC. - FORM 10-KSB-A FOR YEAR ENDED 4/30/96
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Lawrence E. Steinberg, the Chief Executive Officer, received no
compensation for his services during the fiscal year ended April 30, 1996. No
other officer or director received any compensation during the fiscal year ended
April 30, 1996.
Item 10. Security Ownership of Certain Beneficial Owners and Management
The following information is submitted as of July 26, 1996 with respect to
the Company's voting securities owned beneficially by each person known by the
Company owning more than 5% of the Common Stock of the Company (this being the
only class of voting securities now outstanding) and by all directors and
officers of the Company, individually and as a group:
<TABLE>
<CAPTION>
Number of Shares Percentage of
Name and Address Beneficially Owned Outstanding Shares
<S> <C> <C>
Arnold E. Baynard 3,898,034 9.41%
1732 Pittsford Cir.
Charleston, SC 29412
Lawrence E. Steinberg 29,599,491(1) 71.45%
5420 LBJ Freeway Suite 540
Dallas, TX 75240
Michael A. Hershman 3,048,537 7.36%
5420 LBJ Freeway Suite 540
Dallas, TX 75240
All Directors and Officers 36,546,062 (1) 88.22%
as a Group (3 persons)
</TABLE>
(1) Includes 4,000,000 shares owned by trusts for the benefit of Mr.
Steinberg's children, of which he is a trustee.
Item 12. Certain Relationships and Related Transactions
Lawrence E. Steinberg, the President, a director and a principal
stockholder of the Company, had loaned to the Company, as of April 30 1995,
$1,682,095, including $220,969 of accrued interest was reclassified as a loan
from stockholder . These funds were used to purchase equipment and to finance
the operations of the Company. In connection with the loaning of these funds,
Mr. Steinberg obtained a security interest in the studio equipment of WBNU-TV-36
and the cable that the Company had previously purchased, the transmitter and
antenna for which he advanced funds for the purchase, all of the outstanding
stock of New View Broadcasting, Inc. ("New View") (a wholly owned subsidiary of
the Company), and the stock of Caro Corporation held by the Company and New
View. The loan was evidenced by a "grid note" bearing 10% interest per annum due
on demand, or if no demand was made, the loan was due on
STAR RESOURCES, INC. - FORM 10-KSB-A FOR YEAR ENDED 4/30/96
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July 15, 1996, with Star and New View being jointly and severally liable
therefor. On May 1, 1995, Mr. Steinberg released Star Resources, Inc. from its
indebtedness to him in exchange for all the capital stock of New View and the
judgment obtained against Messrs. Gerald and Christopher Arthur. See notes 1, 3,
and 7 to the financial statements.
In June 1993, the Board of Directors and shareholders approved an incentive
employee stock option plan (the Plan) which provides for the granting of options
to key employees to purchase an aggregate of 1,000,000 shares of common stock.
An option to purchase 250,000 shares at $0.10 per share was granted to Michael
Baynard, Vice President of New View Broadcasting, Inc., an option to purchase
250,000 shares at $0.10 per share was granted to Byron J. Miller, Vice President
of New View Broadcasting, Inc., and an option to purchase 50,000 shares at $0.10
per share was granted to Michael Caristi, Account Executive of New View
Broadcasting, Inc. Such options could be exercised in increments over a five
year period subject to continued employment by New View. On April 30, 1995, the
option holders agreed to the cancellation of their options to purchase 550,000
shares of common stock. In exchange for the cancellation of their options, the
Board of Directors allowed them to purchase during May 1995, 550,000 shares of
common stock at $.01 per share subject to each agreeing to sell back to the
Company at $.01 per share, a portion of the stock if their employment with New
View is terminated prior to May 1, 1999.
During the year ended April 30, 1996, the majority stockholder contributed
$19,900 to the capital of the Company . During the fiscal year ended April 30,
1995, the Company received services in the amount of $24,000 from an entity
owned by Mr. Steinberg. See Note 6 to the financial statements.
PART IV
Item 13. Exhibits, Financial Statement Schedules, and Reports on Form 10-KSB
Financial Statements and Schedules
Financial Statements may be found following the signature page of this
Report.
Exhibits
3.1 Certificate of Incorporation of the Company, as filed with the
Secretary of State of Delaware on May 27, 1987 (incorporated by reference to
Registration Statement on Form S-1, Registration No. 33-19324).
3.2 Certificate of Amendment to Certificate of Incorporation of the
Company, as filed with the Secretary of State of Delaware on September 1, 1992.
(incorporated by reference to Form 10-K for the year end April 30, 1992).
3.3 Certificate of Amendment to Certificate of Incorporation of the
Company, as filed with the Secretary of State of Delaware on October 15, 1992.
(incorporated by reference to Form 10-K for the year end April 30, 1992).
STAR RESOURCES, INC. - FORM 10-KSB-A FOR YEAR ENDED 4/30/96
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3.4 By-Laws of the Company (incorporated by reference to Registration
Statement on Form S-1, Registration No. 33-19324).
3.5 Certificate of Amendment to Certificate of Incorporation of the
Company, as filed with the Secretary of State of Delaware on July 19, 1995
(incorporated by reference to Form 10-KSB-A and dated July 28, 1995).
4.1 Specimen Form of Certificate for Common Stock (incorporated by
reference to Registration Statement on Form S-1, Registration No. 33-19324).
10.1 Agreement and Plan of Reorganization dated February 13, 1992 among the
Company, New View Broadcasting, Inc., and the shareholders of New View
Broadcasting, Inc. (incorporated by reference to Form 8-K dated February 24,
1992).
10.2 Purchase Agreement by and between Caro Corporation and Gerald T.
Arthur dated July 18, 1991. (incorporated by reference to Form 8-K dated
February 24, 1992).
10.3 Amended Purchase Agreement dated as of February 20, 1992 by and among
Caro Corporation, the shareholders of Caro Corporation, and New View
Broadcasting, Inc., amending Purchase Agreement described in Exhibit 10.2.
(incorporated by reference to Form 8-K dated February 24, 1992).
10.4 Asset Purchase Agreement dated as of November 22, 1991 by and between
Keith Allen Collea and J & C Productions, Inc. (incorporated by reference to
Form 8-K dated February 24, 1992).
10.5 Agreement to Amend Purchase Agreement by and between Caro Corporation
and New View Broadcasting, Inc. (incorporated by reference to Form 10-K for the
year end April 30, 1992).
16 Letter from John Zale, CPA, the Company's former certifying accountant.
(incorporated by reference to Form 10-K for the year end April 30, 1992).
*Filed Herewith
Reports on Form 8-K
No reports on Form 8-K were filed during the fourth quarter of the fiscal
year ended April 30, 1996. Forms 8-K and 8-K-A both dated May 1, 1995 were filed
with the Securities and Exchange Commission to report the transfer to Lawrence
E. Steinberg of all the common stock of New View and the judgment against Gerald
Arthur and Christopher Arthur.
STAR RESOURCES, INC. - FORM 10-KSB-A FOR YEAR ENDED 4/30/96
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
STAR RESOURCES, INC.
July 26, 1996 By:/s/ Lawrence E. Steinberg
Lawrence E. Steinberg, Chief Executive Officer
(Principal Executive Officer)
July 26, 1996 By:/s/ Michael A. Hershman
Michael A. Hershman, Vice President and Treasurer
(Principal Financial Officer
and Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
July 26, 1996 By:
Arnold E. Baynard, Vice President, Secretary and
Director
July 26, 1996 By:/s/ Lawrence E. Steinberg
Lawrence E. Steinberg,
Chairman of the Board of Directors,
President and Chief Executive Officer
July 26, 1996 By:/s/ Michael A. Hershman
Michael A. Hershman, Vice President,
Treasurer and Director
(Principal Financial Officer
and Principal Accounting Officer)
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STAR RESOURCES, INC.
Financial Statements
and
Independent Auditor's Report
April 30, 1996
STAR RESOURCES, INC. - FORM 10-KSB-A FOR YEAR ENDED 4/30/96
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STAR RESOURCES, INC.
April 30, 1996
TABLE OF CONTENTS
Independent Auditor's Report................................................1
Balance Sheets..............................................................2
Statements of Operations ...................................................3
Statements of Stockholders' Equity..........................................4
Statements of Cash Flows....................................................5
Notes to Financial Statements...........................................6 - 9
Schedule V - Property, Plant and Equipment.................................10
Schedule VI - Accumulated Depreciation.....................................11
STAR RESOURCES, INC. - FORM 10-KSB-A FOR YEAR ENDED 4/30/96
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INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Star Resources, Inc.
We have audited the accompanying balance sheet of Star Resources, Inc. (the
"Company") as of April 30, 1996 and the related statements of operations,
stockholders' equity and cash flows for the year ended April 30, 1996, and we
have audited the accompanying consolidated balance sheet of the Company and its
subsidiary, New View Broadcasting, Inc. ("New View") as of April 30, 1995, and
the related consolidated statements of operations, stockholders' equity and cash
flows for each of the years ended April 30, 1995 and April 30, 1994. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Star Resources, Inc. as of
April 30, 1996, the consolidated financial position of Star Resources, Inc. and
New View as of April 30, 1995, the results of its operations and its cash flows
for the year ended April 30, 1996, and the consolidated results of its
operations and its cash flows for each of the years ended April 30, 1995 and
April 30, 1994, in conformity with generally accepted accounting principles.
In connection with our audits of the financial statements referred to
above, we audited Schedule V - Property, Plant and Equipment and Schedule VI
Accumulated Depreciation for each of the years ended April 30, 1996, April 30,
1995, and April 30, 1994. In our opinion, these financial schedules, when
considered in relation to the financial statements taken as a whole, present
fairly, in all material respects, the information stated therein.
Dallas, Texas
June 24, 1996
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STAR RESOURCES, INC.
Balance Sheets
<TABLE>
<CAPTION>
April 30
1996 1995
Assets
Current Assets
<S> <C> <C>
Cash $ 261 $ 33,634
Accounts receivable, net of $23,600 allowance
for uncollectible accounts in 1995 - 105,150
Broadcast rights - Note 2 - 130,721
Total Current Assets 261 269,505
Property and Equipment, at cost net of accumulated
depreciation - Notes 2 and 7 - 163,191
Other Assets
Investment in unconsolidated affiliate - Notes 4 and 7 - 334,858
Broadcast rights - Note 2 - 179,580
Other - 7,752
$ 261 $ 954,886
Liabilities and Stockholders' Deficit
Current Liabilities
Accounts payable and accrued expenses - Note 6 $ 290 $ 194,292
Contracts payable for broadcast rights - 322,942
Advances from stockholders - Note 6 - 17,000
Loan from stockholder - Notes 3 and 7 - 1,682,095
Total Current Liabilities 290 2,216,329
Contracts payable for broadcast rights - 124,612
Stockholders' Deficit
Preferred stock - $.01 par value
Authorized - 1,000,000 shares
Issued and outstanding - none - -
Common stock - $.0001 par value
Authorized - 120,000,000 shares
Issued and outstanding - 41,426,186 shares - Note 2 4,142 40,876
Additional paid-in capital 356,626 294,492
Retained deficit (360,797) (1,721,423)
Total Stockholders' Deficit (29) (1,386,055)
$ 261 $ 954,886
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
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STAR RESOURCES, INC.
Statements of Operations
<TABLE>
<CAPTION>
For the Year Ended April 30
1996 1995 1994
REVENUE:
<S> <C> <C> <C>
Advertising $ - $ 657,746 $ 323,444
Bartering - 596,698 187,149
Other - 30,810 42,104
Total Revenue - 1,285,254 552,697
EXPENSES:
Advertising and promotion - 213,044 170,532
Agency and sales commissions - 92,769 62,397
Depreciation - 55,377 69,105
Interest - 124,896 75,893
Legal and accounting - 52,140 40,562
Programming - 512,190 154,695
Provision for uncollectible accounts - 52,697 26,149
Rents - 66,000 60,500
Salaries and wages - 360,055 288,314
General and administrative 2,393 282,804 214,158
Total Expenses 2,393 1,811,972 1,162,305
Net loss from operations (2,393) (526,718) (609,608)
OTHER INCOME (EXPENSE):
Interest income - 94 -
Cancellation of contract - Note 9 - 103,750 -
Loss on disposition of investment
in New View Broadcasting, Inc. - Note 3 (301,309) - -
Total Other Income (Expense) (301,309) 103,844 -
Net Loss $ (303,702) $ (422,874) $ (609,608)
Weighted average number of
shares outstanding 41,403,583 41,846,088 42,339,519
Loss Per Share - Note 2 $ (.0073) $ (.0101) $ (.0144)
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
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STAR RESOURCES, INC.
Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Additional Total
Common Stock Paid-in Retained Stockholders'
Shares Amount Capital Deficit Equity (Deficit)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance April 30, 1993 39,957,150 $ 39,957 $292,552 $ (688,941) $ (356,432)
Net loss for the year ended
April 30, 1994 (609,608) (609,608)
Shares issued for cash 2,858,839 2,859 2,859
Balance April 30, 1994 42,815,989 42,816 292,552 (1,298,549) (963,181)
Net loss for the year ended
April 30, 1995 (422,874) (422,874)
Shares returned and cancelled (1,939,803) (1,940) 1,940 -
Balance April 30, 1995 40,876,186 40,876 294,492 (1,721,423) (1,386,055)
Shares issued for cash - Note 8 550,000 550 4,950 5,500
Disposition of investment in New
View Broadcasting, Inc. - Note 3 1,688,328 1,688,328
Capital contribution - Note 6 19,900 19,900
Reduction in par value of stock - Note 2 (37,284) 37,284 -
Dividend distribution (24,000) (24,000)
Net loss for the year ended
April 30, 1996 (303,702) (303,702)
Balance April 30, 1996 41,426,186 $ 4,142 $356,626 $ (360,797) $ (29)
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
STAR RESOURCES, INC. - FORM 10-KSB-A FOR YEAR ENDED 4/30/96
<PAGE>
STAR RESOURCES, INC.
Statements of Cash Flows
<TABLE>
<CAPTION>
For the Year Ended April 30
1996 1995 1994
OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net Loss $(303,702) $(422,874) $(609,608)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation - 55,377 69,105
Provision for uncollectible accounts receivable - 52,697 26,149
Increase in accounts payable 290 37,247 38,241
Increase in receivables - (109,041) (61,296)
Increase in interest payable - 122,602 73,390
Amortization of broadcast rights in excess
of payments on long-term contracts - 36,708 78,880
Other, Net - (286) (5,821)
Loss on disposition of subsidiary 301,309 - -
Net Cash Used by Operating Activities (2,103) (227,570) (390,960)
INVESTING ACTIVITIES:
Payments for property and equipment - (66,326) (28,489)
Deposit for potential acquisition - - (160,000)
Return of deposit for potential acquisition - 160,000 -
Increase in investment in unconsolidated
affiliate - (202,550) -
Cash in disposed of subsidiary (32,670) - -
Net Cash Used by Investing Activities (32,670) (108,876) (188,489)
FINANCING ACTIVITIES:
Proceeds from issuance of common stock 5,500 - 2,859
Advances from stockholders - 369,960 572,000
Capital contribution 19,900 - -
Dividend distribution (24,000) - -
Net Cash Provided by Financing Activities 1,400 369,960 574,859
NET INCREASE (DECREASE) IN CASH (33,373) 33,514 (4,590)
CASH AT BEGINNING OF PERIOD 33,634 120 4,710
CASH AT END OF PERIOD $ 261 $ 33,634 $ 120
The accompanying notes are an integral part of these financial statements.
</TABLE>
5
STAR RESOURCES, INC. - FORM 10-KSB-A FOR YEAR ENDED 4/30/96
<PAGE>
STAR RESOURCES, INC.
Notes to Financial Statements
April 30, 1996
1. Organization
Star Resources, Inc. ("Company") was incorporated on May 27, 1987. The
Company was organized for the purpose of acquiring privately held enterprises
believed to have growth potential irrespective of any particular industry. On
February 24, 1992, the Company acquired all the outstanding stock of New View
Broadcasting, Inc. ("New View"), a broadcast communications company. New View
operates WBNU-TV Channel 36, a high power UHF television station located in
Charleston, South Carolina. On May 1, 1995, the Company disposed of its entire
investment in New View. (The New View disposition is discussed in Note 3.) The
Company plans to pursue its original purpose of acquiring privately held
enterprises believed to have growth potential.
2. Significant Accounting Policies
Consolidation
The financial statements as of April 30, 1995, and for each of years ended
April 30, 1995 and April 30, 1994 include the accounts of the Company and its
wholly-owned subsidiary, New View. The acquisition of the New View outstanding
shares was recorded utilizing the pooling of interests method of accounting. All
significant intercompany transactions are eliminated. On May 1, 1995, the
Company disposed of its entire investment in New View. As of April 30, 1996, and
for the year ended April 30, 1996, the financial statements include the accounts
of the Company only.
Broadcast Rights
Broadcast rights consist principally of rights to broadcast feature films
and syndicated programs and are stated at the lower of cost or net realizable
value. The total cost of these rights is recorded as an asset and a liability
when the program becomes available for broadcast. Broadcast rights are amortized
on a straight line basis over the contract period. The current portion of
broadcast rights represents those rights available for broadcast that are
expected to be utilized in the succeeding year.
Property, Equipment and Depreciation
Property and equipment is recorded at cost. Depreciation is computed using
an accelerated method based on the estimated useful lives of three to ten years.
The significant categories of property and equipment are as follows:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Furniture and fixtures $ - $ 15,307
Equipment - 290,604
Vehicles - 1,487
- 307,398
Accumulated depreciation - (144,207)
$ - $ 163,191
</TABLE>
6
STAR RESOURCES, INC. - FORM 10-KSB-A FOR YEAR ENDED 4/30/96
<PAGE>
STAR RESOURCES, INC.
Notes to Financial Statements (Continued)
April 30, 1996
2. Significant Accounting Policies - Continued
Per Common Share Information
Net loss per common share is computed by dividing the net loss by the
average number of shares outstanding during the period.
Common Stock - Par Value
On July 1, 1995, the Company amended its Articles of Incorporation to
reduce the par value of its common stock from $.001 to $.0001.
3. Disposition of New View
On May 1, 1995, the Company transferred all of its stock in New View to
Lawrence E. Steinberg, the majority stockholder of the Company. Such shares
represented all of the issued and outstanding capital stock of New View. The
Company also transferred to Mr. Steinberg a $250,000 default judgement in favor
of the Company relating to the acquisition of New View. As consideration for the
shares of New View and for the judgement, Mr. Steinberg released the Company
from its obligation as guarantor of his loans to New View.
4. Investment in Unconsolidated Affiliate
Prior to its acquisition by the Company, New View issued common shares to a
member of its Board of Directors in exchange for a contract. The contract
entitled New View to acquire forty-nine percent (49%) of the outstanding stock
of Caro Corporation ("Caro") in exchange for approximately $49,000 of equipment.
During August, 1992, New View exercised its right and acquired 49% of the
outstanding stock of Caro. Caro has no significant operations and holds a
broadcasting license granted by the Federal Communications Commission ("FCC") on
March 31, 1993 to operate a high power television station in Charleston, South
Carolina. On April 30, 1995, New View purchased an additional twenty-five and
one- half percent (25.5%) of Caro outstanding stock. New View paid $202,550 for
the additional stock.
5. Income Taxes
For the three years ended April 30, 1996, no provision for federal income
taxes was recorded due to the losses from operations. As of April 30, 1996, the
Company had net operating loss carryforwards of $35,500 expiring from 2007
through 2011 and a capital loss carryforward of $301,300 expiring in 2001. The
deferred tax asset totalling $114,500 relating to the tax benefit associated
with the net operating loss and capital loss carryforwards has been fully
reserved due to the uncertainty of future operational profitability of the
Company and the uncertainty of the Company's ability to generate capital gain
income sufficient to offset the capital loss.
7
STAR RESOURCES, INC. - FORM 10-KSB-A FOR YEAR ENDED 4/30/96
<PAGE>
STAR RESOURCES, INC.
Notes to Financial Statements (Continued)
April 30, 1996
6. Related Party Transactions
Various minority stockholders have advanced funds to serve as temporary
working capital. At April 30, 1995 advances from these stockholders totalled
$17,000. During the year ended April 30, 1996, the majority stockholder
contributed $19,900 to the capital of the Company.
At April 30, 1995 the Company owed $58,500 to an entity owned by the
majority stockholder for accounting services. In addition, the Company owed
$20,790 at April 30, 1995 to an entity partially owned by the majority
stockholder for legal services.
7. Loan from Stockholder
New View has borrowed from Lawrence E. Steinberg, the majority stockholder
of the Company, to partially fund operations. The Board of Directors has
authorized New View to borrow up to $2,500,000 bearing interest at 10% per
annum. At April 30, 1995, New View had borrowed $1,682,095. The note is due on
demand or on July 15, 1996 if no demand is made and is secured by equipment and
all of the outstanding shares of New View and the shares owned in Caro. At April
30, 1995, New View reclassified $122,602 of accrued interest payable to loan
from stockholder. As discussed in Note 3, on May 1, 1995, Mr. Steinberg released
the Company from its obligation as guarantor of the note in exchange for all of
the capital stock of New View.
8. Employee Stock Option Plan
In June 1993, the Board of Directors and shareholders approved an incentive
employee stock option plan (the Plan), which provides for the granting of
options to key employees to purchase an aggregate of 1,000,000 shares of common
stock. The Plan provides for the granting of incentive stock options as defined
by the Internal Revenue Code. The exercise period for the options are to be
determined by the Board of Directors but shall not exceed ten years from the
date granted. The exercise price of the options shall be determined by the Board
of Directors at the time the option is granted, with such price not to be less
than one hundred percent of the fair market value of the Company's common stock
on the date of the grant. On May 1, 1994, options to purchase 500,000 shares of
common stock were issued at an option price of $.10 per share. These options
were exercisable at 25% per year beginning one year from date of issuance.
During May, 1995, the option holders agreed to the cancellation of their
options to purchase 500,000 shares of common stock. In exchange for the
cancellation of their options, the Board of Directors allowed them to purchase
during May, 1995, 500,000 shares of common stock of the Company at $.01 per
share subject to each agreeing to sell back to the Company at $.01 per share, a
portion of the stock if their employment with New View is terminated prior to
May 1, 1998. Additionally during May, 1995,
8
STAR RESOURCES, INC. - FORM 10-KSB-A FOR YEAR ENDED 4/30/96
<PAGE>
STAR RESOURCES, INC.
Notes to Financial Statements (Continued)
April 30, 1996
8. Employee Stock Option Plan - Continued
another employee was allowed to purchase 50,000 shares of common stock of
the Company at $.01 per share subject to his agreeing to sell back to the
Company at $.01 per share, a portion of the stock if his employment with New
View is terminated prior to May 1, 1998.
9. Cancellation of Contract
The Company had entered into a contract with the bankruptcy trustee of
another television station to acquire the station. Under the terms of the
contract, if the trustee accepted a higher bid for the station than that offered
by the Company, the Company would be returned its $160,000 deposit and would be
paid a contract cancellation fee equal to 25% of the increase in the sales price
for the station. During the year ended April 30, 1995, such event occurred. The
cancellation fee paid to the Company was $103,750.
9
STAR RESOURCES, INC. - FORM 10-KSB-A FOR YEAR ENDED 4/30/96
<PAGE>
STAR RESOURCES, INC.
Schedule V - Property, Plant and Equipment Years Ended April
30, 1996, 1995, and 1994
<TABLE>
<CAPTION>
Balance at Balance at
Beginning of Additions Other End of
Classification Period at Cost Retirements Changes Period
Year ended April 30, 1996
<S> <C> <C> <C> <C> <C> <C>
Furniture and Fixtures $ 15,307 $ - $ - $ (15,307) (3) $ -
Equipment 290,604 - - (290,604) (3) -
Vehicles 1,487 - - (1,487) (3) -
$ 307,398 $ - $ - $ (307,398) $ -
Year ended April 30, 1995
Furniture and Fixtures $ 15,307 $ - $ - $ - $ 15,307
Equipment 224,278 66,326 - - 290,604
Vehicles 1,487 - - - 1,487
$ 241,072 $ 66,326 $ - $ - $ 307,398
Year ended April 30, 1994
Furniture and Fixtures $ 15,307 $ - $ - $ - $ 15,307
Equipment 228,472 27,002 - (40,000) (1) 224,278
8,804 (2)
Vehicles - 1,487 - - 1,487
$ 243,779 $ 28,489 $ - $ (31,196) $ 241,072
</TABLE>
(1) Basis adjustment due to reduction in purchase price.
(2) Equipment acquired via bartering.
(3) Assets of disposed subsidiary.
10
STAR RESOURCES, INC. - FORM 10-KSB-A FOR YEAR ENDED 4/30/96
<PAGE>
STAR RESOURCES, INC.
Schedule VI - Accumulated Depreciation Years Ended April
30, 1996, 1995, and 1994
<TABLE>
<CAPTION>
Balance at Balance at
Beginning of Additions Other End of
Classification Period at Cost Retirements Changes Period
Year ended April 30, 1996
<S> <C> <C> <C> <C> <C> <C>
Furniture and Fixtures $ 8,501 $ - $ - $ (8,501) (1) $ -
Equipment 135,409 - - (135,409) (1) -
Vehicles 297 - - (297) (1) -
$ 144,207 $ - $ - $ (144,207) -
Year ended April 30, 1995
Furniture and Fixtures $ 5,723 $ 2,778 $ - $ - $ 8,501
Equipment 83,107 52,302 - - 135,409
Vehicles - 297 - - 297
$ 88,830 $ 55,377 $ - $ - $144,207
Year ended April 30, 1994
Furniture and Fixtures $ 1,908 $ 3,815 $ - $ - $ 5,723
Equipment 17,817 65,290 - - 83,107
Vehicles - - - - -
$ 19,725 $ 69,105 $ - $ - $ 88,830
</TABLE>
(1) Assets of disposed subsidiary.
11
STAR RESOURCES, INC. - FORM 10-KSB-A FOR YEAR ENDED 4/30/96
<PAGE>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM STAR
RESOURCES INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS
<TABLE>
<CAPTION>
April 30, April 30,
1996 1995
--------------------------------
<S> <C> <C>
Cash and cash items $261 $33,634
Marketable securities 0 0
Notes and accounts receivable-trade 0 128,750
Allowances for doubtful accounts 0 23,600
Inventory 0 0
Total current assets 261 269,505
Property, plant and equipment 0 307,398
accumulated deprecation 0 144,207
total assets 261 954,886
Total current liabilities 290 2,216,329
bonds, mortgages, and similar debt 0 0
Preferred stock-mandatory redemption 0 0
Preferred stock-no mandatory redemption 0 0
Common stock 4,142 40,876
Other stockholders' equity (4,171) (1,680,547)
Total liabilities and stockholders' equity 261 (1,386,055)
Net sales of tangible products 0 0
Total revenues 0 1,389,098
Cost of tangible goods sold 0 0
Total costs and expenses applicable to sales and revenues 2,393 1,811,972
other costs and expenses 0 0
Provision for doubtful accounts and notes 0 0
Interest and amortization of debt discount 0 124,896
Income before taxes and other items 2,393 (422,874)
Income tax expense 0 0
Income/loss continuing operations 2,393 (422,874)
Discontinued operations (301,309) 0
Extraordinary items 0 0
Cumulative effect- changes in accounting principles 0 0
Net income or loss (303,702) (422,874)
Earnings per share - primary ($0.0073) ($0.0101)
Earnings per share - fully diluted ($0.0073) ($0.0101)
</TABLE>
STAR RESOURCES, INC. - FORM 10-KSB-A FOR YEAR ENDED 4/30/96
<PAGE>
