SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. 6)
Filed by the registrant (X )
Filed by a party other than the registrant ( )
Check the appropriate box:
(X) Preliminary proxy statement
( ) Definitive proxy statement
( ) Definitive additional materials
( ) Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
NUOASIS GAMING, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
NUOASIS GAMING, INC.
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box)
(X) $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
( ) $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- - --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
(4) Proposed maximum aggregate value of transaction:
- - --------------------------------------------------------------------------------
1 set forth the amount on which the filing fee is calculated and state how it
was determined.
1
<PAGE>
( X ) Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing of which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
$125.00
- - --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no:
Schedule 14A
- - --------------------------------------------------------------------------------
(3) Filing party:
NuOasis Gaming, Inc.
- - --------------------------------------------------------------------------------
(4) Date filed:
February 9,1995
- - --------------------------------------------------------------------------------
2
<PAGE>
NuOASIS GAMING, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER___ , 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. UNLESS OTHERWISE
INDICATED, THIS PROXY WILL BE VOTED FOR PROPOSALS I THROUGH 6
The undersigned hereby appoints Fred G. Luke proxy to represent the
undersigned, with full power of substitution, to vote all shares of NuOasis
Gaming, Inc. (the "Company") held of record by the undersigned on July 31, 1996,
at the Annual Meeting of Shareholders to be held on September___ , 1996 or any
adjournment thereof, with all the powers the undersigned would possess if
personally present, upon the matters noted and in accordance with the
instructions noted below, and with discretionary authority with respect to such
other matters, not known or determined at the time of the solicitation of this
proxy, as may properly come before said meeting or any adjournment thereof. The
undersigned hereby revokes any proxies heretofore given in connection with the
Annual Meeting and directs said persons to use this proxy to act or vote as
follows:
4. Election of Directors FOR WITHHELD (change of address)
Nominees: -------------------------
Fred G. Luke o o -------------------------
Jonathan Small o o -------------------------
Royce Warren o o -------------------------
(If you have written in
the above space, please
Alternate Nominees: mark the box on the
reverse side of this
Joseph Monterosso o o card.)
Leland E. Rees o o
Paula Amanda o o
For, except vote withheld from the following nominee(s)
SEE REVERSE
SIDE
<PAGE>
<TABLE>
<CAPTION>
|X| Please mark your notes SHARES IN YOUR NAME:-------
as in this example
PRINT NAME CERTIFICATE IS HELD UNDER:
---------------------------------------
o Change of Address
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
1. Proposal to amend the Certificate of Incorporation to increase the number
of authorized shares of $.01 par value Common Stock to One Hundred Million. o o o
2. Proposal to amend the Certificate of Incorporation to recapitalize the number of issued
and outstanding common shares. o o o
3. Proposal to sell Casino Management of America, Inc. and to acquire National Pools
Corporation. o o o
5. Proposal to ratify the selection of Raimondo, Pettit & Glassman, Certified Public
Accountants, as independent accountants for 1995. o o o
6. Proposal to transact such other business as may properly come before the meeting. o o o
</TABLE>
SIGNATURE(S) DATE
----------------------------------- -----------------------------
SIGNATURE(S) DATE
----------------------------------- -----------------------------
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, give your full title as such.
<PAGE>
NuOASIS GAMING, INC.
(Formerly E.N. PHILLIPS COMPANY)
2 Park Plaza, Suite 470
Irvine, California 92614
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
(to be held on Wednesday, September __, 1996)
To the Stockholders of NuOasis Gaming, Inc. (formerly E.N. Phillips Company):
The Annual Meeting of Stockholders of NuOasis Gaming, Inc. (formerly
E.N. Phillips Company), a Delaware corporation (the "Company"), will be held at
the Hyatt Regency Hotel, 17900 Jamboree Road, Irvine, California 92614, on
September __, 1996, at 9:30 A.M.
At the Annual Meeting, stockholders will be asked:
1. To consider and act upon a proposal to amend the Company's
Certificate of Incorporation to increase the number of
authorized shares of $.01 par value common stock to One
Hundred Million; and
2. If proposal No. 1 is not passed, to consider and act upon an
alternative proposal to amend the Company's Certificate of
Incorporation to recapitalize the number of issued and
outstanding common shares whereby common stockholders would
receive one (1) share of common stock of $.01 par value in
the Company for every ten (10) issued and outstanding shares
of $.01par value of common stock in the Company; and
3. To consider and act upon a proposal to sell the Company's
wholly-owned subsidiary Casino Management of America, Inc., a
Utah corporation, ("CMA") and to acquire National Pools
Corporation ("NPC); and
4. To elect three (3) directors to serve as the Board of
Directors until the next Annual Meeting of Stockholders and
until their respective successors have been elected and
qualified; and
5. To consider and act upon the ratification of the selection of
Raimondo, Pettit & Glassman, Certified Public Accountants, as
independent accountants for fiscal year 1995; and
6. To transact such other business as may properly come before
the meeting or any adjournments and postponements thereof.
The discussion of the proposals set forth above is intended only as a
summary, and is qualified in its entirety by the information relating to the
proposals set forth in the accompanying Proxy Statement.
The Board of Directors has fixed the close of business on July 31, 1996
as the record date for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting. Only holders of the Company's voting
securities at the close of business on the record date are entitled to vote at
the Annual Meeting.
<PAGE>
ACCOMPANYING THIS NOTICE ARE A PROXY AND A PROXY STATEMENT. IF YOU WILL
NOT BE ABLE TO ATTEND THE MEETING TO VOTE IN PERSON, PLEASE SIGN AND DATE THE
ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
By Order of the Board of Directors
John D. Desbrow
Secretary
Irvine, California
August ___, 1996
<PAGE>
NuOASIS GAMING, INC.
(Formerly E.N. PHILLIPS COMPANY)
2 Park Plaza, Suite 470
Irvine, CA 92614
ANNUAL MEETING OF STOCKHOLDERS
Wednesday, September , 1996
PROXY STATEMENT
Introduction
This Proxy Statement is being furnished to the holders of the Common
Stock, par value $.01 per share ("Common"), 14% Cumulative Convertible Preferred
Stock, par value $.01 per share ("14% Preferred"), the Series B Preferred Stock
(the "B Preferred"), of NuOasis Gaming, Inc., a Delaware corporation ("NuOasis"
or the "Company"), in connection with the solicitation of proxies by the Board
of Directors for use at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held at the Hyatt Regency Hotel, 17900 Jamboree Road, Irvine,
California, on Wednesday, September __, 1996, at 9:30 a.m. Pacific Standard
Time, and any postponement or adjournment thereof. The approximate date when
this Proxy Statement and form of Proxy are first being sent to stockholders is
August__, 1996.
Matters to be Considered
The following matters will be acted on at the Annual Meeting:
1. Adoption of an Amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of
$.01 par value common stock to One Hundred Million; and
2. If Proposal No. 1 is not passed, Adoption of an Amendment to
the Company's Certificate of Incorporation under which common
stockholers in the Company will receive one (1) share of $.01
par value common stock for every ten (10) issued and
outstanding shares of $.01 par common stock held in the
Company; and
3. Approval of the sale of the Company's wholly-owned
subsidiary, Casino Management of America Inc., a Utah
Corporation ("CMA") for cash and the acquisition of National
Pools Corporation; and
4. Election of three (3) directors to serve as the Board of
Directors until the next Annual Meeting of Stockholders and
until their successors have been elected and qualified the
next Annual Meeting of stockholders; and
5. Ratification of the selection of Raimondo, Pettit & Glassman,
Certified Public Accountants, as independent accountants for
fiscal year 1995; and
1
<PAGE>
6. Transaction of such other business as may properly come
before the meeting or any adjournments and postponements
thereof.
Voting Securities and Voting Rights
Only shareholders of record on July 31, 1996, or their proxies, will be
entitled to vote at the Annual Meeting of stockholders. The warrantholders
and/or optionholders are not entitled to vote at the meeting.
As of July 31, 1996, the Company had 30,000,000 shares of $.01 par
value Common outstanding, each of which has one (1) vote per share outstanding,
170,000 shares of 14% Preferred outstanding, each of which has one (1) vote per
share, and 250,000 shares of Series B Preferred outstanding, each of which has
seventy-eight (78) votes per share, which together represent all of the
outstanding voting securities of the Company.
One-third of the outstanding shares entitled to vote must be
represented at the Annual Meeting in person or by proxy to constitute a quorum
for the transaction of business. All shares are entitled to one vote per share,
with the exception of the Series B Preferred which has seventy-eight (78) votes
per share. In the election of directors, each share of stock is entitled to one
vote for a nominee for each director position. The Company does not have
cumulative voting. A shareholders' list will be available for examination by
shareholders at the Annual Meeting.
Voting Procedure
The shares represented by each properly executed proxy returned to
NuOasis will be voted at the Annual Meeting as indicated on the proxy. If no
instructions are given, the person authorized by the proxy will vote for the
election of the director nominees named in this Proxy Statement at the Annual
Meeting, in favor of the approval of the two alternate proposed Amendments to
the Certificate of Incorporation and in favor of the approval of the
ratification of the selection of Raimondo, Pettit & Glassman, Certified Public
Accountants, as independent accountants for 1995. Any person giving a proxy has
the right to revoke it at any time before it is exercised (1) by filing with the
Secretary of NuOasis a duly signed revocation or proxy bearing a later date or
(2) by voting in person at the Annual Meeting.
The Board of Directors is not aware of any matters other than those set
forth above which may come before the Annual Meeting. If any other matters are
properly presented to the meeting for action, unless contrary instructions are
given, the person named in the enclosed form of proxy and acting thereunder have
the power to vote in accordance with their best judgment on such matters.
Directors of the Company will be elected by a plurality vote of the
outstanding shares of voting securities present and entitled to vote at the
meeting. Pursuant to Section 242(b)(1) of the Delaware General Corporation Law,
approval of the Amendment to the Company's Certificate of Incorporation to
increase the authorized common shares will require the affirmative vote of a
majority of the class of outstanding common stock present in person or
represented by proxy at the meeting voting separately as a class as well as a
majority of the shares of NuOasis voting securities present in person or
represented by proxy at the meeting. Approval of the Amendment to the Company's
Certificate of Incorporation to recapitalize
2
<PAGE>
the number of outstanding common shares will require the affirmative vote of the
majority of the voting securities present in person or represented by proxy at
the meeting. Nona Morelli's II, Inc. ("Nona") intends to vote in favor of the
election of three directors including Mr. Luke and for approval of the proposals
to be voted upon at the meeting. Ratification of the selection of independent
accountants will require the affirmative vote of a majority of the shares of
voting securities present and entitled to vote at the meeting. Nona controls
39.39% of the voting securities outstanding on the Record Date. The Secretary of
the Company intends to vote his shares of common stock representing .275% of the
voting securities outstanding on the Record Date in favor of the election of
three directors including Mr. Luke and for approval of the proposals to be voted
upon at the meeting.
If a proxy is marked with instructions to withhold authority to vote
for one or more director nominees or to abstain from voting on any matter, those
shares will be treated as represented at the meeting and entitled to vote in
determining whether a quorum is present. In other matters where approval is
required by a majority of shares outstanding or represented at the meeting,
abstentions from voting on a matter will have the effect of a vote against the
matter.
Abstentions and broker non-votes (where a broker or other record holder
submits a proxy but does not have authority to vote a customer's shares) will be
considered present for purposes of establishing a quorum. Under applicable
Delaware law, a broker non-vote will have the effect of a vote against the
proposals being considered.
Solicitation of Proxies
The proxies are solicited by the Board of Directors. Solicitation of
proxies may be made by officers, directors and employees of the Company in
person, by telephone, facsimile transmission or by mail. In addition, brokers,
banks and other nominee holders will be reimbursed for expenses they incur in
forwarding proxy materials to and obtaining voting instructions from beneficial
owners of the Company's common stock. The cost of solicitation of proxies will
be borne by the Company.
Security Ownership of Certain Principal Stockholders
The following tables set forth the number of shares of Common Stock,
Series B Preferred Stock, 14% Cumulative Preferred Stock of the Company
beneficially owned as of July 31, 1996, by (I) each person (including any
"Group" as that term is defined in Section 13 (d)(3) of the Securities Exchange
Act of 1934) who beneficially owns more than 5% of any class of voting
securities (i.e. the Common, 14% Cumulative Preferred or the Series B Preferred)
(ii) each of the officers or directors of the Company who beneficially owns any
shares of Common, 14% Preferred, or Series B Preferred and (iii) all directors
and officers of the Company as a group.
3
<PAGE>
<TABLE>
<CAPTION>
Percent of Class
Before Nona Series Percent of Class
Shares of B Preferred After Nona Series B
Common Stock Conversion or Nona Preferred Conversion
Name and Address of Beneficially Warrant and Nona Warrant
Beneficial Owner Owned(3) Exercise Exercise(2)(3)(4)
- - -------------------- ---------------------- ------------------- ---------------------
<S> <C> <C> <C>
None >5%
Officers and
Directors
Fred G. Luke,
Chief Executive
Officer &
Director 0 0% 51.21%(5)
2 Park Plaza,
Suite 470
Irvine, CA 92614
John D. Desbrow,
Secretary 136,250 .454% .22%
2 Park Plaza,
Suite 470
Irvine, CA 92614
Steven H. Dong
Chief Financial Officer
2 Park Plaza, 0 0% 0%
Suite 470
Irvine, CA 92614
All directors and
executive
officers as a
group (2 persons) 136,250 .454% 51.43%
- - ------------------------------------------------------------------------------------------------------------------------------------
Percent of Class Percent of Class
Shares of Series Before Nona Series After Nona Series B
B Preferred Stock B Preferred Preferred Conversion
Name and Address of Beneficially Conversion or Nona and Nona Warrant
Beneficial Owner Owned(2) Warrant Exercise Exercise(2)
- - -------------------- ------------------- ------------------ --------------------
Nona Morelli's II,
Inc. ("Nona") 250,000(P) 100% 0%
2 Park Plaza,
Suite 470
Irvine, CA 92614
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Officers and
Directors
- - ----------------
<S> <C> <C> <C>
Fred G. Luke
Chief Executive
Officer &
Director 250,000(5)(P) 100%(5)(P) 0%
2 Park Plaza,
Suite 470
Irvine, CA 92614
All directors and
executive
officers as a
group (2 Persons) 250,000(5)(P) 100%(5)(P) 0%
- - --------------------------------------------- ----------------------------- -------------------------------- --------------------
Shares of 14%
Cumulative Percent of Class Percent of Class
Preferred Before Nona Series After Nona Series B
Stock B Preferred Preferred Conversion
Name and Address of Beneficially Conversion or Nona and Nona Warrant
Beneficial Owner Owned Warrant Exercise Exercise (3)(4)
- - -------------------- ------------------ -------------------- ---------------
Raymond C. Kitely 30,000 17.6% 17.6%
20079 Glen Arbor
Court
Saratoga, CA 95070
Eli Moshe 10,000 5.9% 5.9%
110 S. Sweetzer,
No. 301
Los Angeles, CA
90048
Walter K. Theis,
M.D. 20,000 11.8% 11.8%
1200 Corsica Drive
Pacific Palisades,
CA 90272
David Seror,
Chapter 7 Trustee
for the Estate of
David A. Paletz 77,500 45.6% 45.6%
221 N. Figueroa
St., Room 800
Los Angeles, CA
90012
</TABLE>
5
<PAGE>
<TABLE>
<S> <C> <C> <C>
Neil Miller 15,000 8.8% 8.8%
2790 Forrester
Drive
Los Angeles, CA
90064
David Sheetrit 10,000 5.9% 5.9%
c/o Moshe Shram
929 East Fourteenth
Street
Los Angeles, CA
90021
- - --------------------------------------------- ----------------------------- -------------------------------- ---------------------
Percent of Voting Percent of Voting
Power of all Voting Power of all Voting
Securities Before Securities After Nona
Shares of all Nona Series B Series B Preferred
Classes of Stock Preferred Conversion and Nona
Name and Address of Beneficially Conversion and Nona Warrant
Beneficial Owner Owned(3)(4) Warrant Exercise Exercise(2)(3)(4)
- - --------------------------- ---------------- -------------------- ---------------------
Nona Morelli's II,
Inc. ("Nona") 250,000(P)(5) 39.39%(P)(5) 51.08%(P)(5)
2 Park Plaza, Suite 470
Irvine, CA 92614
Raymond C. Kitely 30,000(P) .06% .05%
20079 Glen Arbor Court
Saratoga, CA 95070
Eli Moshe 10,000(P) .02% .02%
110 S. Sweetzer, No. 301
Los Angeles, CA 90048
Walter K. Theis, M.D. 20,000(P) .04% .03%
1200 Corsica Drive
Pacific Palisades, CA 90272
David Seror, 77,500(P) .16% .12%
Chapter 7 Trustee
for the Estate of
David A. Paletz
221 N. Figueroa St.
Room 800
Los Angeles, CA 90012
Neil Miller 15,000(P) .03% .02%
2790 Forrester Drive
Los Angeles, CA 90064
David Sheetrit 10,000(P) .02% .02%
929 East Fourteenth St.
Los Angeles, CA 90021
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Officers
and Directors
- - --------------------------
<S> <C> <C> <C>
Fred G. Luke, 250,000(P)(5) 39.39%(5) 51.08%(5)
Chief Executive Officer &
Director
2 Park Plaza, Suite 470
Irvine, CA 92614
Steven H. Dong, 0 0% 0%
Chief Financial Officer
2 Park Plaza, Suite 470
Irvine, CA 92614
John D. Desbrow, 136,250 .275% .22%
Secretary
2 Park Plaza, Suite 470
Irvine, CA 92614
All directors and 136,250 39.669% 51.30%
officers as a 250,000(P)(5)
group (2 persons)
</TABLE>
(1) Each Stockholder listed in these tables possesses sole voting and
investment power with respect to the shares listed opposite the
holder's name.
(2) Gives effect to the seventy-eight (78) votes per share of the Series B
Preferred which is equivalent to 19,500,000 votes. Nona has granted
Joseph Monterosso an option to acquire the 250,000 shares of Series B
Preferred Stock.
(3) Excludes 6,120,000 shares of Common which may be issued to Nona
pursuant to Options which May only be exercised contingent upon
failure to exercise the outstanding New Class A, New Class B, and New
Class C warrants.
(4) Includes 12,000,000 shares of Common which may be issued to Nona
pursuant to New Class D Warrants.
(5) Fred G. Luke, as the Chief Executive Officer of Nona Morelli's II,
Inc., is deemed to be the beneficial owner of shares held of record or
acquirable by Nona Morelli's II, Inc.
(P) Preferred Stock shares.
7
<PAGE>
The Series B Preferred Stock and the Class D Warrants held by Nona are
convertible and/or exercisable upon amendment of the Certificate of
Incorporation of the Company to provide for the sufficient number of unissued
authorized shares. The Options held by Nona are exercisable only in the event
the New Class A, New Class B, and New Class C warrants currently outstanding are
not exercised. The above stock ownership tables accurately reflect ownership
both before and after exercise and/or conversion of all available preferred
stock, warrants, and options by Nona.
Historical Financial Information on the Company
The following selected financial data shows balance sheet and operating
information for the Company for the years 1989 through March 31, 1996. This data
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Consolidated Financial
Statements and Notes included in the Annual Report on Form 10-KSB/A filed by the
Company for the fiscal year ended September 30, 1995, and on Form 10-QSB for the
quarter ended March 31, 1996 respectively, copies of which accompany this
Proxy Statement.
In October 1994, Ba-Mak Gaming International, Inc. ("Ba-Mak"), a
wholly-owned subsidiary of the Company, filed for protection under Chapter 11 of
the U.S. Bankruptcy Code in the Eastern District of Louisiana. While under the
protection of Chapter 11, Ba-Mak continued to operate as a charitable bingo
route operator in Louisiana as Debtor-in-Possession. It was management's
objective to reorganize Ba-Mak's debt under Chapter 11 and fully continue its
gaming operations. Accordingly, Ba-Mak was accounted for as a continuing
operation during this period.
On April 20, 1995, upon motion from the United States Trustee, an order
converting the case to Chapter 7 was issued and a Chapter 7 Trustee was
appointed. The Trustee took possession of Ba-Mak's assets and liquidated such
assets for the benefit of Ba-Mak's bankruptcy estate. As such, all gaming
operations of Ba-Mak ceased and accordingly, Ba-Mak has been accounted for as a
disposition of an investment which resulted in (1) the write-off of $1,056,978
and $1,415,050 of total assets and liabilities, respectively; and (b) a net loss
on disposal of investment in the amount of approximately $140,949. Fiscal year
1995 gaming revenues include approximately $884,000 in Ba-Mak revenues which
will not be recurring in future fiscal years.
Since April 1995 the Chapter 7 Trustee has liquidated Ba-Mak's assets
for the benefit of Ba- Mak's bankruptcy estate. All but 35 of the video bingo
machines were returned to the machine vendor in satisfaction of its claim under
the Louisiana vendor's lien statute. The remaining 35 machines and Ba- Mak's
office equipment were sold by the Trustee. The Company has filed a Proof of
Claim with the Bankruptcy Court for the intercompany advances made to Ba-Mak. As
of the date of this Proxy Statement, the Trustee's administration of the
bankruptcy estate is ongoing. In February 1996, the Trustee applied to the
bankruptcy court for authority to make an interim distribution in the amount of
$70,750 consisting of $67,168 to Chapter 11 Administrative Creditors, $750
to the Office of the U.S. Trustee and $2,831 to the Trustee for interim
compensation and expenses payable to the Trustee. Since the interim distribution
is expected to exhaust the estate and since the Company's claim is not included
in the Trustee's interim distribution list, the Company does not anticipate
receiving any sums on its Claim.
Total revenues and cost of gaming during fiscal 1994 from Ba-Mak in the
amounts of $2.2 Million for fiscal 1994 and $1.9 Million, respectively, are not
expected to recur in future years due to Ba- Mak's Chapter 7 bankruptcy and
therefore the Company's historical financial information is not indicative of
the Company's future financial condition.
8
<PAGE>
<TABLE>
<CAPTION>
3 Months
Ended
March
31,1996 Years Ended September 30,
------- ---------------------------------------------------------------------------
(Unaudited)(5) (Audited)
Operating Data: 1995(5) 1994(4) 1993 1992
- - ---------------- -------------- -------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Revenues from
continuing
operations(1) - $ 884,077 $ 2,252,699 $ 82,137 $ 75,415
Loss from
continuing
operations (200,196) (1,096,705) (4,657,456) (813,501) (1,009,914)
Loss from
discontinued
operations(2) - - - (5,986) (18,600)
Net loss (200,196) (1,096,705) (4,657,456) (819,487) (1,028,514)
Net loss
applicable
to common (206,146) (1,120,505) (4,564,681) (850,637) (1,086,614)
stock(3)
Net loss per
common
share(3):
Continuing
operations $ (.01) $ (.04) $ (.23) $ (.06) $ (.12)
Discontinued
operations $ - $ - $ - $ - $ --
</TABLE>
<TABLE>
<CAPTION>
Years Ended September 30, (Continued)
- - --------------------------------------------------------------------------
(Audited)
Operating Data: 1991 1990 1989
- - --------------- -------------- -------------- --------------
<S> <C> <C> <C>
Revenues from
continuing
operations(1) $ 107,607 $ 171,112 $ 58,688
Loss from
continuing
operations (1,060,200) (691,392) (413,680)
Loss from
discontinued
operations(2) (1,292,102) (409,664) (201,098)
Net loss (2,352,302) (1,101,056) (614,778)
Net loss
applicable
to common (2,457,302) (1,206,056) (631,220)
stock(3)
Net loss per
common
share(3):
Continuing
operations $ (.18) $ (.16) $ (.11)
Discontinued
operations $ (.20) $ (.09) $ (.05)
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
3 Months
Ended
March
31,1996 Years Ended September 30,
------- ------------------------------------------------------------------------------
(Unaudited)(5) (Audited)
Operating Data: 1995(5) 1994(4) 1993 1992
- - ---------------- -------------- -------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Weighted
average
number of
common shares
outstanding 29,651,740 23,785,550 19,755,113 12,716,027 8,733,158
BalanceSheet
Data:
Working
capital
(Deficit) $ (568,356) $ (580,103) $ (410,547) $ 277,142 $ (323,077)
Total assets $ 40,872 $ 328,732 $ 2,859,550 $ 2,889,096 $ 1,152,682
Long-term
debt $ - $ - $ - $ 804,102 $ 821,221
Total
liabilities $ 601,929 $ 631,555 $ 906,723 $ 1,551,581 $ 1,148,914
Stockholders'
Equity
(Deficiency) $ (561,057) $ (302,824) $ 1,952,827 $ 1,337,515 $ 3,768
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Years Ended September 30, (Continued)
--------------------------------------------------
(Audited)
Operating Data: 1991 1990 1989
- - -------------- -------------- ------------ --------------
<S> <C> <C> <C>
Weighted
average
number of
common shares
outstanding $ 6,392,200 4,875,161 3,937,806
BalanceSheet
Data:
Working
capital
(Deficit) $ 200,638 $ 131,745 $ 1,108,269
Total assets $ 1,635,716 $ 2,532,049 $ 2,773,666
Long-term
debt $ 876,194 $ 910,081 $ 1,248,131
Total
liabilities $ 1,180,004 $ 1,572,675 $ 1,342,540
Stockholders'
Equity
(Deficiency) $ 455,712 $ 959,374 $ 1,431,126
</TABLE>
10
<PAGE>
(1) Includes revenues from gaming operations of $7,685 in fiscal 1993.
Operations of electronic video bingo machines did not commence until
September, 1993.
(2) The Company discontinued its health screening center operations
effective September 30, 1991.
(3) The Company has paid no dividends on its common stock. Dividends in
arrears on the Company's 14% Preferred Stock aggregated $116,575 and
$92,775 at September 30, 1995 and 1994, respectively.
(4) On January 29, 1996, the Texas State Board of Public Accountancy made a
determination that the firm of C. Williams & Associates, P.C. was not
properly licensed to practice public accounting in Texas, retroactive
back to March 2, 1995.
The firm of C. Williams & Associates, P.C. performed an audit of the
Company's financial statements for the year ended September 30, 1994
and issued its report on that audit on February 5, 1995, which is prior
to the revocation of Mr. Williams' license on March 2, 1995, and
therefore is in accordance with the applicable rules and regulations of
the Securities and Exchange Commission.
Article 2 of Regulation S-X provides that, after March 2, 1995, the
firm of C. Williams & Associates, P.C. is not qualified to practice
before the Commission. Shareholders continue to retain legal rights to
sue and recover damages from C. Williams & Associates, P.C., for
material misstatements or omissions, if any, in the financial
statements.
Should C. Williams & Associates, P.C. dissolve under the laws of Texas,
its state of incorporation, the rights of the shareholders to sue and
recover damages from C. Williams & Associates, P.C. and its directors,
officers and shareholders would be determined by the laws of the State
of Texas governing the dissolution of Texas professional corporations.
(5) As of April 1995, the former operations of the Company's gaming
subsidiary have ceased following conversion of Chapter 11 proceedings
to Chapter 7 under the Bankruptcy Code. As of the date of this Proxy
Statement the Company is not engaged in gaming or any other revenue
generating activities and the Company's historical financial
information is not indicative of the Company's future financial
condition of results of operations.
11
<PAGE>
PROPOSAL NO. 1: AMENDMENT TO CERTIFICATE OF INCORPORATION
The Company's Board of Directors has approved an amendment to the
Company's Certificate of Incorporation and is recommending that the stockholders
approve the amendment to the Company's Certificate of Incorporation.
Need for Additional Authorized Common Shares and Common Shares
Reserved for Issuance
--------------------------------------------------------------
The Company currently has insufficient authorized shares to provide for
conversion of all outstanding convertible securities and exercise of all
outstanding warrants and options. The Company's Certificate of Incorporation
currently authorizes Thirty Million shares of $.01 par value common stock and
all 30,000,000 shares are now issued and outstanding. There are 1,530,000 shares
currently reserved for issuance upon conversion of New Class A Warrants;
3,080,000 shares currently reserved for issuance upon conversion of New Class B
Warrants; 1,510,000 shares currently reserved for issuance upon conversion of
New Class C Warrants; 12,000,000 shares currently reserved for issuance upon
conversion of 6,000,000 New Class D Warrants held by Nona; 1,325,193 shares
currently reserved for issuance upon exercise of warrants held by Douglas J.
Phillips; 19,500,000 shares currently reserved for issuance upon conversion of
250,000 Series B Preferred shares held by Nona; 170,000 shares reserved for
issuance to 14% Cumulative Preferred Stock shareholders; 6,375,000 shares
currently reserved for issuance upon exercise of outstanding options. On March
30, 1994 the number of shares reserved for issuance together with the number of
shares issued and outstanding on March 30, 1994 exceeded the number of shares
authorized in the Company's Certificate of Incorporation. For common shares
reserved to be issued the dates of reservation and common shares outstanding on
each reservation date are as follows:
<TABLE>
<CAPTION>
Approximate
Number of Number of
Preferred Number of Common Shares
Shares/ Common Number of Outstanding on
Description of Warrants/ Shares Common Issuance/
Derivative Month Options Initially Shares now Reservation
Securities Issued Issued Reserved Reserved Date
- - ---------------- ------- ------------ -------------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
14% Cumulative
Preferred Stock 6-89 750,000 750,000 170,000 4,791,276
Douglas Phillips
Options 11-91 200,000 200,000 200,000 9,161,175
Hal Phillips
Options 11-91 150,00 150,000 150,000 9,161,175
Gary Blum Option 11-91 50,000 50,000 50,000 9,161,175
New Class A
Warrants 6-93 3,080,000 3,080,000 1,530,000** 18,711,175
New Class B
Warrants 6-93 3,080,000 3,080,000 3,080,000 18,711,175
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Approximate
Number of Number of
Preferred Number of Common Shares
Shares/ Common Number of Outstanding on
Description of Warrants/ Shares Common Issuance/
Derivative Month Options Initially Shares now Reservation
Securities Issued Issued Reserved Reserved Date
- - --------------- ------ ---------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
New Class C
Warrants 8-93 1,550,000 1,550,000 1,510,000# 18,711,175
New Class D
Warrants 3-94 6,000,000 12,000,000 12,000,000 20,688,675
Series B
Preferred Stock 3-94 250,000 19,500,000 19,500,000 20,688,675
Phillips'
Warrants 9-94 1,325,193 1,325,193 1,325,193 20,688,675
OTC
Communications 10-94 600,000 600,000 600,000 20,688,675
NuVen Advisors
Option 2-95 2,000,000 2,000,000 2,000,000 25,151,175
Steven H.Dong
Option 7-95 275,000 275,000 275,000 25,801,175
Fred G. Luke
Option 8-95 3,000,000* 3,000,000* 3,000,000 26,176,175
Total: 45,390,193
</TABLE>
* Accrues option rights at 50,000 shares per month from April 1994.
** 1,550,000 New Class A Warrants were exercised.
# 40,000 New Class C Warrants were canceled for non-payment of the
exercise price on 40,000 New Class A Warrants tendered for exercise.
None of the above options, warrants or preferred shares may be
exercised or converted until the Certificate of Incorporation is
amended to authorize additional shares.
13
<PAGE>
Dilution to Existing Shareholders
If the Certificate of Incorporation is amended to authorize additional
shares, upon the issuance of new shares for whatever reason, whether upon
exercise of options or conversion of warrants or preferred stock or otherwise,
existing shareholders will suffer dilution. If the Certificate of Incorporation
is amended, significant dilution of current common stockholders is possible upon
the issuance of more common shares. If 70,000,000 more shares are issued,
existing common stockholders would be diluted to a 30% ownership of the
outstanding common shares.
Conflicts of Interest and Control Over Future Issuances of Common Stock
Furthermore, increasing the number of authorized shares via amendment of
the Certificate of Incorporation will permit the Board of Directors to issue
stock to consultants for services including issuing shares to members of the
Board of Directors and officers of the Company. Such enabling discretion in the
Board of Directors may be viewed as a conflict of interest of which shareholders
should be aware. Until the Company has meaningful cash flows from operations it
is unlikely the Company will be able to compensate its officers and directors
and outside consultants in any manner other than through the issuance of shares
of common stock. In this regard, NuVen Advisors, Inc., which renders services
and provides facilities and administrative personnel to the Company and which
holds an option to purchase 2,000,000 shares of the Company, is controlled by
Fred G. Luke, the President of the Company and current sole Director of the
Company. Issuances of shares to NuVen Advisors, Inc., whether for sums due it by
contract or upon exercise of its option, presents a conflict of interest of
which shareholders should be aware. Additionally, issuances of shares to
officers such as Fred G. Luke and Steven H. Dong upon exercise of compensatory
options poses a conflict of interest of which shareholders should be aware. All
of the above will be made possible by the passage of the proposal to increase
the number of authorized common shares. By voting in favor of the proposal
shareholders will in essence grant to the Board of Directors control over future
issuances of shares except for specified transactions requiring shareholder
approval under Delaware law.
Statutory Requirements for Shareholder Approval of Certain Transactions
The Delaware General Corporation Law requires the approval of a
majority of the outstanding shares present in person or represented by proxy at
a meeting for the merger, consolidation or dissolution of the Company or the
sale, lease or exchange of all or substantially all of the Company's assets. Any
future transactions falling within these parameters will require future
solicitation of shareholder approval. Transactions not encompassed by the
above-referenced sections of Delaware law will not require shareholder approval
prior to the issuance of additional common shares and this solicitation will be
the only opportunity for the shareholders to consider such future issuances of
common stock, unless the Board, under the discretion conferred upon it in the
Certificate of Incorporation, elects to submit any contract for shareholder
ratification. For example, the acquisition of a new operating subsidiary will
not require future shareholder approval unless such transaction includes or
occurs simultaneous with a merger or the sale, lease or exchange of
substantially all of the Company's assets.
14
<PAGE>
Benefits of Approval of the Increase in Authorized Common Shares
The Board of Directors has determined that adoption of the proposal is
in the best interest of the Company. Increasing the authorized number of common
shares will allow the Company to be able to issue shares of common stock now
reserved for issuance upon exercise or conversion of outstanding warrants,
options and shares of preferred stock. It will also allow the Company to issue
common shares as necessary for any mergers, acquisitions or other business
combinations to which the Company may be a party and to issue shares in
subsequent private placements or public offerings to raise capital for the
Company.
Consequences of a Failure to Authorize Additional Shares
If the proposed Amendment is not adopted, there will be insufficient
shares authorized to allow conversion of outstanding warrants and options.
Although the Stock Purchase Agreement with Nona discussed in this proposal
contained a condition subsequent clause permitting Nona to rescind the Stock
Purchase Agreement in the event the Company did not implement a one-for-four
reverse common stock split by June 29, 1994 and the Company's prior management
neither implemented nor obtained shareholder approval for a reverse stock split,
Nona elected to waive its rescission rights under the Stock Purchase Agreement
due to the lapse of time and negotiations with Douglas Phillips which led to the
Settlement Agreement with Douglas Phillips in September, 1994. Accordingly,
there are no ramifications to the Stock Purchase Agreement if the proposal is
not approved. However, neither the Series B Preferred Stock nor the Nona Option
may be exercised until there are sufficient common shares authorized to permit
such conversion or exercise. Whether or not the proposal is approved, the
Company may engage in negotiations with Nona Morelli's II, Inc. or an
unaffiliated party for the sale of CMA.
The Board of Directors believes that if the proposed amendment is not
adopted, the Company will be significantly hampered in its ability to raise
capital, to enter into business combinations, to increase the value of
shareholder's equity, and to carry out the Company's business plans. The Board
of Directors will submit a recapitalization proposal, Proposal No. 2 herein, to
the shareholders if Proposal No. 1 is not adopted.
Common Stock
The Company is authorized to issue 30,000,000 shares of Common Stock of
$.01 par value. Each share of Common Stock is entitled to one vote at all
meetings of shareholders. All shares of Common Stock are equal to each other
with respect to liquidation rights and dividend rights. All shares of Common
Stock when issued, including shares issuable upon exercise of Warrants and upon
conversion of the 14% Preferred Stock and Series B Preferred Stock, will be
validly issued, fully paid, and non-assessable. There are no preemptive rights
with respect to additional issuances of Common Stock. The Certificate of
Incorporation of the Company does not provide for cumulative voting at the
election of directors.
In the event of liquidation, dissolution, or winding-up of the Company,
holders of the Common Stock will be entitled to receive on a pro-rata basis all
assets of the Company remaining after satisfaction of all liabilities, including
the liquidation preference of the holders of the Company's 14% Preferred Stock
or any other series of preferred stock subsequently issued having a liquidation
preference.
15
<PAGE>
14% Cumulative Convertible Preferred Stock
The 14% Cumulative Convertible $.01 par value Preferred Stock ("14%
Preferred Stock") issued by the Company shall pay an annual dividend of $.14 or
fourteen percent (14%) paid quarterly in arrears on March 31, June 30, September
30 and December 31, to the extent permitted by the General Corporation Law of
the State of Delaware and, if applicable, also of the State of California.
Dividends are cumulative; i.e., unpaid dividends, whether or not
earned, accrue beyond the designated payment date. Dividends in arrears
aggregated $116,575 and $92,775 at September 30, 1995 and 1994, respectively.
Dividends may be declared and paid upon Common Stock in any fiscal year of the
Company only if all accrued dividends upon all shares of 14% Preferred Stock
have been paid. The 14% Preferred Stock shall have a liquidation preference of
the original purchase price ($1.00 per share) plus unpaid dividends on each
share of Preferred Stock. The balance of proceeds of a liquidation, if any, are
to be paid to the Common Stockholders of the Company. A merger or reorganization
or other transaction in which control is transferred will be treated similar to
a liquidation.
The 14% Preferred Stock is redeemable by the Company upon thirty days
notice by the Company's Board of Directors at a redemption price of $1.00 per
share plus an amount equal to all unpaid dividends thereon to the redemption
date.
Subject to anti-dilution adjustments, each share of 14% Preferred Stock
is convertible at any time into one share of the Company's Common Stock. Each
share of the 14% Preferred Stock votes on a 1:1 converted-to-Common Stock basis,
and the holders of 14% Preferred Stock and the holders of Common Stock shall
vote together as one class on all matters submitted to a vote of the Company's
stockholders. The conversion ration of the 14% Preferred Stock to Common Stock
will be proportionally adjusted in the event of dilution. Proportional
adjustments for stock splits and stock dividends will be made.
Acquisition of Casino Management of America, Inc.
On January 13, 1994, the Company entered into a Stock Purchase and
Business Combination Agreement (the "Stock Purchase Agreement") with Nona
Morelli's II, Inc. ("Nona") and Casino Management of America, Inc. ("CMA"). The
Stock Purchase Agreement provided for the transfer of all of the stock of CMA,
which was a wholly owned subsidiary of Nona, to the Company in exchange for
certain shares of common stock, preferred stock, warrants, and options issued to
Nona by the Company. The Stock Purchase Agreement closed on March 30, 1994 (the
"Closing Date"), pursuant to the terms of a Closing Agreement executed by Nona,
CMA, and the Company. At the closing, Nona transferred to the Company 7,500,000
shares of common stock in CMA, comprising 100% of the stock issued and
outstanding of CMA, and the Company issued to Nona 1) 2,000,000 shares of common
stock; 2) 250,000 shares of Series B Convertible Preferred Stock; 3) 6,000,000
New Class D common stock purchase warrants; and 4) an option to purchase up to
6,160,000 shares of common stock.
16
<PAGE>
Series B Preferred Stock
The 250,000 shares of Series B Preferred are convertible at the rate of
seventy-eight (78) shares of common stock for each share of Series B Preferred,
or a total of 19,500,000 shares of common stock if all of the shares of Series B
are converted. The Series B Preferred Stock has no redemption rights and is not
entitled to any dividends. It has a liquidation value of $2 per share in
preference to any payment on common stock, subject only to rights of the holders
of the 14% Preferred Stock. Each share is entitled to seventy-eight (78) votes
and shall be convertible into seventy-eight (78) fully paid and non-assessable
shares of common stock.
Nona Option
The Nona Option for the purchase of up to 6,160,000 shares of common
stock is nontransferable and exercisable at $.01 per share. The total number of
shares that can be purchased upon exercise of the option is equal to the number
of shares of common stock subject to New Class A, New Class B and New Class C
warrants outstanding on March 30, 1994 that eventually expire unexercised. In
other words the option was designed to enable Nona to purchase any of the shares
underlying the New Class A, B and C Warrants that are not exercised by the
Warrantholders. The Company and the Warrant Agent have amended the respective
Warrant Agreements to extend the expiration dates of the respective Warrants to
one year after the effective date of a registration statement. One year after
the effective date of the registration statement, Nona June exercise its option
provided all the New Class A, B and C Warrants have not been exercised. Nona
does not hold any of the New Class A, B or C Warrants, nor is it currently
entitled to exercise its Option. Option certificate(s) for the actual number of
shares of stock which New Class A, B and C Warrantholders fail to purchase shall
be issued to Nona within ten (10) days of the expiration date of the New Class
A, B and C Warrants. The right to exercise the Nona Option will continue for a
period of 180 days after the last expiration date of the New Class A, B and C
Warrants. The Nona Option is non-transferable. In the event of a reverse split
after an option certificate is issued, the number of shares subject to exercise
and purchase shall be proportionately reduced.
New Class D Warrants
Each New Class D Warrant is exercisable at $1.00 per share and will
entitle the holder to receive upon exercise two (2) shares of common stock, or a
total of 12,000,000 shares if all of the New Class D Warrants are exercised. The
New Class D Warrants expire on March 30, 2004. American Stock Transfer & Trust
Company is the Warrant Agent for the New Class D Warrants as well as the New
Class A, B and C Warrants. To date none of the New Class D Warrants have been
exercised and Nona has been the holder of the New Class D Warrants since March
30, 1994. The New Class D Warrant are transferable only on the books of the
Company maintained at the principal office of the Warrant Agent upon delivery
thereof duly endorsed by the Holder or by his duly authorized attorney or
representative, or accompanied by proper evidence succession, assignment or
authority to transfer. The New Class D Warrants and warrant shares purchasable
upon exercise of the Warrants shall not be subject to dilution or reduction by
any reverse split. New Class D Warrants may only be exercised for the purchase
of whole warrant shares. New class D Warrants May be exercised upon surrender to
the Company at the principal office of the Warrant Agent of the certificate or
certificates evidencing the Warrants to be exercised (except as otherwise
provided below), together with the form of election to purchase on the reverse
thereof duly filled in and signed, and upon payment to the Warrant Agent for the
account of the Company of the Warrant Price for the number of warrant shares in
respect of which such New Class D Warrants are then exercised. If the
Registrant's Class D Warrants are assigned or transferred by Nona,
17
<PAGE>
unless such assignment or transfer is to a Nona affiliate or subsidiary or is
the result of a corporate reorganization or recapitalization of Nona, the
exercise price may only be paid in cash. In the event the New Class D Warrants
are retained by Nona or are assigned or transferred to a Nona affiliate or
subsidiary or are assigned or transferred as a result of a corporate
reorganization or recapitalization of Nona, the exercise price may be paid in
cash, by application of the CMA Net Asset Credit (as defined in Section 2.6 of
the Stock Purchase Agreement), or by transfer of gaming-related assets, the
valuation of which shall be subject to approval by both the Registrant and Nona.
Subsequent to the closing of the Stock Purchase Agreement, Nona
distributed 1,508,153 shares of its 2,000,000 shares of the Company's common
stock to its own shareholders, leaving it with 491,847 shares of common stock in
the Company. In addition, between March 30, 1994 and the present, additional
common shares of stock in the Company were issued bringing the total number of
shares of outstanding common stock to 30,000,000 as of the date of this Proxy
Statement. After these events, Nona's stock holdings, without accounting for
exercise of any of its warrants and/or options presently amount to 40.2% the
outstanding voting securities of the Company. If Nona chose to convert its
Series B Preferred shares and exercise all of its New Class D Warrants, assuming
that none of the existing New Class A, New Class B, or New Class C Warrants were
exercised, Nona would own 51.8% of the outstanding voting securities of the
Company.
Further, the Company may become a majority-owned subsidiary of Nona if
Nona converts its Series B Preferred shares and exercises the New Class D
Warrants granted to it in the Stock Purchase Agreement. The current Certificate
of Incorporation of the Company does not authorize sufficient unissued and
unreserved shares for Nona to exercise its New Class D Warrants and Series B
Preferred stock conversion rights granted to it.
At the closing of the Stock Purchase Agreement, three directors of the
Company resigned -- Douglas J. Phillips, Dennis Phillips and Richard H. Wessler
- - -- leaving only one director, Gary L. Blum on the Board. At the Closing, the
vacancies created by the resignations of Douglas J. Phillips and Dennis Phillips
as Directors were filled by Fred G. Luke and John D. Desbrow, both of whom
accepted their nominations by the Board to serve as Directors for the remaining
balance of the unexpired terms of the resigning Directors. The vacancy created
by the resignation of Richard H. Wessler is unfilled and will be filled at the
shareholder's meeting if a sufficient number of votes are cast to fill such
vacant Director position. Prior to March 30, 1994, Gary Blum was a Director of
and corporate counsel to ENP. He was paid $27,000 in fiscal year 1992, $20,000
in fiscal year 1993 and $14,000 in fiscal year 1994. On June 15, 1992 the
Company granted Mr. Blum an option to purchase 100,000 shares exercisable at
$.125 per share. The option was exercised in February 1994. As full
consideration for the exercise price Mr. Blum forgave $12,500 owed to him by the
Company for legal services. On November 15, 1991 Mr. Blum received an option to
purchase 50,000 shares of stock exercisable at $.292. The option has not yet
been exercised and expires in November, 1996. On July 13, 1994, Mr. Blum
resigned as a director of the Company. On July 20, 1994 John D. Desbrow resigned
as a Director and Secretary. On October 24, 1994, Kenneth R. O'Neal was
appointed as a Director and Chief Financial Officer of the Company. On July 15,
1995 Kenneth R. O'Neal resigned as a Director and as Chief Financial Officer. On
November 9, 1994 John D. Desbrow resumed the office of Secretary.
Subsequent to the closing of the Stock Purchase Agreement, certain
disagreements arose between Nona, CMA, the Company, and Douglas J. Phillips
("Phillips"), former president and major
18
<PAGE>
shareholder in the Company. In order to settle those disagreements, a Settlement
Agreement was executed on September 13, 1994 between these parties whereby
Phillips agreed to pay the proceeds from sale of 1,325,193 shares of stock owned
by the Phillips Family Investment Limited Partnership in satisfaction of certain
liabilities and claims and subsequently delivered 1,325,163 shares of stock in
the Company to a trustee for liquidation.
Also subsequent to the closing, the Company amended its Certificate of
Incorporation to change the Company name to "NuOasis Gaming, Inc." Notice of the
name change was given to shareholders of record.
There were no tax consequences to shareholders of the Company from the
Stock Purchase Agreement. As a result of the Stock Purchase Agreement, Nona has
become a shareholder of the Company and CMA has become a subsidiary of the
Company. From the perspective of the Company, the transaction was accounted for
as a purchase of assets in exchange for issuance of stock and warrants.
Each of the officers and present directors of the Company have either
an employment agreement or consulting agreement with NuOasis. Each of the
officers of the Company hold similar positions with Nona Morelli's II, Inc.
CMA held certain investments and receivables as of the Closing Date
which are described as follows:
(i) At September 30, 1994 CMA had litigation pending
against the entity owning and principals controlling
the Bobby Womack's Saloon and Gaming Parlor in
Cripple Creek, Colorado ("Bobby Womack's") to recover
$215,000 previously advanced by Nona to Bobby
Womack's in contemplation of the acquisition of Bobby
Womack's. The Deposit of $215,000 was written down
from $215,000 to $180,000 due to uncertainties of
collection in litigation; subsequently, in October
1994, $187,000 was received pursuant to a settlement
of the litigation.
(ii) In April, 1993 CMA's predecessor, Nona, participated
in the formation of and invested, as a limited
partner, in MDM Gaming Partners, L.P., a Colorado
limited partnership ("MDM Gaming") and subscribed for
Units in MDM Gaming representing a net investment of
$1,143,500. Nona subsequently acquired additional
Units increasing its cash investment in MDM Gaming to
$1,353,500. MDM Gaming lent funds to the owner of the
partially completed Horseshoe Casino in Black Hawk,
Colorado. The loan contained equity conversion
features pursuant to which MDM Gaming, subject to
certain restrictions, could have converted its loan
into equity in a new partnership to be formed to own
and operate the Horseshoe Casino. In December 1993,
CMA contributed $39,900 to MDM Gaming as its general
partner capital contribution. Effective September 30,
1994 Nona assigned its limited partner interest to
CMA. As a result of the assignment CMA's cash
contributions to MDM Gaming both as a general and
limited partner totaled $1,393,400. On December 20,
1993, an agreement between MDM Gaming, the owner of
the Horseshoe Casino and a limited partnership which
owned the Glory Hole Casino, was finalized whereby
19
<PAGE>
MDM Gaming's loan was repaid and a new limited
partnership, Eagle Gaming L.P. ("Eagle Gaming") was
formed to own and operate both the Horseshoe Casino
and the Glory Hole Casino. Under the new agreement,
MDM Gaming's loan was repaid. To replace the equity
conversion feature in the loan MDM Gaming and CMA,
jointly received options ("Eagle Options") to
purchase equity in Eagle Gaming. MDM Gaming dissolved
in early 1994 and distributed the Eagle Options held
by MDM Gaming to CMA. CMA received a total of
$1,560,753 in liquidating cash distributions from MDM
Gaming. Under the Partnership Agreement, the general
partner of MDM Gaming was entitled to receive 6.5
Units in the Partnership for services rendered and
research and development costs incurred. The Eagle
Option was recorded at $585,000 representing 6.5
Units valued at $90,000 per Unit, the same price at
which Units had been sold for cash. Following the
liquidation of MDM Gaming, the Eagle Options were
held solely by CMA as an asset of CMA. CMA continued
to hold the Eagle Option until the Option expired on
December 19, 1994. The exercise price of the Eagle
Options was approximately $1,050,000. The Eagle
Options expired unexercised on December 19, 1994 and
the $585,000 book value of the Eagle Option was fully
reserved during fiscal 1994. The Horseshoe
Casino/Black Hawk/Eagle Option (the "Option")
originally recorded at $585,000 was fully reserved
due to uncertainties in obtaining the necessary state
regulatory approval to permit exercise of the Option.
The state regulatory approval was never obtained and
the Option expired unexercised in December 1994. The
MDM General Partner interest originally recorded at
$39,900 was liquidated for $39,900 cash upon
dissolution of MDM.
(iii) CMA held a $400,000 stock subscription receivable
assigned to it by Nona. The funds due CMA were
diverted by Nona's former President to agents of
Bachik Enterprises, Inc. ("Bachik") for the purpose
of applying the funds to the acquisition of an
interest in a non-operating 11,000 square foot casino
in Cripple Creek, Colorado known as the Star of
Cripple Creek ("Star Casino"). Litigation on behalf
of CMA has been instituted to recover the $400,000
plus interest and costs from the responsible parties.
CMA has requested the District Court of Teller
County, Colorado to impose a receiver and
constructive trust against the casino property and
the operating profits if the receivable is not paid
in full. The Bachik/Star Casino investment originally
recorded at $400,000 was fully reserved due to
uncertainties of collection from pending litigation
to recover the investment.
(iv) In April, 1993, former management of Nona advanced
funds due Nona to Mississippi Rose, Inc., a Colorado
corporation ("Mississippi Rose") formed by the
principals of Chrysore, Inc., the operators of Bobby
Womack's, and others, to develop the Whiskey Island
Casino, a proposed dockside riverboat casino to be
located alongside the Mississippi River in Tunica
County, Mississippi. At the time of the advances the
Whiskey Island Casino development costs were
projected to exceed $25,000,000 and the financing
required to develop the Whiskey Island Casino was
contingent upon the approval of Mississippi Rose's
20
<PAGE>
application for a gaming license in Mississippi. In
fiscal year 1994, Nona assigned its investment in
Mississippi Rose to CMA. Nona's expenses for research
and development costs, architectural fees and funds
contributed to Mississippi Rose for working capital
constitute CMA's investment in Mississippi Rose.
Neither Nona nor CMA controls Mississippi Rose. The
Mississippi Rose investment originally recorded at
$150,000 was fully reserved given the failure of the
principals of Mississippi Rose to acknowledge the
equity interest, the assertion of the principals that
the equity interest had been forfeited, the need for
litigation to pursue the investment and the uncertain
recoverability of the investment. No litigation
against Mississippi Rose, a Colorado corporation,
because it is believed its principals transferred all
the corporate assets to a limited partnership of
unknown domicile.
(v) The prepaid media and advertising originally recorded
at $2,500,000 was written down to $500,000 by
expensing $2,000,000 given the uncertainty of
utilizing all of the media prior to expiration and
the uncertainty of the Placement Agent's ability to
fulfill all of such media obligations to CMA. The
media obligations were to be provided by NJM &
Associates, Inc., the Placement Agent, which
consisted of various media formats, including Cash
Coupon Savers, Head Office, Inc., La Suerte, Inc. and
NJM & Associates, Inc.
(vi) Effective September 30, 1993 Nona assigned debentures
issued by Impact Investments, Inc. ("Impact") to CMA.
Impact attempted through one or more subsidiaries to
engage in the business of underwriting insurance
policies. On March 30, 1994, CMA assigned the Impact
Debentures in the book value amount of $1,000,000 to
Nona, and, accordingly CMA recorded a receivable due
from Nona in the amount of $1,000,000.
(vii) As of March 30, 1994, CMA held shares of common stock
of Logos International, Inc. with a book value of
$437,500. The entire $437,500 was fully reserved at
both March 31, 1994 and September 30, 1994.
The following represents the financial position of CMA as of March 30,
1994, the Closing Date, and after subsequent adjustments:
21
<PAGE>
CASINO MANAGEMENT OF AMERICA, INC.
Balance Sheet
March 30, 1994
(unaudited)
<TABLE>
<CAPTION>
Restated to
Retroactively
Reflect 9/30/94
Audit
Adjustments for
Financial
Before Statement
Adjustment Purposes(1)
ASSETS
- - ---------------------------------------------- ----------------- --------------------
<S> <C> <C>
Current Assets
Cash $ 57,212 $ 57,212
Note Receivable - Related Parties 119,014 119,014
----------------- -------------------
Total Current Assets 176,226 176,226
Organizational costs 750 750
Deposits 215,000 180,000
Investments Net of valuation reserve 4,673,400 500,000
----------------- -------------------
TOTAL ASSETS $ 5,065,376 $ 856,976
==================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
Stockholders' Equity
Common Stock, $.001 Par Value -
25,000,000 shares Authorized; 7,500,000
Shares Issued and Outstanding at March 31, 1994 750 750
Additional Paid-in Capital 6,061,764 5,063,264
Stockholder Receivable (1,000,000) (1,000,000)
Retained Earnings (Deficit) 2,862 (3,207,038)
-------------------- ------------------
Total Stockholders' Equity 5,065,376 856,976
-------------------- ------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,065,376 $ 856,976
==================== ===================
</TABLE>
CMA has had no ongoing operations from its inception to the present
time.
22
<PAGE>
CASINO MANAGEMENT OF AMERICA, INC.
Consolidated Statements of Operations
For the Six Months ended March 30, 1994(unaudited)
<TABLE>
<CAPTION>
Restated to
Retroactively
Reflect 9/30/94
Audit Adjustments
for Financial
Before Statement
Adjustment Purposes(1)
- - -------------------------------------------------- ------------------ -------------------------
<S> <C> <C>
Revenues $ 22,570 $ 22,570
Selling, General and Administrative Expenses:
Legal and Professional 22,256 22,256
Write Down of Investments 3,209,900
Other 110 110
------------------ ------------------------
Total Selling, General and Administrative Expenses 22,366 3,232,266
------------------ ------------------------
Operating Income (Loss) 204 3,209,696
Other Income (Expense):
Interest Income 2,658 2,658
------------------ ------------------------
Net Profit (Loss) $ 2,862 $ (3,207,038)
=================== =========================
</TABLE>
(1) In connection with the audit of the Company's financial statements for the
fiscal year ended September 30, 1994, the value of certain prepaid expenses,
deposits and investments of CMA were revalued to their estimated fair value at
September 30, 1994 resulting in a total write-down of investments of $3,209,900
during the period from March 30, 1994 (acquisition date) to September 30, 1994.
The Gold Creek Deposit of $215,000 was written down from $215,000 to $180,000
due to uncertainties of collection in litigation; subsequently, in October 1994,
$187,000 was received pursuant to a settlement of the litigation. The Horseshoe
Casino/Black Hawk/Eagle Option (the "Option") originally recorded at $585,000
was fully reserved due to uncertainties in obtaining the necessary state
regulatory approval to permit exercise of the Option. The state regulatory
approval was never obtained and the Option expired unexercised in December,
1994. The MDM General Partner interest originally recorded at $39,900 was
liquidated for $39,900 cash upon dissolution of MDM. The Bachik/Star Casino
investment originally recorded at $400,000 was fully reserved due to
uncertainties of collection from pending litigation to recover the investment.
The Mississippi Rose investment originally recorded at $150,000 was fully
reserved given the failure of the principals of Mississippi Rose to acknowledge
the equity interest, the assertion of the principals that the equity interest
had been forfeited, the need for litigation to pursue the investment and the
uncertain recoverability of the investment. The prepaid media and advertising
originally recorded at $2,500,000 was written down to $500,000 by reserving
$2,000,000 given the uncertainty of utilizing all of the media prior to
expiration and the uncertainty of the Placement Agent's ability to fulfill all
of such media obligations to CMA. On March 30, 1994 CMA assigned debentures with
a book value of $1,000,000 to Nona and CMA recorded a receivable due from Nona
in the amount of $1,000,000.
The operations of CMA subsequent to March 30, 1994, as a wholly-owned subsidiary
of the Company, are included in the financial statements for the Company for the
period April 1, 1994 to September 30, 1994.
23
<PAGE>
NUOASIS GAMING, INC.
PRO FORMA CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
(UNAUDITED)
(To reflect the Operations of Casino Management of America, Inc. ("CMA")
Combined with NuOasis Gaming, Inc.
For the Year Ended September 30, 1994
<TABLE>
<CAPTION>
Pro Forma Pro Forma
NuOasis(1) CMA(2) Adjustments Consolidated
---------- ----------- ----------- ------------
(Historical) (Historical)
<S> <C> <C> <C> <C>
Revenues:
Gaming $ 2,228,407 $ - $ - $ 2,228,407
Other 24,292 22,570 - 46,862
----------- --------- ---------- -----------
Total Revenues 2,252,699 22,570 - 2,275,269
----------- --------- ---------- -----------
Costs and Expenses:
Gaming 1,920,556 - - 1,920,556
Write-down of investments 3,209,900 - - 3,209,900
General and Administrative 1,199,069 22,256 - 1,221,325
Depreciation and Amortization 289,225 - - 289,225
Interest and Other 291,405 (2,548) - 288,857
---------- --------- ---------- -----------
Total Costs and Expenses 6,910,155 19,708 - 6,929,863
----------- --------- ---------- ------------
Net Loss Before Income Taxes (4,657,456) 2,862 (4,654,594)
Provision for Income Taxes - - - -
----------- ---------- ---------- ------------
Net Loss $(4,657,456) 2,862 - $ (4,654,594)
============ ========== ========== =============
Net Loss per Common Share $ (.23)
=============
Weighted Average Shares Outstanding $ 19,755,113
=============
</TABLE>
Notes to Unaudited Pro Forma Consolidated Statement of Operations
- - -----------------------------------------------------------------
(1)The column includes the historical consolidated statement of operations of
NuOasis for the year ended September 30, 1994, which includes the results of
operations of CMA from March 30, 1994, the date of acquisition of CMA by NuOasis
through September 30, 1994.
(2)The column includes the unaudited results of operations of CMA for the period
from October 1, 1993 to March 30, 1994, the date of acquisition of CMA by
NuOasis. (i.e. prior to consolidation with NuOasis effective March 30, 1994).
Changes to Certificate of Incorporation
As a result of the transactions stated above, the Company currently has
insufficient authorized shares to provide for conversion of all outstanding
convertible securities and exercise of all outstanding warrants and options. The
Board of Directors is proposing to amend the Certificate of Incorporation by
replacing, in
24
<PAGE>
Article Fourth, the number "30,000,000" with the number "100,000,000" so that
Article Fourth shall read as follows:
"FOURTH: The Corporation shall be authorized to issue 100,000,000
shares of common stock of the par value of $.01 and 1,000,000 shares of
preferred stock without par value. Further, the Board of Directors of
this Corporation, by resolution only and without further action or
approval, may cause the Corporation to issue one or more classes of
stock or one or more series of stock within any class thereof
(including the $.01 par value common stock described in this Article
FOURTH), any or all of which classes or series may have such voting
powers, full or limited, or no voting powers, and such designations,
preferences or relative, participating, optional or other special
rights and qualifications, limitations or restrictions thereof, as
shall be stated and expressed in the resolution or resolutions adopted
by the Board of Directors; and to fix the number of shares constituting
any classes or series and to increase or decrease the number of shares
of any such class or series subsequent to the issue of shares of that
class or series."
-------------------------------------------------------
The Board of Directors Recommends that Stockholders
Vote for the Proposed Amendment to the Certificate of
Incorporation. The affirmative vote of a majority of
the common shares present in person or represented by
proxy at the meeting is necessary to pass this
proposal. If all of the common shareholders attend the
meeting or are represented by proxy at the meeting, the
affirmative vote of 15,000,001 common shares would be
required to pass this proposal. Proxies solicited by
the Board of Directors will be voted FOR this proposal
unless a vote against this proposal or abstention is
specifically indicated.
--------------------------------------------------------
PROPOSAL NO. 2: APPROVAL OF RECAPITALIZATION OF COMMON STOCK
In the event Proposal No. 1 is not passed by the shareholders, the Board
has approved an alternate amendment to the Certificate of Incorporation with a
provision for recapitalization of the Company under which every ten (10) shares
of the issued and outstanding $.01 par value common stock will be automatically
converted into one (1) share of $.01 par value common stock of the Company.
Pursuant to this proposal, those stockholders who would receive fractional
shares as a result of this share exchange shall instead receive one (1) full
share in lieu of any fractional shares. It is the intent of the Board that after
the effective date of the share exchange, the Company shall have approximately
one-tenth the number of shares of common stock now issued and outstanding.
If this Proposal is adopted by the stockholders, one (1) share of $.01 par
value common stock in the Company will be exchanged for every ten (10) shares of
$.01 par value common stock now outstanding. New certificates for shares of
post-recapitalization common stock may be obtained by surrendering certificates
representing shares of presently outstanding common stock to the Company's
transfer agent, American Stock Transfer & Trust, Co., ("AST") 40 Wall Street,
New York, New York, (the "Transfer Agent"), together with any documentation
required by AST to permit the exchange. Holders of certificates
25
<PAGE>
of presently outstanding common stock will not be required to exchange their
certificates. It is anticipated that the recapitalization will be effected upon
the filing of Articles of Merger with the Secretary of the State of Delaware as
soon as practicable following shareholder approval.
The conversion basis of the 250,000 outstanding Series B Preferred shares
and 170,000 outstanding 14% Comulative Convertible Preferred Shares will be
proportionately adjusted in accordance with the rights, preferences and
privileges of each series of Preferred Stock. In other words the 250,000 Series
B Preferred shares now convertible into 19,500,000 common shares will be
convertible into 1,950,000 post- recapitalization common shares and the 170,000
14% Preferred shares will be convertible into 17,000 post- recapitalization
common shares.
-------------------------------------------------------
The Board of Directors of the Company unanimously
recommends a vote APPROVING the Recapitalization
Provision in the Proposed Amendment of the Certificate
of Incorporation. Proxies solicited by the Board of
Directors will be voted FOR this proposal unless a vote
against this proposal or abstention is specifically
indicated.
-------------------------------------------------------
PROPOSAL NO. 3 - SALE OF CMA AND ACQUISITION OF NATIONAL POOL CORPORATION
The Company has engaged in discussions to acquire National Pools
Corporation, a California Corporation ("NPC") founded in 1993 to facilitate its
customer's participation in group play in state lotteries in the United States
and the lotteries of foreign countries. These discussions envision the sale of
CMA by the Company to Nona Morelli's II, Inc. No agreements for the acquisition
of NPC or the sale of CMA have been signed. Consummation of either transaction
is expected to be contingent on the Company holding its Shareholder's Meeting
and amending its Certificate of Incorporation to make available for issuance at
least an additional 20,000,000 common shares.
On June 13, 1996 Nona Morelli's II, Inc., granted an option to Joseph
Monterosso, the President and Chief Executive Officer, of NPC, to acquire Nona's
250,000 Series B Preferred shares in the Company.
Under the pending negotiations, a series of transactions would take place
immediately following the Company's annual meeting of shareholders, provided the
Certificate of Incorporation is amended as set forth above. The transactions are
summarized as follows:
1. Monterosso exercises, all or part of, his option to purchase up to
250,000 Series B Preferred Shares and pays the $13.00 per share
exercise price to Nona in two phases. The first phase requires the
minimum purchase of 110,000 Preferred Shares for $1,430,000. A Closing
would occur at the consummation of Phase I. Under Phase II some or all
of the remaining 140,000 Preferred Shares are purchased at
Monterosso's election. If exercised in full the total exercise price
paid to the Company would be $1,820,000.
2. The Company sells its wholly owned subsidiary CMA to Nona Morelli's
II, Inc. for $1,430,000 at the closing of Phase I. At the closing of
Phase II, Nona pays the Company
26
<PAGE>
$1,570,000 for a release of all claims associated with the Company's
purchase of CMA in 1994.
3. At the Closing of Phase I the Company acquires NPC for 200,000 common
shares of the Company and a series of Secured Promissory Notes in the
aggregate amount of $1,200,000 convertible into shares of the
Company's common stock upon the reporting of certain financial goals
over the next several fiscal years. The liabilities of the Company at
the Closing of Phase I are to be reduced to $20,000 under debt
conversion agreements with NuVen Advisors and other creditors.
4. The Company contributes $1,430,000 at the Closing of Phase I and
$1,570,000 at the closing of Phase II to NPC, its wholly owned
subsidiary, for working capital.
5. The Board of Directors and Officers of the Company resign. Monterosso
is elected Chairman of the Board and President. Leland F. Rees and
Paula Amanda are elected to the Board of Directors.
6. Execution of definitive agreements followed by a Closing of Phase I
are expected to occur immediately following or soon after the
conclusion of the shareholder's meeting. The audited financial
statements of NPC are attached hereto as Exhibit "A".
The Board of Directors urges shareholders to vote in favor of the sale of CMA
and the acquisition of NPC. Proxies solicited by the Board of Directors will be
voted for this proposal unless a vote against this proposal or abstention is
specifically indicated.
PROPOSAL NO. 4: ELECTION OF DIRECTORS
A Board of Directors of three members is to be elected at the Annual
Meeting. The persons authorized by the enclosed form of proxy will vote each
proxy received by them for the election of the three nominees named below unless
contrary instructions are given. The term of office for all Directors will
commence on election and such persons will serve as Directors until their
successors are elected and qualified at the next Annual Meeting of shareholders
in 1997. One of the nominees named below, Fred G. Luke, is an incumbent
Director. If Proposals Nos. 1 or 2 and Proposal 3 are not approved, Fred G.
Luke, Jonathan L. Small and Royce Warren will be the nominees. They each have
consented to be named in this Proxy Statement and to serve if elected. If,
however, either Proposals 1 or 2 and Proposal 3 are approved and National Pools
Corporation is aquired by the Company, Fred G. Luke, Jonathan L. Small and Royce
Warren will withdraw their names as nominees and alternatively, Joseph
Monterosso, Leland E. Rees, and Paula Amanda will be the nominees for election
to the Board of Directors. They each have consented to be named in this Proxy
Statement and to serve if elected provided either Proposals 1 or 2 and Proposal
3 are approved.
Except as set forth above, it is not expected that the nominees will become
unable to serve as a Director prior to the Annual Meeting. In the event that any
of the nominees for Director should, before the Annual Meeting, become unable to
serve if elected, it is intended that shares represented by proxies which are
executed and returned will be voted for such substitute nominees as may be
recommended by the Company's
27
<PAGE>
existing Board of Directors. The accompanying form of Proxy contains a
discretionary grant of authority with respect to this matter. If the above
nominees are not elected, shareholders would have to elect other persons as
Directors.
The Board of Directors of NuOasis recommends a vote FOR the election of the
three nominees named below. Proxies solicited by the Board of Directors will be
voted FOR the named nominees unless instructions are given to the contrary.
The following biographical information is furnished with respect to the
three nominees for election at the Annual Meeting:
<TABLE>
<CAPTION>
Position(s) Held
Name of Nominee Age in the Company Director Since
- - ------------------------ -------- -------------------- ----------------
<S> <C> <C> <C>
Fred G. Luke 49 President, Treasurer April 1994
and Director
Jonathan L. Small 43 None Not Applicable
Royse Warren 56 None Not Applicable
</TABLE>
<TABLE>
<CAPTION>
Alternative Nominees (if either Proposals 1 or 2 and Proposal 3 are approved)
- - -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Joseph Monterosso 49 None Not Applicable
Not Applicable
Leland E. Rees 47 None Not Applicable
Not Applicable
Paula Amanda 46 None Not Applicable
</TABLE>
Fred G. Luke, age 49. Mr. Fred Luke has been a Director, Chairman and President
of the Company since March 30, 1994. Mr. Luke has over twenty-five (25) years of
experience in domestic and international financing and the management of private
and publicly held companies. Since 1982, Mr. Luke has provided consulting
services and has served, for brief periods lasting usually not more than six
months, as Chief Executive Officer and/or Chairman of the Board of various
publicly held and privately held companies in conjunction with such financial
and corporate restructuring services. In addition to his position with the
Registrant, Mr. Luke currently serves as Chairman and Chief Executive Officer of
the Company's Parent Company, Nona, as well as Chairman and President of NuVen
Advisors, Inc., ("NuVen Advisors") formerly New World Capital, Inc. ("New
World"), President and Director of The Toen Group, Inc. ("Toen"), President of
Hart Industries, Inc. ("Hart"), Chairman and President of Diversified Land &
Exploration Co. ("DL&E"). DL&E is a former publicly traded independent natural
resource development company engaged in domestic oil and gas exploration,
development and production. Prior to 1995, DL&E was a 90% owned subsidiary of
Basic Natural Resources, Inc. ("BNR"). From 1991 through 1994 Mr. Luke served as
the President and a Director of BNR. BNR is presently inactive. Hart and DL&E
were formerly in the
28
<PAGE>
environmental services and natural gas processing business, respectively. Both
Hart and Toen are public companies which were formerly traded on Nasdaq or the
OTC Bulletin Board. Neither Hart nor Toen have ongoing operations. Nona is a
publicly traded (OTC: Bulletin Board) diversified holding company with overseas
gaming and domestic pasta production subsidiaries, in addition to NuOasis
Gaming. NuVen Advisors provides managerial, acquisition and administrative
services to public and private companies including Nona, NuOasis Gaming, Hart
and Toen. NuVen Advisors, which is controlled by Fred G. Luke, as Trustee of the
Luke Family Trust, is an affiliate of both Nona and NuOasis Gaming. NuVen
Advisors is a stockholder of Hart, DL&E and Nona, and provides management,
general and administrative services, and merger and acquisition services to
Hart, DL&E and Nona pursuant to independent Advisory and Management Agreements.
Mr. Luke also served from 1973 through 1985 as President of American Energy
Corporation, a privately held oil and gas company involved in the operation of
domestic oil and gas properties. From 1970 through 1985 Mr. Luke served as an
officer and Director of Eurasia, Inc., a private equipment leasing company
specializing in oil and gas industry equipment. Mr. Luke received a Bachelor of
Arts Degree in Mathematics from California State University, San Jose in 1969.
Jonathan L. Small, age 43. Mr. Small is currently a member in good standing of
the State Bar of California and has been since 1980. Mr. Small is in the private
practice of law. Mr. Small's law practice consists of the regulation, due
diligence, planning tax opinions for private placement offerings in oil and gas,
real estate, banking, alternative energy, investment and venture capital
programs; financial business and individual planning; civil litigation and
general business matters. Prior to forming his private law practice, Mr. Small
was a tax accountant with Arthur Young & Company in 1981 and 1982. Mr. Small
served as a Director, General Counsel and Assistant Secretary of Basic Natural
Resources, Inc. from June 1992 to September 1994. Mr. Small has served as
Secretary and General Counsel for Diversified Land and Exploration since March
1988. Mr. Small served as a Director of Nona from March 17, 1994 to January 22,
1996.
Royse Warren, age 56. Mr. Royse Warren is Director of Operations of the Indian
Springs Casino in Indian Springs, Nevada. Mr. Warren has held his position with
the Indian Springs Casino since August 1, 1990. Since August 1, 1985, Mr. Warren
has served as President of The Cattle Baron Inc. whose projects include a
restaurant and casino hotel project in Henderson, Nevada. Mr. Warren has more
than 25 years experience in gaming personnel recruitment.
If either Proposal 1 or 2 and Proposal 3 are approved, the three alternate
nominees are as follows:
Joseph Monterosso, age 49. Mr. Monterosso has used his entrepreneurial skills to
launch a variety of companies over the past 25 years, culminating with National
Pools Corporation in 1992. Monterosso embarked upon fulfilling his lifelong
dream of producing his own automobile after attending the Geneva Auto Show in
1986. After raising over $45 million for funding, Monterosso founded LAFORZA
AUTOMOBILES, INC., which produced a four-wheel drive sport utility vehicle for
the luxury market and established a new mark in four-wheel drive sport vehicles.
In June 1979, Monterosso was named Sales and Operating Vice President for Tony
Ward, Inc., an importer of forklifts from Japan. Monterosso left Tony Ward, Inc.
to found North American Forklift, Inc. in July 1980. While living in Australia
from 1970 - 1979, Monterosso founded three successful firms including a company
that manufactured custom wheels and imported accessories for off-road sport
vehicles which was subsequently sold to Ford Motor Corporation in 1979.
29
<PAGE>
Leland E. Rees, age 47. In his role as Chairman of National Pools Corporation's
Advisory Board, Leland E. Rees brings strong experience in government, public
affairs and finance. He was most recently with Rees and Associates, Inc., a
legislative advocacy and governmental affairs firm in Sacramento representing
corporations, non-profit organizations and several associations. Rees remains an
officer and director of Rees and Associates, Inc. which is wholly owned by he
and his wife. Rees has a strong background in finance and banking, as well as
both public and private accounting. He worked for five years in corporate
banking helping to finance large mergers and was the lead lending officer as
well as training officer for both credit analysis and corporate finance. He was
invited by the government of the Philippine Islands to instruct a two- week
seminar on "Financing Cooperatives" where he spoke to an audience of 100
bankers, attorneys and accountants. Rees then spent 12 years with a Fortune 200
company negotiating large, complex, domestic and international, government and
commercial contracts for missile systems and specialty chemicals. Rees joined
that firm to start a specialty chemical company which grew to a $20 million/year
firm and was merged into its parent. Rees is a founder and a major stockholder
of Ventura County National Bank in Oxnard, California. He holds a bachelor's
degree in Accounting from the University of Washington in Seattle, Washington
and a master's degree in Finance from Governor's State University in Park Forest
South, Illinois.
Paula Amanda, 46. Ms. Amanda has used her legal and managerial skills to manage
and launch her own successful real estate development company 12 years ago. Most
recently, for the last five years, Ms. Amanda has served as in house counsel for
Southern Pacific Transportation Company specializing in environmental matters.
Amanda has extensive experience in all business and environmental matters which
has included critical management skills including: the ability to bring together
diverse interests in a cooperative and effective manner to accomplish often
difficult and complex tasks; experience in managing an $8 million per year
environmental budget for the Southern Pacific law department and developing and
implementing compliance with a myriad of state and federal laws and regulations.
Her strengths lie in the conflict resolutions and communication arenas. Ms.
Amanda graduated from UCLA in 1975 with a degree in South East Asian politics
and is a member of Phi Beta Kappa. She received her law degree from the
University of Santa Clara in 1979.
Directors will be elected by a favorable vote of a plurality of the shares
of voting stock present, entitled to vote, and actually voting, in person or by
proxy, at the Annual Meeting. Accordingly, abstentions or broker non-voters as
to the election of Directors will not affect the election of the candidates
receiving the plurality of votes. Properly executed, unrevoked proxies will be
voted FOR election of the above-named nominees unless the stockholders indicate
that the proxy shall not be voted for any one or all of the nominees.
Meetings of Board and Committees
Based on records obtained by the new Board the former Board of Directors
held twelve (12) meetings during the fiscal year ended September 30, 1993, and
no director attended fewer than seventy-five percent (75%) of the aggregate of
the total number of those meetings. During the fiscal year ended September 30,
1994, the former Board of Directors held three meetings. During the fiscal year
ended September 30, 1995 the Board of Directors held one meeting. No director
attended fewer than seventy-five percent (75%) of the aggregate of the total
number of those meetings. During the fiscal years ended September 30, 1994 and
September 30, 1995 the current Board of Directors passed various resolutions by
written consent without a meeting on multiple dates.
30
<PAGE>
The Board of Directors does not have an audit committee or a nominating
committee. Nominees to the Board of Directors are selected by the entire Board
of Directors.
The former Board of Directors, on January 22, 1993 formed a Compensation
Committee whose initial members were Richard H. Wessler and Gary L. Blum. The
Compensation Committee formulates and reviews significant compensation policies
and decisions and administers the Company's employee benefit plans and option
plans.
The Board of Directors, on January 22, 1993 formed an Executive Committee
whose initial members were Douglas J. Phillips, Richard H. Wessler and Gary L.
Blum. The Executive Committee has, and may exercise, all of the powers and
authority of the Board of Directors and the management of the Company, except as
limited by Section 141 of the Delaware General Corporation Law, the by-laws of
the Company and by resolutions of the Board of Directors.
On March 30, 1994, Douglas J. Phillips, Dennis Phillips and Richard H.
Wessler resigned as Directors. Fred G. Luke and John D. Desbrow were appointed
as Directors on March 30, 1994 to fill two vacancies on the Board. Gary L. Blum
resigned as a Director on July 13, 1994. John D. Desbrow resigned as a Director
on July 20, 1994. Kenneth R. O'Neal was appointed as a Director on October 24,
1994 and resigned as a Director on July 15, 1995. Both Compensation Committee
positions and all three Executive Committee positions are currently vacant.
Director or Executive Compensation
There is no standard agreement for the compensation of directors. Directors
do not receive a per diem fee for their attendance at meetings of the Board. Mr.
Luke's Employment Agreement includes compensation for services rendered as
Chairman of the Board of Directors. Members of the Board do not receive a
monthly stipend.
Steven H. Dong. Mr. Dong is Chief Financial Officer of the Company. Mr.
Dong replaced Kenneth R. O'Neal who resigned as the Company's Chief Financial
Officer and as a Director effective July 16, 1995. Prior to joining the Company,
Mr. Dong worked as a Certified Public Accountant with the international
accounting firm of Coopers & Lybrand since 1988. Mr. Dong's experience consisted
of providing financial accounting and consulting services to privately and
publicly held companies. In addition to his position with the Company, Mr. Dong
currently serves as Chief Financial Officer of Nona, Hart Industries, Toen
Group, Inc. and NuVen Advisors. Mr. Dong received his Bachelor of Science degree
in Accounting from Babson College.
John D. Desbrow. Mr. John D. Desbrow has served as Secretary of the Company
from March 30, 1994 to July 20, 1994 and from November 9, 1994 to the present.
Mr. Desbrow is also Secretary of the Company's Parent company, Nona. Mr. Desbrow
is a member in good standing of the State Bar of California and has been since
1980. Prior to joining the Registrant Mr. Desbrow was in the private practice of
law. Mr. Desbrow received his Bachelor of Science degree in Business
Administration from the University of Southern California in 1977, his Juris
Doctorate from the University of Southern California Law Center in 1980, and his
Master of Business Taxation degree from the University of Southern California
Graduate School of Accounting. Mr. Desbrow has also been serving as a Director
and Secretary of Hart Industries, Inc. since July 31, 1993. Mr. Desbrow has been
a director of The Toen Group Inc. since September 28, 1994.
31
<PAGE>
(a) Summary Compensation Table
The following table sets forth in summary form the compensation received
during each of the Company's last three completed fiscal years by the
Company's President and four most highly compensated executive officers
other than the President.
32
<PAGE>
<TABLE>
<CAPTION>
Annual Compensation
----------------------------------------------------------------
Name and Principal Fiscal Other Annual
Position Year Salary($) Bonus Compensation($)
- - --------------------- ----- --------- ------- -----------------
<S> <C> <C> <C> <C>
Fred G. Luke 1993 - - -
President and
Director 1994 $ 27,000 - -
(3-30-94 to
Present) 1995 $ 59,000(1) - -
- - -----------------------------------------------------------------------------------------------------
Douglas J. Phillips 1993 $ 100,000 - -
President(to 11-92)
Secretary and Chief 1994 $ 50,000 - -
Financial Officer
(From 11-92 to 1995 - - -
3-30-94)
- - -----------------------------------------------------------------------------------------------------
John Desbrow 1993 - - -
Secretary (4-94 to
7-94 and 11-94 to 1994 $ 18,000 - -
Present)Director (4-
94 to 7-94) 1995 $ 43,000(2) - -
- - -----------------------------------------------------------------------------------------------------
Kenneth O'Neal 1993 - - -
Chief Financial
Officer and 1994 - - -
Director (10-94 to
7-95) 1995 $ 33,000 - -
- - -----------------------------------------------------------------------------------------------------
Steven H. Dong 1993 - - -
Chief Financial
Officer (7-95 to 1994 - - -
Present)
1995 $ 5,000 - -
</TABLE>
(a) Summary Compensation Table (Continued):
<TABLE>
<CAPTION>
Long Term Compensation
---------------------------------------------------------------------------
Awards Payouts
---------------------------------------------------------------------------
Restricted
Name and Principal Fiscal Stock Options LTIP All Other
Position Year Award(s)$) (#) Payouts($) Compensation
- - ----------- ----- ---------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Fred G. Luke 1993 - - - -
President and
Director 1994 - - - -
(3-30-94 to
Present) 1995 - 3,000,000 - -
- - -----------------------------------------------------------------------------------------------------------------------------
Douglas J. Phillips 1993 - - - -
President(to 11-92)
Secretary and Chief 1994 - - - -
Financial Officer
(From 11-92 to 1995 - - - -
3-30-94)
- - -----------------------------------------------------------------------------------------------------------------------------
John Desbrow 1993 - - - -
Secretary (4-94 to
7-94 and 11-94 to 1994 - - - -
Present)Director (4-
94 to 7-94) 1995 - - - -
- - -----------------------------------------------------------------------------------------------------------------------------
Chief Financial
Officer and 1994 - 100,000 - -
Director (10-94 to
7-95) 1995 - - - -
- - -----------------------------------------------------------------------------------------------------------------------------
Steven H. Dong 1993 - - - -
Chief Financial
Officer (7-95 to 1994 - - - -
Present)
1995 - 275,000 - -
</TABLE>
33
<PAGE>
(1) Compensation of $86,000 during fiscal 1995 was accrued and expensed for
Fred G. Luke, however, no cash payments have been made. Approximately
$27,000 of the $86,000 compensation represents amount of compensation
retroactive from April 1, 1994 to September 30, 1994, which is included
in the table for fiscal year 1994.
(2) Based on amounts billed to the Company by Mr. Desbrow. Mr. Desbrow
billed $18,000 or $3,000 per month for the six months ended September
30, 1994 for his services as Secretary and $4,000 or $1,000 per month
for his services as a Director from April, 1994 to July, 1994. Mr.
Desbrow received 337,500 shares in January 1995, of which the proceeds
from 225,000 shares were applied to amounts due for the 1994 fiscal
year. Mr. Desbrow billed $18,000 or $3,000 per month for the first six
months of fiscal 1995 and $25,000 or $4,167 per month for the second
six months of fiscal 1995. 112,500 of the shares issued in January
1995 and 112,500 shares issued in March 1995 were applied to amounts
due for fiscal year 1995. In June, 1995 Mr. Desbrow received 600,000
shares of which the proceeds from 225,000 shares were applied to the
amounts due for fiscal year 1995. The remaining 375,000 shares have
been applied towards services performed in fiscal 1996.
(b) Option and Long-Term Compensation Tables
The following summary option table sets forth in summary form the aggregate
options granted during each of the Company's last completed fiscal year ended
September 30, 1995 by the Company's President and four most highly compensated
executive officers other than the President.
<TABLE>
<CAPTION>
Percent of Total Options/ Exercise or
Options/SAR's SAR's Granted to Employees Base Price Expiration
Name (#) In Fiscal Year ($/Sh) Date
- - ---------------------- ------------- -------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Fred G. Luke 3,000,000 56% .12 7/00
NuVen Advisors Inc.(2) 2,000,000 37% .10 3/96
Steven H. Dong, CFO 275,000 5% .12 (3)
Kenneth R. O'Neal,
former Director & CFO 100,000 2% .30 11/95
</TABLE>
34
<PAGE>
The following summary option table sets forth in summary form the aggregate
exercise of options during each of the Company's last completed fiscal year
ended September 30, 1995 by the Company's President and four most highly
compensation executive officers other than the President
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-the-Money
Options/SAR's at Options/SAR's at
Fiscal Year-End (#) Fiscal Year-End ($)
Shares Acquired on
Name Exercise(#) Value Realized($) Exercisable/Unexercisable(d) Exercisable/Unexercisable
- - ----------------------- ------------------ ------------------ ---------------------------- -------------------------
<S> <C> <C> <C> <C>
Fred G. Luke, - - 950,000 Exercisable 19,000 Exercisable
President and 2,050,000 Unexercisable 41,000 Unexercisable
Director(1)
NuVen Advisors, Inc.(2) - - 2,000,000 Exercisable 80,000 Exercisable
Steven H. Dong, CFO - - 68,750 Exercisable 1,375 Exercisable
206,250 Unexercisable 4,125 Unexercisable
Kenneth R. O'Neal,
former CFO and
Director - - 100,000 Canceled N/A
Doug Phillips, former
President and
Director (Non-qualified
Plan) - - 150,000 Exercisable N/A
Doug Phillips, former
President and
Director (Incentive
Plan) - - 50,000 Exercisable N/A
Hal Phillips, former
Secretary and
Director - - 150,000 Exercisable N/A
Gary Blum, former
Director - - 50,000 Exercisable N/A
</TABLE>
(1) Options vest prorata over the five year term.
(2) The Luke Family Trust (the "Luke Trust") owns 93.1% of NuVen Advisors,
formerly New World, Fred G. Luke, as Co-Trustee of the Luke Trust
determines the voting of such shares and, as a result, be deemed to
control the Luke Trust.
(3) Mr. Dong's options expire (3) three months subsequent to the last day
services are provided.
35
<PAGE>
There were no awards under long-term incentive plans, such as phantom stock
grants and restricted stock grants that vest upon satisfaction of performance
goals.
Employment Contracts
In August 1995, the Company entered into an Employment Agreement with Fred
G. Luke, the Company's Chairman and President. Mr. Luke has been serving as the
Company's Chairman and President since approximately March 31, 1994. The terms
of the Employment Agreement call for Mr. Luke to receive approximately $4,500
per month, retroactive to April 1, 1994, for five (5) years as a base salary;
granted him an option to purchase 3,000,000 shares of the Company's common stock
at an exercise price of $.12 per share; provides him with an annual bonus based
upon a number of factors related to the Company's growth and performance which
include (a) serving on the Company's Board of Directors and as its President;
(b) providing advice concerning mergers and acquisitions; (c) corporate finance;
(d) day to day management; (e) guidance with respect to general business
decisions; (f) other duties commonly performed by the President of a
publicly-held company; and requires the Company to purchase life insurance
coverage, reimbursement for vehicle expenses, and provide other fringe benefits.
Between October 1, 1994 and September 30, 1995 no cash payments were made by the
Company to Mr. Luke, but he did earn $54,000 or $4,500 per month. Between March
31, 1994 and September 30, 1994, Mr. Luke received no cash payments for his
services. In August 1995, the Company agreed to retroactively compensate Mr.
Luke for past services in the amount of $27,000 or $4,500 per month for the
period April 1, 1994 to September 30, 1994 and $54,000 or $4,500 per month for
the period October 1, 1994 to September 30, 1995. No bonuses have been accrued,
paid or are owed as of the date of this Report. The Company expensed $86,000,
and $0 during fiscal 1995 and 1994, respectively, and had $86,000 and $0 due to
Mr. Luke as of September 30, 1995 and 1994, respectively.
Certain Relationships and Related Party Transactions
The transactions between the Company and its Directors or executive
officers that took place during the 1994 and 1995 fiscal years are as follows:
The Company entered into a three year employment agreement, effective
January 1, 1993, with Douglas J. Phillips for his exclusive services as
President and Chief Financial Officer of the Company. Mr. Phillips' compensation
was $100,000 per year and includes benefits of an automobile and related
expenses, health and disability insurance, and an award of 25,000 shares of
restricted Common Stock for, among other things, serving as guarantor of certain
Company loans, obligations and payments. Effective March 30, 1994 Mr. Phillips
resigned as President and Chief Financial Officer.
Effective April 1, 1994, the Company entered into a Consulting Agreement
with John D. Desbrow for the engagement of Mr. Desbrow to perform legal services
and to hold the office of Secretary, on behalf of the Company, for the period
from April 1, 1994 to March 31, 1995. Between April 1, 1994 and September 30,
1994 Mr. Desbrow did not receive any funds or shares of common stock in the
Company but in fiscal 1995 he did bill and eventually received from the sale of
shares $3,000 per month for services rendered as Secretary between April 1, 1994
and September 30, 1994, all of which was expensed in fiscal year 1995. In fiscal
1995, Mr. Desbrow billed and eventually received from the sale of shares $4,000
for services rendered as a Director from April 1, 1994 to July, 1994. Effective
April 1, 1995, the Company and Mr. Desbrow renewed the Consulting Agreement
through March 31, 1996. Under the renewed Consulting
36
<PAGE>
Agreement the Company contracted to pay Mr. Desbrow $50,000 for the renewal term
payable in the Company's common stock. 1,050,000 shares were registered for
issuance on Forms S-8 filed with the Securities and Exchange Commission during
the 1995 fiscal year for payment of sums earned during fiscal years 1994 and
1995. Under the terms of the renewed Consulting Agreement, Mr. Desbrow invoices
the Company $4,166.67 per month (1/12 of $50,000) and applies the net proceeds
received from the sale of stock to the invoiced amounts. For purposes of any
"profit" computation under Section 16(b) Mr. Desbrow and the Company have agreed
the price paid for the shares is deemed to be $50,000. As of September 30, 1995,
Mr. Desbrow held 600,000 shares which are to be utilized for past, current and
future services incurred. The Company expensed $43,000, and $18,000 during
fiscal 1995 and 1994, respectively, and had $26,885 and $18,000 due to Mr.
Desbrow as of September 30, 1995 and 1994, respectively.
In October 1994, the Company entered into a Consulting Agreement with Mr.
O'Neal, pursuant to which Mr. O'Neal was to perform accounting services, to hold
the office of Chief Financial Officer and to sit on the Company's Board of
Directors for fiscal year ended September 30, 1995. Pursuant to the Consulting
Agreement the Company agreed to pay Mr. O'Neal $36,000, payable in the Company's
common stock and issuable monthly in arrears. During fiscal 1995, the Company
issued 37,500 shares to Mr. O'Neal. Cash payments of $9,550 were made to Mr.
O'Neal by the Company, or its controlled subsidiaries during the year ended
September 30, 1995. No cash payments were made by the Company to Mr. O'Neal for
the fiscal year ended September 30, 1994. The Company expensed $33,000, and $0
during fiscal 1995 and 1994, respectively, and had no amounts outstanding as of
September 30, 1995 and 1994. Mr. O'Neal resigned as Chief Financial Officer and
as a Director on July 15, 1995.
In July 1995, the Company entered into a Consulting Agreement with Mr.
Dong, pursuant to which Mr. Dong is to perform accounting services and to hold
the office of Chief Financial Officer through the end of June 30, 1996. Pursuant
to the agreement the Company agreed to pay Mr. Dong $20,000 in cash or in the
Company's common stock payable monthly in arrears and granted him an option to
purchase 275,000 shares of the Company's common stock at an exercise price of
$.12 per share. Cash payments of $5,000 were made to Mr. Dong by the Company
during fiscal 1995. The Company expensed $5,000 during fiscal 1995 and had no
amounts due as of September 30, 1995.
Consultants in Management Capacity
The Luke Trust and Lawver Corp. owns 93% and 7%, respectively, of NuVen
Advisors. Fred G. Luke, as trustee of the Luke Trust, controls the
Luke Trust and Mr. Lawver is the majority shareholder of Lawver Corp.
and thereby controls Lawver Corp.
Effective April 1, 1994, the Company entered into an Advisory and
Management Agreement with NuVen Advisors for the engagement of NuVen Advisors to
perform administrative, human resource and merger/acquisition services
consisting of (a) management of the use, purchase and disposition of the
Company's assets including, by way of illustration, the evaluation of economic,
statistical, financial and other data, and formulation and/or implementation of
the Company's business plan; and (b) management of the Company's operations
including, by way of illustration, the furnishing of routine supervisory, and
administrative services and the supervision of administrative personnel
including, by way of illustration, consultant recruiting and screening; and (c)
preparation of the usual and customary reports required of a publicly-held
company subject to the reporting requirements of the Securities Exchange Act of
1934; and (d) furnishing of office space, facilities and equipment for the
Company's non-exclusive use. The Company
37
<PAGE>
has significantly reduced or eliminated completely its human resource and
payroll obligations and requirements, but the Company continues to require the
administrative, audit and consultant screenings, and merger/acquisition
services. The Company anticipates continued reliance on the services provided
under the Advisory and Management Agreements until such time it has, or its
subsidiaries, have the need and sufficient cash flow to justify to perform such
services in-house. Pursuant to such Agreement, the Company agreed to pay NuVen
Advisors $180,000 annually, payable monthly in $15,000 increments in arrears,
and granted NuVen Advisors an option to purchase 2,000,000 shares of the
Company's common stock exercisable at a price of $.10 per share. The Company
expensed $180,000, and $0, during fiscal 1995 and 1994, respectively, and had
$15,500 and $0 due to NuVen Advisors as of September 30, 1995 and 1994,
respectively.
Effective April 1, 1994, CMA entered into an Advisory and Management
Agreement with NuVen Advisors for the engagement of NuVen Advisors to perform
administrative, human resource and merger/acquisition services consisting of (a)
management of the use, purchase and disposition of CMA's assets including, by
way of illustration, the evaluation of economic, statistical, financial and
other data, and formulation and/or implementation of CMA's business plan; and
(b) management of CMA's operations including, by way of illustration, the
furnishing of routine supervisory and administrative services and the
supervision of administrative personnel including, by way of illustration,
consultant recruiting and screening; and (c) preparation of the usual and
customary reports required of a publicly-held company subject to the reporting
requirements of the Securities Exchange Act of 1934; and (d) furnishing of
office space, facilities and equipment for CMA's non-exclusive use. CMA has
significantly reduced or eliminated completely its human resource and payroll
obligations and requirements, but CMA continues to require the administrative,
audit and consultant screenings, and merger/acquisition services. CMA
anticipates continued reliance on the services provided under the Advisory and
Management Agreements until such time it has, or its subsidiaries, have the need
and sufficient cash flow to justify to perform such services in-house. Pursuant
to such Agreement CMA agreed to pay NuVen Advisors $120,000 annually, payable
monthly in $10,000 increments in arrears, and granted NuVen Advisors an option
to purchase up to five percent (5%) of CMA's common stock outstanding at the
time of exercise, exercisable at a price per share equal to one hundred ten
percent (110%) of the book value of such shares. CMA expensed $120,000 and $0,
during fiscal 1995 and 1994, respectively, and had $120,000 and $0 due to NuVen
Advisors as of September 30, 1995 and 1994, respectively. The option given to
NuVen Advisors by CMA, if exercised, will (a) result in an infusion of working
capital into CMA; and, (b) reduce the Company's ownership of CMA by five percent
(5%), which management believes will not have any material adverse effect on the
Company's financial condition or investment in CMA.
In September 1994, the Company entered into a Settlement Agreement with
Douglas J. Phillips whereby shares held by Phillips were sold for the benefit of
the Company to pay creditor claims due to Phillips' prior misrepresentations of
the cash account of the Company at March 30, 1994. Under the Settlement
Agreement Phillips placed 1,325,193 shares of the Company's common stock in the
name of the Phillips Family Investment Limited Partnership into escrow with a
third party trustee for liquidation with payment of the net proceeds to the
Company for application towards certain debts including payables to trade
creditors. Under the agreement Phillips provided an opinion of counsel that the
Phillips Family Investment Limited Partnership was not an affiliate of the
Company and had not been an affiliate for 90 days prior to September 13, 1994,
that the shares had been held for more than 3 years and that the shares were
eligible for legend removal under Rule 144(k). Phillips received a grant of
non-transferable Warrants to purchase 1,325,193 shares of the Company's common
stock at an exercise price of $.21875 per share expiring
38
<PAGE>
September 13, 1996. Phillips also agreed to restrict the sale of the remainder
of his holdings, or 1,325,193 shares, to 2,000 shares per business day.
At September 30, 1995 and September 30, 1994, the Company had net operating
loss carryforwards of approximately $6,900,000 and $6,800,000, respectively,
available for Federal income tax purposes that expire through 2009. If the
Company converts the Series B Preferred shares into shares of common stock,
there would be a greater than 50% change in the ownership of the Company's
common stock and IRS Section 382 would place certain restrictions on the amount
of the net operating loss that could be utilized in future years. Internal
Revenue Code Section 382 limits the use of net operating losses to the extent of
an amount equal to the fair market value of the Company just prior to the 50% or
greater change in ownership multiplied by the Federal Long Term Discount Rate. A
valuation allowance was recorded in the financial statements to offset the tax
benefit resulting from utilization of the net operating loss carryfoward due to
the uncertainty surrounding the realization of such tax asset.
Compliance with Section 16(a) of the Securities Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's officers and directors, and person who
own more than ten percent of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission. Officers, directors and greater than
ten-percent shareholders are required by Securities and Exchange Commission
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on review of the copies of such forms furnished to the
Company, or representations that no Forms 5 were required or filed, the Company
believes that during the periods from October 1, 1992 through September 30, 1993
and from October 1, 1993 through September 30, 1995, all Section 16(a) filing
requirements applicable to its officers, directors and greater than ten-percent
beneficial owners were complied with by the former and current officers and
directors except Kenneth O'Neal did not furnish to the Company any Forms 4 which
he may have filed pertaining to his receipt of Company shares or pertaining to
his resignation. The only form submitted by Mr. O'Neal to the Company for review
was a Form 3 timely filed on November 9, 1994 reporting his acceptance of Chief
Financial Officer and Director positions on October 24, 1994. 37,500 shares of
common stock were issued to Mr. O'Neal for services on December 28, 1994 for
which a Form 4 filing was due on January 10, 1995. No Form 4 reporting the
receipt or any later disposition of such shares was received by the Company. Mr.
O'Neal resigned as Chief Financial Officer and Director on July 15, 1995. No
Form 4 reporting the termination of reporting requirements or his resignation
was received by the Company. According to the Transfer Agent's records Mr.
O'Neal was still the record owner of the 37,500 shares on July 26, 1995, which
date is eleven days after the date of Mr.
O'Neal's resignation.
----------------------------------------------------------------------
The Board of Directors of the Company unanimously recommends a vote
FOR the election of each of the nominees listed above. Proxies
solicited by the Board of Directors will be voted FOR the named
nominees unless instructions are given to the contrary.
----------------------------------------------------------------------
39
<PAGE>
PROPOSAL NO. 5: SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has engaged the firm of Raimondo, Pettit &
Glassman, P.C. as independent accountants to audit and report to the
shareholders on the financial statements of NuOasis Gaming, Inc. for the fiscal
year 1995. Although the appointment of independent accountants is not required
to be approved by the stockholders, the Board of Directors believes stockholders
should participate in the appointment through ratification. The Company has not
established an Audit Committee.
J.H. Cohn & Company acted as the independent auditors of the Company
for the four fiscal years prior to 1994. During the fiscal years ended September
30, 1993 and 1992 and the interim period preceding the dismissal, there were no
disagreements with JHC on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure which if not
resolved to the satisfaction of JHC would have caused JHC to make reference to
any such matter in their reports, nor were there any other reportable events.
JHC's reports on the consolidated financial statements of the Company during the
fiscal years ended September 30, 1993 and 1992 did not contain an adverse
opinion or a disclaimer of opinion nor were they qualified or modified as to
uncertainty, audit scope or accounting principles except as described below.
JHC's report dated December 13, 1993 (the "1993 Report") on the consolidated
financial statements of the Company as of September 30, 1993 and 1992 and for
the years ended September 30, 1993, 1992 and 1991 and its report dated January
29, 1993 on the consolidated financial statements of the Company as of September
30, 1992, 1991 and 1990 were modified with respect to uncertainties related to
litigation. The 1993 Report also included an explanatory paragraph with respect
to the substantial doubt existing about the ability of the Company to continue
as a going concern.
Following the change in management discussed above, the new Board of
Directors dismissed J.H. Cohn & Company effective March 31, 1994.
C. Williams & Associates, P.C. ("C. Williams") acted as the
independent accountants of the Company for the fiscal year 1994. The report of
C. Williams with respect to the 1994 fiscal year financial statements included
an explanatory paragraph with respect to the substantial doubt existing about
the ability of the Company to continue as a going concern due to its recurring
net losses, negative cash flows from operating activities since its inception,
limited liquid resources, negative working capital and its primary operating
subsidiary filing for protection under Chapter 11 of the U.S. Bankruptcy Code.
During 1994 and to the date of dismissal there were no disagreements
with C. Williams on any matter of accounting principle or practice, financial
statement disclosure, or auditing scope or procedure, which, if not resolved to
the satisfaction of C. Williams, would have caused C. Williams to make a
reference to the subject matter of the disagreement in connection with its
report. Following the change in Chief Financial Officer in July 1995 C. Williams
was dismissed effective November 8, 1995. On January 29, 1996, the Texas State
Board of Public Accountancy made a determination that the firm of C. Williams
was not properly licensed to practice public accounting in Texas, retroactive
back to March 2, 1995.
The firm of C. Williams performed an audit of the Company's financial
statements for the year ended September 30, 1994 and issued its report on that
audit on February 5, 1995, which is prior to the revocation of Mr. Williams'
license on March 2, 1995, and therefore is in accordance with the applicable
rules and regulations of the Securities and Exchange Commission.
40
<PAGE>
Article 2 of Regulation S-X provides that, after March 2, 1995, the
firm of C. Williams is not qualified to practice before the Commission.
Shareholders continue to retain legal rights to sue and recover damages from C.
Williams, for material misstatements or omissions, if any, in the financial
statements.
Should C. Williams dissolve under the laws of Texas, its state of
incorporation, the rights of the shareholders to sue and recover damages from C.
Williams and its directors, officers and shareholders would be determined by the
laws of the State of Texas governing the dissolution of Texas professional
corporations.
The Report of Raimondo, Pettit & Glassman with respect to the 1995
fiscal year financial statements included an explanatory paragraph with respect
to the substantial doubt existing about the ability of the Company to continue
as a going concern due to its recurring net losses, negative cash flows from
operating activities since its inception, limited liquid resources, negative
working capital and its primary operating subsidiary filing for protection under
Chapter 7 of the Bankruptcy Code.
------------------------------------------------------------
The Board of Directors of NuOasis Gaming, Inc. unanimously
recommends a vote FOR the ratification of the selection of
Raimondo, Pettit & Glassman, P.C. as independent accountants
for fiscal year 1995. Proxies solicited by the Board of
Directors will be voted FOR this proposal unless a vote
against this proposal or abstention is specifically
indicated.
------------------------------------------------------------
PROPOSAL NO. 6: OTHER BUSINESS
The Board of Directors knows of no matter to come before the
stockholders meeting other than as specified in this Proxy Statement. If other
business should, however, be properly brought before such meeting, the persons
voting the proxies will vote them in accordance with their best judgment.
------------------------------------------------------------
The Board of Directors of NuOasis Gaming, Inc. unanimously
recommends a vote FOR approval of such other matters as may
properly come before the shareholders for vote thereon.
------------------------------------------------------------
Annual Report
Copies of the Company's Annual Report on Form 10KSB/A for the fiscal year
ended September 30, 1995 and Quarterly Report on Form 10QSB/A for the quarter
ended March 31, 1996 accompany this Proxy Statement.
41
<PAGE>
Shareholder Proposals
To be considered for inclusion in the Proxy Statement for the 1997 Annual
Meeting, proposals of the shareholders must be received by the Company no later
than March 31, 1997 or ninety (90) days prior to such meeting, whichever date is
later. Such proposals should be directed to the Secretary of the Company.
THE STOCKHOLDERS ARE URGED TO COMPLETE, SIGN, AND RETURN PROMPTLY
THE ACCOMPANYING PROXY CARD.
By Order of the Board of Directors,
John D. Desbrow
Secretary
Irvine, California
August __, 1996
42
<PAGE>
NATIONAL POOLS CORPORATION
(A Development Stage Company)
FINANCIAL STATEMENTS
With Report of Certified Public Accountants
Years Ended December 31, 1995 and 1994, And For The
Period Cumulative From Inception (February 23, 1993) Through
December 31, 1995
MARCIA FRITZ & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
5530 Birdcage Street, Suite 200
Citrus Heights, CA 95610-7621
<PAGE>
NATIONAL POOLS CORPORATION
(A Development Stage Company)
INDEX
Page(s)
Report of Certified Public Accountant
Balance Sheets 3-4
Statements of Operations and
Accumulated Deficit 5
Statements of Changes in
Stockholders' Deficit 6
Statements of Cash Flow 7-8
Notes to the Financial Statements 9-14
<PAGE>
MARCIA FRITZ & COMPANY CERTIFIED PUBLIC ACCOUNTANTS
5530 Birdcage St., Suite 200
Citrus Heights, CA 95610-7621
(916) 966-9366 Fax (916) 966-8743
To the Board of Directors and
Stockholders of National Pools Corporation
We have audited the accompanying balance sheets of National Pools Corporation (a
development stage company) as of December 31, 1995 and December 31, 1994, and
the related statements of operations and accumulated deficit, changes in
stockholders' equity, and cash flows for the years then ended and from inception
(February 23, 1993) through December 31, 1995. 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 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 National Pools Corporation as
of December 31, 1995 and December 31, 1994, and the results of its operations
and its cash flows for the years then ended and from inception (February 23,
1993) through December 31, 1995, 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 12, the Company's
operating losses since inception and negative working capital raise substantial
doubt about its ability to complete development of its project and successfully
conduct principal operations as a going concern. As discussed in Note 11, the
Company is currently attempting to be acquired as a wholly owned subsidiary by
another company. Prior to the acquisition, the acquiring company must be
successful in obtaining sufficient working capital to finance the acquisition,
satisfy the Company's creditors, complete development of the project, and
successfully conduct principal operations. The Company cannot predict what the
outcome of these plans will be. The financial statements do not include any
adjustments that might result from the outcome of these uncertainties.
/s/Marcia Fritz & Company
Marcia Fritz & Company
Citrus Heights, California
July 5, 1996
<PAGE>
NATIONAL POOLS CORPORATION
(A Development Stage Company)
BALANCE SHEETS
December 31, 1995 and 1994
<TABLE>
<CAPTION>
ASSETS
- - ------------------------------ 1995 1994
------------- -------------
<S> <C> <C>
Current Assets
Cash $ 12,639 $ 597
Employee Advances Receivable 17,965 2,286
------------- -------------
Total Current Assets 30,604 2,883
------------- -------------
Fixed Assets:
Equipment 89,090 168,465
Less Accumulated Depreciation 26,218 16,784
------------- -------------
Net Fixed Assets 62,872 151,681
------------- -------------
Intangible Assets:
Software 200,036 190,361
Less Accumulated Amortization 95,120 28,441
------------- -------------
Net Intangible Assets 104,916 161,920
------------- -------------
Deposits 3,811 14,092
------------- -------------
TOTAL ASSETS $ $202,203 $ 330,576
------------- ---------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
NATIONAL POOLS CORPORATION
(A Development Stage Company)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' DEFICIT
- - -------------------------------------
1995 1994
------------- -------------
<S> <C> <C>
Current Liabilities:
Accounts Payable (Note 3) $ 533,085 $ 528,033
Accrued Interest Payable (Note 5) 162,116 51,501
Wages Payable 82,788 102,630
Payroll Taxes Payable 11,512 15,924
Note Payable (Note 5) 822,930 822,930
------------- -------------
Total Current Liabilities 1,612,431 1,521,018
------------- -------------
Payable to Stockholders (Note 6):
Accrued Interest Payable 72,478
Notes Payable 75,864
Advance Payable to Stockholder 72,500
Convertible Debt 496,376
Less Unamortized Original Issue Discount 96,518
------------- -------------
Net Convertible Debt 399,858
------------- -------------
Total Payable to Stockholders 620,700
------------- -------------
Total Liabilities 1,612,431 2,141,718
------------- -------------
Stockholders' Deficit:
Common Stock (Note 8) 991,764 39,926
Preferred Stock (Note 8)
Deficit Accumulated during the
Development Stage ( 2,401,992) ( 1,851,068)
------------- -------------
Total Stockholders' Deficit ( 1,410,228) ( 1,811,142)
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS'
DEFICIT $ 202,203 $ 330,576
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
NATIONAL POOLS CORPORATION
(A Development Stage Company)
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
Years Ended December 31, 1995 and 1994,
and for the Period Cumulative from Inception (February 23, 1993)
through December 31, 1995
<TABLE>
<CAPTION>
Cumulative
from
Inception
through
Years Ended December 31, December 31,
1995 1994 1995
----------- ----------- -------------
<S> <C> <C> <C>
Operating Expenses $( 436,886) $( 437,778) $( 1,019,263)
Research and Development (Note 2) ( 224,191) ( 842,019) ( 1,255,375)
------------- ------------ --------------
Net (Loss) from Operations ( 661,077) ( 1,279,797) ( 2,274,638)
------------ ------------ ------------
Other Income and (Expense):
Interest Expense:
Discounts on Convertible Debt
(Note 6) ( 96,518) ( 82,729) ( 248,188)
Other Interest Expense ( 160,977) ( 97,726) ( 286,997)
----------- ------------ ------------
Total Interest Expense ( 257,495) ( 180,455) ( 535,185)
Interest Income 1,012
Loss on Disposal of Assets ( 17,212) ( 40,373) ( 57,585)
Gain on Extinguishment of Debt
(Note 7) 384,860 67,934 464,404
---------- ---------- ------------
Total Other Income and (Expense) 110,153 ( 152,894) ( 127,354)
---------- ----------- ------------
Net (Loss) ( 550,924) (1,432,691) ( 2,401,992)
Accumulated Deficit, Beginning ( 1,851,068) ( 418,377)
------------ ------------ ------------
Accumulated Deficit, Ending $(2,401,992) $(1,851,068) $(2,401,992)
=========== ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
NATIONAL POOLS CORPORATION
(A Development Stage Company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
Period from Inception (February 23, 1993) through
December 31, 1995
<TABLE>
<CAPTION>
Total
Common Accumulated Stockholders'
Stock Deficit Deficit
-------------- ------------- -------------
<S> <C> <C> <C>
Shares Issued in 1993 (Note 8) $ 10,326 $ 10,326
Net Loss for the period $( 418,377) ( 418,377)
-------------- ------------- -------------
Balance December 31, 1993 10,326 ( 418,377) ( 408,051)
Shares Issued in 1994 (Note 8) 29,600 29,600
Net Loss for the period (1,432,691) ( 1,432,691)
-------------- ------------- ------------
Balance December 31, 1994 39,926 (1,851,068) ( 1,811,142)
Shares Issued in 1995 (Note 8) 951,838 951,838
Net Loss for the period ( 550,924) ( 550,924)
------------- ------------ -----------
Balance December 31, 1995 $ 991,764 $(2,401,992) $(1,410,228)
============== ============= ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
NATIONAL POOLS CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOW
Year Ended December 31, 1995 and 1994, and
the Period From Inception (February 23, 1993) through
December 31, 1995
<TABLE>
<CAPTION>
Cumulative
from
Inception
through
Years Ended December 31, December 31,
1995 1994 1995
------------- ------------- -------------
<S> <C> <C> <C>
Cash Flow from Operating
Activities:
Net Loss $( 550,924) $( 1,432,691) $(2,401,992)
Adjustments to Reconcile Net
Income to Net Cash Provided
by Operating Activities:
Depreciation 21,230 19,374 41,518
Amortization of Intangible Assets 66,679 29,765 97,944
Amortization of Original Issue
Discount, Convertible Debt 96,518 82,729 248,188
Loss on Disposal of Assets 17,212 40,373 57,585
Gain from Extinguishment of Debt ( 384,860) ( 67,934) ( 464,404)
(Increase) Decrease in:
Employee Advance Receivable ( 15,679) ( 145) ( 17,965)
Deposits 10,281 ( 11,092) ( 3,811)
Increase (Decrease) in:
Accounts Payable 96,792 371,564 479,056
Wages Payable 337,364 138,957 523,901
Payroll Taxes Payable ( 4,412) 15,924 11,512
Accrued Interest Payable 160,975 95,685 284,954
------------ ------------- ------------
Net Cash Used by Operating
Activities ( 148,824) ( 717,491) (1,143,514)
Cash Flows from Investing
Activities:
Proceeds from Sale of Assets 8,400 8,400
Cash Paid for Fixed Assets ( 150,722) ( 168,465)
Cash Paid for Intangible Assets ( 9,675) ( 81,292) ( 100,967)
------------ ------------- ------------
Net Cash (Used by) Provided by
Investing Activities ( 1,275) ( 232,014) ( 261,032)
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
NATIONAL POOLS CORPORATION
(A Development Stage Company)
<TABLE>
<CAPTION>
Cumulative
from
Inception
through
Years Ended December 31, December 31,
1995 1994 1995
------------ ------------- ------------
<S> <C> <C> <C>
Cash Flow from Financing
Activities:
Issuance of Common Stock $ 94,341 $ 26,000 $ 129,903
Proceeds from Short-Term Debt 822,930 822,930
Proceeds from Stockholder Loans 67,800 101,640 464,352
------------ ------------- ------------
Net Cash Provided by
Financing Activities 162,141 950,570 1,417,185
------------ ------------- ------------
Net Increase (Decrease) in
Cash and Cash Equivalents 12,042 1,065 12,639
Cash and Cash Equivalents,
Beginning of Period 597 ( 468)
------------ ------------- ------------
Cash and Cash Equivalents,
End of Period $ 12,639 $ 597 $ 12,639
============ ============== =============
Supplemental Disclosures:
Noncash Investing Activities:
Wages Payable Converted to
Common Stock $ 17,372 $ 3,600 $ 22,498
Accounts Payable Converted to
Common Stock 4,748 4,748
Stockholder Loans and Related
Accrued Interest Converted to
Common Stock 835,377 853,377
------------ ------------- ------------
Total Noncash Investing
Activities $ 857,497 $ 3,600 $ 880,623
============ ============= ============
Noncash Financing Activities:
Accounts Payable Reduced by
Disposal (Return) of Assets $( 41,966) $ $( 41,966)
Intangible Assets Financed by
Accounts Payable 145,769 145,769
------------ ------------- ------------
Total Noncash Financing
Activities $( 41,966) $ 145,769 $ 103,803
============ ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
NATIONAL POOLS CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1995 and 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Activity
The Company was formed on February 23, 1993, for the purpose of
developing and operating the Hit-Lotto Project (Project). This Project
uses debit card, telecommunications, and computer technology to market
and distribute chances for lottery players to enter pools when they buy
Hit-Lotto cards.
Basis of Accounting
The financial statements have been prepared for a development stage
company in accordance with generally accepted accounting principles.
Fixed Assets
Equipment is shown at cost. When retired or otherwise disposed of, the
related carrying value and accumulated depreciation are removed from
the respective accounts. Any resulting profit or loss is reflected in
income. The Company provides for depreciation of equipment using the
straight-line method and lives of five to seven years.
Intangible Assets
The Company has capitalized proprietary software developed for the
Project. The Company provides for amortization of intangible assets
using the straight-line method over three years.
Convertible Debt Discount
The Company provides for amortization of the convertible debt discount
using the straight-line method over three years.
Cash Equivalents
For purposes of the statement of cash flows, cash equivalents include
the general operating checking and money market accounts.
2. DEVELOPMENT STAGE OPERATIONS
Since inception, the Company operations have been devoted primarily to
the formulation and design of telecommunications and computer
technology, including the Hit-Lotto debit card and Internet Web Page,
for the Project. In August, 1994, the Project was tested in San Diego,
and development is continuing. Advertising costs of $237,936 were
incurred during the test period and are included in research and
development expenses for the year ended December 31, 1994.
9
<PAGE>
NATIONAL POOLS CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1995 and 1994
3. ACCOUNTS PAYABLE
Accounts payable consist of the following:
1995
Rent $ 81,078
Legal Fees 74,742
Advertising 151,999
Intangible Asset 145,769
Miscellaneous 79,497
---------
Total $ 533,085
=========
4. INCOME TAXES
As of December 31, 1995, the Company has a federal loss carryforward of
$2,401,992 and a state loss carryforward of $1,200,996. The loss
carryforwards are available to reduce future years' taxable income (if
earned) and expire as follows:
Losses Expire
December 31, Federal State
------------- ----------- -----------
2008 $ 418,376 $ 209,188
2009 1,432,692 716,346
2010 550,924 275,462
----------- -----------
$ 2,401,922 $ 1,200,996
=========== ===========
5. NOTE PAYABLE
During 1994 the Company issued a note payable to Providence Investment
Group with an interest rate based on the prime rate plus four points
(12.65% at December 31, 1995). The note is payable upon demand and is
unsecured.
6. PAYABLE TO STOCKHOLDERS
On March 18, 1993, the Company issued convertible debt at a 50%
discount, a 7% interest rate, and a March 1, 1996, maturity date in
connection with a sale of common stock.
During 1993 and 1994, the Company issued notes payable with a 10%
interest rate and a one-year maturity. During 1994 and 1995, the
Company issued notes payable with a 12.5% interest rate and a December
31, 1995, maturity date.
As shown in Note 8, all convertible debt, notes payable to
stockholders, and related accrued interest were converted to
15,257,579 shares of common stock on December 31, 1995. In the event
the Company does not obtain other financing by December 31, 1996, the
shares issued in lieu of payment of stockholder debt shall become void
and interest shall continue to accrue, effective January 1, 1996,
under all indebtedness otherwise converted.
10
<PAGE>
7. GAIN ON EXTINGUISHMENT OF DEBT
As discussed in Note 8, the Company's employees agreed to accept
shares of common stock in lieu of wages. The stock issued was valued
less than wages owed which resulted in gains of $339,834, $67,934, and
$419,378 for the years ended December 31, 1995 and 1994 and since
inception, respectively.
As discussed in Note 10, a vendor and related party agreed to accept
shares of common stock in lieu of payment on accounts payable. The
stock issued was valued less than amounts owed which resulted in a
gain of $45,026 for the year ended December 31, 1995.
8. CAPITAL TRANSACTIONS
Common Stock
The following schedule includes the date and number of common shares
issued for cash and other considerations.
<TABLE>
<CAPTION>
Shares
Authorized Shares
and Unissued Issued Amount
------------ --------- -----------
<S> <C> <C> <C>
Shares authorized,
February 23, 1993 3,000
Increase in shares
authorized, September 23,
1993 9,997,000
Shares issued throughout
year at $.005 per share ( 1,912,398) 1,912,398 $ 9,562
Shares issued to employees
during September through
November 1993, at $.0025
per share ( 305,533) 305,533 764
------------ ---------- -----------
Balance December 31, 1993 7,782,069 2,217,931 10,326
Shares issued during
September, 1994, at $.50
per share ( 50,000) 50,000 25,000
Shares issued during
December, 1994, at $.05
per share ( 20,000) 20,000 1,000
Shares issued to employees
throughout the year at
$.0025 per share ( 1,439,875) 1,439,875 3,600
------------- ----------- -----------
Balance December 31, 1994 6,272,194 3,727,806 39,926
</TABLE>
11
<PAGE>
NATIONAL POOLS CORPORATION
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1995 and 1994
8. CAPITAL TRANSACTIONS (CONTINUED)
<TABLE>
<CAPTION>
Shares
Authorized Shares
and Unissued Issued Amount
------------- ---------- ---------
<S> <C> <C> <C>
Balance December 31, 1994 6,272,194 3,727,806 39,926
Shares issued during April,
1995, at $.0465 per share ( 51,910) 591,910 27,500
Shares issued during April,
1995, in lieu of advance
payable to stockholder
at $.0465 per share ( 1,560,490) 1,560,490 72,500
Shares issued January through
May, 1995, at $.05 per share ( 790,841) 790,841 39,541
Increase in shares
authorized, December 21,
1995 25,000,000
Shares issued to employees
during July, 1995, in lieu
of payment of wages at
$.0025 per share ( 6,948,878) 6,948,878 17,372
Shares issued during December,
1995, in lieu of accounts
payable to stockholder at
$.0025 per share ( 205,500) 205,500 514
Shares issued August through
December, 1995, at $.05
per share ( 546,000) 546,000 27,300
Shares issued during November
and December, 1995, in lieu
of employee expenses at $.05
per share ( 74,685) 74,685 3,734
Shares issued during December,
1995, in lieu of accounts
payable at $.05 per share ( 10,000) 10,000 500
Shares issued during December,
1995, for extinguishment of
stockholder debt at $.05
per share ( 15,257,579) 15,257,579 762,877
-------------- ---------- ----------
Balance December 31, 1995 5,826,311 29,713,689 $ 991,764
============== ========== ==========
</TABLE>
Preferred Stock
On September 23, 1993, the Company authorized 5,000,000 shares of preferred
stock which remain unissued as of December 31, 1995.
12
<PAGE>
NATIONAL POOLS CORPORATION
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1995 and 1994
8. CAPITAL TRANSACTIONS (CONTINUED)
Shares Issued for Extinguishment of Stockholder Debt
In the event the Company does not obtain other financing by December
31, 1996, 15,257,579 shares issued for extinguishment of stockholder
debt shall become void and interest shall continue to accrue, effective
January 1, 1996, under all indebtedness otherwise converted.
9. STOCK OPTIONS OUTSTANDING
On January 20, 1995, one stockholder was granted an option to purchase
3,744,000 shares of common stock at $.05 per share. The option expires
January 30, 1997.
10. RELATED PARTY TRANSACTIONS
Included in operating expenses are $37,294, $21,138, and $67,742 for
the years ended December 31, 1995 and 1994 since inception,
respectively, for lobbying expenses provided by a company owned by a
5.08% stockholder. Included in the gain on extinguishment of debt is
$45,026 formerly owed to this company. Additionally, $514 of accounts
payable to this company was converted to 205,500 shares of common stock
in 1995.
11. SUBSEQUENT EVENT
On June 13, 1996, the President, as an individual, entered into an
option agreement to acquire 250,000 shares of convertible preferred
stock in NuOasis Gaming, Inc. (NuOasis) at $13.00 per share
($3,250,000). The stock is convertible to 19,500,000 shares of common
stock, or 39% of voting stock in NuOasis. The options are assignable,
and any profits earned through assignment will be used to purchase
additional shares of NuOasis common stock.
The preferred shares will be purchased from a single stockholder who in
turn has agreed to use the proceeds to purchase a subsidiary from
NuOasis, and to obtain a release from liabilities from NuOasis.
This transaction is contingent upon NuOasis' acquisition of the Company
for consideration of $1,200,000 in notes and 200,000 shares of common
stock. Subsequent to the acquisition, the company would be a
wholly-owned subsidiary of NuOasis with $3,000,000 working capital
available for continuing operations.
The acquisition and required increase in authorized shares of common
stock is subject ot NuOasis stockholder approval, and to the exercise
of the options.
13
<PAGE>
12. GOING CONCERN
As shown in the accompanying financial statements, the Company has
incurred a $2,401,992 deficit since inception and as of December 31,
1995, the Company's current liabilities exceeded its current assets by
$1,581,827. Liens of $108,498 have been filed by two creditors.
Management of the Company is currently negotiating settlement payments
for several accounts payable balances.
The ability of the Company to continue as a going concern is dependent
on the ability to obtain additional working capital or equity
investment, as well as to be successful in developing a product that
can be marketed profitably. Should the Company not receive additional
funding it is uncertain whether the Company has the ability to
continue. The financial statements do not include any adjustments that
might be necessary if the Company is unable to continue as a going
concern.
14
<PAGE>
