FORM 8-K/A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934
Date of Report (Date of earliest event reported): December 24, 1996
NuOasis Gaming, Inc.
(Exact name of registrant as specified in its charter.)
Delaware
(State of incorporation or organization)
33-73240
(Commission File Number)
95-4176781
(I.R.S. Employee Identification No.)
2 Park Plaza, Suite 470, Irvine, California
(Address of principal executive offices)
92614
(Zip Code)
Registrant's telephone number, including area code: (714) 833-5382
(Former name or former address, if changed since last report)
Total number of pages: 29
[NUOGAM\8KA\NPC8K2.CLN]
<PAGE>
Item 1. Changes in Control of Registrant
N/A
Item 2. Acquisition or Disposition of Assets
Pursuant to a Stock Purchase Agreement dated December 19, 1996
with the shareholders of National Pools Corporation("NPC") (the "Agreement"),
the Registrant acquired 29,713,689 shares of NPC representing 100% of the issued
and outstanding shares of NPC.
The transaction closed on December 24, 1996 whereupon the
Registrant issued a series of Convertible Promissory Notes in the aggregate
amount of approximately $1,200,000 and agreed to issue 1,000,000 shares of
common stock to the shareholders of NPC when there are sufficient authorized
shares available for issuance.
The terms and conditions of the agreement were determined as a
result of arms length negotiations between unrelated parties.
Item 3. Bankruptcy or Receivership
N/A
Item 4. Changes in Registrant's Certifying Accountant
N/A
Item 5. Other Events
N/A
Item 6. Change in Registrant's Directors
On November 25, 1996 the Board elected Joseph Monterosso to
fill one of the vacancies on the Board of Directors.
[NUOGAM\8KA\NPC8K2.CLN]
2
<PAGE>
Item 7. Financial Statements and Exhibits
(a) Financial Statements
Set forth on pages 6 through 19 are the financial
statements of the business acquired required to be
set forth in the Registrant's Current Report. This
current Report on Form 8-K/A amends the Form 8-K
filed on January 15, 1997. The following are
included:
Balance Sheet - As of September 30, 1996.
Statement of Operations for the three and
nine months ended September 30, 1996 and for
the period from February 23, 1993
(inception) through September 30, 1996.
Statement of Stockholders' Equity for the
three and nine months ended September 30,
1996 and for the period from February 23,
1993 (inception) through September 30, 1996.
Statement of Cash Flows for the three and
nine months ended September 30, 1996 and for
the period from February 23, 1993
(inception) through September 30, 1996.
Notes to Financial Statements.
(b) Proforma Financial Information
Set forth on pages 20 through 28 is pro forma
financial information required to be set forth in the
Registrant's Current Report. This current Report on
Form 8- K/A amends the Form 8-K filed on January 15,
1997. The following are included:
Pro Forma Consolidated Balance Sheet
(Unaudited) - September 30, 1996.
Pro Forma Consolidated Statement of
Operations (Unaudited) for the three months
ended September 30, 1996 and for the year
ended June 30, 1996.
Notes to Pro Forma Consolidated Financial
Statements (Unaudited).
(c) Exhibits
1. Stock Purchase Agreement dated December 19,
1996 (incorporated by reference to Exhibit 1
to Form 8-K filed on January 15, 1997 (SEC
File No. 000-18224).
[NUOGAM\8KA\NPC8K2.CLN]
3
<PAGE>
2. Director Acceptance letter by Joseph
Monterosso (incorporated by reference to
Exhibit 2 to Form 8-K filed on January 15,
1997 (SEC File No. 000-18224).
Item 8. Change in Registrant's Fiscal Year
N/A
[NUOGAM\8KA\NPC8K2.CLN]
4
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
NuOasis Gaming, Inc.
(Registrant)
Dated: March 4 , 1997 By: /s/ Joseph Monterosso
----------------------------------
Joseph Monterosso,
President and Director
[NUOGAM\8KA\NPC8K2.CLN]
5
NATIONAL POOLS CORPORATION
(A Development Stage Company)
FINANCIAL STATEMENTS
Three Months Ended September 30, 1996 and 1995, And For The
Period Cumulative From Inception (February 23, 1993) through
September 30, 1996
<PAGE>
<TABLE>
<CAPTION>
NATIONAL POOLS CORPORATION
(A Development Stage Company)
BALANCE SHEETS
September 30, December 31,
1996 1995
(Unaudited) (Audited)
------------ -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 15,211 $ 12,639
Employee Advances Receivable 30,939 17,965
------------ -----------
Total Current Assets 46,150 30,604
------------ -----------
Fixed Assets:
Equipment 89,090 89,090
Less Accumulated Depreciation 39,448 26,218
------------ -----------
Net Fixed Assets 49,642 62,872
------------ -----------
Intangible Assets (Note 7):
Software 200,036 200,036
Less Accumulated Amortization 145,124 95,120
------------ -----------
Net Intangible Assets 54,912 104,916
------------ -----------
Deposits 6,573 3,811
------------ -----------
TOTAL ASSETS $ 157,277 $ 202,203
============ ===========
</TABLE>
See accountants' compilation report and accompanying notes
<PAGE>
<TABLE>
<CAPTION>
NATIONAL POOLS CORPORATION
(A Development Stage Company)
BALANCE SHEETS
(Continued)
September 30, December 31,
1996 1995
(Unaudited) (Audited)
------------ -----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts Payable (Note 3) $ 616,922 $ 533,085
Accrued Interest Payable (Note 5) 255,819 162,116
Wages Payable 195,288 82,788
Payroll Taxes Payable 13,291 11,512
Notes Payable (Note 5) 929,180 822,930
------------ -----------
Total Current Liabilities 2,010,500 1,612,431
------------ -----------
Total Liabilities 2,010,500 1,612,431
------------ -----------
Stockholders' Deficit:
Common Stock (Note 6) 991,764 991,764
Preferred Stock (Note 6)
Deficit Accumulated during the
Development Stage (2,844,987) (2,401,992)
------------ ------------
Total Stockholders' Deficit (1,853,223) (1,410,228)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
DEFICIT $ 157,277 $ 202,203
============ =============
</TABLE>
See accountants' compilation report and accompanying notes
<PAGE>
<TABLE>
<CAPTION>
NATIONAL POOLS CORPORATION
(A Development Stage Company)
STATEMENTS OF OPERATIONS AND ACCUMULATED
DEFICIT Three Months and Nine Months Ended September 30,
1996 and 1995, and for the
Period Cumulative from Inception (February 23, 1993) through September 30, 1996
Cumulative
from
Inception
Three Months Ended Nine Months Ended through
September 30, September 30, September 30,
-------------------------------- -------------------------------- -------------
1996 1995 1996 1995 1996
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Operating Expenses $( 136,788) $( 47,254) $( 296,341) $( 223,489) $( 1,315,604)
Research and Development (Note 2) ( 5,178) ( 39,004) ( 52,951) ( 177,602) ( 1,308,326)
------------- ------------- ------------- ------------- -------------
Net (Loss) from Operations ( 141,966) ( 86,258) ( 349,292) ( 401,091) ( 2,623,930)
------------- ------------- ------------- ------------- -------------
Other Income and (Expense):
Interest Expense:
Discounts on Convertible Debt
(Note 6) ( 20,682) ( 62,046) ( 248,188)
Other Interest Expense ( 32,238) ( 40,324) ( 93,703) ( 120,812) ( 380,700)
------------- ------------- ------------- ------------- -------------
Total Interest Expense ( 32,238) ( 61,006) ( 93,703) ( 182,858) ( 628,888)
Interest Income 1,012
Loss on Disposal of Assets ( 7,490) ( 57,585)
------------- ------------- ------------- ------------- -------------
Total Other Income and (Expense) ( 32,238) ( 61,006) ( 93,703) ( 190,348) ( 685,461)
------------- ------------- ------------- ------------- -------------
Net (Loss) Before Extraordinary
Item ( 174,204) ( 147,264) ( 442,995) ( 591,439) ( 3,309,391)
Benefit from Extinguishment
of Debt 464,404
Net (Loss) ( 174,204) ( 147,264) ( 442,995) ( 591,439) ( 2,844,987)
</TABLE>
See accountants' compilation report and accompanying notes
<PAGE>
<TABLE>
<CAPTION>
NATIONAL POOLS CORPORATION
(A Development Stage Company)
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
(Continued)
Cumulative
from
Inception
Three Months Ended Nine Months Ended through
September 30, September 30, September 30,
-------------------------------- -------------------------------- -------------
1996 1995 1996 1995 1996
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net (Loss) ( 174,204) ( 147,264) ( 442,995) ( 591,439) ( 2,844,987)
Accumulated Deficit, Beginning ( 2,670,783) ( 2,295,243) ( 2,401,992) ( 1,851,068)
------------- ------------- ------------- ------------- -------------
Accumulated Deficit, Ending $( 2,844,987) $( 2,442,507) $( 2,844,987) $( 2,442,507) $( 2,844,987)
============= ============= ============= ============= =============
Per Common Share
Net (Loss) Per Common Share $( .01) $( .01) $( .01) $( .08)
Weighted Average Common Shares
Outstanding 29,713,689 13,925,592 29,713,689 7,483,777
=========== ========== ========== =========
</TABLE>
See accountants' compilation report and accompanying notes
<PAGE>
<TABLE>
<CAPTION>
NATIONAL POOLS CORPORATION
(A Development Stage Company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
Period from Inception (February 23, 1993) through September 30, 1996
Total
Common Accumulated Stockholders'
Stock Deficit Deficit
------------ ------------ ------------
<S> <C> <C> <C>
Shares Issued in 1993 (Note 6) $ 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 6) 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 6) 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)
Net Loss for the period ( 442,995) ( 442,995)
------------ ------------ ------------
Balance September 30, 1996 $ 991,764 $(2,844,987) $(1,853,223)
============ ============ ============
</TABLE>
See accountants' compilation report and accompanying notes
<PAGE>
<TABLE>
<CAPTION>
NATIONAL POOLS CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOW
Three Months and Nine Months Ended September 30, 1996 and 1995, and
the Period From Inception (February 23, 1993) through September 30, 1996
Cumulative
from
Inception
Three Months Ended Nine Months Ended through
September 30, September 30, September 30,
-------------------------------- -------------------------------- -------------
1996 1995 1996 1995 1996
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Cash Flow from Operating
Activities:
Net Loss $( 174,204) $( 147,264) $( 442,995) $( 591,439) $( 2,844,987)
Adjustments to Reconcile Net
Income to Net Cash Provided
by Operating Activities:
Depreciation 4,410 8,992 13,230 26,976 54,748
Amortization of Intangible Assets 16,668 50,004 50,010 147,948
Amortization of Original Issue
Discount, Convertible Debt 20,682 62,047 248,188
Loss on Disposal of Assets 7,490 57,585
Gain from Extinguishment of Debt ( 464,404)
(Increase) Decrease in:
Employee Advances Receivable ( 8,359) ( 5,581) ( 12,974) ( 6,279) ( 30,939)
Deposits ( 2,762) 610 ( 2,762) 10,281 ( 6,573)
Increase (Decrease) in:
Accounts Payable 54,055 4,901 83,837 94,397 562,893
Wages Payable 37,500 36,725 112,500 109,151 636,401
Payroll Taxes Payable 1,075 ( 4,510) 1,779 ( 795) 13,291
Accrued Interest Payable 32,237 40,244 93,703 120,731 378,657
------------ ------------- ------------- ------------- ------------
Net Cash Used by Operating
Activities ( 39,380) ( 28,531) ( 103,678) ( 117,430) ( 1,247,192)
</TABLE>
See accountants' compilation report and accompanying notes
<PAGE>
<TABLE>
<CAPTION>
NATIONAL POOLS CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOW
(Continued)
Cumulative
from
Inception
Three Months Ended Nine Months Ended through
September 30, September 30, September 30,
------------------------------- -------------------------------- ------------
1996 1995 1996 1995 1996
------------ ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Cash Flows from Investing
Activities:
Proceeds from Sale of Assets $ $ $ $ 8,000 8,400
Cash Paid for Fixed Assets ( 168,465)
Cash Paid for Intangible
Assets ( 100,967)
------------ ------------- ------------- ------------- ------------
Net Cash (Used by) Provided by
Investing Activities 8,000 ( 261,032)
Cash Flows from Financing
Activities:
Issuance of Common Stock 5,000 75,167 129,903
Proceeds from Short-Term Debt 822,930
Proceeds from Stockholder Loans
(Note 5) 33,537 21,650 106,250 35,602 570,602
------------- ------------- ------------- ------------- ------------
Net Cash Provided by
Financing Activities 33,537 26,650 106,250 110,769 1,523,435
------------- ------------- ------------- ------------- ------------
Net Increase (Decrease) in
Cash and Cash Equivalents ( 5,843) ( 1,881) 2,572 1,339 15,211
Cash and Cash Equivalents,
Beginning of Period 21,054 3,817 12,639 597
------------- ------------- ------------- ------------ ------------
Cash and Cash Equivalents,
End of Period $ 15,211 $ 1,936 $ 15,211 $ 1,936 $ 15,211
============= ============= ============= ============= ============
</TABLE>
See accountants' compilation report and accompanying notes
<PAGE>
<TABLE>
<CAPTION>
NATIONAL POOLS CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOW
(Continued)
Cumulative
from
Inception
Three Months Ended Nine Months Ended through
September 30, September 30, September 30,
-------------------------------- --------------------------------- -------------
1996 1995 1996 1995 1996
------------- -------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Supplemental Disclosures:
Noncash Investing Activities:
Accounts Payable Reduced by
Disposal (Return) of Assets $ $ $ $( 41,966) $( 41,966)
Intangible Assets Financed by
Accounts Payable 145,769
Total Noncash Investing
Activities $ $ $ $( 41,966) $ 103,803
============= ============= ============= ============= ============
Noncash Financing Activities:
Wages Payable Converted to
Common Stock $ $ $ $ $ 22,498
Accounts Payable Converted to
Common Stock 4,748
Stockholder Loans and Related
Accrued Interest Converted to
Common Stock 853,377
Total Noncash Financing
Activities $ $ $ $ $ 880,623
============= ============= ============= ============= ============
</TABLE>
See accountants' compilation report and accompanying notes
<PAGE>
NATIONAL POOLS CORPORATION
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
September 30, 1996
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, Internet website, 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, subject to periodic
review of impairment whenever events or changes in circumstances
indicate that the carrying amount of the asset may not be recoverable.
Convertible Debt Discount
The Company provides for amortization of the convertible debt discount
using the straight-line method over three years.
Research and Development Costs
The Company charges all research and development costs, including direct
and indirect costs, to an expense when incurred.
Net Loss Applicable Per Common Share
Per share amounts are calculated based on the weighted average number of
common shares outstanding during the periods of net loss.
Cash Equivalents
For purposes of the statement of cash flows, cash equivalents include
the general operating checking and money market accounts.
<PAGE>
NATIONAL POOLS CORPORATION
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
September 30, 1996
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.
3. ACCOUNTS PAYABLE
Accounts payable consist of the following at September 30, 1996:
Rent $ 81,078
Legal Fees 129,357
Advertising 151,999
Proprietary Software 145,769
Accounting 35,126
Miscellaneous 73,593
---------
Total $ 616,922
=========
4. INCOME TAXES
As of September 30, 1996, the Company has a federal loss carryforward of
$2,844,987 and a state loss carryforward of $1,422,493. 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
2011 442,995 221,497
----------- -----------
$ 2,844,987 $ 1,422,493
=========== ===========
5. NOTES PAYABLE
Included in notes payable at September 30, 1996, are the following:
Payable to Providence on demand,
prime + 4% (12.25% at September 30, 1996) $ 822,930
Payable to stockholders, 10%, revolving
three month maturity 106,250
---------
$ 929,180
<PAGE>
NATIONAL POOLS CORPORATION
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
September 30, 1996
6. CAPITAL TRANSACTIONS
Common Stock
The following schedule includes the date and number of common shares
issued for cash and other considerations.
Shares
Authorized Shares
and Unissued Issued Amount
------------ ---------- ---------
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
Shares issued during April,
1995, at $.0465 per share ( 591,910) 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 29,
1995 25,000,000
<PAGE>
NATIONAL POOLS CORPORATION
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
September 30, 1996
6. CAPITAL TRANSACTIONS (Continued)
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 September 30, 1996 5,286,311 29,713,689 $ 991,764
============ ========== =========
Preferred Stock
On September 23, 1993, the Company authorized 5,000,000 shares of
preferred stock which remain unissued as of September 30, 1996.
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.
7. INTANGIBLE ASSETS AMORTIZATION
Unamortized intangible assets were $54,912 at September 30, 1996.
Amortization expense was $16,668, $50,004, and $147,948 for the three
months and nine months ended September 30, 1996 and since inception,
respectively. Accumulated amortization was $145,124 at September 30,
1996.
<PAGE>
NATIONAL POOLS CORPORATION
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
September 30, 1996
8. 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.
9. 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 majority of the proceeds to purchase a
subsidiary from NuOasis, and to obtain a release from liabilities from
NuOasis.
9. SUBSEQUENT EVENT (Continued)
The preferred share option exercise is contingent upon NuOasis'
acquisition of the Company for consideration of $1,200,000 in
convertible notes and 1,000,000 shares of common stock when available
for issuance. Subsequent to the acquisition and the preferred share
option exercise, the Company would be a wholly-owned subsidiary of
NuOasis with $3,000,000 working capital available for continuing
operations.
The conversion of the NuOasis preferred shares following the exercise of
the preferred share option is conditioned on an increase in the
authorized shares of NuOasis common stock. The required increase in
authorized shares of common stock is subject to NuOasis stockholder
approval.
10. GOING CONCERN
As shown in the accompanying financial statements, the Company has
incurred a $2,844,987 deficit since inception and, as of September 30,
1996, the Company's current liabilities exceeded its current assets by
$1,964,350. 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 its 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.
<PAGE>
NUOASIS GAMING, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
AND STATEMENTS OF OPERATIONS
(Unaudited)
To Reflect the
Acquisition of
National Pools Corporation
The following unaudited pro forma consolidated balance sheet as of September 30,
1996 and the unaudited pro forma consolidated statement of operations for the
three months ended September 30, 1996, give effect to the acquisition of all the
outstanding shares of National Pools Corporation, ("NPC") by NuOasis Gaming
Inc., ("NuOasis") which acquisition was completed on December 24, 1996, and
other related transactions which are expected to occur in the near future
(collectively, the "Transaction"). The pro forma consolidated information is
based on the historical financial statements of NuOasis Gaming and NPC and
includes the effect of the acquisition under the purchase method of accounting
and the assumptions and adjustments set forth in the accompanying notes to the
pro forma consolidated financial statements. The pro forma consolidated balance
sheet presents the financial position of NuOasis Gaming as if it had acquired
NPC as of September 30, 1996. The pro forma consolidated statement of operations
presents the result of operations of NuOasis Gaming as if it had acquired NPC as
of July 1, 1995.
The unaudited pro forma consolidated balance sheet as of September 30, 1996 and
the unaudited pro forma consolidated statement of operations for the year ended
June 30, 1996 and for the three months ended September 30, 1996 may not be
indicative of the results which may be obtained in the future or that actually
would have occurred if the Transaction closed on July 1, 1995, and the
combination had been in effect on the dates indicated. These unaudited pro forma
consolidated financial statements should be read in conjunction with the NuOasis
Gaming audited financial statements and notes included in its Annual Report on
Form 10-KSB for the fiscal year ended June 30, 1996, and the NPC's audited
financial statements and notes contained elsewhere herein.
<PAGE>
<TABLE>
<CAPTION>
NUOASIS GAMING, INC.
PRO FORMA CONSOLIDATED BALANCE SHEETS
As of September 30, 1996
(Unaudited)
Pro Forma Pro Forma
NuOasis NPC Adjustments Totals
---------------- ---------------- ------------------------------------ -----------------
<S> <C> <C> <C> <C>
ASSETS
Cash $ 2,022 $ 15,211 $ 1,765,000 (E) $ 3,017,233
1,235,000 (B)
Employee Advances - 30,939 - 30,939
Fixed Assets, Net - 49,642 - 49,642
Intangibles, Net - 54,912 - 54,912
835,999 (A)
(835,999) (D)
Investment in NPC - - 1,325,000 (A) -
(1,325,000) (A)
Other Assets - 6,573 - 6,573
----------------- ---------------- --------------------- -----------------
Total Assets $ 2,022 $ 157,277 $ 3,000,000 $ 3,159,299
================ ================ ===================== =================
LIABILITIES &
STOCKHOLDERS' DEFICIT
Current Liabilities $ 79,436 $ 1,081,320 $ (59,436) (F) $ 1,101,320
Due to Affiliates 760,198 - (79,025) (F) 2,221,588
(224,585) (E)
1,765,000 (A)
Notes Payable 1,200,000 (A)
- 929,180 125,000 (A) 2,254,180
----------------- ---------------- --------------------- -----------------
Total Liabilities 839,634 2,010,500 2,726,954 5,577,088
Stockholders' Deficit
Preferred Stock Series B 501,700 - (501,700) (A) 501,700
501,700 (A)
Common Stock 300,000 991,764 (300,000) (A) 300,000
300,000 (A)
(991,764) (A)
1,368,000 (B)
Stockholders' Receivable (1,326,613) - (523,300) (A) 41,387
(11,852,896) (A)
190,064 (A)
Additional Paid in Capital 12,376,196 - 12,688,895 (A) 190,064
138,461 (F)
(835,999) (B)
91,585 (B)
Accumulated Deficit (12,688,895) (2,844,987) (3,450,940)
----------------- ---------------- ------------------
Total Stockholders' Deficit (837,612) (1,853,223) 273,046 (2,417,789)
----------------- ---------------- --------------------- ------------------
Total Liabilities and
Stockholders' Equity $ 2,022 $ 157,277 $ 3,000,000 $ 3,159,299
================= ================ ===================== =================
</TABLE>
See Accompanying Notes to Pro Forma Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
NUOASIS GAMING, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended June 30, 1996
(Unaudited)
Pro Forma Pro Forma
NuOasis NPC Adjustments Totals
--------------- -------------- -------------------------- -----------------
<S> <C> <C> <C> <C>
Operating Expenses $ 1,087,987 $ 406,524 $ - $ 1,494,511
Write-off Goodwill - - 835,999 (A)(D) 835,999
Research & Development - 195,762 - 195,762
---------------- --------------- ------------------ -----------------
Total operating expenses 1,087,987 602,286 835,999 2,526,272
Interest Expense - 227,095 96,000 (C) 323,095
Loss (gain) on Disposal of Asset - 12,684 (91,585) (B) (78,901)
---------------- --------------- ------------------ -----------------
Net (loss) income before
extraordinary item (1,087,987) (842,065) (840,414) (2,770,466)
Extraordinary item
Extinguishment of Debt Benefit - 384,860 138,461 (F) 523,321
---------------- --------------- ------------------ -----------------
Net Income (loss) $ (1,087,987) $ (457,205) $ (701,953) $ (2,247,145)
================ =============== ================= ==================
Pro forma net loss per share $ (.04) $ N/A $ N/A $ (.08) (G)
================ =============== ================= ==================
Pro forma weighted-average common
shares outstanding 28,301,697 N/A N/A 28,301,697 (G)
================ =============== ================= =================
</TABLE>
See Accompanying Notes to Pro Forma Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
NUOASIS GAMING, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended September 30, 1996
(Unaudited)
Pro Forma Pro Forma
NuOasis NPC Adjustments Totals
----------------- ---------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Operating Expenses $ 189,067 $ 136,788 $ - $ 325,855
Write-off Goodwill - - - -
Research & Development - 5,178 - 5,178
----------------- ----------------- ----------------- ---------------
Total operating expenses 189,067 141,966 - 331,033
Interest Expense - 32,238 24,000 (C) 56,238
----------------- ----------------- ----------------- ---------------
Net Income $ (189,067) $ (174,204) $ (24,000) $ (387,271)
================= ================= ================= ================
Pro forma net loss per share $ (.01) $ N/A $ N/A $ (.01) (G)
================= ================= ================= ================
Pro forma weighted-average
common shares outstanding 30,000,000 N/A N/A 30,000,000 (G)
================= ================= ================= ================
</TABLE>
See Accompanying Notes to Pro Forma Consolidated Financial Statements.
<PAGE>
NUOASIS GAMING, INC.
Notes to Pro Forma Financial Statements
(Unaudited)
Note 1. Basis of Presentation
The unaudited pro forma consolidated balance sheet as of September 30, 1996 and
the unaudited pro forma consolidated statement of operations for the three
months ended September 30, 1996 of NuOasis reflect the acquisition of NPC and
the unaudited pro forma consolidated financial statements and operations of
NuOasis as if it had acquired NPC as of July 1, 1995.
These unaudited pro forma consolidated financial statements do not purport to be
indicative of the results that actually would have been obtained if the two
companies and their operations had actually been combined at July 1, 1995, and
this presentation is not intended to be a projection of future results or
trends.
These proforma financial statements are presented assuming that NPC is the
accounting acquiror. As a result of the Transaction, the shareholders of NPC
will become the largest NuOasis equity ownership group, and the control group of
NPC will continue in control of the surviving entity.
These proforma financial statements are presented assuming that all
contingencies surrounding the Transaction, described in Note 2 herein, have
occurred.
Note 2. Background and Overview of the Transaction
NPC was formed in 1993 for the purpose of developing and operating a system to
facilitate participation in group play in state lotteries in the United States
and the lotteries of foreign countries. The program developed by NPC was named
"Hit-Lotto". The Hit-Lotto program uses debit cards, telecommunications,
Internet Website, and proprietary computer software to organize and market
lottery pools for lottery players who participate in various state lotteries.
Since inception NPC's operations have been devoted primarily to the formulation
and design of the telecommunication and computer technology to support the
Hit-Lotto program. In August, 1994, Hit-Lotto was tested in the San Diego
market: development is ongoing.
On June 13, 1996 Nona Morelli's II, Inc. ("Nona"), the controlling parent of
NuOasis, granted an option to Joseph Monterosso, the President and Chief
Executive Officer of NPC ("Monterosso"), to acquire 250,000 Series B Preferred
Shares (the "Series B Shares") owned by Nona. Such option is exercisable at a
price of $13.00 per share. Monterosso has subsequently conditionally assigned
his rights under the option as to 95,000 Series B Shares to certain shareholders
of NPC and other investors, leaving him with rights under the option to purchase
155,000 Series B Shares.
On December 19, 1996 NuOasis entered into a Stock Purchase Agreements with each
of the shareholders of NPC pursuant to which it agreed to issue a series of
Secured Promissory Notes (the "Notes") in the aggregate amount of $1,200,000 and
1,000,000 shares of its common stock to the NPC shareholders in exchange for all
of the issued and outstanding shares of capital stock of NPC. The Notes are
convertible into a total of 241,900,000 shares of NuOasis' common stock
contingent upon NPC's operations achieving certain financial goals over the next
several fiscal years. The Notes are non-recourse to NuOasis and secured by the
assets of NPC, bear interest at 8% per annum, and are due and payable on May 31,
1999. Under the terms of the Notes, for every $250,000 of net annual operating
income achieved by NPC, $7,500 in principal amount of the Notes may be converted
into 1,511,875 shares of restricted NuOasis common stock. As part of this
<PAGE>
NUOASIS GAMING, INC.
Notes to Pro Forma Financial Statements
(Unaudited)
acquisition, Nona and NuOasis agreed to a debt assumption agreement whereby all
NuOasis debt in excess of $20,000 on December 24, 1996 is assumed by Nona except
for amounts owed to NuVen Advisors, Inc, an affiliate, and Fred G. Luke,
Chairman and former President, which are to be converted into shares of NuOasis
common stock: the conversion rate is based upon the prevailing market price on
the date of the next NuOasis Shareholder's Meeting.
The audited financial statements of NPC are included herein as an exhibit. Such
audit reports explain that NPC's financial statements have been prepared
assuming that NPC will continue as a going concern and that such statements do
not include any adjustments that may result in the event it is unable to do so.
The audited financial statements of NPC also reflect that it has incurred
operating losses of $2,401,992 from its inception and had negative working
capital of $1,581,827, as of December 31, 1995. Unaudited financial statements
of NPC for the quarter ended September 30, 1996 are also included elsewhere
herein at Part (a) to this Report.
Subject to the exercise of the Option and the sale by Nona of the Series B
Shares, NuOasis has agreed to fund NPC's future operations. Exercise of the
Option is contingent upon the approval of an amendment to the NuOasis
Certificate of Incorporation allowing for its authorized capital stock to be
increased to have sufficient shares of its common stock available for conversion
of the Notes. Upon such Amendment to the NuOasis Certificate of Incorporation,
and the acquisition of the Series B Shares, there will be a change of control of
NuOasis. If the NuOasis shareholders do not approve such Amendment to the
Certificate of Incorporation it is unlikely that the Series B Shares will be
acquired pursuant to the Option and, in this event, NPC may not have sufficient
working capital to "roll out" the Hit-Lotto program on a commercial basis, and
there will not be a change of control of NuOasis. The Company estimates the
minimum dollar amount to roll out the Hit Lotto project on a commercial basis is
$1,235,000; however, full implementation on a more rapid scale would require
$3,000,000 The Transaction is divided into three phases and summarized as
follows:
Phase I : Acquisition of NPC, which closed on December 24, 1996
Phase II: Exercise of 95,000 Series B Shares
Holders of the Option exercise the option to purchase 95,000
Series B Shares, at $13.00 per share, by payment to Nona of
$1,235,000. The 95,000 Series B Shares so acquired may then
immediately be converted into 7,410,000 shares of restricted
NuOasis common stock at the election of the holders.
Subject to the exercise of the Option as to the 95,000 Series B
Shares, NuOasis has agreed to sell its wholly-owned subsidiary,
CMA, to Nona for $1,235,000. Upon the sale of CMA, NuOasis
intends to contribute most if not all of the proceeds of the
sale of CMA to NPC, its wholly owned subsidiary, for working
capital.
Phase III: Exercise of 155,000 Series B Shares
Following the initial exercise of 95,000 Series B Shares, if
such exercise occurs, there will be remaining 155,000 Series B
Shares available under the Option. If exercised, the 155,000
Series B Shares could immediately be converted into 12,090,000
<PAGE>
NUOASIS GAMING, INC.
Notes to Pro Forma Financial Statements
(Unaudited)
common shares. The exercise and sale of such remaining Series B
Shares will result in an additional $2,015,000 in proceeds to
Nona which Nona intends to utilize to satisfy any intercompany
payables owed to NuOasis of up to $1,765,000 as of the date
Phase III occurs. No amounts are owed by Nona to NuOasis as of
September 30, 1996 assuming Phase II occurs, therefore, the
entire $1,765,000 is assumed to be a short term loan from Nona
to NuOasis and accordingly reflected as such in the pro forma
financial statements (see Note 4).
Note 3. Difference in Fiscal Year Ends
NPC's most recent fiscal year end of December 31, 1995 differs from the
Registrant's most recent fiscal year end of June 30, 1996 by more than 93 days.
NPC's income statement is updated to March 31, 1996 which is within 93 days of
the Registrant's most recent fiscal year end of June 30, 1996. This updating is
accomplished by adding subsequent interim period results of three months ended
March 31, 1996 to the most recent fiscal year-end information of December 31,
1995 and deducting the comparable preceding year interim period results of the
three months ended March 31, 1995.
During the most recent fiscal year end of NuOasis, a change in fiscal year end
was made from September 30 to June 30 and, accordingly, the most recent fiscal
year ended June 30, 1996 results include only nine months ended June 30, 1996.
Since NPC's latest fiscal year is a twelve month period and that NPC is the
accounting acquiror, the latest fiscal year (nine months) of NuOasis ended June
30,1996 have been shown to present a twelve month period ended June 30, 1996.
The twelve months ended June 30, 1996 is accomplished by adding NuOasis' interim
period results of three months ended September 30, 1995 to its nine months ended
June 30, 1996 results.
Note 4. Adjustments to Proforma Financial Statements
(A) Acquisition of NPC
This adjustment reflects (i) the acquisition of 100% of the outstanding stock of
NPC in exchange for the Note in the amount of $1.2 million and the issuance of 1
million shares of NuOasis restricted common stock valued at $125,000, the low
bid price on the purchase date of $.12 per share; (ii) the elimination of
NuOasis' capital account, including accumulated deficit in the amount of
$12,688,895 and additional paid in capital in the amount of $11,852,896; and,
(iii) the recording of "goodwill" in the amount of $835,999 which is assumed to
be immediately written off - see Adjustment (D) below.
The acquisition is presented assuming NPC is the accounting acquiror, as
discussed above, and accordingly, the allocation of NuOasis' assets acquired and
liabilities assumed is as follows:
<PAGE>
NUOASIS GAMING, INC.
Notes to Pro Forma Financial Statements
(Unaudited)
September 30
NuOasis 1996 (Historical)
------------------------- -----------------------
Cash $ 2,022
Stockholders' receivable 1,326,613
Goodwill 835,999 (a)
Liabilities assumed (839,634)
-----------------------
Total consideration $ 1,325,000 (b)
=======================
(a) Goodwill is assumed to be written off - see adjustment
(D) below.
(b) Total consideration consists of note payable of
$1,200,000 and accrued liability of $125,000.
(B) Sale of CMA
This adjustment reflects the probable sale of CMA for $1,235,000 resulting in
the elimination of the CMA's net equity basis of $ 1,459,585 and gain on sale of
$91,585. The adjustment also reflects the elimination of CMA's net assets,
including $224,585 of current liabilities and $1,368,000 of shareholders'
receivable.
(C) Interest on Notes Payable
This adjustment reflects interest expense retroactively incurred in the amounts
of $96,000 and $24,000 for the twelve months ended June 30, 1996 and three
months ended September 30, 1996, respectively, as if the Notes were issued on
July 1, 1995.
(D) Write-off of Goodwill
The excess of the purchase price over the fair market value of the net assets
acquired was approximately $ 835,999 and was assumed to be allocated to
goodwill. Due to the Registrant's and NPC's historical negative cash flows from
operations and working capital deficit, this adjustment assumes the goodwill of
$835,999 is immediately written off due to the uncertainty of realizing any
future benefit from this asset.
(E) Short Term Loan
This adjustment reflects the assumption that the Phase III funds generated in
the amount of $1,765,000 by Nona are assumed to be a short term loan from Nona
to NuOasis (see Note 2).
(F) Debt Assumption
This adjustment reflects the assumption that, as agreed upon by NuOasis and
Nona, all account payables and accrued expenses in excess of $20,000 on December
24, 1996 is assumed by Nona. The total amount of $138,461 represents the
<PAGE>
outstanding balances of account payables and accrued expenses, as of September
30, 1996, less the $20,000.
(G) Earnings/Loss Per Share
Pro forma loss per share is completed using the weighted average number of
shares of NuOasis common stock issued and outstanding assuming that all the
shares were outstanding for the entire year. Common stock equivalents were not
considered in the loss per share calculation as the effect would have been
anti-dilutive.
