SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-QSB/A
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For The Quarter Ended December 31, 1996 Commission File No. 0-18224
NuOASIS GAMING, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or or organization)
95-4176781
(I.R.S. Employer Identification Number)
2 Park Plaza, Suite 470, Irvine, California
(Address of principal executive offices)
92614
(Zip Code)
(714) 833-5382
(Registrant's telephone number, including area code)
N/A
(Former Address, if changed since last report)
N/A
(Former Zip Code, if changed since last report)
N/A
(Former telephone number, if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of capital stock, as of the latest practicable date.
Common Stock $.01 par value; 30,000,000 shares as of December 31, 1996
Total No. of Pages: 25
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NUOASIS GAMING, INC.
INDEX
Page
PART I
Item 1. Financial Statements
Consolidated Balance Sheets as of December 31, 1996
(unaudited) and June 30, 1996 (audited) ...............1
Consolidated Statements of Operations for the Three
and Six Months Ended December 31, 1996 and 1995
(unaudited) ...........................................2
Consolidated Statements of Cash Flows for the Six
Months Ended December 31, 1996 and 1995 (unaudited) ...3
Notes to Consolidated Financial Statements ..............4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ...................9
PART II
Item 1. Legal Proceedings....................................... 10
Item 2. Changes In Securities.................................. 10
Item 3. Defaults Upon Senior Securities..........................10
Item 4. Submission Of Matters to a Vote of Security Holders......10
Item 5. Other Information........................................10
Item 6. Exhibits And Reports On Form 8-K.........................10
Signatures...............................................11
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<TABLE>
<CAPTION>
NUOASIS GAMING, INC.
Consolidated Balance Sheets
As of December 31, 1996 (Unaudited) and
June 30, 1996 (Audited)
December 31, June 30,
1996 1996
--------------------- --------------------
(Unaudited) (Audited)
--------------------- --------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ - $ 84
--------------------- --------------------
Total Current Assets - 84
--------------------- --------------------
Fixed assets
Equipment 89,090 -
Less accumulated depreciation (43,858) -
--------------------- --------------------
Total Fixed Assets, net 45,232 -
--------------------- --------------------
Intangible asset
Software 200,037 -
Less accumulated amortization (161,792) -
--------------------- --------------------
Total Intangible Asset, net 38,245 -
--------------------- --------------------
Other assets 5,455 -
--------------------- --------------------
TOTAL ASSETS $ 88,932 $ 84
===================== ====================
Current Liabilities:
Accounts payable $ 730,201 $ 98,595
Loans payable 944,328 -
Due to affiliates 1,325,617 665,371
Accrued expenses and accrued interest 299,409 5,130
--------------------- --------------------
Total Current Liabilities 3,299,555 769,096
--------------------- --------------------
Commitments And Contingencies - -
Long Term Liabilities:
Notes payable 1,200,000 -
--------------------- --------------------
Total Long Term Liabilities 1,200,000 -
--------------------- --------------------
Total Liabilities 4,499,555 769,096
--------------------- --------------------
Stockholders' Deficiency:
Preferred stock - par value $.01; authorized 1,000,000 shares; 14% cumulative
convertible; issued and outstanding 170,000
shares (aggregate liquidation of $170,000) 1,700 1,700
Preferred Stock Series B - par value $2.00; authorized, issued
and outstanding 250,000 shares (aggregate liquidation of $500,000) 500,000 500,000
Common stock - par value $.01; authorized 30,000,000 shares;
30,000,000 shares issued and outstanding 300,000 300,000
Additional paid-in capital 12,376,196 12,376,196
Stockholders' receivables (1,370,073) (1,447,080)
Accumulated deficit (16,218,446) (12,499,828)
-------------------- ---------------------
Total Stockholders' Deficiency (4,410,623) (769,012)
--------------------- ---------------------
TOTAL LIABILITIES AND STOCKHOLDERS'
DEFICIENCY $ 88,932 $ 84
===================== ====================
</TABLE>
See accompanying notes to these consolidated financial statements
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<TABLE>
<CAPTION>
NUOASIS GAMING, INC.
Consolidated Statements of Operations
For the Three and Six Months Ended December 31, 1996 and 1995 (Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
----------------------------------------- ---------------------------------------
1996 1995 1996 1995
-------------------- -------------------- ------------------- -------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
-------------------- -------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Revenues:
Gaming $ - $ - $ - $ -
-------------------- -------------------- ------------------- -------------------
Totals - - - -
-------------------- -------------------- ------------------- -------------------
Costs and expenses:
General and administrative 211,444 373,539 400,511 664,386
Write down of goodwill 3,318 5,107 - 3,318,107 -
-------------------- -------------------- ---------------- -------------------
Totals 3,529,551 373,539 3,718,618 664,386
-------------------- -------------------- ------------------- ------------------
Net loss $ (3,529,551) $ (373,539) $ (3,718,618) $ (664,386)
==================== ==================== =================== ===================
Net loss applicable to
common stock $ (3,535,501) $ (379,489) $ (3,730,518) $ (676,286)
==================== ==================== =================== ===================
Net loss per common share $ (.12) $ (.01) $ (.12) $ (.03)
==================== ==================== =================== ===================
Weighted average common
shares outstanding 30,000,000 27,202,841 30,000,000 26,668,675
==================== ==================== =================== ==================
</TABLE>
See accompanying notes to these consolidated financial statements
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<TABLE>
<CAPTION>
NUOASIS GAMING, INC.
Consolidated Statements of Cash Flows
For the Six Months Ended December 31, 1996 and 1995 (Unaudited)
Six Months Ended
December 31,
1996 1995
----------------------- -----------------------
(Unaudited) (Unaudited)
----------------------- -----------------------
<S> <C> <C>
Operating activities:
Net loss $ (3,718,618) $ (664,386)
Adjustments to reconcile net loss to net
cash used in operating activities:
Effect of common shares issued for payment of services - 76,213
Depreciation and amortization - 360,001
Write off of goodwill 3,318,107 -
Increase (decrease) from changes in: -
Other assets - (11,220)
Accounts payable and accrued expenses (13,589) 170,231
Due to affiliate 292,757 68,820
----------------------- -----------------------
Net cash provided (used) in operating activities (121,343) (341)
----------------------- -----------------------
Financing activities:
Proceeds from stockholders' receivables 121,259 -
----------------------- -----------------------
Net cash provided (used) by financing activities 121,259 -
----------------------- -----------------------
Net increase (decrease) in cash and cash equivalents (84) (341)
Cash and cash equivalents, beginning of period 84 341
----------------------- -----------------------
Cash and cash equivalents, end of period $ - $ -
======================= =======================
Supplemental Disclosure of Cash Flow Information Cash paid during the year for:
Income taxes $ - $ -
Interest $ - $ -
Non-cash investing and financing activities:
Purchase of NPC (Note 2) for notes payable $ 1,200,000 $ -
Purchase of NPC (Note 2) for accrued liability $ 125,000 $ -
</TABLE>
See accompanying notes to these consolidated financial statements
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NUOASIS GAMING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 (Unaudited)
Note 1. General
Principles of Consolidation
NuOasis Gaming, Inc. and its subsidiaries (the "Company" or the "Registrant"),
operated as a holding company for leisure and entertainment related businesses.
NuOasis Gaming, Inc. was incorporated in the State of Delaware in 1987. During
the quarter ended December 31, 1996, the Company had three wholly-owned
subsidiaries engaged in casino gaming and investment development activities.
The activities of the Company's subsidiaries have been primarily in the United
States.
The accompanying unaudited condensed consolidated financial statements include
the accounts of NuOasis Gaming, Inc. ("NuOasis") and its wholly-owned
subsidiaries, National Pools Corporation ("NPC") (Note 2), Ba-Mak Gaming
International, Inc. ("Ba-Mak"), formerly Phillips Gaming International, Inc.,
and, Casino Management of America, Inc. ("CMA"); the accounts of CMA include its
wholly-owned subsidiaries, NuOasis Las Vegas, Inc. ("NuOasis Las Vegas"), and
NuOasis Laughlin, Inc. ("NuOasis Laughlin"). As used herein, collectively
referred to as the "Registrant" or the "Company" unless the context indicates
otherwise. All material intercompany accounts and transactions have been
eliminated in consolidation.
In the opinion of management, the accompanying unaudited condensed consolidated
financial statements reflect all adjustments, consisting of normal recurring
accruals, necessary to present fairly the Registrant's financial position as of
December 31, 1996, and its results of operations and cash flows for six months
then ended. Information included in the unaudited condensed consolidated balance
sheet as of December 31, 1996 has been derived from the Registrant's audited
consolidated balance sheet included in the Registrant's 1996 Form 10-KSB. The
accompanying unaudited condensed consolidated financial statements should be
read in conjunction with the consolidated financial statements and other
information in the fiscal 1996 Form 10-KSB. The unaudited results of operations
for the three and six months ended December 31, 1996 are not necessarily
indicative of the operating results for the full year.
Management Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Bankruptcy Filing of Ba-Mak Gaming International, Inc.
Ba-Mak was incorporated in Louisiana on December 15, 1992 to conduct the
Company's gaming operations, including gaming machine route operations and sales
of gaming equipment. On April 8, 1993, Ba-Mak received approval from the
Louisiana Gaming Regulatory Division to become a licensed distributor/route
operator for electronic video bingo machines.
In October 1994, Ba-Mak 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 fiscal 1995.
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NUOASIS GAMING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 (Unaudited)
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 is in the process
of liquidating such assets for the benefit of Ba-Mak's bankruptcy estate. As
such, all gaming operations at Ba-Mak ceased and, accordingly, were accounted
for as a disposition of an investment during fiscal 1995 which resulted in (a)
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. Gaming revenues with respect to Ba-Mak were $0 and
$884,077 during fiscal years 1996 and 1995, respectively, and will not recur in
future years.
Going Concern
The Company has experienced recurring net losses, has limited liquid resources,
negative working capital and its primary operating subsidiary was liquidated
during the fiscal year 1995. Management's intent is to continue searching for
additional sources of capital and new operating opportunities. In the interim,
the Company will continue operating with minimal overhead and key administrative
functions will be provided by an affiliate, NuVen Advisors and National Pools
Corporation (See Note 2). The Company has received financial support from Nona
Morelli's II, Inc. ("Nona"), the Registrant's controlling parent company, and
management estimates that Nona will need to contribute financial support for the
Company to fund its operations through the remaining of fiscal year 1997.
Accordingly, the accompanying consolidated financial statements have been
presented under the assumption the Company will continue as a going concern.
Issuance of Stock for Services
Shares of the Company's common stock issued for services are recorded in
accordance with APB16 at the fair market value of the stock issued or the fair
market value of the services provided, whichever value is the more clearly
evident. The value of the services are typically stipulated by contractual
agreements. There were no shares issued for services during the three months
ended December 31, 1996.
Loss per Common Share
Loss per common share is computed based on the net loss for each period, as
adjusted for dividends required on preferred stock ($5,950 and $5,950 for the
three months ended December 31, 1996, and 1995, respectively) and the weighted
average number of common shares outstanding. Common stock equivalents were not
considered in the loss per share calculations, as the effect would have been
anti-dilutive.
Income Taxes
The Company accounts for income taxes using the liability method. Income taxes
are provided on all revenue and expense items, regardless of the period in which
such items are recognized for tax purposes, except for those items representing
a permanent difference between pre-tax accounting income and taxable income. A
valuation allowance is recorded when it is more likely than not that benefits
resulting from deferred tax assets will not be realized.
Revenue Recognition
There were no gaming revenues during the three and six months ended December 31,
1996 and 1995.
Reclassification of Prior Year Amounts
To enhance comparability, the fiscal 1996 consolidated financial statements have
been reclassified, where appropriate, to conform with the financial statement
presentation used in fiscal 1997.
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NUOASIS GAMING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 (Unaudited)
Note 2. Acquisition
On June 13, 1996, Nona entered into an Option Agreement ("Option") with Joseph
Monterosso ("Monterosso"), President of National Pools Corporation ("NPC"), an
individual previously unrelated to the Registrant or Nona, and granted such
individual an option to purchase the 250,000 Series B Preferred Shares of the
Registrant owned by Nona at a purchase price of $13.00 per share, or a total of
$3,250,000, with a minimum purchase of 95,000 shares.
The exercise of the option is conditioned upon shareholder approval of a
proposal to increase the authorized number of shares of common stock of the
Registrant. The option shall expire 90 days after the next Annual Meeting of
Shareholders of the Registrant. 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 November 21, 1996, the Registrant's Board of Directors approved the
acquisition of NPC. On December 24, 1996 NuOasis executed and closed the 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 acquisition, Nona and NuOasis
agreed to a debt assumption agreement whereby all NuOasis debt in excess of
$20,000 on December 24, 1996 will be 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.
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-LottoTM". The Hit-LottoTM 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-LottoTM program. In August, 1994, Hit-LottoTM was tested in the San Diego
market: development is ongoing.
The audited financial statements of NPC as of December 31, 1995 and the year
then ended are incorporated by reference filed with the Registrant's Form 8-K/A
(SEC File No. 000-18224). 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 December 31, 1996
and 1995 are included elsewhere herein in Part II, Item 6 as an exhibit.
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-LottoTM program on a commercial basis, and
there will not be a change of control of NuOasis. The Transaction is divided
into three phases and summarized as follows:
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NUOASIS GAMING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 (Unaudited)
Phase I : Acquisition of NPC, which closed on December 24, 1996
On December 24, 1996 NuOasis executed and closed the Stock Purchase
Agreements with each of the shareholders of NPC pursuant to which it
issued a series of the Secured Promissory Notes in the aggregate amount
of $1,200,000 and a promise to issue 1,000,000 shares of common stock
of NuOasis to the NPC shareholders in exchange for all of the issued
and outstanding shares of capital stock of NPC.
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 II is expected to occur
following the next NuOasis Shareholders' Meeting. As of the date of
this Report there has been no Shareholders' Meeting held.
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 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 expected to
be owed by Nona to NuOasis assuming Phase II occurs, therefore, the
entire $1,765,000 is expected to be a payment from Nona to NuOasis for
a release of liability, if any, for events while it controlled NuOasis.
Phase III is expected to occur following Phase II and the next NuOasis
Shareholders' Meeting. As of the date of this Report there has been no
Shareholders' Meeting held.
Basis of Presentation
As of December 31, 1996, Phase I has occurred and accordingly Phase I has been
reflected in the accompanying unaudited condensed consolidated financial
statements. The Phase II and III portions of the acquisition will be reflected
and recorded at such time when the events included in Phase II and III have
occurred; these events are expected to occur only subsequent to the next NuOasis
Shareholders' Meeting. As of the date of this Report there has been no
Shareholders' Meeting held. The acquisition has been recorded as a purchase with
NuOasis Gaming as the accounting acquiror. Since conversion of the Notes is
based upon future earnings of NPC, which is in itself based upon the success of
the Hit-Lottotm program, a developmental business, the probability of the
conversion is undeterminable and uncertain. Although control of NuOasis Gaming
may be transferred to the NPC shareholders upon conversion of the Notes, due to
this uncertainty, the acquisition of NPC has been accounted for as a purchase
with NuOasis Gaming deemed the accounting acquiror.
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Supplemental Pro Forma Information
The following unaudited pro forma combined results of operations for the three
months ended December 31, 1996 and 1995 have been prepared assuming that the
acquisition of NPC occurred at the beginning of each such period. In preparing
the pro forma data, adjustments have been made for the interest expense related
to the borrowings under the Notes to finance a portion of the purchase price and
the write off of goodwill. The following unaudited pro forma financial
information is not necessarily indicative of results of operations that would
have occurred had the transaction been put into effect at the beginning of each
of the periods or of future results of the combined companies.
8
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NUOASIS GAMING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 (Unaudited)
Three Months Ended
December 31,
Proforma Information 1996 1995
----------------------------------- ------------- -------------
Net revenues $ - $ -
Loss before extraordinary item $ (3,273,783) $ (3,812,237)
Net loss $ (3,273,783) $ (3,427,377)
Per share data:
Loss before extraordinary item $ (.11) $ (.14)
Net loss $ (.11) $ (.12)
Weighted average common shares 30,000,000 27,202,841
Note 3. Stockholders' Receivables
Stockholders' Receivables relates primarily to a receivable from Nona in
connection with the acquisition of CMA and has been reclassified to equity
because the repayment of the receivable is at the discretion of Nona and the
Company. The Company is dependent upon Nona for continued financial support
(Note 1), and Nona historically and currently provides financial support to the
Company. The Company believes that Nona has the ability and intent to repay the
receivable or will offset the receivable against any amounts due to Nona by the
Company, or alternatively, the receivable will be sold back to Nona under Phase
II (Note 2).
Note 4. Change in Registrant's Directors and Officers
On November 25, 1996, the Board of Directors elected Joseph Monterosso to fill
one of the vacancies on the Registrant's Board of Directors. Additionally, on
November 25, 1996, Fred G. Luke resigned as President and the Board of Directors
elected Joseph Monterosso to the office of President. Fred G. Luke remains as
Chairman.
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ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Registrant has incurred net losses and negative cash flows from operating
activities since its inception in 1988. The Registrant had cash and cash
equivalents of approximately $0 and $84 as of December 31, 1996 and June 30,
1996, respectively, and negative working capital of $3,299,555 and $769,012 as
of December 31, 1996 and June 30, 1996, respectively. The increase in working
capital deficiency is a direct result of the acquisition of NPC, discussed
below, whereby the Registrant assumed current liabilities in the approximate
amount of $2.1 million as part of acquiring NPC. As of the date of this Report,
the Registrant has no material commitments for capital expenditures.
As a result of the Registrant having no revenue producing activities, the
Registrant had limited cash and cash equivalents remaining as of December 31,
1996 to finance future operations. The Registrant has received financial support
from Nona, and is dependent upon Nona for future working capital. The
Registrant's plan is to continue searching for additional sources of equity and
working capital and consummating the remaining phases of the NPC acquisition
(see Note 2 of the footnotes to accompanying unaudited financial statements
included elsewhere herein at Item 1). In the interim, the Registrant's existence
is dependent upon continuing financial support from Nona and NPC for the
remaining of fiscal year 1997. Such conditions raise substantial doubt about the
Registrant's ability to continue as a going concern.
As of the date of filing this Report, Ba-Mak's operations had ceased following
the bankruptcy court's conversion in April 1995 of its Chapter 11 proceeding
into a proceeding under Chapter 7 of the Bankruptcy Code. The Chapter 7 Trustee
took possession of Ba-Mak's assets and is in the process of liquidating such
assets for the benefit of Ba-Mak's bankruptcy estate. As such, all gaming
operations at Ba-Mak ceased and accordingly, Ba-Mak was accounted for as a
disposition of an investment during fiscal year 1995. Gaming revenues in the
amount of $884,077 for the year ended September 30, 1995 from Ba-Mak are not
expected to recur in future years due to the Chapter 7 bankruptcy. The
Registrant is also pursuing other joint venture, merger or acquisition
opportunities which may provide additional capital resources during fiscal 1997.
Acquisition
On December 24, 1996, Phase I of the NPC acquisition occurred (see Note 2 of the
footnotes to accompanying unaudited financial statements included elsewhere
herein at Item 1).
Results of Operations
Comparison of the Three Months Ended December 31, 1996 to the Three Months Ended
December 31, 1995
There were no gaming or other revenue producing operations during the three
months ended December 31, 1996. The Registrant's gaming operations ceased during
April 1995 upon commencement of Ba-Mak's Chapter 7 bankruptcy liquidation. As a
result, there were no gaming revenues or gaming costs or expenses during the
three months ended December 31, 1996 and 1995.
Total General and Administrative expenses decreased by $162,095 or 43% during
the quarter ended December 31, 1996 as compared to the same period last year.
Since there were no operations during the quarter, General and Administrative
expenses comprised mostly of professional, consulting and advisory fees.
Additionally, the acquisition of NPC had no significant effect on General or
Administrative expenses since Phase I of the acquisition occurred late in the
second quarter on December 24, 1996.
As a result of the NPC acquisition, the excess of the purchase price over the
fair market value of the net assets acquired was approximately $3,318,107 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, the
goodwill of $3,318,107 is immediately written off due to the uncertainty of
realizing any future benefit from this asset. There was no such write off during
the comparable period last year.
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Comparison of the Six Months Ended December 31, 1996 to the Six Months Ended
December 31, 1995
There were no gaming or other revenue producing operations during the six months
ended December 31, 1996. The Registrant's gaming operations ceased during April
1995 upon commencement of Ba-Mak's Chapter 7 bankruptcy liquidation. As a
result, there were no gaming revenues or gaming costs or expenses during the
three months ended December 31, 1996 and 1995.
Total General and Administrative expenses decreased by $263,875 or 40% during
the quarter ended December 31, 1996 as compared to the same period last year.
Since there were no operations during the quarter, General and Administrative
expenses comprised mostly of professional, consulting and advisory fees.
Additionally, the acquisition of NPC had no significant effect on General or
Administrative expenses since Phase I of the acquisition occurred late in the
second quarter on December 24, 1996.
As a result of the NPC acquisition, the excess of the purchase price over the
fair market value of the net assets acquired was approximately $3,318,107 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, the
goodwill of $3,318,107 is immediately written off due to the uncertainty of
realizing any future benefit from this asset. There was no such write off during
the comparable period last year.
Cash used in operating activities increased to $121,343 for the six months ended
December 31, 1996 from $341 used in operating activities for the comparable
period last year which was primarily attributable to the Chapter 7 bankruptcy
proceedings of the Registrant's operating subsidiary which commenced April 20,
1995. Additionally, payments for professional services contributed to the
increase.
Cash provided by financing activities increased to $121,259 for the six months
ended December 31, 1996 from $0 for the comparable period last year which was
primarily attributable to proceeds received from stockholder's receivables. Of
the $121,259 proceeds received, approximately $80,000 was received from the
former President for repayment of a note receivable.
PART II: OTHER INFORMATION
Item 1. Legal Proceedings
The Registrant knows of no significant changes for the six months ended December
31, 1996, in the status of the pending litigation as described in the fiscal
year 1996 Form 10-KSB, filed on or about November 22, 1996.
Item 2. Changes In Securities: None
Item 3. Defaults Upon Senior Securities: None
Item 4. Submission Of Matters To A Vote Of Security Holders: None
Item 5. Other Information: None
Item 6. Exhibits And Reports On Form 8-K
Exhibit No. Description
----------- ------------------------------------------------
1 Financial Statements of National Pools Corporation
for the three and six months ended December 31, 1995
2 Financial Statements of National Pools Corporation as
of December 31, 1996 and for the three months and
year then ended.
27 Financial Data Schedule
[NUOGAM\10QA\:123196.QSB-A]-2
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
NUOASIS GAMING, INC.
Dated: Mach 28, 1997 By: /s/ Joseph Monterosso
-----------------------------
Joseph Monterosso,
President and Director
Dated: March 28, 1997 By: /s/ Fred G. Luke
-----------------------------
Fred G. Luke, Chairman
Dated: March 28, 1997 By: /s/ Steven H. Dong
-----------------------------
Steven H. Dong,
Chief Financial Officer
[NUOGAM\10QA\:123196.QSB-A]-2
12
<PAGE>
EXHIBIT 1
Financial Statements of National Pools Corporation
for the three and six months ended December 31, 1995
with Report of Certified Public Accountants
[NUOGAM\10QA\:123196.QSB-A]-2
13
<PAGE>
NATIONAL POOLS CORPORATION
(A Development Stage Corporation)
FINANCIAL STATEMENTS
With Report of Certified Public Accountants
Three and Six Months Ended December 31, 1995, And For
The Period Cumulative From Inception (February 23, 1993)
through December 31, 1995
[NUOGAM\10QA\:123196.QSB-A]-2
14
<PAGE>
MARCIA FRITZ & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
5530 Birdcage Street, Suite 200
Citrus Heights, CA 95610-7621
[NUOGAM\10QA\:123196.QSB-A]-2
15
<PAGE>
MARCIA FRITZ & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
5530 Birdcage Street, Suite 200
Citrus Heights, CA 95610-7621
To the Board of Directors and
Stockholders of National Pools Corporation
We have compiled the accompanying statements of operations of National Pools
Corporation (a development stage company) for the three months and six months
ended December 31, 1995, and from inception (February 23, 1993) through December
31, 1995, in accordance with Statements on Standards and Review Services issued
by the American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying statements of operations and, accordingly, do not
express an opinion or any other form of assurance on them.
Management has elected to omit substantially all of the disclosures required by
generally accepted accounting principles. If the omitted disclosures were
included with the statements of operations, they might influence the user's
conclusions about the Company's results of operations. Accordingly, these
statements of operations are not designed for those who are not informed about
such matters.
/s/ Marcia Fritz & Company
-----------------------------
Marcia Fritz & Company
February 13, 1997
[NUOGAM\10QA\:123196.QSB-A]-2
16
<PAGE>
<TABLE>
<CAPTION>
NATIONAL POOLS CORPORATION
(A Development Stage Company)
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
Three and Six Months Ended December 31,
1995, and for the Period Cumulative from Inception
(February 23, 1993) through December 31, 1995
Three Months Six Months
Ended Ended Cumulative from
----------------------- ----------------------------- Inception through
December 31, 1995 December 31, 1995
----------------------- ----------------------------- ----------------------------
<S> <C> <C> <C>
Operating Expenses $ (104,903) $ (177,864) $ (1,019,263)
Research and Development (46,589) (85,593) (1,255,375)
----------------------- ----------------------------- ----------------------------
Net (Loss) from Operations (151,492) (263,457) (2,274,638)
----------------------- ----------------------------- ----------------------------
Other Income and (Expense):
Interest Expense:
Discounts on Convertible Debt (34,471) (55,153) (248,188)
Other Interest Expense (40,165) (80,489) (286,997)
----------------------- ----------------------------- ----------------------------
Total Interest Expense (74,636) (135,642) (535,185)
Interest Income 1,012
Loss on Disposal of Assets (9,721) (9,721) (57,585)
----------------------- ----------------------------- ----------------------------
Total Other Income and (Expense) (84,357) (145,363) (591,758)
----------------------- ----------------------------- ----------------------------
Net (Loss) Before Extraordinary Item (235,849) (408,820) (2,866,396)
Benefit from Extinguishment of Debt 384,860 384,860 464,404
----------------------- ----------------------------- ---------------------------
Net Income (Loss) 149,011 (23,960) (2,401,992)
Accumulated Deficit, Beginning (2,551,003) (2,378,032)
----------------------- -----------------------------
Accumulated Deficit, Ending $ (2,401,992) $ (2,401,992) $ (2,401,992)
======================= ============================= ============================
Per Common Share
Net (Loss) Before Extraordinary Item $ (.01) $ (.03)
Benefit from Extinguishment of Debt .02 .03
----------------------- ----------------------------
Net Income (Loss) Per Common Share $ .01 $ (.00)
======================= =============================
Weighted Average Common Shares
Outstanding 16,604,200 14,571,210
======================= =============================
</TABLE>
[NUOGAM\10QA\:123196.QSB-A]-2
17
<PAGE>
EXHIBIT 2
Financial Statements of National Pools Corporation
as of December 31, 1996 and for the three months
and the year then ended
[NUOGAM\10QA\:123196.QSB-A]-2
18
<PAGE>
<TABLE>
<CAPTION>
National Pools Corporation
Balance Sheet
As of December 31, 1996
(Unaudited)
December 31,
1996
(Unaudited)
--------------------------
<S> <C>
CURRENT ASSETS
Current Assets
Cash $ 1,342
Accounts Receivable 1,000
Employee Advances 33,550
--------------------------
Total Current Assets 35,892
Fixed Assets
Office Equipment 89,090
Accumulated Depreciation - Office Equipment (43,858)
---------------------------
Total Fixed Assets, net 45,232
Intangible Assets
Software 200,036
Accumulated Amortization (161,792)
Total Intangible Assets, net 38,244
Other Assets 5,456
TOTAL ASSETS $ 124,824
===========================
LIABILITIES
Current Liabilities
Accounts Payable $ 641,538
Loans Payable 121,398
Accrued Interest Payable ST 285,986
Payroll Payable 232,788
Payroll Taxes Payable 13,291
Working Capital Loan Payable 822,930
---------------------------
TOTAL LIABILITIES 2,117,931
STOCKHOLDERS' DEFICIENCY
Capital
Common Stock 991,764
Accumulated Deficiency (2,984,871)
TOTAL STOCKHOLDERS' DEFICIENCY (1,993,107)
---------------------------
TOTAL LIABILITIES AND EQUITY $ 124,824
===========================
</TABLE>
[NUOGAM\10QA\:123196.QSB-A]-2
19
<PAGE>
<TABLE>
<CAPTION>
National Pools Corporation
Income Statement
For the three months and year ended
December 31, 1996
(Unaudited)
Three Months Year
Ended Ended
------------------------------ ------------------------------
December 31, 1996
(Unaudited)
------------------------------ ------------------------------
<S> <C> <C>
Operating Expenses $ 103,569 $ 452,861
------------------------------ ------------------------------
Net loss from Operations (103,569) (452,861)
------------------------------ ------------------------------
Other Income and (Expense):
Interest Expense:
Discounts on Convertible Debt - -
Other Interest Expense (36,315) (130,018)
------------------------------ ------------------------------
Total Interest Expense (36,315) (130,018)
------------------------------ ------------------------------
Total Other Income and (Expense) (36,315) (130,018)
------------------------------ ------------------------------
Net loss $ (139,884) $ (582,879)
============================== ==============================
</TABLE>
[NUOGAM\10QA\:123196.QSB-A]-2
20
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> DEC-31-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 89,090
<DEPRECIATION> (43,858)
<TOTAL-ASSETS> 88,932
<CURRENT-LIABILITIES> 3,299,555
<BONDS> 0
0
501,700
<COMMON> 300,000
<OTHER-SE> (5,212,323)
<TOTAL-LIABILITY-AND-EQUITY> 88,932
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,529,551
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,529,551)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,529,551)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,529,551)
<EPS-PRIMARY> (.12)
<EPS-DILUTED> 0
</TABLE>
