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NEVSTAR GAMING AND ENTERTAINMENT CORP
BALANCE SHEET
DECEMBER 31, 2002
(Unaudited)
ASSETS
Current Assets $ -
-------
Total Assets $ -
=======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 91,087
--------
Total Current Liabilities $ 91,087
Long Term Liabilities
Pre-petition tax liabilities - Note 3 $ 194,858
Credit facility, related party -Note 4 $ 222,398
-------
$ 417,256
Shareholders' Equity (Deficit)
Common Stock $.01 par value,
68,894,783 shared authorized, 28,243,961
issued and outstanding $ 282,439
Accumulated deficit - Prior to the development
stage (776,988)
Accumulated deficit - development stage (13,814)
---------
Total Shareholders' Deficit $ (508,343)
Total Liabilities and
Shareholders' Deficit $ -
=========
See Accompanying Notes to Financial Statements
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NEVSTAR GAMING AND ENTERTAINMENT CORP
STATEMENT OF OPERATIONS
For the period November 22, 2002 to December 31, 2002
(Unaudited)
Revenue $ -
--------
Expenses
General and Administrative $ 13,814
--------
Net Loss $(13,814)
Basic and diluted loss per share $0.00
Weighted average shares outstanding 28,243,961
See Accompanying Notes to Financial Statements
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NEVSTAR GAMING AND ENTERTAINMENT CORP
STATEMENT OF CASH FLOWS
For the period November 22, 2002 to December 31, 2002
(Unaudited)
OPERATING ACTIVITIES
Net Loss $ (13,814)
Adjustments to reconcile net loss
to net cash used in operating activities:
Changes in assets and liabilities:
Accounts Payable 13,041
---------
Net cash used by by operating activities (773)
FINANCING ACTIVITIES
Cash provided by long-term debt 773
---------
Net cash for the period 0
Net cash a beginning of period 0
---------
Net cash at end of period $ 0
=========
See Accompanying Notes to Financial Statements
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NEVSTAR GAMING AND ENTERTAINMENT CORP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
(Unaudited)
Note 1 - Basis Of Presentation and Results of Bankruptcy Proceedings
This report should be read in conjuction with the Company's Form 8-K
filed with the Securities and Exchange Commission on November 25, 2002.
The accompanying unaudited financial statements have been prepared
inaccordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q of Regulations S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting prinicples for complete financial statements.
In the opinion of management, all normal recurring adjustments considered
necessary for a fair presentation have been included. Operating results for
the period from November 22, 2002 (the effective date of the Bankruptcy Plan of
Reorganization) through December 31, 2002 are not necessarily indicative of the
results that may be expected for the fiscal year ending June 30, 2003.
On December 1, 1999, the Company filed a voluntary petition for relief
under Chapter 11 (the "First Chapter 11 Proceeding") in the United States
Bankruptcy Court, District of Nevada (the "Bankruptcy Court"), Case No.
99-19566RCJ. The Company acted as debtor in possession during the First
Chapter 11 Proceeding. In part as a result of the objections of certain of the
Company's secured creditors and the Bankruptcy Court's belief that the Company
could not be successfully reorganized in view of such objections, the
Bankruptcy Court dismissed the First Chapter 11 Proceeding on or about
March 2, 2000.
On March 3, 2000, Randy Black was appointed by the District Court of
Clark County, Nevada as receiver for the Company. On or about March 8, 2000,
Black caused the casino to cease all meaningful operations and the casino
was closed. The Company has not engaged in business operations since that date.
Subsequently, Black acquired the first trust deed on the casino from the
bank and he began foreclosure proceedings against the casino. On July 10,
2000, the Company again filed a voluntary petition for relief under Chapter 11
(the "Second Chapter 11 Proceeding")in the Bankruptcy Court, Case No.
BK-S-00-15075-LBR. During the Second Chapter 11 Proceeding, the Company acted
as debtor in possession. During the course of the Second Chapter 11
Proceeding, the Bankruptcy Court permitted Black to foreclose on the casino,
which occurred on November 13, 2000.
In April, 2001, the Company and W/F Investment Corp. ("W/F") submitted
to the Bankruptcy Court a plan of reorganization, which was amended from time
to time (the "Plan of Reorganization").
On February 20, 2002, the Bankruptcy Court issued an order confirming the
Plan of Reorganization.
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On November 22, 2002 the Plan of Reorganization became effective. The
Company issued 8,267,374 shares of common stock to holders of unsecured claims;
26,000 shares of common stock to holders of preferred stock; 686,040 shares of
common stock to certain administrative claimants and to a previously secured
claim, and 15,156,852 shares of common stock to the Plan Proponents. The
4,107,687 shares of Common Stock that were previously outstanding were
retained by the holders of those shares. There are a total of 28,243,961
shares of common Stock outstanding after the issuance of shares under the Plan
of Reorganization.
The Company does not currently have any operations.
Note 2 - Going Concern and Summary of Significant Accounting Policies
Going Concern:
The accompanying financial statments have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company does not generate
any revenue, and has a net capital deficiency. These factors among others may
indicate that the Company will be unable to continue as a going concern for a
reasonable period of time. The Company currently funds its disbursements by a
line of credit from one of its Plan Proponents.
The financial statements do not include any adjustments relating to the
recoverability of assets and classification of liabilities that might be
necessary should the Company be unable to continue as a going concern.
The Company is no longer operating, and will attempt to locate a new business
(operating company), and offer iself as a merger vehicle for a company that may
desire to go public through a merger rather than through its own public stock
offering.
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Accounting for Reorganization:
The Company applied Financial Accounting Standards No. 5 ("Accounting for
Debtors and Creditors for Troubled Debt Restructuring") for its emergence
from Bankruptcy. The Company has also adopted the Fresh Start Reporting method.
Use of Estimates:
The preparation of a balance sheet in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates in preparing financial statements including the value of shares
of common stock issued to the unsecured creditors in accordance with the Plan
of Reorganization. Management uses its knowledge and expertise in making these
estimates. Actual results could differ from those estimates.
Income Taxes:
The Company utilizes the liability method to account for income taxes. Under
this method, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and liabilities
and are measured using the enacted rates and laws expected to apply when the
differences are expected to reverse.
Note 3 - Pre-Petition Tax Liabilities
Pre-petition tax liabilities consist of $194,858 payable to the Nevada
Department of Taxation and the Nevada Gaming Commission Pursuant to the
Bankruptcy Code and stipulations entered into between the parties and the
Company, the amounts willbe paid in full, plus interest at 5%, in equal
quarterly payments commencing January, 2004 and ending September, 2009,
subject to reduction if certain conditions are met.
Note 4- Long Term Credit Facility, Related Party
The credit facility consists of $222,398 outstanding on a $250,000 revolving
line of credit issued to the Company by W/F Investment Corp, a shareholder of
the Company and a proponent of the bankruptcy Plan of Reorganization. The line
of credit was used to pay the Company's obligations through November 22, 2002,
the Effective Date of the Plan of Reorganization, including the allowed
administrative expenses, accounting, legal and related expenses. It has
subsequently been used to pay the Company's general and administrative expenses.
The line of credit bears interest at prime plus 2%, payable monthly. It is due
no earlier than October 31, 2003 and no later than October 31, 2007.
Note 5 - Fresh Start Accounting
In accordance with it Plan of Reorganization, The Company converted unsecured
liabilities amounting to approximatedly $14,000,000 into 8,267,374 shares of
common stock. The Company also issued 686,048 shares of common stock for
administrative claims totalling $12,000 and 15,156,852 shares of common stock
to the Plan Proponents. The shares issued were valued at $0.01 per share,
generating a gain on debt forgiveness of $14,000,000, The amount of
accumulated deficit prior to the reclassification in accordance with the Fresh
Start Reporting method amounted to approximately $15,000,000. Management
estimated the fair value of the shares issued at par value, based on the fact
that no cash flows are expected in the foreseeable future. The balance of the
accumulated deficit after the adjustment required by Fresh Start Reporting
represents the "Excess Reorganization Value", which was impaired due to the
fact that the Company has no operations, and no cash flows are expected in the
foreseeable future.
Note 6- Income Taxes
The Company utilizes the liability method to account for income taxes.
Under this method, deferred tax assets and liabilities are determined based
on differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws
expected to apply when the differences are expected to reverse.
At November 22, 2002, the Company had net operating loss carryforwards
of approximately $14 million for federal tax purposes, which expire from 2012
to 2015. Because of statutory ownership changes, the amount of net operating
losses which may be utilized in future years may be subject to significant
annual limitations. At November 22, 2002, total deferred tax assets,
consisting principally of net operating loss carry forwards, amounted to
approximately $5 million. For financial reporting purposes, a valuation
allowance has been recognized in an amount equal to such deferred tax assets
due to the uncertainty surrounding their ultimate realization.
The effective tax rate differs from the U.S. Federal statutory rate
principally due to the valuation allowance recognized due to the uncertainty
surrounding the ultimate realization of deferred tax assets.
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NEVSTAR GAMING AND ENTERTAINMENT CORP
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Unaudited)
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995
This Quarterly Report on Form 10-Q includes certain forward-looking statements
based upon management's beliefs, as well as assumptions made by and data
currently available to management. This information has been, or in the
future, may be included in reliance on the "safe harbor" provision of the
Private Securities Litigation Reform Act of 1995. These statements are subject
to a number of risks and uncertainties including, but not limited to, the
following: (a) the Company does not generate any revenue, and has a net capital
deficiency which may impair its ability to continue as a going concern; (b)
the ability of the Company to find a merger candidate or other business
opportunity to bring profitable business operations into the Company; and
(c) the absence of an active public trading market for the Company's common
stock.
Actual results may differ materially from those anticipated in any such
forward-looking statements. The Company undertakes no obligation to update or
revise any forward-looking statements to reflect subsequent events or
circumstances.
The Company's Bankruptcy Plan of Reorganization became effective November 22,
2002. The Company is in the process of completing the administrative procedures
to allow it to formally emerge from the oversight of the Bankruptcy Court.
The Company is no longer operating, and will attempt to locate a new business
(operating company), and offer iself as a merger vehicle for a company that may
desire to go public through a merger rather than through its own public stock
offering.
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PART II - OTHER INFORMATION
Item 1 - Litigation
The Company is not party to any litigation
Item 6. Exhibits and Report on Form 8-K
The Company filed a report on Form 8-K dated November 25, 2002 reporting the
Company's balance sheet as of the November 22, 2002, the effective date
of the implementation of the Company's Plan of Reorganization.
The Company filed a report on Form 8-K dated December 3, 2002 reporting a
change in the Company's independent auditors.
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.
NEVSTAR GAMING AND ENTERTAINMENT CORP
/s/ William O. Fleischman
Date: January 22, 2003 William O. Fleischman
Chief Executive Officer and
Chief Financial Officer
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CERTIFICATIONS
I, William O. Fleischman, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Nevstar Gaiming
and Entertainment Corp;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact necessary to make the statements made, in
light of circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. As the registrant's certifying officer, I am responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and I have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant is made known to
us by others within the entity, particularly during the period
in which this quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior
to the filing date of theis quarterly report (the "Evaluation
Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. As the registrant's certifying officer, I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a. all significant deficiences in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses
in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
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6. I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of our most
recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
January 22, 2003 By: /s/ William O. Fleischman
_____________________
William O. Fleischman
Chairman of the Board,
Chief Executive Officer and
Chief Financial Officer