SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended June 30, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number: 0-21071
NEVSTAR GAMING AND ENTERTAINMENT CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 88-0309578
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1900 Avenue of the Stars, Suite 2410, Los Angeles CA 90067
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 553-7176
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock - $.01 par value
(Title of class)
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 such 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
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant on September 13, 2004 was $101,430 (based on the average bid and
asked price of Common Stock in the over-the-counter market on that date).
50,715,008 shares of registrant's Common Stock, $.01 par value, were
outstanding on September 13, 2004.
2
NEVSTAR GAMING AND ENTERTAINMENT CORPORATION
CONTENTS
Page
PART I
Item 1. BUSINESS 3
Item 2. PROPERTIES 4
Item 3. LEGAL PROCEEDINGS 4
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 4
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS 4
Item 6. SELECTED CONSOLIDATED FINANCIAL DATA 5
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 7
Item 7a QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK 8
Item 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA 9
Item 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING OR FINANCIAL
DISCLOSURES 18
Item 9A. CONTROLS AND PROCEDURES 18
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT 18
Item 11. EXECUTIVE COMPENSATION 18
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT 19
Item 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS 19
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 20
Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K 20
3
PART I
NEVSTAR GAMING AND ENTERTAINMENT CORPORATION
Item 1 - Business
General. The Company, a Nevada Corporation, filed a financial report with
the Securities and Exchange Commission ("SEC") on Form 10-Q, for the quarter
ended March 31, 1999. At that time, the Company owned and operated the
Mesquite Star, a hotel and casino in Mesquite, Nevada. The Company filed
no further reports with the SEC until September, 2002. The Company has
insufficient financial records or suppporting documentation to recreate these
records for the interim period because those records were lost or destroyed
as a result of the foreclosure of the principal asset of the Company, the
Mesquite Star Hotel and Casino.
During 2002, the SEC was apprised of the Company's deficiencies, and a report
was filed on Form 8-K dated September 30, 2002 summarizing the events which
had occurred during the period since its last reporting. No reports on Form
10-K will be filed by the Company for the periods ended June 30, 1999, 2000,
2001, 2002, and the interim period ended November 22, 2002. Certain
comparative financial reporting required to be disclosed on this Form 10-K
has been ommitted because of this lack of Company financial data.
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.
On November 22, 2002 the Plan of Reorganization became effective. The
Company issued 15,141,674 shares of common stock to holders of unsecured
claims;156,428 shares of common stock to certain administrative claimants
and to a previously secured claim holder, and 27,807,219 shares of common
stock to the Plan Proponents. The 7,583,687 shares of Common Stock that
were previously outstanding were retained by the holders of those shares.
There are a total of 50,715,008 shares of common Stock outstanding after
the issuance of shares under the Plan of Reorganization. The Plan of
Reorganization authorized a reverse split of the Common Stock, which it
is anticipated will be implemented concurrently with the Company's
acquisition of a business opportunity.
The Company is in the process of completing the administrative
procedures, which include the acquisition of an operating entity, to
allow it to formally emerge from the oversight of the Bankruptcy Court.
The Company does not currently have any operations.
4
NEVSTAR GAMING AND ENTERTAINMENT CORPORATION
Employees. The Company had no employees at September 13, 2004. The Company is
not a party to any collective bargaining agreements and its employees are not
represented by a labor union.
Item 2 - Properties
The Company's principal executive offices are located at 1900 Avenue of the
Stars, Suite 2410, Los Angeles, California 90067. The space is provided to
the Company without charge by W/F Investment Corp, its secured lender and
a member of W/F Nevstar LLC, a principal shareholder of the Company.
Item 3 - Legal Proceedings
The Company is not currently party to any legal proceedings.
Item 4 - Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the fourth
quarter (ending June 30, 2004) of fiscal 2003.
PART II
Item 5 - Market for Registrant's Common Equity and Related Stockholder Matters
The Company's common stock trades on the over-the-counter market under the
symbol "NVST". The table below sets forth the high and low bid prices for the
Company's common stock. Bids represent inter-dealer prices, without retail
mark-up, markdown or commissions, and may not represent actual transactions.
Period High Low
------ ---- ----
Calendar 2003
1st Quarter................................................ .001 .001
2nd Quarter................................................ .001 .001
3rd Quarter................................................ .001 .001
4th Quarter................................................ .001 .001
Calendar 2004
1st Quarter................................................ .001 .001
2nd Quarter................................................ .001 .001
5
NEVSTAR GAMING AND ENTERTAINMENT CORPORATION
As of September 13, 2004, there were approximately 671 beneficial owners of
50,715,008 outstanding shares of the Company's common stock, held by
approximately 671 shareholders of record.
The Company has not paid a dividend on its common stock since inception.
Item 6 - Selected Financial Data
Year ended Period November 22, 2002
June 30, 2004 through June 30, 2003
---------------- ------------------------ --------------------------
Revenues $ 0 $ 0
Net loss ($78,612) (36,007)
Total assets 0 0
Long-term debt 491,878 456,773
Net loss per
share of common stock (0.00) (0.00)
6
NEVSTAR GAMING AND ENTERTAINMENT CORPORATION
SUMMARY OF QUARTERLY OPERATIONS
(Unaudited)
Quarter ended Quarter ended Quarter ended Quarter ended
September 30, 2003 December 31, 2003 March 31, 2004 June 30, 2004
--------------- --------------- --------------- ---------------
Revenues $ -- $ -- $ -- $ --
Expenses:
General and
administrative 11,392 20,389 10,535 7,918
------ ------ ------ -------
Operating loss (11,392) (20,389) (10,535) (7,918)
Other income -- -- -- --
Interest expense 6,686 7,053 7,180 7,459
-------- -------- ------- -------
Net income(loss) ($18,078) ($27,442) ($17,715) ($15,377)
========= ========= ========= =========
Net income(loss) per
share of common stock ($0.00) ($0.00) ($0.00) ($0.00)
Weighted average number
of shares outstanding 50,715,008 50,715,008 50,715,008 50,715,008
7
NEVSTAR GAMING AND ENTERTAINMENT CORPORATION
Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995.
This Annual Report on Form 10-K 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: the ability of the Company to successfully complete the
conditions of the Plan of Reorganization; the ability to develop, fund and
execute an operating plan for the Company; the ability of the Company to have
sufficient funds available to pay its liabilities as they come due; the
ability of the Company to repay its secured lender, or to renegotiate the
terms of its secured debt; and 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.
Overview
The Notes to the Financial Statements are an integral part of
Management's Discussion and Analysis of Financial Condition and Results of
Operations and should be read in conjunction herewith.
LIQUIDITY AND CAPITAL RESOURCES
The Company has met its obligations through a credit facility consisting
of 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 Company currently owes $322,020
plus accrued interest of $28,334 on this line of credit. There is no
assurance that W/F Investment Corp will continue to fund the Company's
obligations as they become due, and the Company has no current operations
to provide funds, nor does it have sufficient credit-worthiness or
unpledged assets to seek other loans.
STOCK OPTIONS
The Company has no stock option plan, and there are currently no stock options
outstanding.
8
NEVSTAR GAMING AND ENTERTAINMENT CORPORATION
Results of Operations
Fiscal 2003 and 2003
The Company's Bankruptcy Plan of Reorganization became effective November 22,
2002. The Company is in the process of completing the administrative
procedures, which include the acquisition of an operating entity, 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.
Impact of Inflation
The Company currently has no operations. The interest rate on the Company's
line of credit is indexed using the prime (reference) rate, which could be
affected by inflation.
Foreign Currency Transactions
The Company currently has not operations, and has no exposure to foreign
currency exchange rate risk.
Item 7A - Quantitative and Qualitative Disclosures About Market Risk
The Company owns no financial instruments or other assets, nor has it entered
into any contracts or commitments, which would expose it to market risks such
as interest rate risk, foreign currency exchange rate risk or commodity
price risk as required to be disclosed pursuant to Regulation S-K, Item 305,
of the 1934 Securities Exchange Act, as amended.
9
NEVSTAR GAMING AND ENTERTAINMENT CORPORATION
Item 8 - Financial Statements and Supplementary Data
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Page
Independent Auditors' Report 10
Balance Sheets at
June 30, 2004 and 2003 11
Statement of Operations for the Year Ended June 30, 2004,
for Period November 22, 2002 through June 30, 2003, and for
the Period November 22, 2002 through June 30, 2004 12
Statement of Cash Flows for the Year Ended June 30, 2004,
for Period November 22, 2002 through June 30, 2003, and for
the Period November 22, 2002 through June 30, 2004 13
Statement of Shareholders' Deficit for for
Period November 22, 2002 through June 30, 2004 14
Notes to Financial Statements 15
ALL OTHER SCHEDULES FOR WHICH PROVISION IS MADE IN THE APPLICABLE ACCOUNTING
REGULATION OF THE SECURITIES AND EXCHANGE COMMISSION ARE NOT REQUIRED UNDER
THE RELATED INSTRUCTIONS OR ARE INAPPLICABLE, AND THEREFORE HAVE BEEN OMITTED.
10
INDEPENDENT AUDITORS' REPORT
Board of Directors
Nevstar Gaming and Entertainment Corporation
We have audited the accompanying balance sheets of Nevstar Gaming and
Entertainment Corporation(the "Company") as of June 30, 2004 and
June 30, 2003 and the related statements of operations, shareholders'
deficit and cash flows for the year ended June 30, 2004, for the
period from November 22, 2002 through June 30, 2003, and for the period
from November 22, 2002 through June 30, 2004. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with the standards established by
the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Nevstar Gaming and
Entertainment Corporation as of June 30, 2004 and June 30, 2003, and the
results of its operations and its cash flows for the year ended June 30, 2004,
for the period from November 22, 2002 through June 30, 2003, and for the
period November 22, 2002 through June 30, 2004 in conformity with
accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company did not generate revenue and is not
operating which raise substantial doubt about its ability to continue as a
going concern. Management's plans in regard to these matters are described
in Note 2. The financial statement does not include any adjustments that
might result from the outcome of this uncertainty.
Rose, Snyder & Jacobs
A Corporation of Certified Public Accountants
Encino, California
September 13, 2004
11
NEVSTAR GAMING AND ENTERTAINMENT CORPORATION
BALANCE SHEETS
June 30, June 30,
2004 2003
ASSETS
Current Assets $ -- $ --
------ ------
Total assets $ -- $ --
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $57,086 $57,996
Accrued interest 28,184 15,767
Current portion of long-term debt - Note 3 32,000 -
------- ------
Total current liabilities $117,270 $73,763
Long Term Liabilities
Pre-petition tax liabilities - net of current
portion - Note 3 $161,858 $194,858
Long-term credit facility-related party - Note 4 330,020 $261,915
-------- --------
Total Liabilities $609,148 $530,536
Shareholders' Equity (deficit)
Common stock $.01 par value; 126,396,450
shares authorized; 50,715,008 shares issued
and outstanding 507,150 507,150
Accumulated deficit, prior to development
stage - Note 6 (1,001,679) (1,001,679)
Accumulated deficit, during development stage (114,619) (36,007)
------------ ------------
Total shareholders' equity (deficit) (609,148) (530,536)
----------- -----------
$ -- $ --
=========== ===========
SEE INDEPENDENT AUDITORS' REPORT AND NOTES TO FINANCIAL STATEMENTS.
12
NEVSTAR GAMING AND ENTERTAINMENT CORPORATION
STATEMENT OF OPERATIONS
For the year ended For the period from For the period from
June 30, 2004 November 22, 2002 November 22, 2002
(Inception of the (Inception of the
development stage) development stage)
to June 30, 2003 to June 30, 2004
Revenue
$ - $ - $ -
Expenses
General and administrative 50,234 40,240 90,474
------- ------- -------
Other income - Note 7 - 20,000 20,000
Interest expense 28,378 15,767 44,145
------- ------- -------
Net loss ($78,612) ($36,007) ($114,619)
======== ========= ==========
Basic and diluted income
(loss) per share:
Loss from continuing
operations ($0.00) ($0.00) ($0.00)
------- ------- -------
Net income (loss) ($0.00) ($0.00) ($0.00)
======= ======= =======
Weighted average shares
outstanding 50,715,008 50,715,008 50,715,008
SEE INDEPENDENT AUDITORS' REPORT AND NOTES TO FINANCIAL STATEMENTS.
13
NEVSTAR GAMING AND ENTERTAINMENT CORPORATION
STATEMENT OF CASH FLOWS
For the year ended For the period from For the period from
June 30, 2004 November 22, 2002 November 22, 2002
(Inception of the (Inception of the
development stage) development stage)
to June 30, 2003 to June 30, 2004
OPERATING ACTIVITIES
Net loss ($78,612) ($36,007) ($114,619)
Adjustments to reconcile
net(loss) to net cash used
in operating activities:
Changes in assets and liabilities:
Accounts payable (910) (20,050) (20,960)
Accrued interest 12,417 15,767 28,184
--------- --------- ---------
Net cash used in operating activities (67,105) (40,290) (107,395)
FINANCING ACTIVITIES
Cash provided by long-term debt 67,105 40,290 107,395
--------- --------- ----------
Net cash for the period $0 $0 $0
Net cash at beginning of period 0 0 0
--------- --------- ---------
Net cash at end of period $0 $0 $0
========= ========= =========
Cash payments:
Interest $16,000 $0 $16,000
Taxes $0 $0 $0
SEE INDEPENDENT AUDITORS' REPORT AND NOTES TO FINANCIAL STATEMENTS.
14
NEVSTAR GAMING AND ENTERTAINMENT CORPORATION
STATEMENT OF SHAREHOLDERS' EQUITY
Number of Common Accumulated Accumulated Total
Shares Stock Deficit, prior Deficit Shareholders'
to development development Deficit
stage stage
Balance at
November 22, 2002 50,715,008 $507,150 $(1,001,679) $ --- $(494,529)
Net loss for the year
ended June 30, 2003 -- -- -- $(36,007) (36,007)
---------- ------- ----------- --------- ----------
Balance at
June 30, 2003 50,715,008 $507,150 $(1,001,679) $(36,007) $(530,536)
Net loss for the year
ended June 30, 2004 -- -- -- $(78,612) (78,612)
---------- ------- ----------- --------- ----------
Balance at
June 30, 2003 50,715,008 $507,150 $(1,001,679) $(114,619) $(609,148)
SEE INDEPENDENT AUDITORS' REPORT AND NOTES TO FINANCIAL STATEMENTS.
15
NEVSTAR GAMING AND ENTERTAINMENT CORP
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2003
1. ORGANIZATION, INTERMIN EVENTS AND BANKRUPTCY PROCEEDINGS
The Company, a Nevada Corporation, filed its last financial report to
the Securities and Exchange Commission on Form 10-Q, for the quarter ended
March 31, 1999. At that time, the Company owned and operated the Mesquite
Star, a hotel and casino in Mesquite, Nevada.
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.
On November 22, 2002 the Plan of Reorganization became effective. The
Company issued 15,141,674 shares of common stock to holders of unsecured
claims; 156,428 shares of common stock to certain administrative claimants
and to a previously secured claim, and 27,807,219 shares of common stock
to the Plan Proponents. The 7,583,687 shares of Common Stock that were
previously outstanding were retained by the holders of those shares. There
are a total of 50,715,008 shares of common Stock outstanding after the
issuance of shares under the Plan of Reorganization.
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 does not currently have any operations.
Note 2 - Going Concern and Summary of Significant Accounting Policies
Going Concern
The accompanying financial statement has 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 itself as a merger vehicle for a
company that may desire to go public through a merger rather than through
its own public stock offering.
See independent auditors' report.
16
NEVSTAR GAMING AND ENTERTAINMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2003
Note 2 - Going Concern and Summary of Significant Accounting Policies
(Continued)
Accounting for Reorganization
The Company applied Financial Accounting Standards No. 15 ("Accounting
for Debtors and Creditors for Troubled Debt Restructuring") for its
emergence from Bankruptcy. The Company also adopted the Fresh Start
Reporting (see Note 6).
Use of estimates
The preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the amounts
and disclosures reported in the accompanying financial statements. Significant
estimates made in preparing these financial statements include 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 liablity method to account for income taxes.
Under this method, deferred taxes 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 $193,858 payable to the Nevada
Department of Taxation and the Nevada Gaming Authority. Pursuant to the
Bankruptcy Code and stipulations entered into between the parties and the
Company, the amounts will be paid in full, plus interest at 5% in quarterly
payments commencing January, 2004 and ending September, 2009. Payments due
on these liabilities during the next five years are as follows:
Fiscal Year Ending June 30,
---------------------------
2005 $32,000
2006 $32,000
2007 $32,000
2008 $32,000
2009 $32,000
Note 4 - Long Term Credit Facility, Related Party
The credit facility consists of $330,020 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 has been used to pay the Company's
obligations, including the bankruptcy related allowed administrative
expenses, accounting, legal and related expenses. The line of credit bears
interest at prime plus 2%, payable monthly. It is due October 31, 2007.
Accrued interest on the credit facility totalled $28,334 as of June 30, 2004.
See independent auditors' report.
17
NEVSTAR GAMING AND ENTERTAINMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2004
Note 5 - Income Taxes
At June 30, 2004 the Company had net operating loss carryforwards
of approximately $1.1 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 June 30, 2004, total deferred tax assets,
consisting principally of net operating loss carry forwards, amounted to
approximately $375,000. 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.
Note 6 - Fresh Start Reporting
In accordance with its Plan of Reorganization, the Company converted
unsecured liabilities amounting to approximately $18,300,000 to 15,167,674
shares of its common stock. The Company also issued 156,428 shares of its
common stock in payment of administrative claims totaling approximately
$20,0000, and 27,807,219 shares of its common stock to its Plan Proponents.
The shares issued were valued at $0.01 per share, generating a gain on debt
forgiveness of approximately $18,000,000. The amount of accumulated deficit
prior to the reclassification in accordance with Fresh Start Reporting
amounted to approximately $19,000,000. 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 accumulated deficit after
the adjustement requred by the Fresh Start Reporting represents the
"Excess Reorganization Value", which was impaired due to the fact that no
cash flows are expected in the foreseeable future.
Note 7 - Other Income
On October 12, 2001, the Company entered into a settlement agreement
with certain former creditors of the Company by which, among other conditions
of mutual release, the creditors were to pay the Company $35,000 on the
Effective Date of the Plan of Reorganization. The Company received the funds,
net of $15,000 paid to a former director and a party to the agreement, in
June, 2003 and recorded the receipt as Other Income.
See independent auditors' report.
18
NEVSTAR GAMING AND ENTERTAINMENT CORPORATION
Item 9 - Changes In and Disagreements with Accountants on Accounting or
Financial Disclosure
As reported on Form 8-K dated December 3, 2002, on November 25, 2002 the
Company engaged Rose, Snyder & Jacobs ("Rose Snyder") as the Company's
independent auditors and for other independent accounting and tax-related
services on an ongoing basis, to replace the firm of Piercy Bowler Taylor
& Kern, who were dismissed as auditors of the Company. Piercy Bowler
Taylor & Kern were engaged on March 18, 2002 and did not issue any
reports on the Company's financial statements. In connection with the
audit of the Company's financial statements during the interim period
of Piercy Bowler Taylor and Kern's engagement, there were no disagreements
with Piercy Bowler Taylor and Kern on any matter of accounting principles
or practice, financial statement disclosure, or auditing scope or procedures.
Item 9A - Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that
information required to be disclosed in the reports filed or
submitted under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the SEC's rules
and forms. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information
required to be disclosed in the reports filed under the Exchange Act is
accumulated and communicated to management, to allow timely decisions
regarding required disclosures.
Within the 90 days prior to this report, the Company carried out an
evaluation under the supervision and with the participation of the
Company's management, including the Company's Chief Executive Officer
and Chief Financial Officer, of the effectiveness of the design and
operation of the Company's disclosure controls and procedures. Based
upon and as of the date of that evaluation, the Company's Chief
Executive Officer and Chief Financial Officer concluded that the
Company's disclosure controls and procedures are effective to ensure
that the information required to be disclosed in the reports the
Company files and submits under the Exchange Act is recorded,
processed, summarized, and reported as and when required.
(b) Changes in Internal Controls
There were no changes in the Company's internal controls or in other
factors that could have significantly affected those controls subsequent
to the date of the Company's most recent evaluation.
PART III
Item 10 - Directors and Executive Officers of the Registrant
The Company's by-laws provide for the number of Directors of the Company
to be fixed from time to time by resolution of the Board. The Board has
not made a resolution determining the allowed number of Directors.
Directors are elected at each Annual Meeting of Shareholders to serve
thereafter until their successors have been duly elected and qualified.
The following table provides certain information as of September 13, 2004 for
each director and executive officer of the Company:
Name Age Position with the Company
William O. Fleischman 59 Chairman of the Board, Chief Executive and
Chief Financial Officer
Douglas Hrdlicka 61 Director, Secretary
William O. Fleischman has been an officer and director since
November 22, 2002. Mr. Fleischman, in his individual capacity or
through W/F Investment Corp and its affiliates, has substantial experience
investing in and managing companies. Mr. Fleischman is also an attorney
officed in Century City.
Mr. Hrdlicka has been an officer and director since November 22, 2002.
Mr. Hrdlicka has substantial experience in the operations and management
of companies in the service industry with a strong background in
marketing and advertising. For the past ten years, he has been involved
in turn-around strategies in some of the country's largest beverage
distribution networks.
None of the officers or directors of the Company is related to any other
officer or director of the Company. Officers are appointed by the Board of
Directors and serve at the pleasure of the Board of Directors or until they
resign. At present two officers of W/F Investment Corp, the Company's secured
lender and a principal shareholder of the Company, serve on the
Company's Board of Directors.
19
NEVSTAR GAMING AND ENTERTAINMENT CORPORATION
COMPLIANCE WITH SECTION 16(a)
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's executive officers and directors and persons who own more than 10%
of a registered class of the Company's equity securities to file with the
Securities and Exchange Commission initial statements of beneficial ownership,
reports of changes in ownership and annual reports concerning their ownership
of commons stock and other equity securities of the Company, on Forms 3, 4
and 5 respectively. Executive officers, directors and greater than 10%
shareholders are required by Commission regulations to furnish the Company with
copies of all Section 16(a) reports they file. To the best of the Company's
knowledge (based solely upon a review of the Forms 3, 4, and 5 filed), no
officer, director or 10% beneficial shareholder failed to file on a timely
basis any reports required by Section 16(a) of the Securities Exchange Act
of 1934, as amended.
Item 11 - Executive Compensation
Compensation of Directors and Executive Officers
The Executive Officers and Directors of the Company received
no compensation during fiscal 2001, 2002 and 2003.
Item 12 - Security Ownership of Certain Beneficial Owners and Management
Security Ownership of Certain Beneficial Owners
The following table sets forth information with respect (1) to those persons
known by the Company to own beneficially more than 5% of the Company's common
stock as of September 13, 2004 and (2)shares of the Company's outstanding
common stock which are owned beneficially by each director and nominee and
the aggregate number of shares owned beneficially by all directors, nominees
and officers as a group as of September 13, 2004.
Amount and Nature
Name and Address of of Beneficial Percent of
Beneficial Owner Ownership Class
William O. Fleischman 27,807,219 (1) 54.83%
1900 Avenue of the Stars, Suite 2410
Los Angeles, CA 90067
Director, Chief Executive and
Chief Financial Officer
All officers and directors as a
group (2 persons) 27,807,219 54.83%
(1) Consists of 27,807,219 shares of common stock owned by W/F Nevstar LLC.
W/F Investment Corp, of which Mr. Fleischman is a 93% shareholder, owns 77%
of W/F Nevstar LLC.
Item 13 - Certain Relationships and Related Transactions
Two directors of the Company, Mr. William O. Fleischman and Mr. Douglas
Hdrlicka, are principals and officers and directors of W/F Investment
Corp, the Company's secured lender and a member of W/F Nevstar LLC, a
principal shareholder of the Company.
20
NEVSTAR GAMING AND ENTERTAINMENT CORPORATION
Item 14 - Principal Accountant Fees and Services
(1) Audit Fees - The aggregate fees billed for each of the last two fiscal
years for professional services rendered by Piercy, Bowler, Taylor and
Kern, the Company's former principal accountant, and Rose, Synder
& Jacobs, the Company's principal accountant, for the audit of the
Company's annual financial statements and review of the financials
statements included in the Company's Form 10-Q are as follows:
Accounting Firm Billings for the Billings for the
Fiscal Year Ended Fiscal Year Ended
June 30, 2003 June 30, 2004
Piercy Bowler Taylor & Kerns $13,452 $ -
Rose, Snyder & Jacobs $12,500 $14,500
(2) Audit-Related Fees - No other Audit-Related fees were billed in the last
two fiscal years.
(3) Tax Fees - No tax fees were billed in the last two fiscal years.
(4) All Other Fees - No other fees were billed in the last two fiscal years.
(5) Prior the engagement of Rose, Snyder & Jacobs as the Company's independent
auditors, the Company's Board of Directors, acting as the Audit Committee,
approved the engagement and determined that Rose, Snyder & Jacobs was
qualified and independent in both fact and appearance. The Board of
Directors conducted a review of fees and compensation arrangements,
prior or current business relationships and other services performed by
Rose, Snyder & Jacobs for the Company in making this determination.
Item 15 - Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) The financial statements and financial statement schedules filed as part
of this report are listed on the Index to Financial Statements and
Schedules on page 6.
Exhibits
2.1 (5) Second Amended Plan of Reorganization dated as of April 17, 2000
99.1 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K during the quarter ended
June 30, 2004.
(c) Exhibits
All exhibits required by Item 601 of Regulation S-K have been filed.
(d) Financial Statement Schedules
All other financial statement schedules which are required by the
regulations of the Securities and Exchange Commission are either
inapplicable or are included as part of Item 8 herein.
21
NEVSTAR GAMING AND ENTERTAINMENT CORPORATION
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Dated: September 13, 2004
NEVSTAR GAMING AND ENTERTAINMENT CORP
By: S/William O. Fleischman
William O. Fleischman
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following officers and directors of Nevstar
Gaming & Entertainment Corp., on behalf of the Company, in the capacities
and in the dates indicated.
Chairman of the Board, Chief Executive and
Chief Financial Officer
September 13, 2004 By: /s/William O. Fleischman
William O. Flieschman
Director and Secretary
Septebmer 13, 2004 By: /s/Douglas Hrdlicka
Douglas Hrdlicka