U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB
[X[ ANNUAL REPORT PURSUANT TO SECTION 13
OF THE SECURITIES EXCHANGE ACT
For the Fiscal Year Ended December 31, 1998
Commission File No. 0-29582
UNITED COMMUNITY HOLDINGS, INC.
(Name of Small Business Issuer as specified in its Charter)
<TABLE>
<S> <C> <C> <C>
Nevada 16910 Dallas Parkway, Suite 100, Dallas, Texas 75248 75-2300997
(State or Other Jurisdiction (Address of Principal Executive Office, (IRS Employer
of incorporation) including Zip Code) Identification No.)
</TABLE>
(972) 248-1922
(Registrant's telephone number, including area code)
(Registrant's former name: Pacific Great China Co., Ltd.)
Securities Registered under Section 12(b) of the Exchange Act:
Title of each Class Name of Each Exchange on which Registered
None None
Securities registered Under Section 12(g) of the Exchange Act: Common Stock,
$0.00001 Par Value
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of management'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 ]
State issuer's revenues for its most recent fiscal year: $-0-.
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days: $-0-(stock is not quoted).
As of March 15, 1999 the issuer had 8,000,818 shares of common stock issued and
outstanding.
1
<PAGE>
PART I
Item 1. Description of Business.
- --------------------------------
General
United Community Holdings, Inc. (the "Company") was incorporated on May
31, 1989 under the laws of the State of Delaware, under the name
Professionalistics, Inc. In 1996 the Company changed its name to Pacific Great
China Co., Ltd., at the request of, and in anticipation of the sale of shares
representing control of the corporation to, a group of investors; however, the
sale never occurred. The Company subsequently filed a registration statement on
Form 10-SB under The Securities Exchange Act of 1934, as amended, with the
Securities and Exchange Commission on November 5, 1997 which became effective in
January of 1998. The Company has not yet engaged in any business operations. The
business purpose of the Company is to seek out and obtain an acquisition, merger
or outright sale transaction, whereby its shareholders would benefit.
It is the intention of the Company's management to keep its SEC
periodic reporting current and advance funds to ensure this so that the Company
might be potentially attractive to a private business that has an interest in
becoming a publicly-held company, without the expense and time delay involved in
distributing its securities to the public.
Proposed Business
The Company intends to locate and combine with an existing, privately
held company, which is profitable, or, in management's view, has growth
potential, irrespective of the industry in which it is engaged. However, the
Company does not intend to combine with a private company that may be deemed to
be an investment company subject to the Investment Company Act of 1940. A
combination may be structured as a merger, consolidation, exchange of the
Company's common stock for stock or assets or any other form that will result in
the combined enterprise's becoming a publicly held corporation.
Pending negotiation and consummation of a combination, the Company
anticipates that it will have, aside from carrying on its search for a
combination partner, no business activities, and, thus, will have no source of
revenue. Should the Company incur any significant liabilities prior to a
combination with a private company, it may not be able to satisfy such
liabilities as they are incurred.
If the Company's management pursues one or more combination
opportunities beyond the preliminary negotiations stage and those negotiations
are subsequently terminated, it is foreseeable that such efforts will exhaust
the Company's ability to continue to seek such combination opportunities before
any successful combination can be consummated. In that event, the Company's
common stock will become worthless and holders of the Company's common stock
will receive a nominal distribution, if any, upon the Company's liquidation and
dissolution.
Combination Suitability Standards
In its pursuit for a combination partner, the Company's management
intends to consider only combination candidates, which are profitable, or, in
management's view, have growth potential. The Company's management does not
intend to pursue any combination proposal beyond the preliminary negotiation
2
<PAGE>
stage with any combination candidate that does not furnish the Company with
audited financial statements for at least its most recent fiscal year and
unaudited financial statements for interim periods subsequent to the date of
such audited financial statements, or is in a position to provide such financial
statements in a timely manner. In the event such a combination candidate is
engaged in a high technology business, the Company may obtain reports from
independent organizations of recognized standing covering the technology being
developed and/or used by the candidate. The Company's limited financial
resources may make the acquisition of such reports difficult or even impossible
to obtain and, thus, there can be no assurance that the Company will have
sufficient funds to obtain such reports when considering combination proposals
or candidates. To the extent the Company is unable to obtain the advice or
reports from experts, the risks of any combined enterprise's being unsuccessful
will be enhanced. Furthermore, to the knowledge of the Company's officers and
directors, neither the candidate nor any of its directors, executive officers,
principal shareholders or general partners:
(1) will have been convicted of securities fraud, mail fraud, tax fraud,
embezzlement, bribery, or a similar criminal offense involving
misappropriation or theft of funds, or be the subject of a pending
investigation or indictment involving any of those offenses;
(2) will have been subject to a temporary or permanent injunction or
restraining order arising from unlawful transactions in securities,
whether as issuer, underwriter, broker, dealer, or investment advisor,
may be the subject of any pending investigation or a defendant in a
pending lawsuit arising from or based upon allegations of unlawful
transactions in securities; or
(3) will have been a defendant in a civi1 action which resulted in a final
judgement against it or him awarding damages or rescission based upon
unlawful practices or sales of securities.
The Company's officers and directors will make these determinations by
asking pertinent questions of the management of prospective combination
candidates. Such persons will also ask pertinent questions of others who may be
involved in the combination proceedings. However, the officers and directors of
the Company will not generally take other steps to verify independently
information obtained in this manner which is favorable. Unless something comes
to their attention that puts them on notice of a possible disqualification which
is being concealed from them, such persons will rely on information received
from the management of the prospective combination candidate and from others who
may be involved in the combination proceedings.
Item 2. Description of Property.
- --------------------------------
As of December 31, 1998, the Company has no properties.
Item 3. Legal Proceedings.
- ---------------------------
The Company is not a party to any material pending litigation nor is it
aware of any threatened legal proceeding.
Item 4. Submission of Matters to a Vote of Security Holders.
- ------------------------------------------------------------
No matters were submitted to securities holders during the year ended
December 31, 1998.
3
<PAGE>
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
- -----------------------------------------------------------------
Market Information
The stock does not trade on any exchange or the OTC market. There is no
known public market for this security. As of March 15, 1999, there were 681
holders on record of the Company's common stock, holding a total of 8,000, 818
shares.
Dividend Policy
The Company has never paid any dividends on its common stock and does
not have any current plan to pay any dividends in the foreseeable future.
Item 6. Management's Discussion and Analysis of Financial Condition and Plan of
Operation.
- --------------------------------------------------------------------------------
Discussion of Financial Condition
The Company currently has no revenues, no operations and owns no
assets. The Company will remain illiquid until such time as a business
combination transaction occurs. No prediction of the future financial condition
of the Company can be made.
Due to the lack of sustaining operations from inception, the
Company is considered in the development stage and, as such, has generated no
significant operating revenues and has incurred cumulative operating losses of
approximately $5500. Accordingly, the Company is dependent upon its current
management and/or significant stockholders to provide sufficient working capital
to preserve the integrity of the corporation during this phase.
Plan of Business
General. The Company intends to locate and combine with an existing,
privately held company which is profitable or, in management's view, has growth
potential, irrespective of the industry in which it is engaged. However, the
Company does not intend to combine with a private company that may be deemed to
be an investment company subject to the Investment Company Act of 1940. A
combination may be structured as a merger, consolidation, exchange of the
Company's common stock for stock or assets or any other form that will result in
the combined enterprise's becoming a publicly held corporation.
Pending negotiation and consummation of a combination, the Company
anticipates that it will have, aside from carrying on its search for a
combination partner, no business activities, and, thus, will have no source of
revenue. Should the Company incur any significant liabilities prior to a
combination with a private company, it may not be able to satisfy such
liabilities as they are incurred.
If the Company's management pursues one or more combination
opportunities beyond the preliminary negotiations stage and those negotiations
are subsequently terminated, it is foreseeable that such efforts will exhaust
the Company's ability to continue to seek such combination opportunities before
4
<PAGE>
any successful combination can be consummated. In that event, the Company's
common stock will become worthless and holders of the Company's common stock
will receive a nominal distribution, if any, upon the Company's liquidation and
dissolution.
Combination Suitability Standards. In its pursuit for a combination
partner, the Company's management intends to consider only combination
candidates which are profitable or, in management's view, have growth potential.
The Company's management does not intend to pursue any combination proposal
beyond the preliminary negotiation stage with any combination candidate which
does not furnish the Company with audited financial statements for at least its
most recent fiscal year and unaudited financial statements for interim periods
subsequent to the date of such audited financial statements, or is in a position
to provide such financial statements in a timely manner. In the event such a
combination candidate is engaged in a high technology business, the Company may
obtain reports from independent organizations of recognized standing covering
the technology being developed and/or used by the candidate. The Company's
limited financial resources may make the acquisition of such reports difficult
or even impossible to obtain and, thus, there can be no assurance that the
Company will have sufficient funds to obtain such reports when considering
combination proposals or candidates. To the extent the Company is unable to
obtain the advice or reports from experts, the risks of any combined
enterprise's being unsuccessful will be enhanced. Furthermore, to the knowledge
of the Company's officers and directors, neither the candidate nor any of its
directors, executive officers, principal shareholders or general partners:
(1) will have been convicted of securities fraud, mail fraud, tax fraud,
embezzlement, bribery, or a similar criminal offense involving
misappropriation or theft of funds, or be the subject of a pending
investigation or indictment involving any of those offenses;
(2) will have been subject to a temporary or permanent injunction or
restraining order arising from unlawful transactions in securities,
whether as issuer, underwriter, broker, dealer, or investment advisor,
may be the subject of any pending investigation or a defendant in a
pending lawsuit arising from or based upon allegations of unlawful
transactions in securities; or
(3) will have been a defendant in a civil action which resulted in a final
judgement against it or him awarding damages or rescission based upon
unlawful practices or sales of securities.
The Company's officers and directors will make these determinations by
asking pertinent questions of the management of prospective combination
candidates. Such persons will also ask pertinent questions of others who may be
involved in the combination proceedings. However, the officers and directors of
the Company will not generally take other steps to verify independently
information obtained in this manner which is favorable. Unless something comes
to their attention which puts them on notice of a possible disqualification
which is being concealed from them, such persons will rely on information
received from the management of the prospective combination candidate and from
others who may be involved in the combination proceedings.
RECENT DEVELOPMENTS
- -------------------
Prior to the merger of Pacific Great China Co., Ltd. with and into
United Community Holdings, Inc. ("UCHI"), described below, the Company did not
engage in any business activities and the business purpose of the Company was to
seek out and find an acquisition or merger transaction whereby its stockholders
would benefit by owning an interest in a viable business enterprise. Since the
Company had no operations or significant assets, its principal potential for
profits came solely from operations it would receive in the future as part of an
acquisition or merger transaction. Such a merger or acquisition transaction with
the Company would allow a privately held company to become a publicly owned
corporation with a broad shareholder base with experiencing the significant time
and filing requirements and financial expenditures typically imposed by federal
and state securities laws.
5
<PAGE>
On November 19, 1998 Halter Capital Corporation (then the controlling
shareholder of the Company) executed a Stock Purchase Agreement with James F.
Robinson of Jackson, Mississippi and the sole owner of the Rosemont Gardens and
Funeral Home (herein "Robinson") whereby it agreed to sell him a controlling
interest in the Company, consisting of 7,200,000 shares of common stock, in
anticipation of a reverse merger transaction whereby the Company would merge
with a privately held company incorporated under the laws of the State of
Nevada.
MERGER WITH UNITED COMMUNITY HOLDINGS, INC.
On December 16, 1998, United Community Holdings, Inc. ("UCHI") was
incorporated under the laws of the State of Nevada. On December 17, 1998,
Pacific Great China Co., Ltd. ("PGCC") executed a merger agreement with UCHI
whereby PGCC would be merged with and into UCHI thereby changing the Company's
state of incorporation. As a result of this merger, the Company's stockholders
received one share of UCHI's common stock in exchange for each share of PGCC's
common stock then outstanding. United Community Holdings, Inc. is the surviving
corporation resulting from that merger and the Articles of Incorporation and
Bylaws of UCHI now govern the merged corporation.
ACQUISITION OF ROSEMONT GARDENS FUNERAL CHAPEL-CEMETERY, INC.
Rosemont Gardens Funeral Chapel-Cemetery, Inc. was incorporated
under the laws of the State of Mississippi on March 4, 1994. Rosemont has an
authorized capital stock of 10,000 shares of common stock, of which only 1000
shares were issued and are currently outstanding. All of its outstanding shares
were owned by James F. Robinson. Rosemont has operated a funeral home and
cemetery in Jackson, Mississippi since 1996.
As of January 1, 1999, Robinson and UCHI entered into a stock purchase
agreement (under that date) whereby Robinson sold all of stock which he then
owned in Rosemont to UCHI (representing 100% of the then issued and outstanding
shares of Rosemont) in exchange for an additional 1000 shares of the common
stock of UCHI. As a result of this transaction, Rosemont has become a wholly
owned subsidiary of UCHI and, at present, its only operating subsidiary.
The reason that the Company entered into this transaction with Robinson
was so that it could complete an acquisition or merger transaction whereby its
stockholders would benefit by owning an interest in a viable business enterprise
with a history of operations. Specifically, UCHI desired to enter into a
transaction with a company such as Rosemont that on a consolidated basis either
presently qualified, or in the near future would qualify, for listing on the
Nasdaq Small Cap Market. For these reasons, UCHI believed that it could best
enhance its stockholders' investment by consummating this transaction with
Robinson.
6
<PAGE>
Item 7. Financial Statements.
- -----------------------------
Page
Report of Independent Certified Public Accountants F-1
Financial Statements
Balance Sheets as of December 31, 1998, 1997 and 1996 F-2
Statements of Operations and Comprehensive Income F-3
for the years ended December 31, 1998, 1997 and 1996
and for the period May 31, 1989 (date of inception)
to December 31, 1998
Statement of Changes in Shareholder's Equity F-4
for the years ended December 31, 1998,1997 and 1996
and for the period May 31, 1989 (date of inception)
to December 31, 1998
Statements of Cash Flows F-6
for the years ended December 31, 1998, 1997 and 1996
and for the period May 31, 1989 (date of inception)
to December 31, 1998
Notes to Financial Statement F-7
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures.
- --------------------------------------------------------------------------------
None
7
<PAGE>
PART III
Item 9. Directors. Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act.
- --------------------------------------------------------------------------------
The only officer and director of the Company is Kevin B. Halter, Jr., age 38,
who is its President, Secretary and sole Director Set forth below is a
description of the background of the only officer and director of the Company.
Kevin B. Halter, Jr. has served as President, Secretary and the only Director of
the Company since May 1995. Mr. Halter has served as Vice President, Secretary
and a director of Millennia, Inc. since January 1994. He has been President of
Securities Transfer Corporation, a registered stock transfer company, since
1987. Mr. Halter has served as Vice President and Secretary of Halter Capital
Corporation (a privately owned consulting firm) since 1987.
Item 10. Executive Compensation.
- --------------------------------
The Company's management is not currently compensated for services
provided to the Company, and no compensation has been accrued and none is
expected to be accrued in the future.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
- ------------------------------------------------------------------------
The following table set forth the names and addresses of each of the
persons known by the Company to own beneficially 5% or more of the common stock
of the Company, as well as the common stock ownership of each of the officers
and directors of the Company as of March 15, 1999.
Name and Address Number of Shares Percentage of Ownership
James F. Robinson 7,201,000 90%
3935 Interstate 55 South
Jackson MS 39212
Halter Capital Corporation(A) 550,129 6.9%
16910 Dallas Parkway
Suite 100
Dallas, Texas 75248
Kevin B. Halter, Jr. 6,735 nil
All officers and directors as
a group (one person) 6,735 0%
- --------------------------------------------------------------------------------
(A) Kevin B. Halter, Jr. serves as a director and officer of Halter Capital
Corporation and as a result may be deemed to be the beneficial owner of the
550,129 shares beneficially owned by Halter Capital Corporation. However,
pursuant to Rule 16a-3 promulgated under the Exchange Act, he expressly
disclaims that he is the beneficial owner, for the purpose of Section 16 of the
Exchange Act, of such stock, other than those shares in which he has an economic
interest.
8
<PAGE>
Item 12. Certain Relationships and Related Transactions.
- --------------------------------------------------------
None
Item 13. Exhibits and Reports on Form 8-K.
- ------------------------------------------
Exhibits: None
Reports on Form 8-K : None
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Dated: March 16, 1999
UNITED COMMUNITY HOLDINGS, INC.
By: /s/ Kevin B. Halter
-------------------
Kevin B. Halter, President, Secretary and sole Director
<PAGE>
S. W. HATFIELD, CPA
certified public accountant
Member: American Institute of Certified Public Accountants
SEC Practice Section
Information Technology Section
Texas Society of Certified Public Accountants
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------
Board of Directors and Shareholders
United Community Holdings, Inc.
(formerly Pacific Great China Co., Ltd.)
We have audited the accompanying balance sheets of United Community Holdings,
Inc. (formerly Pacific Great China Co., Ltd. ) (a Nevada corporation and a
development stage company) as of December 31, 1998, 1997, and 1996 and the
related statements of operations and comprehensive income, changes in
shareholders' equity and cash flows for the each of the respective years then
ended and for the period May 31, 1989 (date of inception) through December 31,
1998. 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 generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 United Community Holdings, Inc.
(formerly Pacific Great China Co., Ltd.) (a development stage company) as of
December 31, 1998, 1997, and 1996, and the results of its operations and its
cash flows for the each of the respective years then ended and for the period
May 31, 1989 (date of inception) through December 31, 1998, in conformity with
generally accepted accounting principles.
/s/ S. W. HATFIELD, CPA
-----------------------
S. W. HATFIELD, CPA
(formerly S. W. HATFIELD + ASSOCIATES)
Dallas, Texas
March 13, 1999
Use our past to assist your future sm
P. O. Box 820395 9002 Green Oaks Circle, 2nd Floor
Dallas, Texas 75382-0395 Dallas, Texas 75243-7212
214-342-9635 (voice) (fax) 214-342-9601
800-244-0639 [email protected]
F-1
<PAGE>
<TABLE>
<CAPTION>
UNITED COMMUNITY HOLDINGS, INC.
(formerly Pacific Great China Co., Ltd.)
(a development stage company)
BALANCE SHEETS
December 31, 1998, 1997, and 1996
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Assets $ -- $ -- $ --
======= ======= =======
Liabilities $ -- $ -- $ --
------- ------- -------
Shareholders' Equity
Preferred stock - $0.00001 par value
10,000,000 shares authorized; none
issued and outstanding -- -- --
Common stock - $0.00001 par value
50,000,000 shares authorized
7,999,818 shares issued and outstanding,
respectively 80 80 80
Contributed capital 5,438 5,438 5,438
Deficit accumulated during
the development stage (5,518) (5,518) (5,518)
------- ------- -------
Total Shareholders' Equity -- -- --
------- ------- -------
Total Liabilities and Shareholders' Equity $ -- $ -- $ --
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
UNITED COMMUNITY HOLDINGS, INC.
(formerly Pacific Great China Co., Ltd.)
(a development stage company)
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Years ended December 31, 1998, 1997 and 1996
and the period May 31, 1989 (date of inception)
through December 31, 1998
Period from
May 31, 1989
(date of inception)
Year ended Year ended Year ended through
December 31, December 31, December 31, December 31,
1998 1997 1996 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ -- $ -- $ -- $ --
--------- --------- --------- -----------
Expenses
Rent and management fees -- -- -- 4,000
Other expenses -- -- -- 1,433
Amortization of organization costs -- -- -- 85
--------- --------- --------- -----------
Total expenses -- -- -- 5,518
--------- --------- --------- -----------
Net Loss -- -- -- (5,518)
Other Comprehensive Income -- -- -- --
--------- --------- --------- -----------
Comprehensive Income $ -- $ -- $ -- $ (5,518)
========= ========= ========= ===========
Earnings per share of common stock
outstanding, computed on net
loss - basic and fully diluted nil nil nil nil
=== === === ===
Weighted-average number
of shares of common
stock outstanding 7,999,818 7,999,818 7,999,818 7,999,818
========= ========= ========= ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
UNITED COMMUNITY HOLDINGS, INC.
(formerly Pacific Great China Co., Ltd.)
(a development stage company)
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the period May 31, 1989 (date of inception)
through December 31, 1998
Deficit
accumulated
Common Stock during the
------------ Contributed development
Shares Amount capital stage Total
------ ------ --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Issuance of stock at formation 16,000,000 $ 160 $ -- $ -- $ 160
Capital contributed to
support development -- -- 1,460 -- 1,460
Net loss for the period -- -- -- (1,545) (1,545)
---------- ---------- ---------- ---------- ----------
Balances at December 31, 1989 16,000,000 160 1,460 (1,545) 75
Capital contributed to
support development -- -- 1,700 -- 1,700
Net loss for the year -- -- -- (1,717) (1,717)
---------- ---------- ---------- ---------- ----------
Balances at December 31, 1990 16,000,000 160 3,160 (3,262) 58
Capital contributed to
support development -- -- 1,298 -- 1,298
Net loss for the year -- -- -- (1,315) (1,315)
---------- ---------- ---------- ---------- ----------
Balances at December 31, 1991 16,000,000 160 4,458 (4,577) 41
Capital contributed to
support development -- -- 900 -- 900
Net loss for the year -- -- -- (941) (941)
---------- ---------- ---------- ---------- ----------
Balances at December 31, 1992 16,000,000 160 5,358 (5,518) --
Net loss for the year -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Balances at December 31, 1993 16,000,000 $ 160 $ 5,358 $ (5,518) $ --
========== ========== ========== ========== ==========
</TABLE>
- Continued -
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
UNITED COMMUNITY HOLDINGS, INC.
(formerly Pacific Great China Co., Ltd.)
(a development stage company)
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY - CONTINUED
For the period May 31, 1989 (date of inception)
through December 31, 1998
Deficit
accumulated
Common Stock during the
------------ Contributed development
Shares Amount capital stage Total
------ ------ --------- -------- ---------
<S> <C> <C> <C> <C> <C>
Balances at December 31, 1993 16,000,000 $ 160 $ 5,358 $ (5,518) $ --
Net loss for the year -- -- -- -- --
----------- ----------- ----------- ----------- ----------
Balances at December 31, 1994 16,000,000 160 5,358 (5,518) --
Net loss for the year -- -- -- -- --
----------- ----------- ----------- ----------- ----------
Balances at December 31, 1995 16,000,000 $ 160 $ 5,358 $ (5,518) $ --
Effect of one for two reverse
stock split, including rounding (8,000,182) (80) 80 -- --
Net loss for the year -- -- -- -- --
----------- ----------- ----------- ----------- ----------
Balances at December 31, 1996 7,999,818 80 5,438 (5,518) --
Net loss for the year -- -- -- -- --
----------- ----------- ----------- ----------- ----------
Balances at December 31, 1997 7,999,818 80 5,438 (5,518) --
Net loss for the year -- -- -- -- --
----------- ----------- ----------- ----------- ----------
Balances at December 31, 1998 7,999,818 $ 80 $ 5,438 $ (5,518) $ --
=========== =========== =========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
UNITED COMMUNITY HOLDINGS, INC.
(formerly Pacific Great China Co., Ltd.)
(a development stage company)
STATEMENTS OF CASH FLOWS
Years ended December 31, 1998, 1997 and 1996
and the period May 31, 1989 (date of inception)
through December 31, 1998
Period from
May 31, 1989
(date of inception)
Year ended Year ended Year ended through
December 31, December 31, December 31, December 31,
1998 1997 1996 1998
------ ------ ------ -------
<S> <C> <C> <C> <C>
Cash Flows from Operating Activities
Net loss for the period $ -- $ -- $ -- $(5,518)
Adjustments to reconcile
net loss to net cash provided
by operating activities
Payment of organization costs -- -- -- (85)
Amortization of organizational costs -- -- -- 85
------ ------ ------ -------
Net cash used in operating activities -- -- -- (5,518)
------ ------ ------ -------
Cash Flows from Investing Activities -- -- -- --
------ ------ ------ -------
Cash Flows from Financing Activities
Issuance of common stock -- -- -- 160
Capital contributed to
support development -- -- -- 5,358
------ ------ ------ -------
Net cash used in financing activities -- -- -- 5,518
------ ------ ------ -------
Increase in Cash -- -- -- --
Cash at beginning of period -- -- -- --
------ ------ ------ -------
Cash at end of period $ -- $ -- $ -- $ --
====== ====== ====== =======
Supplemental Disclosure of
Interest and Income Taxes Paid
Interest paid for the period $ -- $ -- $ -- $ --
====== ====== ====== =======
Income taxes paid for the period $ -- $ -- $ -- $ --
====== ====== ====== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
UNITED COMMUNITY HOLDINGS, INC.
(formerly Pacific Great China Co., Ltd.)
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
Note A - Organization and Description of Business
United Community Holdings, Inc. (Company) was incorporated under the corporate
name of Professionalistics, Inc. on May 31, 1989, under the laws of the State of
Delaware, as a wholly-owned subsidiary of Debbie Reynolds Hotel and Casino, Inc.
(formerly Halter Venture Corporation), a publicly-owned corporation (DRHC). The
Company changed its name to Pacific Great China Co., Ltd. on May 8, 1996 as a
result of an action by the Company's Board of Directors in anticipation of a
business acquisition or merger transaction. Subsequently, the anticipated
business acquisition or merger transaction was mutually canceled by both
parties.
On December 17, 1998, the Company changed its state of Incorporation from
Delaware to Nevada by means of a merger with and into a Nevada corporation
formed solely for the purpose of effecting the reincorporation. The Articles of
Incorporation and Bylaws of the Nevada corporation are the Articles of
Incorporation and Bylaws of the surviving corporation. Such Articles of
Incorporation did not change the capital structure of the Company. The effect of
this action also changed the Company's name to United Community Holdings, Inc.
The Company's majority shareholder has continued to maintain the corporate
status of the Company and provides all nominal working capital support on the
Company's behalf. Because of the Company's lack of operating assets, its
continuance is fully dependent upon the majority shareholder's continuing
support. The majority shareholder intends to continue the funding of nominal
necessary expenses to sustain the corporate entity.
The Company has had no substantial operations or substantial assets since
inception. The business purpose of the Company is to seek out and obtain a
merger, acquisition or outright sale transaction whereby the Company's
shareholders will benefit.
On November 19, 1998, the Company's then majority shareholder sold 7,200,000
shares of the total 7,750,129 shares held to an unrelated third party in
anticipation of a reverse merger transaction whereby the Company would merge
with and into a privately held operating company during the first quarter of
1999.
The Company is considered in the development stage and, as such, has generated
no significant operating revenues and has incurred cumulative operating losses
of approximately $5,500.
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.
Note B - Summary of Significant Accounting Policies
1. Cash and cash equivalents
The Company considers all cash on hand and in banks, including accounts in
book overdraft positions, certificates of deposit and other highly-liquid
investments with maturities of three months or less, when purchased, to be
cash and cash equivalents.
F-7
<PAGE>
UNITED COMMUNITY HOLDINGS, INC.
(formerly Pacific Great China Co., Ltd.)
(a development stage company)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Note B - Summary of Significant Accounting Policies - Continued
2. Organization costs
Organization costs were amortized using the straight-line basis.
3. Income taxes
For the period May 31, 1989 (date of inception) through December 31, 1990,
the Company was included in the consolidated income tax return of DRHC. For
the two years ended December 31, 1992 and 1991, respectively, the Company
(and its parent, DRHC) were included in the consolidated income tax return
of the Company's majority shareholder. As of December 31, 1993, the Company
began filing its own separate federal income tax return. The Company has no
net operating loss carryforwards available to offset financial statement or
tax return taxable income in future periods.
4. Earnings per share
Earnings per share is computed by dividing net income by the composite
weighted-average number of shares of common stock outstanding during the
year. As of December 31, 1998, 1997 and 1996, the Company has no issued and
outstanding securities, options or warrants that would be deemed
potentially dilutive in the current and future periods.
Note C - Related Party Transactions
For the period May 31, 1989 (date of inception) through September 30, 1992, DRHC
provided office space and management services to the Company for a fee of $100
per month. Total expenses under this arrangement aggregated $4,000 for the
period presented from inception.
Note D - Equity Transactions
On May 8, 1996, the Board of Directors approved a one for two reverse stock
split of the Company's common stock. All amounts presented in the accompanying
financial statements reflect the effect of the reverse split as of the beginning
of the first period presented.
On May 23, 1996, the Company issued approximately 1,585,875 shares of
unregistered, restricted common stock to a group of consultants on a stock
subscription agreement. The subscription was anticipated to be satisfied with
either consulting services related to a then-pending transaction or cash.
Subsequently, during 1996, the then- pending business combination or merger
transaction was mutually canceled by both parties and, accordingly, the shares
issued under the subscription agreement were canceled and returned to the
Company.
Note E - Subsequent Event
On February 28, 1999, effective as of January 1, 1999, the Company exchanged
1,000 shares of restricted, unregistered common stock with its then current
majority shareholder for 100.0% of the issued and outstanding stock of Rosemont
Gardens Funeral Chapel-Cemetery, Inc. (a Mississippi corporation) (Rosemont). At
closing, Rosemont became a wholly-owned subsidiary of the Company
F-8
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