SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X]Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended June 30, 2000.
[ ]Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from to .
Commission file number: 0-27831
GENESIS CAPITAL CORPORATION OF NEVADA
(Exact name of small business issuer as specified in its charter)
Nevada
(State or other jurisdiction 91-1947658
of incorporation or organization) (I.R.S. Employer Identification No.)
11701 South Freeway, Burleson, Texas 76028
(Address of principal executive office) (Zip Code)
(817) 293-9334
(Issuer's telephone number)
Check whether the issuer: (1) 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 XX No
--- ---
The number of outstanding shares of the issuer's common stock, $0.001 par
value, as of August 18, 2000 was 2,217,911, and the total number outstanding
shares of the issuer's preferred stock, $.001 par value, was 77,755.
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TABLE OF CONTENTS
PART I
ITEM 1. FINANCIAL STATEMENTS 3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS 4
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 6
SIGNATURES 6
INDEX TO EXHIBITS 7
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PART I
ITEM 1. FINANCIAL STATEMENTS
As used herein, the term "Company" refers to Genesis Capital Corporation of
Nevada., a Nevada corporation, and its subsidiaries and predecessors unless
otherwise indicated. Consolidated, unaudited, condensed interim financial
statements including a balance sheet for the Company as of the quarter ended
June 30, 2000 and statements of operations and statements of cash flows for
the interim period up to the date of such balance sheet and the comparable
period of the preceding year are attached hereto as Pages F-1 through F-8 and
are incorporated herein by this reference.
The consolidated financial statements for the Company included herein are
unaudited but reflect, in management's opinion, all adjustments, consisting
only of normal recurring adjustments, that are necessary for a fair
presentation of the Company's financial position and the results of its
operations for the interim periods presented. Because of the nature of the
Company's business, the results of operations for the three months ended June
30, 2000 are not necessarily indicative of the results that may be expected
for the full fiscal year. The financial statements included herein should be
read in conjunction with the financial statements and notes thereto included
in the Form 10-SB for the year ended September 30, 1999.
The consolidated financial statements included herein have been subjected to a
limited review by Clyde Bailey P.C., independent accountant for the Company,
whose report is included herein.
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REPORT OF INDEPENDENT ACCOUNTANT
To the Board of Directors
Genesis Capital Corporation of Nevada
(a Nevada corporation)
We have made a review of the consolidated balance sheet of Genesis Capital
Corporation of Nevada as of June 30, 2000,and the related consolidated
statements of operations and cash flows for the three months period ended June
30, 2000 and 1999, in accordance with the standards established by the
American Institute of Certified Public Accountants. These financial
statements are the responsibility of the Company's management.
A review of interim financial information consists principally of obtaining an
understanding of the system for the preparation of interim financial
information, applying analytical review procedures to financial data, and
making inquiries of persons responsible for financial and accounting matters.
It is substantially less in scope than an audit in accordance with generally
accepted auditing standards, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole. Accordingly, we
do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the consolidated financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of September 30, 1999, and the
related consolidated statements of operations, cash flows and changes in
common shareholders' equity (deficit) for the year then ended (not presented
herein); and in our report dated October 20, 1999, we expressed a qualified
opinion on those financial statements. In our opinion, the information set
forth in the accompanying balance sheet as of June 30, 2000, is fairly stated
in all material respects in relation to the balance sheet from which it has
been derived.
S/ Clyde Bailey
Clyde Bailey P.C.
San Antonio, Texas
August 14, 2000
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Genesis Capital Corporation of Nevada
Balance Sheet
As of As of
June 30, 2000 September 30, 1999
(Unaudited) (Audited)
ASSETS
Current Assets:
Cash in Bank $ - $ -
Total current assets - -
Investments - -
Marketable Securities, at Market Value 975,000 600,000
Deferred Tax Benefit 8,175 4,619
Total Assets $ 983,175 $ 604,619
LIABILITIES
Current Liabilities: $ $
Accrued Expenses 54,500
Deferred Tax payable - Investments 127,500 32,158
Total Current Liabilities 182,000 32,158
Commitment and Contingencies - -
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par
value, 10,000,000 shares authorized;
with 77,755 and 932,755 shares
issued and outstanding 78 933
Common stock ($.001 par value 50,000,000
shares authorized; with 2,217,911 and
2,067,911 shares issued and outstanding 2,218 2,068
Accumulated Other Comprehensive Income 247,500 -
Additional paid in capital 9,195,579 9,194,829
Accumulated Deficit (8,644,200) (8,625,369)
Total Stockholders' Equity 801,175 572,461
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 983,175 $ 604,619
See accompanying summary of accounting principles and notes to consolidated
financial statements.
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Genesis Capital Corporation of Nevada
Statement of Operations
For the Three Months For the Nine Months
Ended June 30, Ended June 30,
2000 1999 2000 1999
Revenues
Revenues $ - $ - $ - $ -
Total Revenues - - - -
Expenses
Property Taxes - 4,231 (32,158) 12,693
Rent 27,000 27,000
Directors Fees 13,500 13,500
Management Fees 14,000 14,000
General & Administrative
Expenses - - 45 -
Total Expenses 54,500 4,231 22,387 12,693
Net Income Before Tax (54,500) (4,231) 22,387 (12,693)
Income Tax Benefit 8,175 - 3,358 -
Net Income $ (46,325) $ (4,231) $ (19,029) $ (12,693)
Earnings Per Share - Basic
Net Income (Loss)
per Share $ (0.021) $ (1.530) $ (0.009) $ (4.589)
Earnings Per Share - Diluted
Net Income (Loss)
per Share $ (0.015) $ (0.001) $ (0.006) $ (0.004)
Weighted Average Shares
Outstanding 2,217,911 2,766 2,117,910 2,766
Weighted Average Shares
Outstanding (Diluted)
(Retroactively Restated) 2,995,461 3,347,290 2,995,461 3,347,290
See accompanying summary of accounting principles and notes to consolidated
financial statements.
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Genesis Capital Corporation of Nevada
Statements of Cash Flows
For the Nine Months EndedJune 30,
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ (19,029) $ (12,693)
Adjustments:
Accrued Property Taxes (32,158) 12,693
Accrued Expenses 54,500
Deferred Income Tax Benefit (3,558)
Accounts Receivable -
Total from Operating Activities $ (245) $ -
Cash Flows - Investing Activities
Fixed assets - -
Total for Investing Activities $ - $ -
Cash Flows - Financing Activities
Common Stock/Paid-In-Capital 245 -
Other - -
Total From Financing Activities $ 245 $ -
Increase in Cash - -
Cash Balance, Begin of Year - -
Cash Balance, End of Year - -
Supplement Disclosure:
Cash paid during year for:
Interest - -
Income taxes - -
See accompanying summary of accounting principles and notes to consolidated
financial statements.
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GENESIS CAPITAL CORPORATION OF NEVADA
Notes to Financial Statements
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES
NATURE OF BUSINESS
Genesis Capital Corporation (the "Company") was incorporated in the State of
Colorado in 1983. The Company had no revenues or expenses for the years ended
September 30, 1998 and 1997. In the fiscal year ended September 30, 1999 only
minimal activity has been recorded. In March of 1999 the Company filed an
Articles of Merger in the State of Nevada to change the name to Genesis
Capital Corporation of Nevada and to change the par value of the common stock.
In December 1997, the Company merged with Lincoln Health Fund Inc. which owned
land in Tarrant County Texas. The company has a total of 50,000,000 authorized
common shares (par value of $.001) with 2,217,911 shares issued and
outstanding, and 10,000,000 authorized preferred stock (par value of $.001)
with 77,755 shares issued outstanding as of June 30, 2000.
MARKETABLE SECURITIES
In accordance with Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," (SFAS
115), the Company classifies its investment portfolio according to the
provisions of SFAS 115 as either held to maturity, trading, or available for
sale. At June 30, 2000, the Company classified its investment portfolio as
available for sale and held to maturity. Securities available for sale are
carried at fair value with unrealized gains and losses included in
stockholders' equity.
Gain or losses from the sale or redemption of the investments are determined
using the specific identification method calculating deferred income taxes.
The asset and liability approach requires the recognition of deferred tax
liabilities and assets for the expected future tax consequences of temporary
differences between the carrying amounts and the tax basis of assets and
liabilities.
ACCOUNTING METHOD
The Company's financial statements are prepared using the accrual method of
accounting. Revenues are recognized when earned and expenses when incurred.
Fixed assets are stated at cost. Depreciation and amortization using the
straight-line method for financial reporting purposes and accelerated methods
for income tax purposes. The Company does not have any fixed assets at this
time.
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GENESIS CAPITAL CORPORATION OF NEVADA
Notes to Financial Statements
EARNINGS PER COMMON SHARE
The Company adopted Financial Accounting Standards (SFAS) No. 128,
"Earnings Per Share," which simplifies the computation of earnings per share
requiring the restatement of all prior periods.
Basic earnings per share are computed on the basis of the weighted average
number of common shares outstanding during each year.
Diluted earnings per share are computed on the basis of the weighted average
number of common shares and dilutive securities outstanding. Dilutive
securities having an anti-dilutive effect on diluted earnings per share are
excluded from the calculation.
UNINSURED CASH BALANCES
The Company maintains its cash balances at several financial institutions.
Accounts at the institutions are secured by the Federal Deposit Insurance
Corporation up to $100,000. Periodically, balances may exceed this amount.
At June 30, 2000, there were no uninsured cash balances.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure on
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.
YEAR 2000 CONCERNS
The Company has addressed the concerns of potential year 2000 computing
problems, both internally and with external parties and believes that
significant additional costs will not be incurred because of this
circumstance. The Company has performed an evaluation of its computer hardware
and software and has determined that recent enhancements and upgrades have
brought its systems significantly into compliance with the year 2000
phenomenon and that existing support agreements are adequate to cope with any
remaining issues. Based upon equipment evaluations and analysis by consulting
parties, management does not believe that significant operational equipment
modifications are necessary.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of financial instruments including marketable securities,
notes and loans receivables, accounts payable and notes payable approximate
their fair values at June 30, 2000 and September 30, 1999.
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GENESIS CAPITAL CORPORATION OF NEVADA
Notes to Financial Statements
LONG-LIVED ASSETS
Statement of Financial Accounting Standards No. 121 "Accounting for Impairment
of Long-Lived Assets to be Disposed of " requires, among other things,
impairment loss of assets to be held and gains or losses from assets that are
expected to be disposed of be included as a component of income from
continuing operations before taxes on income.
STOCK BASED COMPENSATION
Statement of Financial Accounting Standards No. 123, "Accounting for Stock
Based Compensation" (SFAS No. 123), established a fair value method for
accounting for stock-based compensation plans either through recognition or
disclosure. The Company did not adopt the fair value based method but instead
discloses the effects of the calculation required by the statement.
COMPREHENSIVE INCOME
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income," establishes standards for reporting and display of
comprehensive income, its components and accumulated balances. Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. Among other disclosures,
SFAS No.130 requires that all items that are required to be recognized under
current accounting standards as components of comprehensive income be reported
in a financial statement that is displayed with the same prominence as other
financial statements.
SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION
Statement of Financial Accounting Standards (SFAS) No. 131, "Disclosures about
Segments of an Enterprise and Related Information," supersedes SFAS No. 14,
"Financial Reporting for Segments of a Business Enterprise." SFAS 131
establishes standards for the way that public companies report information
about operating segments in annual financial statements and requires reporting
of selected information about operating segments in interim financial
statements issued to the public. It also establishes standards for
disclosures regarding products and services, geographic areas and major
customers. SFAS 131 defines operating segments as components of a company
about which separate financial information is available that is evaluated
regularly by the chief operating decision maker in deciding how to allocate
resources and in assessing performance.
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GENESIS CAPITAL CORPORATION OF NEVADA
Notes to Financial Statements
NOTE 2 - ACQUISITION AGREEMENT
In February of 2000, an acquisition agreement was completed between the
Company and Power Exploration, Inc. ("Power") for 100% of the issued and
outstanding shares of the Lincoln Health Fund, Inc. a Delaware Corporation
("Lincoln"), a wholly owned subsidiary of the Company, for 600,000 shares of
Power's common stock. The major asset of Lincoln was 10.687 acres of vacant
land in Ft Worth, Texas. The value of stock received is being classified as a
marketable security, available for sale.
As a result of this transaction the property taxes that had been accrued for
the land was included in the acquisition agreement and assumed by Lincoln. The
accrued property taxes is being reversed in these financial statements.
NOTE 3- COMMON STOCK
The Company filed a plan of merger in the State of Nevada with an effective
date of March 9, 1999. As part of the agreement, the Board of Directors
approved a 2000 to 1 reverse stock split be recorded with any fractional
shares rounded up. Also, the par value of the Nevada corporation was changed
to $.001 par value. In the quarter ended March 31, 2000, 150,000 shares of
stock were issued. A total of 105,000 shares was issued as conversion of
preferred stock and 45,000 shares for legal services.
NOTE 4- PREFERRED STOCK
The Company's preferred stock contains a designation of $.60 cumulative
convertible Preferred Stock. A total of 10,000,000 shares are authorized with
77,755 and 932,755 issued and outstanding as of June 30, 2000 and September
30, 1999. The holders of the Convertible Preferred Stock shall be entitled to
receive, when declared by the Board of Directors, dividends of $.60 per share
and no more. Also, the preferred stock is eligible to be converted to common
stock at the rate of 10 shares of common stock for each share of preferred
stock. In the quarter ended June 30, 2000, a total of 105,000 shares of
preferred stock was converted into common stock.
NOTE 5- MARKETABLE SECURITIES
The carrying amounts of marketable securities as shown in the accompanying
balance sheet and their approximate market values at June 30, 2000 are as
follows:
Gross Gross
Unrealized Unrealized Market
Cost Gains Losses Value
Available for sale:
Securities $600,000 $375,000 $ -0- $975,000
Unrealized gains on securities available for sale at June 30, 2000 are shown
net of income taxes as a component of stockholders' equity.
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GENESIS CAPITAL CORPORATION OF NEVADA
Notes to Financial Statements
NOTE 6- ACCRUED EXPENSES
In the quarter ended June 30, 2000, an amount of $54,500 has been accrued for
rent, directors fees, and management fees for the nine months ended June 30,
2000.
NOTE 7 - CONTINGENT LIABILITIES
The Company is pursuing a "Reverse Merger" or similar transactions. The
Company recognizes that it will pay consultants or professional fees that are
applicable to the industry. The Company is also indebted to consultants for a
total of 400,000 shares of stock for debt negotiation and liability
settlements for the Company.
NOTE 8- SUBSEQUENT EVENTS
No other material subsequent events have occurred that warrant disclosure
since the balance sheet date.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
This Quarterly Report contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, which are intended to
be covered by the safe harbors created thereby. Investors are cautioned that
all forward-looking statements involve risks and uncertainty, including
(without limitation) the ability of the Company to continue its expansion
strategy, changes in costs of raw materials, labor, and employee benefits, as
well as general market conditions, competition and pricing. Although the
Company believes that the assumptions underlying the forward-looking
statements contained herein are reasonable, any of the assumptions could be
inaccurate, and therefore, there can be no assurance that the forward-looking
statements included in this Quarterly Report will prove to be accurate. In
light of the significant uncertainties inherent in the forward-looking
statements including herein, the inclusion of such information should not be
regarded as a representation by the Company or any other person that the
objectives and plans of the Company will be achieved.
As used herein the term "Company" refers to Genesis Capital Corporation of
Nevada, a Nevada corporation, and its predecessors, unless the context
indicates otherwise. The Company is currently a shell company whose purpose
will be to acquire operations through an acquisition, merger or beginning its
own start-up business.
The Company is in the process of attempting to identify and acquire a
favorable business opportunity. The Company has reviewed and evaluated a
number of business ventures for possible acquisition or participation by
the Company. The Company has not entered into any agreement, nor does it have
any commitment or understanding to enter into or become engaged in a
transaction as of the date of this filing. The Company continues to
investigate, review, and evaluate business opportunities as they become
available and will seek to acquire or become engaged in business
opportunities at such time as specific opportunities warrant.
In its report on Form 10-QSB for the period ended March 31, 2000, the Company
reported in its "Subsequent Events" section that on April 12, 2000, the
Company announced that it had signed an agreement to acquire all of the
capital stock of RBSI, Inc., a Dallas, Texas based ATM machine company, in
exchange for 8 million shares of Genesis' restricted common stock. The
closing was expected to occur on or about April 15, 2000, and had not closed
as of the time the Form 10-QSB for March 31, 2000 had been filed. Since that
time, the transaction did not close, and the parties mutually agreed to
terminate that transaction. As a result, the shares issued in escrow for the
closing of that transaction have never been delivered and have not been
counted in the current issued and outstanding shares of the Company. Because
the transaction with RBSI did not close, the Company is still a shell company
and is still investigating, reviewing, and evaluating business opportunities
as they become available. RBSI has come back to the Company and asked to
reopen negotiations, but no understanding with RBSI has been reached to date.
<PAGE>
Results of Operations
The Company had no sales revenues for either of the three-month periods ended
June 30, 2000 or 1999. The Company had no sales for either of the
three-month periods ended June 30, 2000 or 1999 because it is a shell company
that has not had any business operations for the past three years.
The Company's property tax expense decreased to $0.00 for the three-month
period ended June 30, 2000, as compared to $4,231 for the same period in 1999,
due to the fact that in February 2000, an acquisition agreement was completed
between the Company and Power Exploration, Inc. ("Power") for 100% of the
issued and outstanding shares of the Lincoln Health Fund, Inc. a Delaware
Corporation ("Lincoln"), a wholly owned subsidiary of the Company, for 600,000
shares of Power's common stock. The major asset of Lincoln was 10.687 acres
of vacant land in Ft Worth, Texas. As a result of this transaction the
property taxes that had been accrued for the land was included in the
acquisition agreement and assumed by Lincoln.
The Company accrued rent expense of $27,000 for the three-month period ended
June 30, 2000, as compared to $0.00 for rent in the same period in 1999.
The Company had director's fees of $13,500, and management fees of $14,000,
for the three month period ended June 30, 2000, compared to $0.00 for
directors and management fees for the same period in 1999.
The Company had general and administrative expenses of $0.00 for the three
month period ended June 30, 2000, compared to $0.00 general and administrative
expenses for the same period in 1999.
The Company recorded a net loss of $46,325 for the three months ended June
30, 2000, compared to a $4,231 net loss for the same period in 1999.
The Company is pursuing a "Reverse Merger" or similar transactions. The
Company recognizes that it will pay consultants or professional fees that are
applicable to the industry. The Company is also indebted to consultants for a
total of 400,000 shares of stock for debt negotiation and liability
settlements for the Company.
Capital Resources and Liquidity
At June 30, 2000, the Company had total current assets of $0.00 and total
assets of $983,175, as compared to $0 current assets and $604,619 total assets
at September 30, 1999. The Company had a net working capital deficit of
$182,000 at June 30, 2000 as compared to a working capital deficit of $32,158
at September 30,1999.
Net stockholders' equity in the Company was $801,175 as of June 30, 2000, as
compared to $572,461 as of September 30, 1999.
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PART II
ITEM 6. EXHIBITS
(1) Exhibits. Exhibits required to be attached by Item 601 of Regulation
S-B are listed in the Index to Exhibits on page 6 of this Form 10-QSB, and are
incorporated herein by reference.
(2) Reports on Form 8-K. No reports on Form 8-K were filed during the
period covered by this Form 10-QSB.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized, this ___ day of August, 2000.
GENESIS CAPITAL CORPORATION OF NEVADA
S/ Reginald Davis___________
Reginald Davis President/
CEO and Director August 19, 2000
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EXHIBIT INDEX
Exhibit No. Page No. Description
27 8 Financial Data Schedule "CE"
