<PAGE>
U.S. 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: 0-24053
The National Capital Companies, Inc.
------------------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 88-0350154
------ ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
18952 MacArthur Boulevard, Suite 300, Irvine, California 92612
-------------------------------------------------------- -----
Address of principal executive offices) (Zip Code)
(949) 261-2101
------------------------------------------------
(Issuer's Telephone Number, including Area Code)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 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
As of August 31, 2000, there were 7,368,090 shares of the issuer's $.001 par
value common stock issued and outstanding.
<PAGE>
THE NATIONAL CAPITAL COMPANIES, INC.
------------------------------------
INDEX TO FORM 10-QSB
--------------------
For the Quarter Ended June 30, 2000
-----------------------------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheet as of June 30, 2000 3 - 4
Condensed Consolidated Statements of Income for the 5
Six Months and Three Months Ended June 30, 2000
Condensed Consolidated Statements of Cash Flows for the 6
Six Months and Three Months Ended June 30, 2000
Notes to Condensed Consolidated Financial Statements for the 7 - 8
Six Months Ended June 30, 2000
Item 2. Management's Discussion and Analysis 9 - 12
PART II. OTHER INFORMATION
13
Item 1. Legal Proceedings
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
-----------------------------
THE NATIONAL CAPITAL COMPANIES, INC.
------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEET
------------------------------------
JUNE 30, 2000
-------------
(UNAUDITED)
-----------
(In 000's)
----------
ASSETS
------
Cash and cash equivalents $ 1,322
Receivables from clearing organizations 1,793
Accounts receivable, net of allowance for doubtful accounts of $11 195
Other receivables 435
Securities owned, at estimated fair value 1,614
Furniture and equipment, less accumulated depreciation of $123 1,190
Goodwill, less accumulated amortization of $324 6,290
Other assets 351
-------
Total assets $13,190
=======
3
<PAGE>
THE NATIONAL CAPITAL COMPANIES, INC.
------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEET
------------------------------------
JUNE 30, 2000
-------------
(UNAUDITED)
-----------
(In 000's)
----------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Accounts payable and accrued expenses $ 363
Commissions payable 1,560
Payable to clearing organizations 817
Income taxes payable 722
Other liabilities 209
Due to affiliates 325
Notes payable 1,746
-------
Total liabilities 5,742
-------
MINORITY INTEREST 7
-------
STOCKHOLDERS' EQUITY
Common stock
$.001 par value,
50,000,000 shares authorized
7,368,090 shares issued and outstanding 7
Additional paid in capital 6,795
Retained earnings 639
-------
Total stockholders' equity 7,441
-------
Total liabilities and stockholders' equity $13,190
=======
4
<PAGE>
THE NATIONAL CAPITAL COMPANIES, INC.
------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------
(UNAUDITED)
-----------
(In 000's)
----------
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
---------------------------- --------------------------
2000 1999 2000 1999
------- ------ ------- ------
<S> <C> <C> <C> <C>
NET REVENUES
Commissions $ 6,984 $ 310 $10,130 $ 589
Investment banking 807 1,080 2,142 1,421
Principal transactions (814) 748 423 1,648
Other 150 152 821 491
------- ------ ------- ------
TOTAL NET REVENUES 7,127 2,290 13,516 4,149
------- ------ ------- ------
EXPENSES
Commissions, compensation and benefits 7,735 1,130 11,329 1,679
General and administrative 1,450 483 2,980 837
Minority interest 2 --- 4 ---
------- ------ ------- ------
TOTAL EXPENSES 9,187 1,613 14,313 2,516
------- ------ ------- ------
INCOME (LOSS) BEFORE INCOME TAXES (2,060) 677 (797) 1,633
PROVISION (BENEFIT) FOR INCOME TAXES (721) 200 (152) 410
------- ------ ------- ------
NET INCOME (LOSS) $(1,339) $ 477 $ (645) $1,223
======= ====== ======= ======
BASIC EARNINGS (LOSS) PER SHARE $ (.18) $ .30 $ (.09) $ .77
======= ====== ======= ======
DILUTED EARNINGS (LOSS) PER SHARE $ (.18) $ .30 $ (.09) $ .77
======= ====== ======= ======
</TABLE>
5
<PAGE>
THE NATIONAL CAPITAL COMPANIES, INC.
------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(UNAUDITED)
-----------
<TABLE>
<CAPTION>
Six Months Ended June 30,
-----------------------------
2000 1999
------- ------
<S> <C> <C>
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ (217) $ 822
------- ------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 755 (948)
------- ------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (306) 924
------- ------
NET INCREASE IN CASH AND CASH EQUIVALENTS 232 798
CASH AND CASH EQUIVALENTS, beginning of period 1,090 451
------- ------
CASH AND CASH EQUIVALENTS, end of period $ 1,322 $1,249
======= ======
NON-CASH INVESTING AND FINANCING ACTIVITIES
Business acquisitions
Assets acquired $ 3,714 $1,412
Liabilities assumed (3,424) (271)
Common stock issued (290) (167)
------- ------
Cash paid for acquisition $ --- $ 974
======= ======
SUPPLEMENTAL INFORMATION, CASH PAID FOR:
Interest $ 48 $ ---
======= ======
Income taxes $ --- $ ---
======= ======
</TABLE>
6
<PAGE>
THE NATIONAL CAPITAL COMPANIES, INC.
------------------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
(UNAUDITED)
-----------
JUNE 30, 1999 AND 2000
----------------------
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements include the accounts of the
Company and all of its wholly owned and majority owned subsidiaries. All
significant intercompany transactions have been eliminated. The unaudited
financial statements included herein have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three and six month periods ended June 30, 1999 and
2000 are not necessarily indicative of the results that may be expected for the
years ended December 31, 1999 and 2000. Operating results for the three and six
month periods ended June 30, 1999 were not reviewed by the Company's independent
certified public accountants. For further information, the statements should be
read in conjunction with the consolidated financial statements and notes thereto
included in the Company's annual report on Form 10-KSB for the year ended
December 31, 1999 and the Company's current report on Form 8-K/A dated April 25,
2000 the Form 8-K dated March 24, 2000.
NOTE 2 - EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings
per share:
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------------
2000 1999
---------- ----------
<S> <C> <C>
Net income (loss) $ (645,000) $1,223,000
========== ==========
Weighted average shares outstanding:
Basic 7,368,090 1,585,000
========== ==========
Diluted 7,368,090 1,585,000
========== ==========
Basic earnings per share $ (.09) $ .77
Diluted earnings per share $ (.09) $ .77
</TABLE>
7
<PAGE>
NOTE 3 - ACQUISITIONS
On February 4, 2000, the Company conducted a reorganization with The
National Capital Companies, Inc., an Oklahoma Corporation ("NCC"). Pursuant to
the terms of a Securities Purchase and Plan or Reorganization between the
Company and the stockholders of NCC, the Company acquired all of the outstanding
capital stock of NCC in exchange for the issuance of 4,000,000 shares common
stock to the former stockholders of NCC. Because the stockholders of NCC owned
approximately 61.5% of the outstanding shares of the common stock of the Company
after giving effect to the Reorganization, the acquisition of NCC was considered
a reverse merger, and the Company has been deemed the acquirer for accounting
purposes. As such, the equity of NCC has been carried forward as the equity of
the Company.
On March 9, 2000, the Company acquired AISCO Holdings, LTD., an Illinois
corporation ("AISCO"). AISCO is a full-service financial services company
including brokerage, trading, investment advisory and insurance. Pursuant to
the Securities Purchase agreement, the Company acquired approximately eighty
percent (80%) of AISCO in exchange for approximately 818,000 shares of the
Company. The acquisition has been accounted for under the purchase method of
accounting and is intended to qualify as a tax-free reorganization under IRC
(S)368(a)(1)(B). The fair value of purchase consideration of approximately
$5,725,000 has been allocated to tangible and identifiable intangible assets
acquired and liabilities assumed based on their relative fair values. The
excess of the fair value of purchase consideration over assets acquired and
liabilities assumed has been allocated to goodwill and is being amortized on a
straight-line basis over ten (10) years.
The following pro forma results of operations give effect to these
acquisitions as if the transactions had occurred January 1, 2000:
<TABLE>
<CAPTION>
Six Months
Ended
June 30, 2000
----------------
<S> <C>
Revenues $19,026
=======
Net loss $ (481)
=======
Earnings (loss) per share $ (.06)
=======
</TABLE>
The unaudited pro forma condensed consolidated statements of operations are
not necessarily indicative of the operating results that would have occurred as
if these acquisitions had occurred as of the beginning of the periods presented
and should not be construed as being representative of future operating results.
NOTE 4 - CONTINGENCIES
A subsidiary of the Company is also a defendant in ten (10) lawsuits
alleging various claims. The suits ask for total damages approximating
$1,800,000 in actual damages plus punitive damages, interest, costs, and
attorney fees. Outside counsel for the Company has advised that at this stage
in the proceedings, they cannot offer an opinion as to the probable outcomes.
8
<PAGE>
Item 2. Management's Discussion and Analysis
---------------------------------------------
Business of the Registrant.
The Company and its subsidiaries operate as a investment firm in four primary
niches of the securities industry including brokerage services, investment
banking and corporate finance, trading and market making, and money management.
In addition, we have operations involved in securities research, commodities
brokerage, mortgage banking, insurance brokerage, merchant banking, venture
capital, and consulting. Our 225 registered representatives serve thousands of
customers and over 250 corporate and institutional clients nationwide. We are
headquartered in Irvine, California and we maintain offices in Dallas, Texas,
Las Vegas, Nevada, Oklahoma City, Oklahoma, Colorado Springs, Colorado and
Peoria, Illinois.
Through our subsidiaries, we provide the following financial services:
Brokerage Services. We provide brokerage services to individuals and
institutions. As a securities broker, we act as an agent for our customers in
the purchase and sale of common and preferred stocks, options and debt
securities traded on the nationally recognized exchanges or in the over-the-
counter ("OTC") market. Major portions of our revenues are derived from
commissions from customers on these transactions. We also provide investment
and financial planning consultation to our individual clients, offering a
diverse range of investments and services including fixed income securities,
mutual funds, and retirement and estate planning. We also execute securities
transactions for institutional investors such as banks, mutual funds, insurance
companies, hedge funds, money managers and pension and profit sharing plans.
Investment Banking, Corporate Finance and Merchant Banking. We raise capital
through public and private offerings of securities for corporations that are
engaged in a variety of businesses. We generally underwrite offerings of
securities in the range of $500,000 to $10,000,000 on a "best efforts" basis.
We also provide our clients with advisory services designed to assist them with
their evaluation of potential merger and acquisition partners and assist them
with the due diligence process, the negotiation and structure of the transaction
and the development of corporate strategies for growth and investment. We offer
merchant banking services, providing both debt and equity financing to micro-cap
and small-cap companies. We identify and evaluate investment opportunities,
then structure direct equity investments or mezzanine financing primarily with
public companies.
Trading and Market Making. We act as a principal in executing trades in
equity securities. Our market making activities are conducted primarily with
other dealers in the "wholesale marketplace". Transactions with dealers are
effected as principal at the current inter-dealer price. We make a market in
approximately 200 OTC traded equity securities.
Money Management. We provide professional money management to approximately
300 accounts of wealthy individuals, funds, institutions, foundations,
endowments, and municipalities, five open-end mutual funds and two hedge funds.
We currently manage in excess of $125 million in investments.
Our executive offices are located at 18952 MacArthur Boulevard, Suite 300,
Irvine, California 92612; telephone (949) 261-2101.
9
<PAGE>
Results of Operations.
On March 9, 2000, the Company acquired all of the outstanding Class A
stock of AISCO Holdings, Ltd. ("AISCO") which represented approximately 82% of
the outstanding common stock of AISCO. Pursuant to the Stock Purchase Agreement
and plan of Reorganization dated March 9, 2000 by and among the Company and the
Class A stockholders of AISCO, the Company issued 818,090 shares of its common
stock to the former Class A stockholders of AISCO in exchange for all of the
outstanding Class A stock of AISCO. The operations of AISCO since the date of
its acquisition by the Company are included in the Company's condensed
consolidated financial statements contained in this report.
We have experienced and expect to continue to experience, fluctuations in
quarterly operating results due to a variety of factors, including the recent
AISCO acquisition, the value of our market-making securities positions, the
volume of our market-making activities, volatility in the securities markets,
overhead and other expenses, the addition or loss of sales and trading
professionals, regulatory changes, the amount and timing of capital and general
economic conditions. If demand for our services declines and we are unable to
adjust our cost structure on a timely basis, our operating results could be
materially and adversely affected. We have experienced and expect to continue
to experience, some seasonality in our business.
It is also expected that the upcoming change to decimalization in the NASDAQ
trading market will further narrow the spread between "bid" and "ask" prices on
the stocks in which the Company's broker-dealer subsidiaries makes markets and
may adversely affect profitability per ticket. Management believes, however
that these subsidiaries will be able to capitalize on the increased volatility
and liquidity in the markets that decimalization may bring about. In addition,
with the increase in the number of brokers and traders, the Company anticipates
being able to further capitalize on its other financial services such as
investment banking and money management.
Due to all of the foregoing factors, period-to-period comparisons of our
revenues and operating results are not necessarily meaningful and such
comparisons cannot be relied upon as indicators of future performance.
Total Net Revenues. Revenues from continuing operations of the Company
increased by $4,837,000, or 211%, for the three months ended June 30, 2000, as
compared with the quarter ended June 30, 1999, and increased $9,367,000, or
226%, for the six months ended June 30, 2000 as compared with the six months
ended June 30, 1999. The increase in revenues is directly attributable to the
Company's acquisition of AISCO in March 2000 and Cornerstone Capital Management
in June 1999. Without giving effect to the AISCO acquisition and the loss on
principal transactions, the Company's revenues would have been approximately
$1,560,000 for the three months ended June 30, 2000 as compared to $2,290,000
for the three months ended June 30, 1999, representing a decrease of
approximately 32%. This decrease primarily results from the decrease in the
Company's investment banking revenues. During 1999 and through the first
quarter of 2000, the Company's investment banking revenues were at all-time
highs due to favorable economic conditions and surging venture capital infusions
into U.S. businesses, particularly within the internet and high technology
industries. The Company expects investment banking activities to increase
moderately going forward, but may not reach the record levels achieved during
1999. Principal transactions are comprised of trading gains and losses and
include both realized and unrealized gains and losses incurred by the Company on
its securities owned and are generally presented net. For the three months ended
June 30, 2000, the net loss from principal transactions was ($814,000) as
compared to $748,000 in net revenue for the equivalent period a year ago. This
decrease was directly attributable to the volatility in the U.S. equity markets
and the corresponding reduction in stock prices of many U.S. equities during the
second quarter of 2000. While the Company still holds many of the same
securities it owned at the close of the first quarter of 2000, the decline in
stock prices has resulted in a lower portfolio valuation leading to unrealized
losses which has adversely impacted the Company's overall net revenues. Total
revenue for AISCO for the three months ended June 30, 2000 was approximately
$6,375,000.
Total Expenses. Expenses of the Company increased by $7,574,000, or 470%,
for the three months ended June 30, 2000, as compared with the quarter ended
June 30, 1999, and increased $11,797,000 or 469%, for the six months ended June
30, 2000, as compared with the six months ended June 30, 1999. Overall, this
increase is due primarily to the Company's acquisition of AISCO in March 2000.
Operational changes in expenses are set forth below.
10
<PAGE>
Commissions, compensation and benefits increased by $6,605,000, or 585%, and
$9,650,000, or 575% for the three and six months ended June 30, 2000,
respectively, as compared to the equivalent periods in the prior year. The
increases in this expense were primarily attributable to the rise in
compensation to the Company's traders and brokers as a result of the increase in
net trading revenue in terms of overall ticket and share volume. With the AISCO
acquisition, the Company added over 200 brokers and established branch managers
and traders in various states including Arizona, Colorado, Michigan, and Texas.
As a result, not only did the Company's commissions increase, but also its base
compensation structure as well. Without giving effect to the AISCO acquisition,
the Company's commissions, compensation and benefits would have been
approximately $1,000,000 for the three months ended June 30, 2000 as compared to
$1,130,000 for the three months ended June 30, 1999, representing a decrease of
approximately 12%. This decrease is primarily attributable to the corresponding
decrease in commission and investment banking revenues offset by an increase in
employees and an addition of a business line during the second quarter of 2000.
During the second quarter of 2000, the Company established a mortgage banking
division with a four person management team and added three brokerage service
branch managers and two money managers in which approximately $250,000 of
compensation was paid without adding any revenues to the Company's top line.
Revenues from the mortgage banking division are expected to commence during the
fourth quarter of this year. Total commissions, compensation and benefits for
AISCO for the three months ended June 30, 2000 was approximately $5,800,000.
Overall, the total number of employees and commissioned brokers increased to
approximately 300 as of June 30, 2000 from approximately 55 as of June 30, 1999.
The Company's acquisitions have necessitated the need to retain and attract
qualified personnel to handle the significant increase in trade volume and
technological requirements that the Company has experienced over the last year.
General and administrative expenses increased by $967,000, or 200%, and
$2,143,000, or 256% for the three and six months ended June 30, 2000,
respectively, as compared with the same periods in the previous year. As a
percentage of revenue, general and administrative expenses were 20% and 22% for
the three and six months ended June 30, 2000, respectively, as compared to 21%
and 20% for the same periods in the prior year. The increases in these expenses
were primarily due to the Company's acquisition of AISCO. As compared to the
previous year with offices in two (2) states, the Company now operates offices
within six (6) states throughout the country. In addition, the Company began
taking a charge for goodwill related to its acquisitions in the amount of
approximately $190,000 per quarter. Goodwill represents the excess of cost over
the net assets acquired and is being amortized over ten (10) years. Other
general and administrative expenses, including clearing and related brokerage
charges, increased as a result of the overall ticket volume and rates with the
Company's various clearing brokers. With its acquisitions, the Company expects
to negotiate more favorable ticket rates with its contracted clearing brokers
during the third and fourth quarters. The remainder of the increases is due to
the significant growth in the volume of business and the increase in staff size.
Net Income (Loss). Net income (Loss) decreased by $1,816,000 for the three
months ended June 30, 2000 as compared with the three months ended June 30, 1999
and decreased $1,868,000 for six months ended June 30, 2000 as compared with the
six months ended June 30, 1999. Without giving effect to the AISCO acquisition,
the Company's net loss would have been approximately ($1,060,000) for the
quarter ended June 30, 2000 as compared to net income of $477,000 for the same
period a year ago. This decrease is due primarily to the principal transaction
portfolio loss as a result of the significant volatility and downturn in the
U.S. equity markets during the second quarter of 2000.
11
<PAGE>
Liquidity and Financial Condition.
The Company's tangible assets are liquid, but subject to market price
fluctuation with more than 36% consisting of cash or assets convertible into
cash (principally, securities positions, receivables from brokers, and cash).
To date, the Company's operations have generally been financed by internally
generated funds.
The Company historically has generated revenues from its investment banking
services, from commissions on trades in which it acts as a broker and from
profits on trades in which it acts as a principal. The Company's revenues and
financial condition are substantially dependent on factors outside its control,
including the level of activity in the national securities markets, particularly
the Nasdaq National Market and the OTC Bulletin Board, as well as the strength
of the overall economy. From the record levels reached by the stock markets in
terms of both price and volume during the first quarter of 2000, the Company has
seen a decline in its consolidated revenues, consolidated total assets, and
consolidated net income (Loss) in the second quarter of 2000 as a result of the
overall decline in both price and trading volume on the Nasdaq and the OTC
Bulletin Board.
As of June 30, 2000, the Company had approximately $500,000 of working
capital, including $2,936,000 in cash, cash equivalents and securities, as
compared to approximately $285,000 of working capital as of December 31, 1999.
The Company believes that its existing working capital is sufficient to finance
its current level of operations. However, the Company believes that it requires
a minimum of $500,000 in additional working capital to finance the planned
growth of its existing operations. In August 2000, the Company commenced the
private placement sale of up to $5,000,000 of shares of its common stock,
however the Company has no commitments from any outside sources to purchase its
securities, and there can be no assurance that additional financing will be
available when needed on terms favorable to the Company or at all.
During 2000, the Company has continued to make significant investments to
fund its future growth and increase stockholder value. These included the
acquisition of AISCO and expenditures of over $150,000 for computer and
technological upgrades and other property.
The Company's broker-dealer subsidiaries are subject to the SEC's minimum
net capital requirement which is designed to measure the general financial
soundness and liquidity of broker-dealers. As of June 30, 2000, these
subsidiaries had approximately $1,040,000 in excess of the SEC required minimum
net capital. The net capital rule imposes financial restrictions upon the
Company's broker-dealer subsidiaries which are more severe than those imposed on
most other businesses.
Cash flows from operations will vary on a daily basis as the Company's
portfolio of marketable securities changes. The Company's ability to convert
marketable securities owned into cash is determined by the depth of the market
and the size of the Company's securities positions in relation to the market as
a whole. The portfolio mix also affects the regulatory capital requirements
imposed on the Company's broker-dealer subsidiaries, which directly affects the
amount of funds available for operating, investing and financing activities.
Forward Looking Statements.
This report contains forward-looking statements that are based on the
Company's beliefs as well as assumptions made by and information currently
available to the Company. When used in this report, the words "believe,"
"expect," "anticipate," "estimate," and similar expressions are intended to
identify forward-looking statements. Such statements are subject to certain
risks, uncertainties and assumptions, including without limitation, the overall
strength of the national securities markets, the difficulties faced by the
Company is assimilating its recently acquired businesses, the Company's present
financial condition and the risks and uncertainties concerning the availability
of additional capital as and when required, technological changes, increased
competition, and general economic conditions. Should one or more of these risks
or uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, estimated, or
projected. The Company cautions potential investors not to place undue reliance
on any such forward-looking statements, all of which speak only as of the date
made.
12
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
--------------------------
A subsidiary of the Company is a defendant in a total of ten lawsuits
brought by different investors alleging various claims. These actions
collectively seek approximately $1,800,000 in actual damages plus punitive
damages, interest, costs, and attorney fees. The Company intends to vigorously
defend itself in connection with these actions.
Item 2. Changes in Securities
------------------------------
None.
Item 3. Defaults Upon Senior Securities
----------------------------------------
None.
Item 4. Submission of Matters to Vote of Security Holders
----------------------------------------------------------
None.
Item 5. Other Information
--------------------------
None.
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
On February 20, 2000, the Company filed a Current Report on Form 8-K with
the Securities and Exchange Commission to report the NCC Reorganization. On
April 25, 2000, the Company filed an amendment to that Form 8-K to include the
financial statements of NCC as of December 31, 1999 and for the two years ended
December 31, 1999 and 1998.
The following exhibits are contained in this 10-QSB:
Exhibit No: Description
----------- -----------
27 Financial Data Schedule
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: September 8, 2000 THE NATIONAL CAPITAL COMPANIES, INC.
By: /s/ Tim A. Quintanilla
--------------------------------
Tim A. Quintanilla
Its: Chief Financial Officer
14
