UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year ended: February 29, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from: _____ to _____
Commission File No. 0-26136
UNIVERSAL CAPITAL CORPORATION
(Exact Name of Small Business Issuer as Specified in its Charter)
COLORADO 84-1018684
(State or Other Jurisdiction of (I.R.S. Employer Identi-
Incorporation or Organization) fication Number)
16178 East Prentice Place
Aurora, Colorado 80015
(Address of Principal Executive Offices, Including Zip Code)
Issuer's Telephone Number, Including Area Code: (303) 690-6787
Securities Registered Pursuant to Section 12(b) of the Act: None.
Securities Registered Pursuant to Section 12(g) of the Act:
COMMON STOCK, NO PAR VALUE
(Title of Class)
Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Check if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-B is not contained in this Form, and no disclosure will be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]
State Issuer's revenues for its most recent fiscal year: $2,113.
As of May 15, 1996, 2,035,000 shares of common stock were outstanding, and the
aggregate market value of the common stock of the Registrant held by
non-affiliates was approximately $1,870,000.
Documents incorporated by reference: NONE.
Transitional Small Business Disclosure Format (check one): Yes __ No X
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
GENERAL
Universal Capital Corporation (the "Company") is a development stage
enterprise formed under the laws of the State of Colorado on March 5, 1986, to
evaluate, structure and complete a merger with, or acquisition of, prospects
consisting of private companies, partnerships or sole proprietorships. The
Company may seek to acquire a controlling interest in such entities in
contemplation of later completing an acquisition. The Company is not limited
to any operation or geographic area in seeking out opportunities. Management
has not identified any particular business or industry within which the
Company will seek an acquisition or merger. The Company has not conducted,
nor have others made available to it, market research supporting the viability
of the Company's proposed operations.
The Company sold 100,000 shares of no par value common stock ("Common
Stock") at $.02 per Share, for net proceeds of $185,180 in a public offering
which closed on March 10, 1987.
Since the Company does not have any cash, it must locate a potential
acquisition or merger candidate that is only interested in the liquidity of a
public company.
On June 12, 1995, the Company effected a 1 for 100 reverse split of the
Company's outstanding Common Stock. All numbers of shares stated herein give
retroactive effect to the reverse split.
The Company's offices are located at 16178 East Prentice Place, Aurora,
Colorado 80015, and its telephone number is (303) 690-6787.
DESCRIPTION OF BUSINESS
The Company believes it has insufficient capital with which to finance
cash acquisitions of other business entities. Accordingly, the Company will
be incapable of acquiring the assets or business of other entities except in
those instances where the Company exchanges its common stock with those held
by the target company and/or the target company's shareholders. Another
possibility, although less likely, is that the Company may give its common
stock to a target in exchange for the target's assets. Management expects
that an exchange of the Company's common stock in a merger or acquisition, if
ever, would require the Company to issue a substantial number of its common
stock. Accordingly, the percentage of common stock held by the Company's
then-shareholders would be reduced as a result of the increased number of
common stock issued and outstanding following any such merger or acquisition.
The Company expects to continue to concentrate primarily on the
identification and evaluation of prospective merger or acquisition "target"
entities including private companies, partnerships or sole proprietorships.
The Company does not intend to act as a general or limited partner in
connection with partnerships it may merge with or acquire. Management has not
identified any particular area of interest within which the Company will
continue its efforts.
Management contemplates that the Company will seek to merge with or
acquire a target company with either assets or earnings, or both, and that
preliminary evaluations undertaken by the Company will assist in identifying
possible target companies. The Company has not established a specific level
of earnings or assets below which the Company would not consider a merger or
acquisition with a target company. Moreover, management may identify a target
company which is generating losses which it will seek to acquire or merge with
the Company. The merger with or acquisition of a target company which is
generating losses or which has negative shareholders' equity may have a
material adverse affect on the price of the Company's common stock. There is
no assurance, if the Company acquires a target company with assets or
earnings, or both, that the price of the Company's common stock will increase.
PLAN OF ACQUISITION
The Company will follow a systematic approach to identify its most
suitable acquisition candidates.
First, management will continue to concentrate on identifying any number
of preliminary prospects which may be brought to the attention of management
through present associations or by virtue of the very limited advertising
campaign the Company will conduct. Management will then apply certain of its
broad criteria to the preliminary prospects. Essentially, this will entail a
determination by management as to whether or not the prospects are in an
industry which appears promising and whether or not the prospects themselves
have potential within their own industries. During this initial screening
process, management will ask and receive answers to questions framed to
provide appropriate threshold information, depending upon the nature of the
prospect's business. Such evaluation is not expected to be an in-depth
analysis of the target company's operations although it will encompass to look
at most, if not all, of the same areas to be examined once one or more target
companies are selected for an in-depth review. For instance, at this stage
management may look at a prospect's unaudited balance sheet. Once a prospect
is selected for an in-depth review, management will review the prospect's
audited financial statements. Nevertheless, management anticipates this
evaluation will provide a broad overview of the business of the target company
and should allow a large percentage of preliminary prospects to be eliminated
from further consideration.
Management expects to enter into further negotiations with target company
management following successful conclusion of financial and evaluation
studies. Negotiations with target company management will be expected to
focus on the percentage of the Company which target company shareholders would
acquire in exchange for their shareholdings in the target company. Depending
upon, among other things, the target company's assets and liabilities, the
Company's shareholders will in all likelihood hold a lesser percentage
ownership interest in the Company following any merger or acquisition. The
percentage ownership may be subject to significant reduction in the event the
Company acquires a target company with substantial assets. Any merger or
acquisition effected by the Company can be expected to have a significant
dilutive effect on the percentage of shares held by the Company's
then-shareholders.
The final stage of any merger or acquisition to be effected by the
Company will require the Company to retain the services of its counsel and a
qualified accounting firm in order to properly effect the merger or
acquisition. The Company may be expected to incur significant legal fees and
accounting costs during the final stages of a merger or acquisition. Also, if
the merger or acquisition is successfully completed, management anticipates
that certain costs will be incurred for public relations, such as the
dissemination of information to the public, to the shareholders and to the
financial community. If the Company is unable to complete the merger or
acquisition for any reason, the Company's capital may be substantially
depleted if legal fees and accounting costs have been incurred. Management
intends to retain legal and accounting services only on an as-needed basis in
the latter stages of a proposed merger or acquisition.
Management anticipates that the Company may have to seek additional
financing in order to continue operations.
COMPETITION
The Company is and will remain an insignificant participant among the
firms that engage in mergers with and acquisitions of privately financed
entities. Many established venture-capital and financial concerns have
significantly greater financial and personnel resources and technical
expertise than the Company. In view of the Company's limited financial
resources and limited management availability, the Company will continue to be
at a significant disadvantage compared to the Company's competitors.
EMPLOYEES
The Company has no full time employees. Its officers devote as much time
as is necessary to conduct the Company's business.
ITEM 2. DESCRIPTION OF PROPERTY.
Effective May 15, 1996, the Company maintains its office in space
provided by Timothy J. Brasel, the Company's President, at no charge. The
Company owns no real property.
ITEM 3. LEGAL PROCEEDINGS.
There are no pending legal proceedings, and the Company is not aware of
any threatened legal proceedings to which the Company is a party.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders of the Company
during the last quarter of the fiscal year ended February 29, 1996.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
(a) MARKET INFORMATION. The Company's Common Stock has been traded on
the over-the-counter market since September 27, 1995. The following table
sets forth the high and low bid price for the Company's Common Stock for the
periods indicated as reported by the NASD's Electronic Bulletin Board. These
prices are believed to be inter-dealer quotations and do not include retail
mark-ups, mark-downs, or other fees or commissions, and may not necessarily
represent actual transactions.
QUARTER ENDED HIGH BID LOW BID
November 30, 1995 $2.00 $2.00
February 29, 1996 $2.00 $2.00
(b) APPROXIMATE NUMBER OF HOLDERS OF COMMON STOCK. The number of record
holders of the Company's no par value common stock at May 28, 1996, was
approximately 90. This does not include shareholders who hold stock in their
accounts at broker/dealers.
(c) DIVIDENDS. No dividends have been declared or paid by the Company
since inception, except that the Company has declared a dividend of the shares
of Prime Rate Investment Management Enterprises, Inc., to the Company's
shareholders of record on May 22, 1995. See Item 12 below.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
During the fiscal year ended February 29, 1996, and since completing its
public offering, the Company has engaged in no significant operations other
than the search for, and identification and evaluation of, possible
acquisition candidates. No revenues were received by the Company during the
fiscal year other than a limited amount of interest income. The Company
experienced a net loss of $(74,151) during the fiscal year ended February 29,
1996, which was primarily the result of the legal and accounting costs of
compliance with the reporting requirements of the securities laws, general and
administrative expenses, and $25,000 for the registration costs of Prime's
stock (see Item 12 below).
For the remainder of the current fiscal year, the Company anticipates
losses similar in magnitude to those experienced historically. Should the
Company intensify its search for an acquisition candidate, however, losses are
likely to accrue at a greater rate than experienced historically. The Company
anticipates that until a business combination is completed with an acquisition
candidate, it will not generate revenues other than interest income, and may
continue to operate at a loss after completing a business combination,
depending upon the performance of the acquired business.
As of February 29, 1996, the Company had no material commitments for
capital expenditures.
ITEM 7. FINANCIAL STATEMENTS.
The financial statements are set forth on pages F-1 through F-10 hereto.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING FINANCIAL
DISCLOSURE.
There have been no disagreements between the Company and its independent
accountants on any matter of accounting principles or practices or financial
statement disclosure since the Company's inception.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The Directors and Executive Officers of the Company are as follows:
NAME AGE POSITION
Timothy J. Brasel 37 President, Secretary, Treasurer
and Director
Timothy J. Brasel has served as the Company's sole Officer and Director
since May 22, 1995. He also serves as President and a Director of three other
publicly-held "shells": Capital 2000, Inc., Beechport Capital Corp., and High
Hopes, Inc. Mr. Brasel has served as President of a number of other
publicly-held, blind-pool companies, including Prentice Capital, Inc. (March
1990 - August 1994); Eagle Eye Enterprises, Inc. (July 1987 - October 1994);
Extare Corporation; Brasel Ventures (March 1990 - August 1993); Eagle Vision,
Inc. (July 1987 - April 1990); L.I. Inc. (November 1988 - June 1990); and Fox
Ridge Capital, Inc. (February 1987 - March 1989). Since 1987, Mr. Brasel has
also served as President and a director of Bleu Ridge Consultants, Inc., a
business and management consulting firm in Denver, Colorado. Mr. Brasel
received a Bachelor of Science Degree in Business Administration from
Morningside College, Sioux City, Iowa, in 1980.
All Directors of the Company will hold office until the next annual
meeting of the shareholders and until their successors have been elected and
qualified.
The Officers of the Company are elected by the Board of Directors at the
first meeting after each annual meeting of the Company's shareholders, and
hold office until their death, or until they shall resign or have been removed
from office.
The date of the next annual meeting of the Company will be determined by
the Company's Board of Directors in accordance with Colorado law.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Based solely on a review of Forms 3 and 4 and amendments thereto
furnished to the Company during its most recent fiscal year, and Forms 5 and
amendments thereto furnished to the Company with respect to its most recent
fiscal year and certain written representations, no persons who were either a
director, officer, beneficial owner of more than 10% of the Company's common
stock, failed to file on a timely basis reports required by Section 16(a) of
the Exchange Act during the most recent fiscal year.
ITEM 10. EXECUTIVE COMPENSATION.
The following table sets forth information regarding the executive
compensation for the Company's President. No executive officer received any
compensation for the fiscal year ended February 29, 1996:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
NAME AND PRINCIPAL OTHER ANNUAL
POSITION YEAR SALARY BONUS COMPENSATION
Timothy J. Brasel, 1996 -0- -0- -0-
President
Michael L. Schumacher, 1995 -0- -0- -0-
President
LONG-TERM COMPENSATION
AWARDS PAYOUTS ALL
RESTRICTED OPTIONS/ OTHER
NAME AND PRINCIPAL STOCK SARs LTIP COMPEN-
POSITION YEAR AWARDS (NUMBER) PAYOUTS SATION
Timothy J. Brasel, 1996 -0- -0- -0- -0-
President
Michael L. Schumacher, 1995 -0- -0- -0- -0-
President
The Company's sole Officer and Director currently receives no salary from
the Company.
The Company has no retirement, pension, profit-sharing or insurance or
medical reimbursement plans covering its Officers and Directors.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of May 28, 1996, the stock ownership
of each person known by the Company to be the beneficial owner of five percent
or more of the Company's Common Stock, each Director individually and all
Directors and Officers of the Company as a group:
<TABLE>
<CAPTION>
AMOUNT AND
NAME AND ADDRESS NATURE OF BENE- PERCENT
OF BENEFICIAL OWNER FICIAL OWNERSHIP OF CLASS
<S> <C> <C>
Timothy J. Brasel 1,100,001 <FN1> 54.1%
16178 East Prentice Place
Aurora, Colorado 80015
Paul H. Dragul 410,000 20.1%
950 East Harvard, No. 500
Denver, Colorado 80210
Joe Peirce 232,500 <FN2> 11.4%
5125 West Lake Avenue
Littleton, Colorado 80123
All Directors and Officers 1,100,001 <FN1> 54.1%
Of the Company (1 Person)
__________________
<FN>
<FN1>
Includes 150,001 shares held by Brasel Charitable Remainder Trust; 250,000
shares held by Charitable Remainder Trust of Timothy J. Brasel; 200,000 shares
held by Charitable Remainder Trust of Mary Jane Brasel; 200,000 shares held by
Charitable Remainder Trust of Susan Anne Brasel; 200,000 shares held by Bleu
Ridge Consultants, Inc. Profit Sharing Plan and Trust; and 100,000 shares held
by La Mirage Trust. Timothy J. Brasel is the trustee of each of these trusts.
<FN2>
Includes 95,000 shares held by Peirce Enterprises, Inc. Mr. Peirce is
President and owner of Peirce Enterprises, Inc.
</FN>
</TABLE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On May 22, 1995, the Company entered into a Stock Purchase Agreement with
Timothy J. Brasel ("Brasel") and Paul H. Dragul ("Dragul") pursuant to which
the Company issued 1,800,000,000 shares of its common stock to Brasel, Dragul
and their assignees in exchange for $40,000 in cash.
During May 1995, the Company formed a corporation, Prime Rate Investment
Management Enterprises, Inc. ("Prime"), and contributed all of its assets,
including the $40,000 cash received from Brasel and Dragul, to Prime and a
dividend was declared to the shareholders of the Company as of May 22, 1995
(the "Record Date"). The dividend will consist of shares of Prime's common
stock or all of the cash held by Prime. The distribution of the Prime stock,
which will be made pro rata among the shareholders of the Company as of the
Record Date, will not occur until a registration statement is declared
effective by the SEC concerning the distribution. In the event that the
registration statement is not declared effective by May 31, 1997, Prime will
be liquidated and all of its cash distributed on a pro rata basis among all of
the Company's shareholders as of the Record Date. The total amount of cash to
be distributed is approximately $250,000. The shares of Prime which will be
distributed are being held by Prime's President for the benefit of the
Company's shareholders of record on May 22, 1995, until the registration is
completed. In view of this, Prime is no longer considered a subsidiary of the
Company.
On March 1, 1996, the Company entered into a consulting agreement with
Joe Peirce, a principal shareholder, pursuant to which Mr. Peirce is to
continue providing consulting services in the areas of locating, identifying,
evaluating and acquiring acquisition or merger candidates. Mr. Peirce was
issued 30,000 shares for his services during the period September 1, 1995
through February 29, 1996, and the Company agreed to issue 5,000 shares per
month during the six months ending August 31, 1996, and 50,000 shares on the
completion of a business acquisition or merger.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) 3. EXHIBITS.
EXHBIIT
NUMBER DESCRIPTION LOCATION
3 Articles of Incorporation, Incorporated by reference to
as amended Registrant's Form S-18 Registration
Statement (No. 33-7678-D)
3 Bylaws Incorporated by reference to
Registrant's Form S-18 Registration
Statement (No. 33-7678-D)
(b) REPORTS ON FORM 8-K. No reports on Form 8-K were filed during the
quarter ended February 29, 1996.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Universal Capital Corporation
Aurora, Colorado
We have audited the accompanying balance sheet of Universal Capital
Corporation (a development-stage enterprise) as of February 29, 1996 and the
related statements of operations and stockholders' equity and cash flows for
the two years ended February 29, 1996. 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statements presentation. We believe that our audit provides 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 Universal Capital Corporation
(a development-stage enterprise) as of February 29, 1996 and the results of
its operations, changes in stockholders' equity and its cash flows for the two
years ended February 29, 1996, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Notes 1 to the
financial statements, the Company has a net capital deficiency as of February
29, 1996 and has not commenced business operations. These factors raise
substantial doubt about its ability to continue as a going concern.
Management's plan in regard to these matters is also described in Note 1. The
financial statements do not include any adjustments that may result from the
outcome of this uncertainty.
By /s/ Miller and McCollom
MILLER AND MCCOLLOM
3900 E. Mexico Ave., Suite 504
Denver, CO 80210
May 31, 1996
UNIVERSAL CAPITAL CORPORATION
(A Development-Stage Enterprise)
BALANCE SHEET
February 29, 1996
ASSETS
Current Assets:
Cash advance, related party and other $ 2,998
TOTAL ASSETS $ 2,998
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Liabilities:
Current Liabilities:
Accounts payable, related parties $ 6,956
Accounts payable, other 30,536
Advances payable, related parties,
(Note 6) 17,250
Total Current Liabilities 54,742
TOTAL LIABILITIES 54,742
Stockholders' (Deficit) (Note 2):
Common Stock, no par value, authorized
100,000,000 shares, issued and out-
standing 2,000,000 shares, 30,000 shares
unissued (Note 2) 52,838
Excess of expenses over revenues
during development stage (104,582)
TOTAL STOCKHOLDERS' (DEFICIT) (51,744)
TOTAL LIABILITIES AND STOCKHOLDERS'
(DEFICIT) $ 2,998
The accompanying notes are an integral part of the financial statements.
UNIVERSAL CAPITAL CORPORATION
(A Development-Stage Enterprise)
STATEMENTS OF OPERATIONS
FROM
MARCH 5, 1986
(DATE OF
INCEPTION)
YEAR ENDED YEAR ENDED THROUGH
FEBRUARY FEBRUARY FEBRUARY
29, 1996 28, 1995 29, 1996
Revenue:
Interest Income $ 2,113 $ 6,803 $ 87,721
Expenses:
Legal & Accounting (Note 3) 23,912 5,890 78,455
Registration costs (Note 5) 25,000 - 25,000
Stock issued for services -
related party (Note 2) 22,000 43,000 65,000
Other 5,352 1,476 19,746
Total Expenses 76,264 50,366 188,201
Excess of (Expenses over
Revenue) During Development
Stage, before Provision for
Income Tax (74,151) (43,563) (100,480)
Provision (Credit) for Income
Taxes, Current - - 4,102
Excess of (Expenses over
Revenue) During Development
Stage $ (74,151) $(43,563) $(104,582)
Per Share $ (.05) $ (.27) $ (.05)
Weighted Average Shares
Outstanding 1,525,000 160,000 2,000,000
The accompanying notes are an integral part of the financial statements.
UNIVERSAL CAPITAL CORPORATION
(A Development-Stage Enterprise)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
From March 5, 1986 (Date of Inception) through February 29, 1996
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL RETAINED
PER PAID-IN EARNINGS
SHARES SHARE CAPITAL (DEFICIT)
TOTAL
<S> <C> <C> <C> <C> <C>
Balance, March 5, 1986 - $ - $ - $
-
May 15, 1986, for Cash 60,000 $ .30 18,000 -
18,000
March 10, 1987, for Cash
(Net of Offering Costs of
$14,820) 100,000 1.85 185,180 -
185,180
Excess of Revenue over
Expenses During Develop-
ment Stage, March 5, 1986
through February 28, 1987 - 1,593
1,593
Balance at February 28, 1987 160,000 $ 203,180 $ 1,593 $
204,773
Additional Offering Costs
Incurred (1,120)
(1,120)
Excess of Revenue over
Expenses During Develop-
ment Stage, Year Ended
February 29, 1988 - 4,314
4,314
Balance at February 29, 1988 160,000 $ 202,060 $ 5,907 $
207,967
Excess of Expenses over
Revenue During Development
Stage, Year Ended February
28, 1989 - (6,010)
(6,010)
Balance at February 28, 1989 160,000 $ 202,060 $ (103) $
201,957
Excess of Revenue over
Expenses During Development
Stage, Year Ended February
28, 1990 - 7,119
7,119
Balance at February 28, 1990 160,000 $ 202,060 $ 7,016 $
209,076
Excess of Revenue over
Expenses During Development
Stage, Year Ended February
28, 1991 - 5,770
5,770
Balance at February 28, 1991 160,000 $ 202,060 $ 12,786 $
214,846
Excess of Revenue over
Expenses During Development
Stage, Year Ended February
29, 1992 - 3,464
3,464
Balance at February 29, 1992 160,000 $ 202,060 $ 16,250 $
218,310
Excess of Expenses over
Revenue During Development
Stage, Year Ended February
28, 1993 - (1,090)
(1,090)
Balance at February 28, 1993 160,000 $ 202,060 $ 15,160 $
217,220
Excess of Expenses over
Revenue During Development
Stage, Year Ended February
28, 1994 - (2,028)
(2,028)
Balance at February 28, 1994 160,000 $ 202,060 $ 13,132 $
215,192
Stock issued for services 40,000 $1.075 43,000 -
43,000
Excess of Expenses over
Revenue During Development
Stage, Year Ended February
28, 1995 - (43,563)
(43,563)
Balance at February 28, 1995 200,000 245,060 (30,431)
214,629
Common stock issued 1,800,000 $ .022 40,000 -
40,000
Dividend - (250,000) -
(250,000)
Rounding related to reverse
stock split 2 - -
-
Stock redeemed (190,002) $ .02222 (4,222) -
(4,222)
Stock issued for services 190,000 $ .10 19,000 -
19,000
Stock issued for services
subsequent to year end - 3,000 -
3,000
Excess of Expenses over
Revenue During Development
Stage, Period Ended February
29, 1996 - (74,151)
(74,151)
Balance at February 29, 1996 2,000,000 $ 52,838 $(104,582) $
(51,744)
</TABLE>
The accompanying notes are an integral part of the financial statements.
UNIVERSAL CAPITAL CORPORATION
(A Development-Stage Enterprise)
STATEMENTS OF CASH FLOWS
FROM MARCH 5,
1996 (DATE
OF INCEPTION)
YEAR ENDED YEAR ENDED THROUGH
FEBRUARY 29, FEBRUARY 28, FEBRUARY 29,
1996 1995 1996
Cash Flows from Operating
Activities:
Excess of (expenses over
revenue) during development
stage $ (74,151) $ (43,563) $(104,582)
Adjustments to reconcile
net income to net cash
provided by (used in)
operating activities:
Issuance of stock for
services 22,000 43,000 65,000
(Increase) decrease in
accrued interest re-
ceivable and other (2,715) (203) (2,998)
Amortization of discount
on treasury bill (1,349) - (1,349)
Increase (decrease) in
income taxes and accounts
payable 33,267 (55) 33,270
Net Cash Provided by (Used in)
Operating Activities (22,948) (821) (10,659)
Cash Flows from Investing
Activities:
Sale of treasury bill 101,000 - 101,000
Purchase of treasury bill - (99,651) (99,651)
Net Cash (Used in) Investing
Activities 101,000 (99,651) 1,349
Cash Flows from Financing
Activities:
Dividends paid (250,000) - (250,000)
Notes payable, related parties 17,250 - 17,250
Issuance of stock, net of
offering costs 40,000 - 242,060
Net Cash Provided by Financing
Activities (192,750) - 9,310
Increase (Decrease) in Cash (114,698) (100,472) -
Cash, Beginning of Period 114,698 215,170 -
Cash, End of Period $ - $ 114,698 $ -
Cash Paid for Interest $ - $ - $ -
Cash Paid for Income Taxes $ - $ - $ 3,129
Non-Cash Investing and Financing Activities:
At February 29, 1996, the Company has an account payable to a related party
of $4,222 for repurchase of stock.
The accompanying notes are an integral part of the financial statements.
UNIVERSAL CAPITAL CORPORATION
(A Development-Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
February 29, 1996 and February 28, 1995
(1) SUMMARY OF ACCOUNTING POLICIES
A summary of the significant accounting policies consistently applied in the
preparation of the accompanying financial statements follows:
(a) GENERAL. Universal Capital Corporation (Company), was incorporated
under the laws of Colorado on March 5, 1986 for the purpose of engaging in any
lawful business, but intends to acquire a business opportunity. The Company
is a development-stage enterprise since planned principal operations have not
yet commenced.
(b) PER SHARE INFORMATION. Per share information is computed based upon
a weighted average number of shares outstanding.
(c) CASH EQUIVALENTS. For purposes of these statements of cash flows,
cash equivalents include time deposits, certificates of deposit and all highly
liquid debt instruments with original maturities of three months or less.
(d) USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS. 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 revenue and expenses during the reporting period.
Actual results could differ from those estimates.
(e) REVERSE STOCK SPLIT. During 1995, the Company effected a
one-for-one hundred reverse common stock split. All references to shares of
common stock in the financial statements have retroactively been adjusted for
this reverse stock split.
(f) GOING CONCERN. The Company is a development-stage enterprise whose
planned business operations have not yet commenced. At February 29, 1996, the
Company has a net capital deficiency. If the Company does not establish
business operations or obtain additional financing, the Company may be unable
to continue as a going concern. Management has engaged a consultant for the
purpose of locating, identifying, analyzing, evaluating and acquiring
acquisition or merger candidates.
(2) COMMON STOCK ISSUED FOR SERVICES
During the year ended February 28, 1995, the Company issued 40,000 shares of
its common stock for services. The shares issued were valued by the Board of
Directors at book value of $43,000. These shares were issued to a related
party. During the year ended February 29, 1996, 190,000 shares of the
Company's common stock were issued to a related party for services valued at
$19,000. Subsequent to February 29, 1996, an additional 30,000 shares were
issued to this party for services rendered through February 29, 1996, valued
at $3,000 (see Note 8).
(3) RELATED PARTY TRANSACTIONS
The former President of the Company is the principal shareholder of an
accounting firm which was paid $3,800 for the year ended February 28, 1995 for
assisting the Company with its Securities and Exchange Commission filings and
with the preparation of its corporate income tax returns.
(4) INCOME TAXES
The Company has a net operating loss carryover at December 31, 1994 of $39,021
which expires in the year ending February 28, 2010. The deferred tax asset
related to that net operating loss has a valuation allowance provided of 100%
of the asset given questionable future realization.
(5) DIVIDEND
During the year ended February 29, 1996, the Company formed a corporation,
Prime Rate Investment Management Enterprises, Inc. (Prime). On May 22, 1995
the Company executed a stock purchase agreement whereby the Company issued
1,800,000 shares of its no par value common stock for $40,000 in cash.
Immediately, prior to the closing, the Company contributed all if its assets,
including the $40,000 received in cash, to Prime and a dividend from paid-in
capital was declared to the shareholders of record on May 22, 1995 consisting
of 100% of the newly issued outstanding stock of Prime. Distribution of the
shares is subject to registration with the Securities and Exchange Commission.
If a successful registration is not completed, the cash will be distributed
at $1.25 per share to the shareholders of record on May 22, 1995 equal to the
initial $250,000 contribution made to Prime. Only the shareholders of record
prior to issuance of the 1,800,000 shares in May, 1995 will receive this
distribution. The shares of Prime are being held by Prime's President for the
benefit of the Universal Capital shareholders of record on May 22, 1995, until
the registration can be successfully completed. The Company has agreed to pay
up to $25,000 of Prime's registration costs which has been included in
accounts payable as of February 29, 1996.
(6) ADVANCES PAYABLE
As of February 29, 1996, the Company had outstanding $17,250 of advances from
related parties. These advances bear no interest and have no written
repayment terms.
(7) FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value of advances receivable, advances payable and accounts payable are
considered to be equal to the carrying value given the absence of any specific
interest rate or repayment terms.
(8) SUBSEQUENT EVENTS - COMMITMENTS
On March 1, 1996, the Company entered into a consulting agreement with a
related party for consulting services in the area of locating, identifying,
investigating, analyzing, evaluating and acquiring acquisition or merger
candidates. The consultant will be issued 30,000 shares of the Company's no
par value common stock for services performed from September 1, 1995 through
February 29, 1996, and 5,000 shares per month from March 1, 1996 through
August 31, 1996. In the event the Company successfully completes a business
acquisition or merger, a bonus of up to 50,000 shares will be issued. The
Company has further agreed to register these shares under the Securities Act
of 1933 pursuant to a registration statement on Form S-8. This registration
statement was filed on May 1, 1996.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned thereunder duly authorized.
UNIVERSAL CAPITAL CORPORATION
Dated: June 14, 1996 By: /s/ Timothy J. Brasel
Timothy J. Brasel, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
/s/ Timothy J. Brasel President, Secretary, June 14, 1996
Timothy J. Brasel Treasurer (Principal
Financial and Account-
ing Officer) and
Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
balance sheets and statements of operations found on pages F-2 and F-3 of the
Company's Form 10-KSB for the fiscal year ended February 29, 1996, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-END> FEB-29-1996
<CASH> 2,998
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,998
<PP&E> 0
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<TOTAL-ASSETS> 2,998
<CURRENT-LIABILITIES> 54,742
<BONDS> 0
0
0
<COMMON> 52,838
<OTHER-SE> (104,582)
<TOTAL-LIABILITY-AND-EQUITY> 2,998
<SALES> 0
<TOTAL-REVENUES> 2,113
<CGS> 0
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<OTHER-EXPENSES> 76,264
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (74,151)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> 0
