<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 1996
Commission File Number 0-26136
UNIVERSAL CAPITAL CORPORATION
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(Exact name of small business issuer as specified in its charter)
Colorado 84-1018684
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
16178 East Prentice Place, Aurora, Colorado 80015
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(Address of principal executive offices)
(303) 690-6787
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(Registrant's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the 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
As of November 30, 1996, Registrant had 2,500,000 shares of common stock, No
Par Value, outstanding.
Transitional Small Business Disclosure Format: Yes [ } No [ X ]
<PAGE>
INDEX
Page
Number
Part I. Financial Information
Item I. Financial Statements
Balance Sheets, February 29, 1996 and
November 30, 1996 (Unaudited) 3
Statements of Operations, Three Months
Ended November 30, 1996 (Unaudited) and
From March 5, 1986 (Date of Inception)
through November 30, 1996 (Unaudited) 4
Statements of Operations, Nine Months
Ended November 30, 1996 (Unaudited) and
From March 5, 1986 (Date of Inception)
through November 30, 1996 (Unaudited) 5
Statements of Cash Flows, Three Months
Ended November 30, 1996 and From March
5, 1986 (Date of Inception) through
November 30, 1996 (Unaudited 6
Statements of Cash Flows, Nine Months
Ended November 30, 1996 and From March
5, 1986 (Date of Inception) through
November 30, 1996 (Unaudited 7
Item 2. Management's Discussion and Analysis of
Financial Conditions and Results of
Operations 8
Part II. Other Information 8
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UNIVERSAL CAPITAL CORPORATION
(A Development-Stage Enterprise)
BALANCE SHEETS
(Unaudited)
February 29, November 30,
1996 1996
ASSETS
Current Assets:
Cash $ - $ 97
Cash advance, related party and other 2,998 3,000
Total Current Assets 2,998 3,097
TOTAL ASSETS $ 2,998 $ 3,097
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current Liabilities:
Accounts payable 37,492 46,796
Notes payable, related parties 17,250 34,828
Total Current Liabilities 54,742 81,624
TOTAL LIABILITIES 54,742 81,624
Stockholders' (Deficit):
Common stock, No par value, 100,000,000
shares authorized; 2,500,000 shares
issued and outstanding 49,838 75,588
Excess of expenses over revenue during
development stage (101,582) (154,115)
TOTAL STOCKHOLDERS' (DEFICIT) (51,744) (78,527)
TOTAL LIABILITIES AND STOCKHOLDERS'
(DEFICIT) $ 2,998 $ 3,097
The accompanying notes are an integral part of the financial statements.
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<PAGE>
UNIVERSAL CAPITAL CORPORATION
(A Development-Stage Enterprise)
STATEMENTS OF OPERATIONS
(Unaudited)
From March 5,
1986 (Date
Three Months of Inception)
Ended through
November 30, 1996 November 30, 1996
Revenue:
Interest income $ - $ 87,721
Expenses:
Accounting and legal 1,680 127,164
Stock issued for services - 87,750
Miscellaneous 324 22,820
2,004 237,734
Excess of Expenses over Revenue
During Development Stage
before Provision for Income Taxes (2,004) (150,013)
Provision for Income Taxes Current - 4,102
Excess of Expenses over Revenue
During Development Stage $ (2,004) $ (154,115)
Excess of Expenses over Revenue
During Development Stage
Per Share $ nil $ (.06)
Weighted Average Common Shares
Outstanding 2,500,000 2,500,000
The accompanying notes are an integral part of the financial statements.
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UNIVERSAL CAPITAL CORPORATION
(A Development-Stage Enterprise)
STATEMENTS OF OPERATIONS
(Unaudited)
From March 5,
1986 (Date
Nine Months of Inception)
Ended through
November 30, 1996 November 30, 1996
Revenue:
Interest income $ - $ 87,721
Expenses:
Accounting and legal 23,709 127,164
Stock issued for services 25,750 87,750
Miscellaneous 3,074 22,820
52,533 237,734
Excess of Expenses over Revenue
During Development Stage
before Provision for Income Taxes (52,533) (150,013)
Provision for Income Taxes Current - 4,102
Excess of Expenses over Revenue
During Development Stage $ (52,533) $ (154,115)
Excess of Expenses over Revenue
During Development Stage
Per Share $ (.02) $ (.06)
Weighted average Common Shares
Outstanding 2,500,000 2,500,000
The accompanying notes are an integral part of the financial statements.
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UNIVERSAL CAPITAL CORPORATION
(A Development-Stage Enterprise)
STATEMENTS OF CASH FLOWS
(Unaudited)
From March 5,
1986 (Date
Three Months of Inception)
Ended through
November 30, 1996 November 30, 1996
Cash Flows From Operating Activities:
Excess of Expenses over Revenue
During Development Stage $ (2,004) $ (154,115)
Adjustments to reconcile net
(loss) to net cash provided
by (used in) operating activities:
Issuance of stock for services - 87,750
(Increase) in accrued interest
and other - (3,000)
Increase (decrease) in accounts
payable (424) 46,796
Net Cash (Used in) Operating Activities (2,428) (22,569)
Cash Flows From Investing Activities:
Purchase of treasury bill - (99,651)
Sale of treasury bill - 99,651
Net Cash Provided By Investing
Activities - -
Cash Flows From Financing Activities:
Issuance of stock, net of
offering cost - 237,838
Dividends - (250,000)
Loans from related parties 1,928 34,828
Net Cash Provided By Financing
Activities 1,928 22,666
Increase (decrease) in cash (500) 97
Cash, beginning of period 597 -
Cash, end of period $ 97 $ 97
Interest paid $ - $ -
Income taxes paid $ - $ 3,129
The accompanying notes are an integral part of the financial statements.
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<PAGE>
UNIVERSAL CAPITAL CORPORATION
(A Development-Stage Enterprise)
STATEMENTS OF CASH FLOWS
(Unaudited)
From March 5,
1986 (Date
Nine Months of Inception)
Ended through
November 30, 1996 November 30, 1996
Cash Flows From Operating Activities:
Excess of Expenses over Revenue
During Development Stage $ (52,533) $ (154,115)
Adjustments to reconcile net
(loss) to net cash provided
by (used in) operating activities:
Issuance of stock for services 25,750 87,750
(Increase) in accrued interest
and other (2) (3,000)
Increase in accounts payable 9,304 46,796
Net Cash (Used in) Operating Activities (17,481) (22,569)
Cash Flows From Investing Activities:
Purchase of treasury bill - (99,651)
Sale of treasury bill - 99,651
Net Cash Provided By Investing
Activities - -
Cash Flows From Financing Activities:
Issuance of stock, net of
offering cost - 237,838
Dividends - (250,000)
Loans from related parties 17,578 34,828
Net Cash Provided By Financing
Activities 17,578 22,666
Increase (decrease) in cash 97 97
Cash, beginning of period - -
Cash, end of period $ 97 $ 97
Interest paid $ - $ -
Income taxes paid $ - $ 3,129
The accompanying notes are an integral part of the financial statements.
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<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Universal Capital Corporation (the "Company") was organized as a Colorado
corporation on March 5, 1986, in order to evaluate, structure and complete a
merger with, or acquisition of, prospects consisting of private companies,
partnerships of 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 generated minimal revenues during the quarter ended November 30,
1996, and management does not anticipate more than minimal revenues until
following the conclusion of a merger or acquisition, if any, as contemplated
by the Company's business plan.
The Company's capital is limited. The Company anticipates operational costs
will be limited until such time as significant evaluation work is undertaken
regarding prospective mergers or acquisitions.
At November 30, 1996, the Company had no material commitments for capital
expenditures.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
On January 17, 1997, the Company and Remarc International, Inc.
("Remarc") signed a Letter of Intent whereby the Company will acquire all of
the outstanding shares of Remarc in exchange for restricted shares of the
Company's Common Stock.
Remarc, based in Tampa, Florida, was formed for the purpose of
researching, developing, financing and conducting shipwreck projects on a
worldwide basis.
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<PAGE>
If this transaction is consummated, the Company will issue restricted
shares of its common stock in an amount which will represent approximately
92.5% of its outstanding common stock in exchange for all of the issued and
outstanding shares of Remarc.
The Company is planning to hold a shareholder meeting during February
1997 at which time the shareholders will be asked to approve: (1) a 1 for 5
reverse stock split; (2) a change of the Company's domicile from Colorado to
Delaware; and (3) a change of the Company's name to Odyssey Deep Sea
Exploration, Inc.
The closing of this transaction is subject to the execution of a
definitive agreement which will contain various representations and warranties
of each party and which will be subject to the approval of the directors of
each company.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit
10 Letter of Intent dated Filed herewith
January 17, 1997 between electronically
Universal Capital
Corporation and Remarc
International, Inc.
27 Financial Data Schedule Filed herewith
electronically
(b) Reports on Form 8-K
None.
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<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.
UNIVERSAL CAPITAL CORPORATION
Date: January 21, 1997 By: /s/ Timothy J. Brasel
Timothy J. Brasel, President
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<PAGE>
UNIVERSAL CAPITAL CORPORATION
16178 East Prentice Place
Aurora, Colorado 80015
January 17, 1997
John C. Morris, President
Remarc International, Inc.
3030 North Rocky Point Drive, Suite 280
Tampa, Florida 33607
Re: Proposed Exchange of Shares of Universal Capital Corporation
("Universal") for one hundred percent (100%) of the
outstanding shares of Remarc International, Inc. ("Remarc")
Dear Mr. Morris:
This letter will confirm the recent discussions we have had with you and
your representatives relative to the proposed exchange of shares of the common
stock of Universal for all of the issued and outstanding common stock of
Remarc. The objective of our discussions has been the execution and
consummation, as soon as feasible, of a formal agreement between Universal and
Remarc (the "Agreement"), which among other things, would provide for the
various matters set forth below:
1. Universal will acquire all of the issued and outstanding common
stock of Remarc from the shareholders of Remarc in exchange for 7,475,000
restricted shares of no par value common stock of Universal ("Universal Common
Stock"), which will be delivered upon the closing of this transaction (the
"Closing Date"). This exchange is intended to qualify as a tax-free
reorganization under Section 368 of the Internal Revenue Code of 1986, as
amended, and the shares of Universal received by Remarc shareholders will be
received on a tax-free basis. The shares to be issued by Universal will be
"restricted securities" as defined in Rule 144 under the Securities Act of
1933, and an appropriate legend will be placed on the certificates
representing such shares, and stop transfer orders placed against them.
2. There are currently 3,050,008 shares of Universal Common Stock
outstanding. Prior to the Closing, Universal will complete a 1 for 5 reverse
stock split so that the number of shares outstanding just prior to Closing
will be approximately 610,010. After the Closing of this transaction, there
will be approximately 8,085,010 shares outstanding and the current
shareholders of Remarc will own approximately 92.46% of the shares
outstanding. Upon Closing, Remarc will become a wholly-owned subsidiary of
Universal.
3. The parties will use their best efforts to close this transaction
on February 18, 1997.
4. Universal will call a special shareholder meeting to be held no
later than February 14, 1997, and at such meeting management will recommend
(1) a 1 for 5 reverse split of the outstanding shares of common stock; (2) a
change in the name of Universal to Odyssey Deep Sea Exploration, Inc.; and (3)
a change of domicile from Colorado to Delaware.
5. At the Closing, the present Universal officers and directors shall
deliver to Remarc their respective letters of resignation, along with minutes
of the Universal Board of Directors accepting such resignations and appointing
to the Universal Board those persons designated by Remarc to be directors of
Universal.
6. Prior to Closing, Remarc will provide an unaudited balance sheet
and income statement for the period ended December 31, 1996. Universal must
be satisfied that the financials which will be required for Universal's SEC
filings can be audited within 75 days after the Closing.
7. On the date of this Letter of Intent, the common stock of
Universal is registered with the Securities and Exchange Commission pursuant
to Section 12(g) of the Securities Exchange Act of 1934, as amended, (the
"Act"), and Universal has filed all reports required to be filed by Section 13
of the Act during the past 12 months. In addition, Universal's common stock
is quoted on the NASD's Bulletin Board.
8. On the Closing, Universal will have no assets and its liabilities
will not exceed $60,000. Universal will provide to Remarc a schedule of such
liabilities at least ten days prior to closing and Remarc agrees to pay such
liabilities at the time of Closing.
9. It is hereby acknowledged that each party hereto may be
responsible for payment of certain finders fees relating to the transaction
proposed herein and that as a further condition to Closing, as defined herein,
each party shall warrant in the Agreement that such finders fees have been
paid and further, shall indemnify and hold harmless the other party from such
obligation.
10. Once this letter is executed, all parties hereto, in reliance upon
the agreement represented herein, shall not, for a period of 45 days from the
date of execution hereof, negotiate with any other third party with respect to
undertaking any merger or stock or asset acquisition. Both parties hereto
agree to proceed diligently with the completion of all necessary due diligence
and the drafting of all necessary documentation and agreements.
11. Immediately after the Closing, Remarc will retain Timothy J.
Brasel as a consultant to the public company for six months and as
compensation he will be issued 40,000 shares of common stock which will be
registered on a Form S-8 registration statement within two weeks after the
Closing.
12. Universal and Remarc will take all necessary steps to call
meetings of their respective directors as soon as possible to approve the
terms of this Letter of Intent.
13. Upon the signing of this Letter of Intent, Universal and Remarc
will provide to each other full access to their books and records and will
furnish financials and operating data and such other information with respect
to their business and assets as may reasonably be requested from time to time.
If the proposed transaction is not consummated, all parties shall keep
confidential any information (unless ascertainable from public filings or
published information) obtained concerning the other's operations, assets and
business.
14. Remarc will pay the legal expenses reasonably incurred in
connection with this transaction whether or not the transaction is
consummated.
15. This Letter of Intent may be executed in two or more counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
16. Upon the execution by you and return to us of this Letter of
Intent, counsel for Remarc and Universal will prepare an Exchange Agreement
which shall contain provisions in accordance with this Letter together with
such further appropriate terms and conditions as legal counsel and the parties
may mutually determine. The Exchange Agreement shall be subject, in all
respects, to the approval of the respective Boards of Directors of Universal
and Remarc.
17. It is understood that the terms set forth in this Letter may not
constitute all of the major terms which will be included in the Exchange
Agreement, that the terms set forth herein are subject to further discussion
and negotiation, and that this Letter is an expression of intent only and is
not to create or result in any legally binding obligation upon the parties
hereto except with respect to paragraphs 10, 13 and 14 and the obligation to
pursue negotiations in good faith.
If the foregoing accurately reflects our discussions, please execute and
return to the undersigned one copy of this Letter.
UNIVERSAL CAPITAL REMARC INTERNATIONAL, INC.
CORPORATION
By:/s/ Timothy J. Brasel By:/s/ John C. Morris
Timothy J. Brasel, President John C. Morris, President
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
balance sheets and statements of operations found on pages 3 and 5 of the
Company's Form 10-QSB for the year to date, and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-END> NOV-30-1996
<CASH> 97
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,097
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,097
<CURRENT-LIABILITIES> 81,624
<BONDS> 0
<COMMON> 75,588
0
0
<OTHER-SE> (78,527)
<TOTAL-LIABILITY-AND-EQUITY> 3,097
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 52,533
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (52,533)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (52,533)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> 0
</TABLE>
