<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year ended: February 28, 1997
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: $-0-.
As of April 24, 1997, 3,050,008 shares of common stock were outstanding, and
the aggregate market value of the common stock of the Registrant held by
non-affiliates was approximately $501,000.
Documents incorporated by reference: NONE.
Transitional Small Business Disclosure Format (check one): Yes __ No X
<PAGE>
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 800,000 shares of no par value common stock ("Common
Stock") at $.25 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, and on July 17, 1996, the Company effected
an 8 for 1 forward stock split. All financial information and share data in
this Report give retroactive effect to these two stock splits.
The Company's offices are located at 16178 East Prentice Place, Aurora,
Colorado 80015, and the Company's telephone number is (303) 690-6787.
On January 17, 1997, the Company signed a letter of intent to acquire
all of the outstanding shares of Remarc International, Inc. ("Remarc") in
exchange for approximately 37,375,000 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. The closing of this transaction is subject to the execution
of a definitive agreement and the approval of the directors of each company.
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"
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entities including private companies, partnerships or sole proprietorships.
The Company does not intend to act as a general or limited partner in connec-
tion 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 mater-
ial 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 ac-
quisition 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 acquisi-
tion. The
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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.
Since May 15, 1996, the Company has maintained 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 28, 1997.
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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 under the symbol "UVSN" 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 $0.25 $0.25
February 29, 1996 $0.25 $0.25
May 31, 1996 $0.26 $0.25
August 31, 1996 $0.265 $0.25
November 30, 1996 $0.3125 $0.25
February 28, 1997 $0.3125 $0.25
(b) APPROXIMATE NUMBER OF HOLDERS OF COMMON STOCK. The number of record
holders of the Company's no par value Common Stock at April 24, 1997, was 91.
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.
(d) RECENT SALES OF UNREGISTERED SECURITIES. During January 1997, the
Company issued 383,333 shares of its Common Stock to Brasel Family Partners,
Ltd. for conversion of $11,500 of loans, and the Company issued 166,667 shares
to Paul H. Dragul for conversion of $5,000 of loans. Paul H. Dragul is a
principal shareholder of the Company and Timothy J. Brasel, the General
Partner of Brasel Family Partners, Ltd., is the Company's sole officer and
director and he is a principal shareholder. The Company relied on the
exemption contained in Section 4(2) of the Securities Act of 1933, as amended.
Both Mr. Brasel and Mr. Dragul had complete information concerning the Company
and they are sophisticated and understand the risks of their investment.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
During the fiscal year ended February 28, 1997, 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. The Company experienced a net loss of $(38,005) during the
fiscal year ended February 28, 1997, 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.
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
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<PAGE>
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 28, 1997, 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-12 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.
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<PAGE>
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 38 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 two other
publicly-held "shells": Beechport Capital Corp. and High Hopes, Inc. Mr.
Brasel also serves as the sole officer and a director of four other companies
which were formed for the same purpose as the Company: Aspen Capital, Inc.,
Cypress Capital, Inc., Mahogany Capital, Inc. and Walnut Capital, Inc. From
March 1990 until September 1994, Mr. Brasel served as President, Secretary,
Treasurer and a Director of Prentice Capital, Inc., a publicly-held
blank-check company which completed an acquisition of Universal Footcare, Inc.
From March 1990 until August 1993, Mr. Brasel was President, Secretary and a
Director of Brasel Ventures, Inc., a publicly-held blank-check company, which
completed an acquisition of American Pharmaceutical Company. From April 1990
to February 1992, Mr. Brasel served as President, a Director and sole
shareholder of Central Securities Transfer Corporation, a stock transfer
company which is no longer in business. From January 1989 to May 1992, Mr.
Brasel served as a Director of Coalmont, Inc., a publicly-held blank-check
company that completed an acquisition of MCC Holdings, Inc. during May 1992.
From July 1987 until May 1990, Mr. Brasel served as President of Eagle Vision,
Inc., a publicly-held blank-check company that completed an acquisition of
UMA Management Associates, Inc. From November 1988 to June 1990, he also
served as President and a Director of L.I. Inc., a publicly-held blank-check
company which completed an acquisition of Imaging Management Associates, Inc.
Since January 1987, Mr. Brasel has been President and a Director of Bleu Ridge
Consultants, Inc., a business and management consulting firm located 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.
ITEM 10. EXECUTIVE COMPENSATION.
The Company's sole Officer and Director currently received no salary from
the Company.
The Company has no retirement, pension, profit-sharing or insurance or
medical reimbursement plans covering its Officers and Directors.
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ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of April 24, 1997, 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 633,118 <FN1> 20.8%
16178 East Prentice Place
Aurora, Colorado 80015
Paul H. Dragul 259,737 8.5%
950 East Harvard, No. 500
Denver, Colorado 80210
Joe Peirce 923,130 <FN2> 30.3%
5125 West Lake Avenue
Littleton, Colorado 80123
All Directors and Officers 633,118 <FN1> 20.8%
Of the Company (1 Person)
__________________
<FN>
<FN1>
Includes 383,333 shares held by Brasel Family Partners, Ltd.; 34,058 shares
held by Brasel Charitable Remainder Trust; 56,800 shares held by Charitable
Remainder Trust of Timothy J. Brasel; 45,400 shares held by Charitable
Remainder Trust of Mary Jane Brasel; 45,400 shares held by Charitable
Remainder Trust of Susan Anne Brasel; 45,400 shares held by Bleu Ridge
Consultants, Inc. Profit Sharing Plan and Trust; and 22,700 shares held by La
Mirage Trust. Timothy J. Brasel is the trustee of each of these trusts.
<FN2>
Includes 21,565 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 14,400,000 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") of the shares of Prime common stock. The shares were
issued to Michael L. Schumacher, a former President and Director of the
Company to hold in trust until the shares could be distributed to the
shareholders in accordance with the federal securities laws. It is expected
that the shares will be distributed by June 30, 1997. In view of this
dividend, Prime is no longer considered a subsidiary of the Company.
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<PAGE>
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 240,000 shares for his services during the period September 1, 1995
through February 29, 1996, and he was issued an additional 640,000 shares for
services rendered during the fiscal year ended February 28, 1997.
During August 1996, the Company signed a Share Exchange Agreement with
Holiday Club International, Inc. and American Vacation Ventures, Inc., which
was later terminated. In anticipation of the closing of this transaction,
certain of the Company's shareholders cancelled a total of 14,380,000 shares.
Following is a list of the shares cancelled by those persons who were either
principal shareholders or whose shares are beneficially owned by Timothy J.
Brasel or one of the Company's principal shareholders:
Brasel Charitable Remainder Trust 1,165,950
Charitable Remainder Trust of Timothy J. Brasel 1,943,200
Charitable Remainder Trust of Mary Jane Brasel 1,554,600
Charitable Remainder Trust of Susan Anne Brasel 1,554,600
Bleu Ridge Consultants, Inc. Profit Sharing Plan
& Trust 1,554,600
La Mirage Trust 777,300
Nasus Lesarb Ltd. 777,300
J. J. Peirce 738,435
Peirce Enterprises, Inc. 738,435
Paul H. Dragul 3,186,930
----------
Total 13,991,350
During January 1997, the Company issued 383,333 shares of its Common
Stock to Brasel Family Partners, Ltd. for conversion of $11,500 of loans and
the Company issued 166,667 shares to Paul H. Dragul for conversion of $5,000
of loans. Paul H. Dragul is a principal shareholder of the Company and
Timothy J. Brasel, the General Partner of Brasel Family Partners, Ltd., is the
Company's sole officer and director and he is a principal shareholder.
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 28, 1997.
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<PAGE>
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 28, 1997 and the
related statements of operations and stockholders' equity and cash flows for
the two years ended February 28, 1997. 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 28, 1997 and the results of
its operations, changes in stockholders' equity and its cash flows for the two
years ended February 28, 1997, 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 Note 1 to the
financial statements, the Company has a net capital deficiency as of February
28, 1997 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.
/s/ Miller and McCollom
Miller and McCollom
3900 E. Mexico Ave., Suite 504
Denver, CO 80210
April 28, 1997
F-1
<PAGE>
UNIVERSAL CAPITAL CORPORATION
(A Development-Stage Enterprise)
BALANCE SHEET
February 28, 1997
ASSETS
Current Assets:
Cash $ 97
Cash advance, related party (Note 6) 3,000
TOTAL ASSETS $ 3,097
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Liabilities:
Current Liabilities:
Accounts payable, related parties
(Notes 3 and 6) $ 8,909
Accounts payable 36,109
Advances payable, related parties,
(Note 6) 23,328
Total Current Liabilities 68,346
TOTAL LIABILITIES 68,346
Stockholders' (Deficit) (Notes 2, 5 and 8):
Common Stock, no par value, authorized
100,000,000 shares, issued and out-
standing 3,050,000 shares 77,338
Excess of expenses over revenues
during development stage (142,587)
TOTAL STOCKHOLDERS' (DEFICIT) (65,249)
TOTAL LIABILITIES AND STOCKHOLDERS'
(DEFICIT) $ 3,097
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE>
UNIVERSAL CAPITAL CORPORATION
(A Development-Stage Enterprise)
STATEMENTS OF OPERATIONS
From
March 5, 1996
Year Ended Year Ended (Date of Incep-
February 28, February 29, tion) Through
1997 1996 February 28, 1997
------------ ------------ -----------------
Revenue:
Interest Income $ - $ 2,113 $ 87,721
Expenses:
Legal & Accounting
(Note 3) 26,063 23,912 104,518
Registration costs
(Note 5) - 25,000 25,000
Stock issued for ser-
vices - related
party (Note 2) 8,000 22,000 73,000
Other 3,942 5,352 23,688
Total Expenses 38,005 76,264 226,206
Excess of (Expenses over
Revenue) During Develop-
ment Stage, before Pro-
vision for Income Tax (38,005) (74,151) (138,485)
Provision (Credit) for
Income Taxes, Current - - 4,102
Excess of (Expenses over
Revenue) During Develop-
ment Stage $ (38,005) $ (74,151) $ (142,587)
Per Share $ * $ * $ (.05)
Weighted Average Shares
Outstanding 8,360,417 12,200,000 3,050,000
* Less than .01 per share
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
UNIVERSAL CAPITAL CORPORATION
(A Development-Stage Enterprise)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
(Unaudited)
From March 5, 1986 (Date of Inception) through February 28, 1997
<TABLE>
<CAPTION>
Addi-
Common Stock tional Retained
--------------------- Paid-In Earnings
Shares Per Share Capital (Deficit) Total
--------- --------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
Balance, March 5, 1986 - $ - $ - $ -
May 15, 1986, for Cash 480,000 $ .0375 18,000 - 18,000
March 10, 1987, for
Cash (Net of Offering
Costs of $14,820) 800,000 $ .23125 185,180 - 185,180
Excess of Revenue
over Expenses During
Development Stage,
March 5, 1986 through
February 28, 1987 - 1,593 1,593
---------- -------- --------- ---------
Balance at February
28, 1987 1,280,000 203,180 1,593 204,773
Additional Offering
Costs Incurred (1,120) (1,120)
Excess of Revenue
over Expenses During
Development Stage,
Year Ended February
29, 1988 - 4,314 4,314
---------- -------- --------- ---------
Balance at February
29, 1988 1,280,000 $202,060 $ 5,907 $ 207,967
Excess of Expenses over
Revenue During Develop-
ment Stage, Year Ended
February 28, 1989 - (6,010) (6,010)
---------- -------- --------- ---------
Balance at February 28,
1989 1,280,000 $202,060 (103) $ 201,957
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
UNIVERSAL CAPITAL CORPORATION
(A Development-Stage Enterprise)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
(Unaudited)
From March 5, 1986 (Date of Inception) through February 28, 1997
(Continued)
<TABLE>
<CAPTION>
Addi-
Common Stock tional Retained
--------------------- Paid-In Earnings
Shares Per Share Capital (Deficit) Total
--------- --------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
Excess of Revenue
over Expenses During
Development Stage,
Year Ended February
28, 1990 - 7,119 7,119
---------- -------- --------- ---------
Balance at February 28,
1990 1,280,000 $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 1,280,000 $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 1,280,000 $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 1,280,000 $202,060 15,160 217,220
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE>
UNIVERSAL CAPITAL CORPORATION
(A Development-Stage Enterprise)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
(Unaudited)
From March 5, 1986 (Date of Inception) through February 28, 1997
(Continued)
<TABLE>
<CAPTION>
Addi-
Common Stock tional Retained
--------------------- Paid-In Earnings
Shares Per Share Capital (Deficit) Total
--------- --------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
Excess of Expenses over
Revenue During
Development Stage,
Year Ended February 28,
1994 - (2,028) (2,028)
---------- -------- --------- ---------
Balance at February 28,
1994 1,280,000 $202,060 $ 13,132 $ 215,192
Stock issued for
services 320,000 $ .1344 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 1,600,000 245,060 (30,431) 214,629
Common stock issued 14,400,000 $ .003 40,000 - 40,000
Dividend - (250,000) - (250,000)
Stock redeemed (1,520,000) $ .003 (4,222) - (4,222)
Stock issued for
services 1,520,000 $ .0125 19,000 - 19,000
Stock issued for ser-
vices subsequent to
year end - 3,000 - 3,000
Excess of Expenses over
Revenue During Develop-
ment Stage, Period Ended
February 29, 1996 - (74,151) (74,151)
---------- -------- --------- ---------
Balance at February 29,
1996 16,000,000 $ 52,838 $(104,582) $ (51,744)
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE>
UNIVERSAL CAPITAL CORPORATION
(A Development-Stage Enterprise)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
(Unaudited)
From March 5, 1986 (Date of Inception) through February 28, 1997
(Continued)
<TABLE>
<CAPTION>
Addi-
Common Stock tional Retained
--------------------- Paid-In Earnings
Shares Per Share Capital (Deficit) Total
--------- --------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
Common stock issued
for prior year services 240,000 - - -
Common stock issued
for services 40,000 $ .0125 500 - 500
Common stock issued
for services 600,000 $ .0125 7,500 - 7,500
Stock cancelled
(Note 8) (14,380,000) - - -
Stock issued in can-
cellation of note
payable, related
parties 550,000 $ .03 16,500 - 16,500
Excess of Expenses over
Revenue During
Development Stage,
Period Ended February
28, 1997 - (38,005) (38,005)
---------- -------- --------- ---------
Balance at February
28, 1996 3,050,000 $ 77,338 $(142,587) $ (65,249)
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-7
<PAGE>
UNIVERSAL CAPITAL CORPORATION
(A Development-Stage Enterprise)
STATEMENTS OF CASH FLOWS
From
March 5, 1986
(Date of
Year Ended Year Ended tion) Through
February 28, February 29, February 28,
1997 1996 1997
------------ ------------ -------------
Cash Flows from Operating
Activities:
Excess of (expenses over
revenue) during development
stage $ (38,005) $ (74,151) $ (142,587)
Adjustments to reconcile net
income to net cash provided by
(used in) operating activities:
Issuance of stock for services 8,000 22,000 73,000
Amortization of discount - (1,349) (1,349)
(Increase) in accrued interest
receivable and other - (2,715) (2,998)
Increase in income taxes and
accounts payable 7,524 33,267 40,794
Net Cash (Used in) Operating
Activities (22,481) (22,948) (33,140)
Cash Flows from Investing
Activities:
Maturity of treasury bill - 101,000 101,000
Purchase of treasury bill - - (99,651)
Net Cash Provided by Investing
Activities - 101,000 1,349
Cash Flows from Financing
Activities:
Dividends paid - (250,000) (250,000)
Notes payable, related parties 22,578 17,250 39,828
Issuance of stock, net of
offering costs - 40,000 242,060
Net Cash Provided by (Used in)
Financing Activities 22,578 (192,750) 31,888
Increase (Decrease) in Cash 97 (114,698) 97
The accompanying notes are an integral part of the financial statements.
F-8
<PAGE>
UNIVERSAL CAPITAL CORPORATION
(A Development-Stage Enterprise)
STATEMENTS OF CASH FLOWS
(Continued)
From
March 5, 1986
(Date of
Year Ended Year Ended tion) Through
February 28, February 29, February 28,
1997 1996 1997
------------ ------------ -------------
Cash, Beginning of Period - 114,698 -
Cash, End of Period $ 97 $ - $ 97
Cash Paid for Interest $ - $ - $ -
Cash Paid for Income Taxes $ - $ - $ 3,129
Non-Cash Investing and Financing Activities:
During the year ended February 28, 1997, the Company converted notes
payable, related parties to stock in the amount of $16,500.
During the year ended February 29, 1996, the Company incurred an account
payable, related party of $4,222 for repurchase of stock.
The accompanying notes are an integral part of the financial statements.
F-9
<PAGE>
UNIVERSAL CAPITAL CORPORATION
(A Development-Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
February 28, 1997 and February 29, 1996
(1) Summary of Accounting Policies
A summary of significant accounting policies of Universal Capital
Corporation (Company) is presented to assist in understanding the Company's
financial statements. These accounting policies conform to generally accepted
accounting principles and have been consistently applied in the preparation of
the financial statements.
(a) Organization and Operations
The 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) Forward Stock Split
During the year ended February 28, 1997, the Company effected an
eight-for-one forward common stock split. All references to shares of
common stock in the financial statements have retroactively been adjusted for
this forward stock split.
F-10
<PAGE>
UNIVERSAL CAPITAL CORPORATION
(A Development-Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
February 28, 1997 and February 29, 1996
(Continued)
(1) Summary of Accounting Policies, Continued
(f) Going Concern
The Company is a development stage enterprise whose planned business
operations have not yet commenced. At February 28, 1997, 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 and acquiring acquisition or merger
candidates.
(2) Common Stock Issued for Services/Notes Payable
During the year ended February 29, 1996, 1,520,000 shares of the
Company's common stock were issued to a related party for services valued at
$19,000. During the year ended February 28, 1997, 880,000 shares of the
Company's common stock were issued for services valued at $11,000, $3,000 of
which was expensed in 1996. Also during the year ended February 28, 1997,
550,000 shares of the Company's common stock were issued in exchange for notes
payable of $16,500 from related parties.
(3) Related Party Transactions
The former President of the Company is the principal shareholder of an
accounting firm which assisted the Company with its Securities and Exchange
Commission filings and with the preparation of its corporate income tax
returns. Amounts expensed to this firm for the years ended February 28, 1997
and February 29, 1996 were $3,614 and $3,800 respectively. At February 28,
1997, this firm was due $3,614 which is included in accounts payable, related
parties.
(4) Income Taxes
The Company has a net operating loss carryover at February 28, 1997 of
$138,485 which expires in various years ending through February 28, 2012. The
deferred tax asset in the amount of approximately $28,000 related to that net
operating loss has a valuation allowance provided for 100% of the approximate
$28,000 due to questionable future realization.
F-11
<PAGE>
UNIVERSAL CAPITAL CORPORATION
(A Development-Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
February 28, 1997 and February 29, 1996
(Continued)
(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 14,400,000 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 to the shareholders of record equal to the initial
$250,000 contribution made to Prime. Only the shareholders of record prior
to issuance of the additional 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 of which approximately $20,000 is
remaining in accounts payable as of February 28, 1997.
(6) Advances Payable/Receivable - Related Parties
As of February 28, 1997, the Company had outstanding $23,328 of advances
from related parties. These advances bear no interest and have no written
repayment terms. As of February 28, 1997, the Company had an advance
receivable from a related party of $3,000. At February 28, 1997, additional
amounts totalling $5,295 were payable to these related parties.
(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) Cancellation of Stock
During the year ended February 28, 1997, certain shareholders returned
14,380,000 shares of the Company common stock to the Company for cancellation.
The shareholders received no monetary compensation for returning these shares.
(9) Significant Fourth Quarter Adjustments
During the fourth quarter of the year ended February 28, 1997, stock
issued for services was reduced by $14,750 to reflect the shares being issued
at $.0125 per share.
F-12
<PAGE>
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: April 30, 1997 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, April 30, 1997
Timothy J. Brasel Treasurer (Principal
Financial and Account-
ing Officer) and
Director
<PAGE>
<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 28, 1997, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-END> FEB-28-1997
<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> 68,346
<BONDS> 0
0
0
<COMMON> 77,338
<OTHER-SE> (142,587)
<TOTAL-LIABILITY-AND-EQUITY> 3,097
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 38,005
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (38,005)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (38,005)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
