SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 June 30, 1996
Dynasty Capital Corporation
---------------------------
(Name of small business issuer in its charter)
Florida 33-11059-A 59-2773602
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission File (IRS Employee ID #)
or incorporation) Number)
26 West Dry Creek Circle, Suite 600, Littleton, Colorado 80120
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 794-9450
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the past 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
---------- ----------
As of September 12, 1996, 10,801,000 shares of Common Stock of the Registrant
were outstanding and the aggregate market value of the Common Stock of the
Registrant held by non affiliates was not determinable.
Documents incorporated by reference: None
This Form 10-KSB consists of eighteen (18) pages. There are no exhibits to this
Form 10-KSB. The Registrant had no revenues for its fiscal year ended June 30,
1996.
<PAGE>
PART I
------
Item 1. Business.
- ------------------
General
Dynasty Capital Corporation (the "Registrant") is a development stage
enterprise formed under the laws of the State of Florida to evaluate, structure
and complete a business combination in the form of a merger with, or acquisition
of, prospects consisting of private companies, partnerships or sole
proprietorships. A business combination may be structured as a merger,
consolidation, exchange of stock for stock or assets or any other form which
will result in the combined enterprise being a publicly-held corporation. The
Registrant has no business operations and no intention of engaging in an active
business prior to a business combination with another enterprise. The Registrant
may seek to acquire a controlling interest in such entities in contemplation of
later completing a business combination. The Registrant is not limited to any
operation or geographic area in seeking out a potential business combination.
Management has not identified any particular business or industry within which
the Registrant will seek a business combination. The Registrant has not
conducted, not have others made available to it, market research supporting the
viability of the Registrant's proposed operations. This discussion of the
Registrant's business is purposely general and is not meant to be restrictive of
the Registrant's virtually unlimited discretion to search for and enter into
potential business combinations.
The Registrant anticipates that the selection of a business combination in
which to participate will be complex and involve a high degree of risk. Because
of general economic conditions, rapid technological advances being made in some
industries, and shortages of available capital, management believes that there
are firms seeking the benefits of a publicly-traded corporation. Such perceived
benefits of a publicly-traded corporation may include facilitating or improving
the terms on which additional equity financing may be sought, providing
liquidity for the principal shareholders of a business, creating a means for
providing incentive stock options or similar benefits to key employees,
providing liquidity (subject to restriction of applicable statues) for all
shareholders, and other factors. Potentially available business combinations may
occur in many different industries and at various stages of development, all of
which will make the task of comparative investigation and analysis of such
opportunities extremely difficult and complex. In addition, because of its lack
of capital, the Registrant will encounter greater difficulty in locating a
suitable business combination than a similar company with greater capital
resources.
The Registrant's activities to date have been limited to organizational
matters and the Registrant entered into letters of intent with two private
business entities, neither of which resulted in the completion of a business
combination. The Registrant sold 2,500,000 units of $.0001 par value Common
Stock ("Common Stock") at $.02 per unit, for total proceeds of $50,000 in a
public offering which closed on June 8, 1987. On July 7, 1988, the Registrant
entered into a letter of intent with the Starlight Group which did not result in
the completion of a business combination. On March 23, 1989, the Registrant
entered into a non-binding letter of intent with TM Building Products, which did
not result in the completion of a business combination. As of August 27, 1996,
the Registrant entered into a letter of intent with Visitor Services, Inc., to
complete a business combination by October 20, 1996.
2
<PAGE>
The Registrant has extremely limited capital and believes it has
insufficient capital with which to finance cash acquisitions of other business
entities. Accordingly, the Registrant is incapable, in the absence of additional
financing, of where there is no assurance, of acquiring the assets or business
of other entities except in those instances where the Registrant exchanges its
Common and/or Preferred Shares for the assets of a target company and/or for
shares of the target company's shareholders. If the Registrant is unable to
complete a suitable business combination within a reasonable period, such period
to be determined at the discretion of the Board of Directors, its Board of
Directors may recommend the Registrant's liquidation or dissolution.
Management of the Registrant expects that an exchange of the Registrant's
Common Shares to effectuate a business combination, if accomplished, would
require the Registrant to issue a substantial number of its Common Shares.
Accordingly, the percentage of Common Shares held by the Registrant's existing
shareholders prior to a merger would be reduced as a result of the increased
number of Common Shares issued in connection with such a merger or acquisition.
Therefore, it is very likely that existing shareholders would suffer substantial
dilution in the percentage of Registrant's Common Shares held by them subsequent
to the completion of a business combination.
Management of the Registrant contemplates that the Registrant will seek a
business combination with a target company with either assets, revenues or
earnings, or a combination thereof. The Registrant has not established a
specific level of earnings or assets below which the Registrant would not
consider a business combination 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 Registrant. A business combination with a target
company which is generating losses or which has negative shareholders' equity
may have a material adverse affect on the price of the Registrant's Common
Shares. There is also the possibility that the Registrant may incur significant
expenses in seeking a business combination that does not close or is abandoned.
As a result, Registrant would not have financial resources great enough to pay
the expenses of a failed merger without additional financing, of which there is
no assurance. Therefore, shareholders could experience the loss of their entire
investment or experience further significant dilution in the percentage of
Registrant's Common Shares held by them subsequent to a failed attempt to
complete a merger or acquisition. Even if the Registrant were to complete a
business combination with a target company with assets, earnings or both, there
is no assurance that a market will develop for the Registrant's Common Shares or
that the price of such Common Shares would increase in value.
Following the completion of a business combination, of which the Registrant
gives no assurance, the Registrant anticipates that control of the Registrant
would likely change as the result of the issuance of additional Common Stock. At
such time the Registrant's current Board of Directors will most likely resign
and a new Board would be appointed. Once such a change of Directors has taken
place, it is also likely that the new Directors will replace the Officers with
candidates of their choosing. Current management of the Registrant would not
object to such replacements when duly elected.
3
<PAGE>
Management of the Registrant will seek business combination candidates, as
available time permits, through existing associations and by word of mouth. The
Registrant also may employ the services of business brokers or other
intermediaries; however, as of the date hereof, the Registrant has no plans,
proposals, understanding or arrangements with respect to the employment of any
business brokers or other intermediaries.
The Registrant has extremely limited financial resources with which to
identify and evaluate possible business combinations and is wholly dependent on
its Officers and Directors which are not full time employees, for such
identification and evaluation activities. It is likely that a sustained pursuit
of any business combination will require financial resources outside of the
Registrant. To the extent any expenses are incurred, principal shareholders may
provide such funds in the form of loans. The Registrant may also attempt to
borrow money from other sources, but there is no assurance that the Registrant
will be able to do so.
Competition
- -----------
The Registrant is an insignificant participant among the firms which engage
in mergers with and acquisitions of privately owned entities. There are many
established venture capital, investment banking and other financial concerns
which have significantly greater financial and human resources, and technical
expertise than the Registrant. In the view of the Registrant's aggregate limited
financial resources and limited management availability, the Registrant will
continue to be at a significant competitive disadvantage compared to the
Registrant's competitors.
Employees
- ---------
The Registrant currently has no compensated employees. While all of the
Registrant's Officers and Directors have prior experience in the valuation of
businesses and the structuring of acquisitions and mergers, potential conflicts
of interest may arise as a result of the Officer's and Director's ordinary
business activities, which include the identification and valuation of private
companies seeking financing and in some cases, a business combination with an
inactive public company such as the Registrant.
Item 2. Description of Property.
- --------------------------------
The Registrant is not provided office space by Officers and Directors
because it has no need for any office space. However, the Officers and Directors
of the Registrant do allow the Registrant to use their office address for
receipt of mail or other correspondence which mail and correspondence is very
minimal.
Item 3. Legal Proceedings.
- ---------------------------
There are no pending legal proceedings, and the Registrant is not aware of
any threatened legal proceedings to which the Registrant 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 Registrant
during the year ended June 30, 1996, or as of the date hereof.
4
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
- ------------------------------------------------------------------------------
(a) Market Information. The Registrant completed a public offering of its
Common Stock on June 8, 1987. As of May 18, 1995, the Company's shares have been
listed on the OTC Electronic Bulletin Board System with no reported quote. The
Company believes there has been little or no trading in its shares. There is no
assurance that the Common Shares will continue to be listed or that any
liquidity exists for the Company's shareholders.
(b) Holders. The number of record holders of the Registrant's Common Stock
is 30. This does not include shareholders who hold their accounts at
broker/dealers.
(c) Dividends. Holders of Common Stock are entitled to receive such
dividend as may be declared by the Registrant's Board of Directors. No dividends
have been paid with respect to the Registrant's Common Stock and no dividends
are anticipated to be paid in the foreseeable future.
Item 6. Management's Discussion and Analysis or Plan of Operation.
- ------------------------------------------------------------------
The Registrant has generated no revenues since inception with the exception
of interest income. Management anticipates the Registrant will not earn any
income until following the conclusion of a business combination, of which
Registrant gives no assurance, as contemplated by the Registrant's business
plan.
The Registrant has only nominal capital with which to conduct operations.
The Registrant anticipates operational costs will be limited until such time as
significant evaluation work is undertaken regarding a prospective business
combination.
As of September 12, 1996, the Registrant had no material commitments for
capital expenditures.
Item 7. Financial Statement.
- ----------------------------
Please see pages F-1 through F-7.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
- --------------------------------------------------------------------------------
In June of 1994, the Registrant engaged Larry Legel, Certified Public
Accountant, as the independent public accountant to audit its financial
statements for the years ended June 30, 1991; June 30, 1992; June 30, 1993; and
June 30, 1994 replacing the firm of Peterson, Siler and Stevenson, CPAs, which
was the independent public accountant for the Registrant's most recent certified
financial statements.
In connection with the audit for the Registrant's fiscal year ended June
30, 1989, and for the subsequent interim periods preceding the engagement of
Larry Legel, CPA as the Registrant's auditor, there were at that time and at
present, no disagreements with Peterson, Siler and Stevenson, CPAs concerning
accounting principles or practices, financial statement disclosures or auditing
scope or procedures, which would have caused Peterson, Siler and Stevenson, CPAs
to make a reference to the subject matter of the disagreement in connection with
its reports.
5
<PAGE>
In connection with the audit for the Registrant's fiscal year ended June
30, 1989 and for the subsequent interim periods prior to replacement of
Peterson, Siler and Stevenson, CPAs, the reports issued by Peterson, Siler and
Stevenson, CPAs relating to the financial statements of the Registrant did not
contain an adverse opinion or a disclaimer of opinion, nor did they qualify
their opinion as to audit scope or accounting principles.
The decision to change accountants was recommended and approved by the
Registrant's Board of Directors.
The Registrant requested that Peterson, Siler and Stevenson, CPAs submit a
letter addressed to the Securities and Exchange Commission stating whether it
agrees with the statements made by the Registrant in response to Item 8 of this
Form 10-KSB and, if not, stating the respects in which it does not agree.
Accordingly, the Registrant filed by amendment, an exhibit to the June 30, 1994
Form 10-KSB Report on December 15, 1994.
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 Registrant are as follows:
Name Age Position Tenure as Director or Officer
- ---- --- -------- -----------------------------
Earnest Mathis 36 President, Treasurer, From May 24, 1994 to present
and Director
Gary J. McAdam 44 Vice President, From May 24, 1994 to present
Secretary, and Director
Earnest Mathis, Jr., President, Treasurer and a Director. Mr. Mathis has served
as the President, Treasurer, and a Director of the Registrant since May 24,
1994. Mr. Mathis has served as Secretary of Creative Business Concepts, Inc.,
specializing in mergers and acquisitions since August of 1993. From October of
1992 until September of 1994, Mr. Mathis was President and Secretary of
Shareholder information Co., a financial public relations firm located in
Littleton, Colorado. Since January, 1987, Mr. Mathis has been sole proprietor of
Inverness Investments, a financial consulting company in Denver, Colorado. From
April of 1986 to present, Mr. Mathis has been an Officer and Director of
numerous blind pool companies. Mr. Mathis served as President and Director of
P.R. Ink, Inc., a publicly-held financial public relations firm, from June 1985
until December, 1986, at which time P.R. Ink, Inc., acquired Precision Standard,
Inc. From 1985 to January, 1987, Mr. Mathis was an account executive with
Chenault and Associates, Inc., a financial public relations firm located in
Englewood, Colorado. From 1983 to 1984, Mr. Mathis was a business analyst with
Dun and Bradstreet Corporation. Mr. Mathis devotes approximately 20 hours per
month to the Registrant's business.
6
<PAGE>
Gary J. McAdam, Vice President, Secretary, and a Director. Mr. McAdam has served
as the Vice President, Secretary, and a Director of the Registrant since May 24,
1994. Mr. McAdam has served as President of Creative Business Concepts, Inc.,
specializing in mergers and acquisitions, since August of 1993. From 1980
through present, Mr. McAdam has been President of Creative Investment Services,
Inc., a business consulting and investment company in the area of mergers and
acquisitions and public financing of private companies in Littleton, Colorado.
From 1984 to 1986, Mr. McAdam was a registered representative of J.W. Gant &
Associates, a registered securities broker/dealer of Englewood, Colorado. From
1981 to 1984, Mr. McAdam was a registered representative of E.J. Pittock, of
Denver, Colorado, a registered securities broker/dealer. Mr. McAdam devotes
approximately 20 hours per month to the Registrant's business.
The Officers of the Registrant are elected by the Board of Directors at the
first meeting after each annual meeting of Registrant's shareholders, and hold
offices at the discretion of the Board of Directors.
The date of the next annual meeting of Registrant will be determined by the
Registrant's Board of Directors in accordance with Florida law.
Item 10. Executive Compensation.
- --------------------------------
(a) Cash Compensation.
No compensation was paid by the Registrant to its Officers or Directors
during the fiscal year covered by this report. None of the Registrant's Officers
and Directors currently receive any salary from the Registrant. The Registrant
does not intend to begin paying any salaries unless and until the Registrant has
completed a business combination. There are no formal or informal understandings
or arrangements relating to compensation; however, Officers and Directors may be
reimbursed for all reasonable expenses incurred by them in conducting the
Registrant's business. These expenses would include out-of-pocket expenses for
such items as travel, telephone, postage, and federal express charges.
The Officers and Directors of the Registrant provided no significant amount
of time on behalf of the Registrant during the year ended June 30, 1996 because
the Registrant has no business operations.
(b) Compensation Pursuant to Plans.
None.
(c) Other Compensation.
None.
(d) Compensation of Directors.
None.
7
<PAGE>
(e) Termination of Employment and Change of Control Arrangements.
On April 28, 1994, James T. Crawford resigned as Director and President of
the Registrant. On April 28, 1994, Raymond Lukban resigned as Director, Vice
President, and Treasurer of the Registrant. On April 28, 1994 Van R. Perkins was
elected Director and President of the Registrant. On May 24, 1994, Mr. Perkins
resigned as President of the Registrant and on May 25, 1994, Mr. Perkins
resigned as Director of the Registrant. On May 24, 1994, Earnest Mathis, Jr.,
was elected Director, President, and Treasurer of the Registrant. On May 24,
1994, Gary J. McAdam was elected Director, Vice President, and Secretary of the
Registrant.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
- ------------------------------------------------------------------------
The following table sets forth, as of the date of this Report, the stock
ownership of each person known by the Registrant to be the beneficial owner of
five percent or more of the Registrant's Common Stock, each Officer and Director
individually and all Directors and Officers of the Registrant as a group. Each
person is believed to have sole voting and investment power over the shares
except as noted.
Name and Address of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership Class
---------------- -------------------- ----------
*Earnest Mathis, Jr. 2,942,000 (3) 23.0%
300 Rangeview Drive
Littleton, CO 80120
*Gary J. McAdam 4,067,000 (1) (2) 31.8%
14 Redtail Drive
Highlands Ranch, CO 80126
Business Development Corp. 1,700,000 13.3%
150 South Pine Island
Suite 100
Plantation, FL 33324
*All Director and Officers 7,009,000 (1) 54.8%
as a Group (2 Persons)
(a) Includes 950,000 shares owned by Creative Investment Services, Inc., of
which Mr. McAdam is President and controlling shareholder.
(b) Includes 917,000 shares acquired on April 4, 1995 pursuant to an option
agreement between James Crawford and GJM Trading Partners, Ltd., of which Mr.
McAdam is General Partner.
(c) Includes 917,000 shares acquired on April 4, 1995 pursuant to an option
agreement between Raymond Lukban and Mathis Family Partners, Ltd., of which Mr.
Mathis is a General Partner.
8
<PAGE>
Item 12. Certain Relationships and Related Transactions.
- --------------------------------------------------------
On October 31, and November 3, 1986, the Registrant issued a total of
4,301,000 shares of its Common Stock to the following persons and entities for a
total of $4,301 cash:
Name Number of Shares Price Per Share
---- ---------------- ---------------
Business Development Corp. 1,500,000 $.001
Geneva Financial Corp. 500,000 $.001
James T. Crawford 917,000 $.001
Raymond Lukban 917,000 $.001
Charles Bannister 167,000 $.001
Robert C. Hackney 300,000 $.001
On May 24, 1994, the Registrant issued a total of 4,000,000 shares of its
Common Stock to the following persons and entities for a total of $4,000 cash
pursuant to an agreement as set forth below:
Name Number of Shares Price Per Share
---- ---------------- ---------------
Mathis Family Partners, Ltd. 2,000,000 $.001
GJM Trading Partners, Ltd. 2,000,000 $.001
Mr. Earnest Mathis who is a Director, President, and Treasurer of
Registrant is General Partner of Mathis Family Partners, Ltd. Mr. Gary McAdam
who is a Director, Vice President, and Secretary of the Registrant is General
Partner of GJM Trading Partners, Ltd.
Pursuant to an agreement between Mr. Mathis, Mr. McAdam, and the
Registrant, Mr. Mathis and Mr. McAdam and/or their affiliated entities are
obligated to pay the greater of $4,000 or an amount equal for the settlement and
payment of certain known obligations of the Registrant such as outstanding
accounts payable to the Registrant's transfer agent, payment for the preparation
and filing of administrative reports and associated fees and costs from December
31, 1988 onward, together with payment for independent auditors reports as to
Registrant's financial statements for the fiscal years ended June 30, 1991
through June 30, 1994. As a part of the foregoing, Mr. Mathis and Mr. McAdam may
be obligated to loan the Registrant additional funds, if any, as are necessary
to perform due diligence tasks as well as legal expenses incurred in the event
the Registrant enters into a merger or business combination transaction in the
future. As a result, Mr. Mathis and Mr. McAdam may be entitled to receive
additional shares of the Registrant's Common Stock in the event the Registrant
enters into an agreement to complete a business combination which fails to
close.
Earnest Mathis, Jr., and Gary J. McAdam have organized, are organizing,
and expect to organize other companies of a similar nature and similar purposes
as the Registrant. Mr. Mathis and Mr. McAdam may have conflicts in the event
that another company affiliated with either of them is actively seeking the
acquisition of properties and businesses that are identical or similar to those
that the Registrant may seek. A conflict will not be present as between the
Registrant and another similar enterprise if, before the Registrant begins
9
<PAGE>
seeking acquisitions, such other enterprise (i) enters into an understanding,
arrangement, or contractual commitment to participate in, or acquire, any
business or property and (ii) ceases its search for additional properties or
businesses identical or similar to those the Registrant may seek. Conflicts also
may not be present to the extent that potential business opportunities are
appropriate for the Registrant, but not for other similar enterprises (or vice
versa), because of such factors as the difference in cash available from other
companies versus what is available from the Registrant. If, however, at any time
the Registrant and any other enterprises affiliated with Mr. Mathis and Mr.
McAdam are simultaneously seeking business opportunities, Messrs. Mathis and
McAdam will face the conflicts of whether to submit a potential business
acquisition to the Registrant or to such other enterprises. In the event the
opportunity is appropriate to more than one enterprise, Messrs. Mathis and
McAdam will offer that opportunity to that enterprise that first closed the sale
of its securities to the public or first completed its spin-off; provided
however, that if another spin-off or shell is engaged in discussions with a
business opportunity which may lead to a letter of intent, that spin-off or
shell will not be presented with a new opportunity unless and until the
discussions have terminated with the first opportunity. The Registrant is not
expected to merge with, acquire, or invest in any existing business in which Mr.
Mathis or Mr.McAdam have any equity or other ownership position.
The Registrant has established no other guideline or procedures for
resolving potential conflicts other than establishing priority based upon the
closing of each public offering and the completion of a spin-off. Failure by
Messrs. Mathis and McAdam to resolve conflicts of interest in favor of the
Registrant may result in liability of Messrs. Mathis and McAdam to the
Registrant.
The Registrant may pay its Officers, Directors, or other persons a finders
fee of 1% to 5% for locating a business combination candidate and will reimburse
Officers and Directors or persons authorized by the Registrant for travel and
out of pocket expenses in connection therewith.
Item 13. Exhibits and Reports on Form 8-K.
- ------------------------------------------
(a) List of Exhibits.
None.
(b) Reports on 8-K.
No reports on Form 8-K were filed during the last quarter of
Registrant's fiscal year ended June 30, 1996.
10
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, the Registrant caused this Report to be signed on its behalf
by the undersigned, thereunto duly authorized.
DYNASTY CAPITAL CORPORATION
Dated: September 12, 1996 /s/ Earnest Mathis, Jr.
---------------------------------
Earnest Mathis, Jr., President,
Treasurer, and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
Name Title Date
/s/ Earnest Mathis, Jr. President, Treasurer, September 12, 1996
- ----------------------- and Director (Principal
Earnest Mathis, Jr. Executive & Accounting
Officer)
/s/ Gary J. McAdam Vice President, Secretary, September 12, 1996
- ------------------ and Director
<PAGE>
LARRY LEGEL, CPA
5100 NORTH FEDERAL HIGHWAY, #409
FORT LAUDERDALE, FL 33308
(305) 493-8900
INDEPENDENT AUDITOR'S REPORT
Stockholders
Dynasty Capital Corporation
(a Development Stage Company)
Littleton, Colorado
I have audited the accompanying balance sheet of Dynasty Capital Corporation (a
Development Stage Company) as of June 30, 1996 and 1995, and the related
statements of operations, changes in shareholders' equity, and cash flows for
the periods from inception (October 1, 1986) through June 30, 1996. These
financial statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based on
my audits.
I conducted my audits in accordance with generally accepted auditing standards.
Those standards require that I 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 statement presentation.
I believe that my audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Dynasty Capital Corporation (a
Development Stage Company) as of June 30, 1996 and 1995, and the results of its
operations and its cash flows for the periods from inception (October 1, 1986)
through June 30, 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 Note 1 to the
financial statements, the Company is still in the development stage, has had no
business operations and has minimal resources with which to conduct a business.
These conditions raise substantial doubt about its ability to continue as a
going concern. Management's plans regarding those matters also are described in
Note 1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
LARRY LEGEL
/S/ LARRY LEGEL
------------------------------------
Certified Public Accountant
September 4, 1996
<PAGE>
DYNASTY CAPITAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
JUNE 30, 1996 AND 1995
1996 1995
-------- --------
A S S E T S
CURRENT ASSETS:
Cash $ 302 $ 781
======= ========
LIABILITY AND SHAREHOLDERS' EQUITY
LIABILITY:
Accrued expenses $ -0- $ -0-
-------- --------
SHAREHOLDERS' EQUITY:
Common stock, par value $.0001 per share
authorized 100,000,000 shares;
10,801,000 shares issued and outstanding 1 080 1 080
Additional paid in capital 53 245 48 245
Deficit accumulated during the development
stage (54 023) (48 544)
------- --------
Total shareholders' equity 302 781
--------- -------
TOTAL $ 302 $ 781
======== =======
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
DYNASTY CAPITAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE PERIODS FROM INCEPTION (OCTOBER 1, 1986) THROUGH JUNE 30, 1996
YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, FROM
1996 1995 INCEPTION
------------ ------------ ----------
<S> <C> <C> <C>
REVENUE $ -0- $ -0- $ 3 899
EXPENSES 5 479 4 960 61 366
--------- --------- --------
LOSS BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM 5 479 4 960 57 467
PROVISION FOR INCOME TAXES -0- -0- -0-
LOSS BEFORE EXTRAORDINARY ITEM 5 479 4 960 57 467
EXTRAORDINARY ITEM - Gain from
extinguishment of debt based on
settlement with creditor -0- -0- 3 444
-------- -------- -------
NET LOSS $ 5 479 $ 4 960 $54 023
======== ======== =======
NET LOSS PER COMMON SHARE $.00 $.00
==== ====
Loss per share fully diluted $.00 $.00
==== ====
Weighted average number of shares
used in computation without full
dilution 10 801 000 10 801 000
========== ==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DYNASTY CAPITAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE PERIODS FROM INCEPTION (OCTOBER 1, 1986) THROUGH JUNE 30, 1996
COMMON STOCK
------------------------ ADDITIONAL
NO. OF PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
--------- ------ ---------- ------------ -----
<S> <C> <C> <C> <C> <C>
October 31 & November 3,
1986
Common stock issued to
incorporators 4 301 000 $ 430 $ 3 871 $ 4 301
June 9, 1987
Common stock & warrants
issued for cash - initial
public offering 2 500 000 250 49 750 50 000
Offering costs and
expenses (12 476) (12 476)
Net loss for the period
June 30, 1990 $ (39 547) (39 547)
----------- ---------- ----------- --------- ----------
BALANCE - June 30, 1990 6 801 000 680 41 145 (39 547) 2 278
Net loss for the years ended
June 30, 1991, 1992 and 1993 ( 3 771) ( 3 771)
----------- ---------- ----------- --------- ----------
BALANCE - June 30, 1993 6 801 000 680 41 145 (43 318) ( 1 493)
May 23, 1994 - proceeds from
sale of common stock 4 000 000 400 3 600 -0- 4 000
Net loss for the year ( 266) ( 266)
----------- ---------- ----------- --------- ----------
BALANCE - June 30, 1994 10 801 000 1 080 44 745 (43 584) 2 241
Additional capital contribution 3 500 3 500
Net loss for the year ( 4 960) ( 4 960)
----------- ---------- -------------- --------- ----------
BALANCE - June 30, 1996 10 801 000 1 080 48 245 (48 544) 781
Additional capital contribution 5 000 5 000
Net loss for the year ( 5 479) ( 5 479)
----------- ---------- -------------- --------- ----------
10 801 000 $1 080 $ 53 245 $ (54 023) $ 302
=========== ====== ======== ========= ==========
</TABLE>
The accompanying notes are an integralthese financial statements.
<PAGE>
<TABLE>
<CAPTION>
DYNASTY CAPITAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIODS FROM INCEPTION (OCTOBER 1, 1986) THROUGH JUNE 30, 1996
YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, FROM
1996 1995 INCEPTION
------------ ----------- ----------
<S> <C> <C> <C>
CASH FLOWS TO OPERATING ACTIVITIES:
Net loss $ (5 479) $ (4 960) $(54 023)
-------- -------- --------
Adjustments to reconcile net loss to net
cash used by operating activities:
Change in assets and liabilities:
Accounts payable -0- -0- -0-
Net cash flows to operating activities (5 479) (4 960) (54 023)
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES -0- -0- -0-
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from common stock issuance and
additional capital contributions 5 000 3 500 66 801
Stock offering costs -0- -0- 12 476
--------- --------- --------
Net cash flows from financing activities 5 000 3 500 54 325
--------- --------- ---------
NET INCREASE (DECREASE) IN CASH ( 479) (1 460) 302
CASH AT BEGINNING OF PERIOD 781 2 241 -0-
---------- --------- ----------
CASH AT END OF PERIOD $ 302 $ 781 $ 302
========== ========= ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DYNASTY CAPITAL CORPORATION
---------------------------
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
FOR THE PERIODS FROM INCEPTION (OCTOBER 1, 1986) THROUGH JUNE 30, 1996
----------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS
- ---------------------------------------------------------------------
ORGANIZATION - Dynasty Capital Corporation, (the "Company") was
incorporated in the State of Florida on October 1, 1986.
DEVELOPMENT STAGE - The Company continues to be in the development
stage. All of the activity to date relates to its formation and raising
of capital. The Company has had no business operations and has minimal
resources. Management's current plans are to continue to fund the
Company to allow it to pay ongoing expenses and the cost of trying to
identify, evaluate and become affiliated with an active business
venture.
NOTE 2 - PUBLIC OFFERING
- ------------------------
The Company offered to the public and closed on June 8, 1987 the sale
of its previously authorized but unissued common stock at an offering
price of $.02 per share. Each share was offered as part of a unit. A
unit consisted of one share of common stock and one "A" warrant to
purchase one additional share of common stock at $.50 per share during
the period commencing immediately at the close of the offering and
terminating fifteen (15) months from the date of the prospectus and one
"B" warrant representing the right to purchase one share of common
stock at $1.00 per share during the period commencing immediately at
the close of the offering and terminating twenty-four (24) months form
the date of the prospectus. These warrants have both expired.
All expenses of the public offering were charged against additional
paid-in capital upon the successful completion of the public offering.
NOTE 3 - SHAREHOLDERS' EQUITY
- -----------------------------
The Company is authorized to issue 10,000,000 shares of no par value
Preferred Stock. The stock may be issued from time to time with such
rights, preferences and limitations as the board of directors may
determine by resolution. As of June 30, 1996 no preferred stock has
been issued.
<PAGE>
DYNASTY CAPITAL CORPORATION
---------------------------
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------
FOR THE PERIODS FROM INCEPTION (OCTOBER 1, 1986) THROUGH JUNE 30, 1996
----------------------------------------------------------------------
NOTE 4 - RELATED PARTY TRANSACTIONS
- -----------------------------------
As noted in the prospectus, the Company may pay a finder's fee for
locating a merger or acquisition candidate of between 1% and 5%, based
upon a sliding scale of the amounts involved.
On November 3, 1986, the Company adopted an Incentive Stock Option
Plan. Pursuant to the Plan, options to purchase up to 10,000,000 shares
of common stock may be granted to employees of the Company. As of June
30, 1996 no options have been granted under this Plan.
NOTE 5 - LOSS PER COMMON SHARE
- ------------------------------
Loss per common share is computed by dividing the net loss by the
weighted average number of common shares outstanding.
NOTE 6 - SUBSEQUENT EVENT
- -------------------------
On August 27, 1996, the Company entered into a letter of intent with
another company to acquire at least 80% and up to 100% of their common
stock. Dynasty will be the surviving corporation in a tax-free
reorganization. The current shareholders of Dynasty will own
approximately 3% of the outstanding shares in the reorganized company.
A final draft of the agreement is scheduled to be completed by
September 16, while the closing is scheduled for October 20, 1996.
<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.
Dynasty Capital Corporation
(Registrant)
BY: /s/Earnest Mathis
-----------------------------------
Earnest Mathis, Chief Financial Officer
DATE: July 14, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 302
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 302
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 302
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 1080
<OTHER-SE> (7787)
<TOTAL-LIABILITY-AND-EQUITY> 302
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (5479)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (5479)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5479)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5479)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
