<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB/A-1
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
VERSAILLES CAPITAL CORPORATION
------------------------------
(Exact Name of Small Business Issuer in its Charter)
Colorado 84-1044910
- -------------------------------- -------------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
370 17th Street, Suite 2350, Denver, Colorado 80203
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(Address of Principal Offices) (Zip Code)
Registrant's telephone number, including area code: (303) 595-3300
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
NONE NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.05 par value
(Title of Class)
<PAGE>
<PAGE>
FORWARD-LOOKING STATEMENTS
--------------------------
Certain statements contained in this Registration Statement are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 and are thus prospective. Such statements are
subject to risks, uncertainties and other factors which could cause actual
results to differ materially from future results expressed or implied by such
forward-looking statements. Such risks and uncertainties include, but are not
limited to, competitive pressures, changing economic conditions and other
factors, some of which will be outside of the control of the Company.
PART I
------
ITEM 1. DESCRIPTION OF BUSINESS
-----------------------
HISTORY AND BACKGROUND
----------------------
Versailles Capital Corporation ("Versailles" or the "Company"), was
incorporated in the State of Colorado in December, 1986 under the name "Man
O'War, Inc." Pursuant to a Registration Statement filed and declared
effective by the Securities and Exchange Commission in 1987, the Company
completed an initial blank check public offering of 30,000,000 Units, each
Unit consisting of two (2) shares of $.0001 par value Common Stock and one (1)
Class A Warrant at a price of $.02 per Unit.
Effective October 4, 1988, the Company completed the acquisition of
one hundred percent (100%) of the outstanding common stock of Reduction
Technologies, Inc., a Texas corporation ("RTI"), in exchange for 369,000,000
shares of its $.0001 par value common stock. This transaction resulted in a
change of control of the Company. In 1991, RTI sold all of its assets to a
third party for cash and utilized the cash to retire all of its liabilities.
In 1993 RTI was dissolved and ceased to exist. Since 1991, the Company has
not engaged in any business operations or activities. In 1989, the Company
ceased to be a reporting company under Section 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") due to its inability to
audit the financial statements of RTI. While the Company's Common Stock
traded for a brief period of time on the over-the-counter market and were
quoted in the "Pink Sheets" published by the National Quotations Bureau, Inc.,
no public trading market for the Company's Common Stock has existed since
1989.
On November 5, 1996, pursuant to action of its Board of Directors
and the approval of its shareholders, the Company (i) changed its name to
"Versailles Capital Corporation" and (ii) effected a one-for-five hundred (1-
for-500) reverse split of its Common Stock, changing its par value to $.05 per
share. The Company has no business operations or activities other than its
efforts to locate and consummate a merger or acquisition. As a result, it
would be deemed a "blank check" company within the meaning of the Penny Stock
Reform Act of 1990.
The Company is filing this Form 10-SB on a voluntary basis in order
to enhance its ability to attract merger or acquisition candidates.
Management of the Company believes that having a class of securities
registered under Section 12(g) of the Exchange Act and being a reporting
company under Section 13 of the Exchange Act may increase the value of the
Company to potential target entities.
BUSINESS OF REGISTRANT
----------------------
PLAN OF OPERATION
Management believes the Company can offer owners of potential merger
or acquisition candidates the opportunity to acquire a controlling ownership
interest in a public company at substantially less cost than is required to
conduct an initial public offering. The target company will, however, incur
significant post-merger or acquisition registration costs in the event target
company shareholders wish to offer a portion of their shares for subsequent
sale. Further, while target company shareholders will receive "restricted
securities" in any merger or acquisition transaction, those restricted
securities will represent, if a trading market develops for the Company's
Common Stock, ownership in a "publicly-traded" as opposed to a "privately-
held" company. Management also believes target company shareholders may
benefit in obtaining a greater ownership percentage in the Company remaining
after a merger or acquisition than may be the case in the event a target
company offered its shares directly for sale to the public. Nevertheless, the
officers and directors of the Company have not conducted market research and
are not aware of statistical data which would support the perceived benefits
of a merger or acquisition transaction for target company shareholders.
To date, none of the Company's officers, directors or affiliates
have had any substantive contact or discussions with and there are no present
plans, proposals or arrangements with any owners of any business or company
regarding the possibility of an acquisition or merger transaction.
The Company expects to concentrate primarily on the identification
and evaluation of prospective merger or acquisition "target" entities
including private companies, partnerships or sole proprietorships. The
Company does not intend to act as a general or limited partner in connection
with partnerships it may merge with or acquire. Management has not identified
any particular area of interest within which the Company will concentrate its
efforts.
Management contemplates that the Company will seek to merge with or
acquire a target company with either assets or earnings, or both, and that
preliminary evaluations undertaken by the Company will assist in identifying
possible target companies. The Company has not established a specific level
of earnings or assets below which the Company would not consider a merger or
acquisition with a target company. Moreover, management may identify a target
company which is generating losses which it will seek to acquire or merge with
the Company. The merger with or acquisition of a target company which is
generating losses or which has negative shareholders' equity may have a
material adverse affect on the price of the Company's Common Stock.
It should be noted, however, that the Company's independent
accountant's audit report for the fiscal year ended March 31, 1997 contains a
qualification and explanatory language that due to the Company's recurring
losses from operations and net capital deficiency, substantial doubts exist
about its ability to continue as a going concern.
PLAN OF ACQUISITION
The Company intends to follow a systematic approach to identify its
most suitable acquisition candidates. In the past, the Company's officers and
directors have not used consultants in an effort to identify potential target
companies, although it is possible that such consultants may be used in the
future. To date, there have been no discussions with and there exist no
agreements or understandings with any particular consultant to provide such
services for the Company. If a finder or consultant is engaged, of which
there can be no assurance, the Company will make an effort to limit the scope
and duration of the services to be performed by such consultant so as to
minimize any costs associated with such services. Further, the Company will
take steps to insure that the consultant does not have any adverse regulatory
or legal history and comes to the Company with favorable references from
reputable business.
As a reporting Company under Section 13 of the Exchange Act, the
Company will be required to prepare and file an annual report on Form 10-KSB
containing audited financial statements certified by an independent public
accountant. In addition, the Company will be required to file Quarterly
Reports on 10-QSB for the first, second and third interim periods which
include unaudited financial statements for the quarter and year to date. In
addition, to the Quarterly and Annual Reports, extraordinary events outside of
the ordinary course of business must be reported on Form 8-K, such as a change
of control, a material acquisition or disposition of assets, changes in
accountants and the like. Under certain circumstances, an acquisition of
significant assets or a significant subsidiary will require the preparation of
additional audited financial statements for the acquired business as well as
pro forma financial information. Officers, directors and ten-percent
shareholders of the Company will also be subject to the beneficial ownership
reporting requirements and short-swing trading restrictions contained in
Section 16 of the Exchange Act. All of the foregoing reporting requirements,
and the associated costs of complying with such requirements, could limit the
pool of potential acquisition or merger candidates.
While the Company will make every effort to fully comply with its
reporting obligations under the Exchange Act, should such obligations be
suspended for any reason in the future, the Company would intend to continue
to voluntarily file periodic reports if a public trading market for its
securities develops in the future, of which there can be no assurance.
None of the Company's officers, directors, promoters or their
respective affiliates or associates have had any preliminary contact or
discussions with and there are no present plans, proposals, arrangements or
understandings with any representatives of the owners of any business or
entity regarding the possibility of an acquisition or merger transaction.
First, management intends to concentrate on identifying any number
of preliminary prospects which may be brought to the attention of management
through present associations, personal contacts of the Company's affiliates,
or by virtue of very limited advertising campaigns the Company may conduct.
As is customary in the industry, the Company may pay a fee to a non-affiliate
for locating a merger or acquisition candidate. If any such fee is paid, it
will be approved by the Company's Board of Directors and will be in accordance
with industry standards. After preliminary candidates are identified,
management will then apply certain of its broad criteria to the 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 prospects' businesses. Such evaluation is not expected
to be an in-depth analysis of the target company's operations although it will
encompass a 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
example, 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.
Assuming management is able to complete the preliminary evaluation
process and select a limited number of companies for further study, of which
there can be no assurance, the Company may enter into preliminary negotiations
with target company management in order to obtain detailed financial and
operational information. Following the Company's receipt of such information,
management will conduct an in-depth analysis of five major areas of concern
with respect to the target company as follows:
1. Managerial and Financial Stability.
----------------------------------
Management of the Company will review audited financial
statements of the target company, to the extent available, and will also
research the background of each director and member of management of the
target company in order to discern whether the stability of the Company is
such that further negotiations are warranted.
2. Industry Status.
---------------
Management will research the potential of the target company's
industry. The concern here is whether the industry is in a growth, stagnant
or declining stage.
3. Production of Product.
---------------------
If the target company is a manufacturer, management will review
whether it has the necessary resources or access to the necessary resources
and supplies to produce a quality product in a timely manner.
4. Acceptance and Potential of Product.
-----------------------------------
Management will review the acceptance of the target company's
product in the market place and assess the competition. Management will also
review whether or not the product is realistic: is there potential for the
product to be workable and to fulfill its intended purpose.
5. Development of Target Company.
-----------------------------
Management will review the target company's stage of
development (examples: start-up stage, established company, etc.).
The foregoing is an outline of the areas of concern which most often
arise and merit careful scrutiny by management. Because of the possible
varieties of target companies which may come to the attention of management,
additional factors will most likely be considered in any given analysis.
Also, the procedures used in such a review are expected to vary depending upon
the target company being analyzed. Management may select a target company for
further negotiations even though the target may not receive a favorable
evaluation as to some of the five areas of concern.
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 shares 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. Assets of a
merger or acquisition candidate would be valued at historical cost for
transactional purposes. The percentage ownership may be subject to
significant reduction in the event the Company acquires a target company with
substantial assets. Any merger or acquisition effected by the Company can be
expected to have a significant dilutive effect on the percentage of shares
held by the Company's then-shareholders.
The final stage of any merger or acquisition to be effected by the
Company will require the Company to retain the services of its counsel and a
qualified accounting firm in order to properly effect the merger or
acquisition. The Company may be expected to incur significant legal fees and
accounting costs during the final stages of a merger or acquisition. Also, if
the merger or acquisition is successfully completed, management anticipates
that certain costs will be incurred for public relations, such as the
dissemination of information to the public, to the shareholders and to the
financial community. If the Company is unable to complete the merger or
acquisition for any reason, the Company's capital may be substantially
depleted if legal fees and accounting costs have been incurred. Management
intends to retain legal and accounting services only on an as-needed basis in
the latter stages of a proposed merger or acquisition.
Management anticipates that it may be necessary to raise additional
funds within the next 12 months to meet expenditures required for operations.
There are no current plans or commitments in this regard, and there can be no
assurance that the Company will be able to raise the funds necessary to
continue its limited operations.
It is possible that acquisition targets are seeking a business
combination with the Company as part of its efforts to raise additional
capital. The Company does not intend to raise capital, either through the
public or private sale of equity or debt securities to enable it to provide
bridge capital to any potential acquisition candidate. Nor does the Company
intend to borrow any funds or use any proceeds of any equity or debt offering
to make payments to any of the Company's management, promoters, or their
respective affiliates or associates.
ROLE OF MANAGEMENT IN ACQUISITION PROCESS
The consummation of any acquisition will likely result in a change
in control of the Company, pursuant to which the officers, directors and
principal shareholders of the acquired Company will be issued sufficient
numbers of shares of Company's Common Stock to exercise voting control
immediately following the acquisition. In addition, the transaction may
involve the sale by the Company's current principal shareholders of all or a
portion of their beneficial ownership of the Company's Common Stock to the
control persons of the acquired company. Such sale would be upon terms
privately negotiated between the principals of the acquired company and the
principal shareholders of the Company. The Company shareholders will, in all
likelihood, not be provided with information, including financial statements,
of a business to be acquired or be afforded an opportunity to approve or
consent to any stock buy-out transaction involving the principal shareholders
of the Company. Moreover, the other shareholders of the Company will in all
likelihood not be offered an opportunity to sell their shares of the Company's
Common Stock on the same or similar terms and conditions. The Company has not
adopted and does not plan to adopt in the future any policy which would
restrict, limit or prohibit management or the Company's principal shareholders
from negotiating a buy-out of their stock in connection with an acquisition
transaction.
The Company's management has informally adopted a policy that it
will not seek a merger or acquisition with a company that is affiliated with
any officer, director or principal shareholder of the Company. Rather, the
Company will seek an acquisition through arms-length negotiations with non-
affiliated third parties. Any potential acquisition may involve the
activities of one or more consultants who may charge a finders fee in
connection with the successful completion of a transaction. Such fees may be
paid in either cash, securities or a combination of cash and securities and
shall be subject to the approval of the Company's Board of Directors. The
payment of such fees may become a factor in the negotiations surrounding any
potential transaction. The Company does not intend to pay any finders' fees
or other acquisition-related compensation to any of its officers, directors,
promoters or their affiliates or associates.
COMPETITION
The Company will remain an insignificant participant among the firms
which engage in mergers with and acquisitions of privately-financed entities.
There are many established venture capital and financial concerns which have
significantly greater financial and personnel resources and technical
expertise than the Company. In view of the Company's combined limited
financial resources and limited management availability, the Company will
continue to be at a significant competitive disadvantage compared to the
Company's competitors. Also, the Company will be competing with numerous
other small, blank check, public companies.
EMPLOYEES
The Company is a development stage company and currently has no
employees. Management expects to use legal counsel, accountants and
consultants as necessary, and does not anticipate that it will engage any
full-time employees so long as it is seeking and evaluating business
opportunities. The need for employees and their availability will be
addressed in connection with the decision whether or not to acquire or
participate in specific business opportunities.
REGULATION AND TAXATION
The Company could be subject to regulation under the Investment
Company Act of 1940 in the event the Company obtains and continues to hold a
minority interest in a number of entities. Management's plan of operation is
based upon the Company obtaining a controlling interest in any merger or
acquisition target company and, accordingly, the Company may be required to
discontinue any prospective merger or acquisition of any company in which a
controlling interest will not be obtained.
The Company could also be required to register under the Investment
Company Act of 1940 in the event the Company comes within the definition of an
Investment Company contained in that Act due to its assets consisting
principally of shares held in a number of other companies. Management intends
to seek at most one or two mergers or acquisitions, which transactions
management believes will not result in the Company being deemed an "investment
company" since its interests will be in majority or wholly owned subsidiaries
which themselves will not be investment companies.
Any securities which the Company acquires in exchange for its Common
Stock will be "restricted securities" within the meaning of the Securities Act
of 1933 (the "1933 Act"). If the Company elected to resell such securities,
such sale could not proceed unless a registration statement had been declared
effective by the Securities and Exchange Commission or an exemption from
registration was available. Section 4(1) of the 1933 Act, which exempts sales
of securities not involving a distribution, would in all likelihood be
available to permit a private sale if various restrictions pertaining to such
a sale are complied with. Although management's plan of operation does not
contemplate resale of securities acquired, in the event such a sale were
necessary, the Company would be required to comply with the provisions of the
1933 Act.
As a condition to any merger or acquisition, it is possible that the
target company management may request registration of the Company's Common
Stock to be received by target company share holders. In such event, the
Company could incur registration costs, and management intends to require the
target company to bear most, if not all, of the cost of any such registration.
If the Company does contribute toward the cost of such registration, its
maximum contribution will be limited to the extent that the Company has assets
available for such contribution. Alternatively, the Company may issue
"restricted securities" to any prospective target company, which securities
may be subsequently registered for sale or sold in accordance with Rule 144 of
the Securities Act of 1933.
The Company intends to structure a merger or acquisition in such a
manner as to minimize federal and state tax consequences to the Company and
any target company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
---------------------------------------------------------
The following discussion and analysis should be read in conjunction
with the Financial Statements and Notes thereto appearing elsewhere in this
report.
LIQUIDITY AND CAPITAL RESOURCES: MARCH 31, 1997 COMPARED TO DECEMBER 31, 1997
(UNAUDITED)
The Company has no current or fixed assets and no working capital.
This is expected not to change until and unless the Company successfully
completes a business combination, of which there can be no assurance.
The Company's total liabilities increased by $9,642 during the nine
months ended December 31, 1997, principally reflecting increases in accounts
payable and loans from shareholders resulting from the Company's activities
associated with the preparation of its audited financial statements and this
Registration Statement. This resulted in a similar increase in the Company's
stockholders' deficit. During the nine months, the Company issued an
aggregate of 300,000 shares of Common Stock to various individuals in
consideration of their services to the Company. The shares of Common Stock
were valued at par, $.05 per share.
RESULTS OF OPERATION: YEARS ENDED MARCH 31, 1997 AND 1996, AND NINE MONTHS
ENDED DECEMBER 31, 1997
The Company had no operations during fiscal 1996, fiscal 1997 or the
first three quarters of fiscal 1998 and, therefore, there were no operating
revenues during either period. Expenses increased from $1,460 to $16,061 and
$9,642 from the year ended March 31, 1996 to the year ended March 31, 1997 and
the nine months ended December 31, 1997, respectively. These expenses reflect
legal and accounting expenses incurred by the Company in connection with
completing its audited financial statements in the preparation of this
Registration Statement. As a result of the foregoing, the Company's net loss
increased from ($1,194) for the year ended March 31, 1996 to ($20,271) for the
year ended March 31, 1997 and ($9,642) for the nine months ended December 31,
1997.
Absent a merger, acquisition or other business combination, there
will be no business operations or substantial results therefrom. The Company
will continue to incur expenses in its efforts to comply with its reporting
requirements under Section 13(a) of the Securities Exchange Act of 1934 as
well as in connection with its efforts to identify and complete a merger or
other business combination.
Other than the foregoing, management knows of no trends or other
demands, commitments, events or uncertainties that will result in, or that are
reasonably likely to result in, a material impact upon the income and expenses
of the Company.
ITEM 3. DESCRIPTION OF PROPERTY
-----------------------
The Company has no ownership interest in any real or personal
property. The Company currently maintains its corporate offices at 370 17th
Street, Suite 2350, Denver, Colorado 80203. This space is provided on a
rent-free basis by the Company's principal shareholder, Ms. Carylyn Bell. The
Company owns no equipment.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
The following table sets forth, as of the date of this Registration
Statement, the number of shares of the Company's Common Stock owned by (i)
each person who owned of record, or was known to own beneficially, more than
five percent (5%) of the Company's outstanding shares of Common Stock,
(ii) each of the Company's current directors and executive officers and (iii)
all of the Company's current directors and executive officers as a group:
<TABLE>
<CAPTION>
Class Name and Address Amount and Nature Percent
of Stock of Beneficial Owner(3) of Beneficial Ownership of Class(1)(2)
- -------- ------------------- ----------------------- -------------
<S> <C> <C> <C>
Common David C. Walters 39,334 3.1%
Stock, 255 Oakwood Drive
$.05 Lancaster, TX 25146
value
" William Maury Bell 41,533 3.2%
370 17th Street
Denver, CO 80203
Cindy R. Hintgen 33,333 2.6%
" 370 17th Street
Denver, CO 80203
" Carylyn K. Bell 504,496 39.3%
370 17th Street
Denver, CO 80203
" Clifford L. Neuman 66,667 5.2%
1507 Pine Street
Boulder, CO 80302
" All Officers and Directors 114,200 8.9%
as a Group (3 Persons)
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<FN>
<F1> Shares not outstanding but beneficially owned by virtue of the
individuals' right to acquire them as of the date of this Registration
Statement, or within sixty (60) days of such date, are treated as
outstanding when determining the percent of the class owned by such
individual and when determining the percent of the class owned by the
group.
<F2> The Company has no current plans, understandings or arrangements to issue
additional securities of the Company prior to completing an acquisition.
<F3> Each shareholder exercises the sole investment and voting power with
respect to their shares.
</FN>
</TABLE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
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DIRECTORS AND EXECUTIVE OFFICERS
The name, position with the Company, age of each director and
officer and the period during which each director and/or officer has served
are as follows:
<TABLE>
<CAPTION>
Director and/or Executive
Name and Position in the Company Age Officer Since
- -------------------------------- --- -------------
<S> <C> <C>
David C. Walters, 52 1996
President and Director
William Maury Bell 31 1996
Vice-President and Director
Cindy R. Hintgen 33 1996
Secretary/Treasurer and
Director
- --------------------------------------------------
</TABLE>
DAVID C. WALTERS, President. Mr. Walters has been Chairman of the
Board and President since inception. Currently, Mr. Walters is a partnership
with Pulling & Walters, L.L.P., Certified Public Accountants. From November
1985 until January 1986 he served as President and Director of Atlantic
Express, Inc., a publicly held company formed as a "blind pool" for the
purpose of acquiring and continuing a business opportunity. In January 1987,
Atlantic Express, Inc. completed a business combination with NTR, Inc., a New
York City based company engaged in the transportation business, at which time
Mr. Walters resigned as an officer but continues to serve as a director. NTR,
Inc. is not a reporting company. From August, 1982 to April, 1986, he was
controller of Star CATV Investment Corp., a cable TV headquarters for 140
systems in Waxahachie, Texas. From 1980 to 1982, he served as Vice President
and Treasurer of American/Chaparral, Inc., an oil and gas leasing and drilling
company. He owned and operated Walters Rentals, a company which engaged in
real estate management and residential loan origination and commercial loan
brokering. He has served as Vice President and Treasurer of Security
Bankshares, Inc., a bank holding company from 1975 to 1976; he was controller
of First National Bank in Colorado Springs, Colorado, from 1972 to 1974 and
auditor for Fidelity Services Corporation, a bank holding company, from 1967
to 1972. Mr. Walters graduated from Lamar University with a BBA degree in
Accounting in 1967. He became a Certified Public Accountant in 1984.
WILLIAM MAURY BELL, Vice President. Mr. Bell is Vice President of
Huttner & Company, a Houston based management consulting firm. Prior to
working with Huttner & Company, Mr. Bell worked in the Corporate Finance
Consulting Department at Coopers & Lybrand, L.L.P.
CINDY R. HINTGEN, Secretary. Ms. Hintgen has worked as an Executive
Secretary for Industrial Services Technologies, Inc. for the last ten years.
From 1984 until 1987 she worked as a Word Processor for an architectural
design firm.
There are no family relationships among Directors or Executive
Officers and there exists no arrangements or understandings between any
Director or Executive Officer or any other person pursuant to which any
Director was elected as such. William Maury Bell, Vice-President and Director
of the Company, is the son of Carolyn Bell, a principal shareholder of the
Company. The present term of office of each Director will expire at the next
regular annual meeting of shareholders. David Walters and Carylyn Bell would
be deemed to be "promoters" of the Company within the meaning of Regulation C
under the Securities Act. Their activities will be material to the operations
of the Company. As a principal shareholder of the Company, Ms. Bell intends
to exercise her voting rights to retain the current officers and directors of
the Company. In addition, those officers and directors may seek her advice
and consultation in connection with evaluating potential acquisition
candidates. There are no agreements or understandings for any officer or
director to resign at the request of another person, and none of the officers
or directors are acting on behalf of or will act at the discretion of any
other person.
During the fiscal year ending March 31, 1997, there was one meeting
of Directors, attended by all members. There exists no standing committees of
the Board of Directors, including an audit committee, compensation committee
or nominating committee. None of the Company's Directors receive any
compensation for their services as Directors; however, outside Directors are
reimbursed their expenses associated with attendance at meetings or otherwise
incurred in connection with the discharge of their duties as a Director.
The Executive Officers of the Company are elected annually at the
first meeting of the Company's Board of Directors held after each annual
meeting of Shareholders. Each Executive Officer will hold office until his
successor is duly elected and qualified, until his resignation or until he
shall be removed in the manner provided by the Company's By-Laws.
None of the Company's officers and Directors will devote their full
time to the Company's affairs. The Company's executive officers will
individually devote less than five hours per month to the affairs of the
Company until such time as an acquisition target is identified and the
transaction requires additional time and attention. Such persons are
affiliated with other business entities and enterprises, some of which may
also be seeking an acquisition for similar purposes as the Company and thus be
in direct competition with the Company. Such activities may result in such
persons being exposed to conflicts of interest from time-to-time. The Company
has adopted no other conflict of interest policy with respect to such
transactions. However, the officers and Directors of the Company recognize
their fiduciary obligation to treat the Company and its shareholders fairly in
any such future activities.
The Company's executive officers serve without compensation. There
exists no agreement or arrangement or other understanding pursuant to which
management will in the future receive compensation either in the form of cash
or securities of the Company. Nevertheless, should management be required to
devote increased attention to the affairs of the Company, the Company may
reconsider the appropriateness of paying reasonable compensation for those
services. Such compensation could be in the form of the issuance of
additional securities, which could be undertaken by action of the Board of
Directors without further shareholder approval.
Current management of the Company does not intend to become involved
with or otherwise promote other blank check entities. Nevertheless, such
persons may become involved in merger or acquisition activities on behalf of
companies with which they are affiliated. Such activities would be limited,
however, to the particular areas of interest of the other affiliated entities
and would in all likelihood not involve the same target entities which would
be candidates for an acquisition with the Company.
None of the Company's executive officers have prior experience with
managing blank check companies. Ms. Carylyn Bell, a principal shareholder of
the Company, was an officer and director of one blank check company, Magellan
Company, which undertook an initial blank check public offering and
consummated an acquisition transaction in approximately 1988.
There are no material proceedings to which any director, officer or
affiliate of the Company, or any owner of record or beneficially of more than
five percent (5%) of any class of voting securities of the Company, or any
associate of any such director, officer, affiliate of the Company, or
securityholder is a party adverse to the Company or any of its subsidiaries or
has a material interest adverse to the Company or any of its subsidiaries.
During the past five years, no director or officer of the Company
has:
(1) Filed or has had filed against him a petition under the federal
bankruptcy laws or any state insolvency law, nor has a receiver, fiscal agent
or similar officer been appointed by a, court for the business or property of
such person, or any partnership in which he was a general partner, or any
corporation or business association of which he was an Executive Officer at or
within two years before such filings;
(2) Been convicted in a criminal proceeding or is a named subject
of a pending criminal proceeding (excluding traffic violations and other minor
offenses);
(3) Been the subject of any order, judgment, or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining such person from, or
otherwise limiting his involvement in any type of business, securities or
banking activities.
(4) Been found by a court of competent jurisdiction in a civil
action, the Securities and Exchange Commission or the Commodity Futures
Trading Commission to have violated any federal or state securities or
commodities law, which judgment has not been reversed, suspended, or vacated.
ITEM 6. EXECUTIVE COMPENSATION
----------------------
The Company did not pay compensation to any officers, Directors or
employees during Fiscal 1996 or 1997. No Executive Officer of the Company is
currently receiving a salary from the Company.
There are no written employment agreements between the Company and
any of its officers or Directors. The officers of the Company will dedicate
sufficient time to fulfill their fiduciary obligations to the Company's
affairs. The Company has no retirement, pension, profit sharing or insurance
or medical reimbursement plans, or stock incentive of other option plans for
its officers and Directors, and does not contemplate implementing any such
plans at this time.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
Corporate Stock Transfer, Inc. will act as Transfer Agent for the
Common Stock of the Company. Carylyn K. Bell, a principal shareholder of the
Company, is an officer, Director and shareholder of Corporate Stock Transfer,
Inc. The Company has no outstanding obligation to Corporate Stock Transfer,
Inc.
ITEM 8. LEGAL PROCEEDINGS
-----------------
Neither the Company nor any of its management in their capacities as
such is the subject of any pending material legal proceedings.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
------------------------------------------------------------------
OTHER SHAREHOLDER MATTERS
-------------------------
MARKET PRICE
As of the date of this Registration Statement, and for the two (2)
preceding fiscal years, no public trading market for the Company's securities
has existed.
Neither the Company, nor anyone acting on its behalf has taken any
affirmative steps to request or encourage any broker-dealer to act as a market
maker for the Company's securities. To date, there have not been any
preliminary discussions or understandings between the Company and any market
maker regarding the participation of such market maker in the future trading
market, if any, for the Company's securities. While there can be no
assurance, it is likely that activities calculated to develop market making
activities in the Company's securities will occur only after an acquisition
transaction has been completed, although no consultants have been retained to
identify or engage market makers for that purpose.
If a public market for the Company's securities does develop in the
future prior to the completion of an acquisition or merger, the resale or
secondary offer of the Company's securities may be subject to restrictions or
prohibitions imposed by certain states under their respective blue sky
regulations. Any shareholder residing in such a state may be unable to sell
their shares until such time as a business combination is completed and the
Company no longer considered a blank check entity.
THE SECURITIES ENFORCEMENT AND PENNY STOCK REFORM ACT OF 1990.
The Securities Enforcement and Penny Stock Reform Act of 1990
requires additional disclosure, relating to the market for penny stocks, in
connection with trades in any stock defined as a penny stock. The Commission
recently adopted regulations that generally define a penny stock to be any
equity security that has a market price of less than $5.00 per share, subject
to certain exceptions. Such exceptions include any equity security listed on
NASDAQ and any equity security issued by an issuer that has (i) net tangible
assets of at least $2,000,000, if such issuer has been in continuous operation
for three years, (ii) net tangible assets of at least $5,000,000, if such
issuer has been in continuous operation for less than three years, or
(iii) average annual revenue of at least $6,000,000, if such issuer has been
in continuous operation for less than three years. Unless an exception is
available, the regulations require the delivery, prior to any transaction
involving a penny stock, of a disclosure schedule explaining the penny stock
market and the risks associated therewith.
The Common Stock of the Company is subject to rules adopted by the
Commission regulating broker-dealer practices in connection with transactions
in "penny stocks." Those disclosure rules applicable to penny stocks require
a broker-dealer, prior to a transaction in a penny stock not otherwise exempt
from the rules, to deliver a standardized list disclosure document prepared by
the Commission. That disclosure document advises an investor that investments
in penny stocks can be very risky and that the investor's salesperson or
broker is not an impartial advisor but rather paid to sell the shares. It
contains an explanation and disclosure of the bid and offer prices of the
security, any retail charges added by the dealer to those prices ("markup" or
"markdown"), and the amount of compensation or profit to be paid to or
received by the salesperson in connection with the transaction. The
disclosure contains further admonitions for the investor to exercise caution
in connection with an investment in penny stocks, to independently investigate
the security as well as the salesperson with whom the investor is working, and
to understand the risky nature of an investment in the security. Further, the
disclosure includes information regarding the market for penny stocks,
explanations regarding the influence that market makers may have upon the
market for penny stocks and the risk that one or two dealers may exercise
domination over the market for such security and therefore control and set
prices for the security not based upon competitive forces. The broker-dealer
must also provide the customer with certain other information and must make a
special written determination that the penny stock is a suitable investment
for the purchaser and receive the purchaser's written agreement to the
transaction. Further, the rules require that following the proposed
transaction the broker provide the customer with monthly account statements
containing market information about the prices of the securities. These
disclosure requirements may have the effect of reducing the level of trading
activity in the secondary market for a stock that becomes subject to the penny
stock rules. If the Common Stock became subject to the penny stock rules,
many brokers may be unwilling to engage in transactions in the Common Stock
because of the added disclosure requirements, thereby making it more difficult
for purchasers of Common Stock in this offering to dispose of their
securities.
DIVIDENDS
No cash dividends were paid by the Company during the fiscal years
ended March 31, 1996 and 1997. The Company's Board of Directors does not
currently intend to pay any cash dividends.
There are currently no plans, proposals, arrangements or
understandings with any person with regard to the development of the trading
market in any of the Company's securities. Prior to the Company's
consummation of a merger or acquisition transaction, it would be deemed a
"blank check" company within the meaning of the Penny Stock Reform Act of
1990. Some states have adopted statutes, rules and regulations limiting or
restricting sales of securities of "blank check" companies in their respective
jurisdictions. As a result, should a public trading market for the Company's
Common Stock develop in the future while it is still a "blank check" entity,
shareholders who reside in states which limit or restrict resales of
securities of "blank check" companies may be unable to effect sales of their
shares. There currently exists no public trading market for the Company's
Common Stock, and the Company has no agreements, arrangements or
understandings with any broker-dealer to act as a market maker in the
Company's Common Stock in the future. As a result, there can be no assurance
that a public trading market in the Company's Common Stock will develop in the
future.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
---------------------------------------
In February 1997, the Company issued an aggregate of 300,000 shares
of Common Stock to five (5) persons in consideration of services to the
Company valued at $15,000, or $.05 per share. Those persons consisted of the
Company's three directors, Ms. Carylyn Bell, and Clifford Neuman, the
Company's attorney. Each of the four persons qualified as an "accredited
investor" within the meaning of the Act. The shares were acquired for
investment purposes and were subject to appropriate transfer restrictions.
The shares were not registered under the Act in reliance upon Section 4(2)
thereof.
ITEM 11. DESCRIPTION OF SECURITIES
-------------------------
The Company is authorized to issue up to 100,000,000 shares of $.05
par value Common Stock and up to 50,000,000 shares of $.10 par value Preferred
Stock. As of the date of this Registration Statement, 1,284,116 shares of
Common Stock and no shares of Preferred Stock were issued and outstanding.
COMMON STOCK.
Each holder of Common Stock of the Company is entitled to one (1)
vote for each share held of record. There is no right to cumulative votes for
the election of directors. The shares of Common Stock are not entitled to
pre-emptive rights and are not subject to redemption or assessment. Each
share of Common Stock is entitled to share ratably in distributions to
shareholders and to receive ratably such dividends as may be declared by the
Board of Directors out of funds legally available therefor. Upon liquidation,
dissolution or winding up of the Company, the holders of Common Stock are
entitled to receive, pro-rata, the assets of the Company which are legally
available for distribution to shareholders. The issued and outstanding shares
of Common Stock are validly issued, fully paid and non-assessable.
PREFERRED STOCK.
The Company is authorized to issue up to 50,000,000 shares of $.10
par value Preferred Stock. The preferred stock of the corporation can be
issued in one or more series as may be determined from time to time by the
Board of Directors without further stockholder approval. In establishing a
series the Board of Directors shall give to it a distinctive designation so as
to distinguish it from the shares of all other series and classes, shall fix
the number of shares in such series, and the preferences, rights and
restrictions thereof. All shares of any one series shall be alike in every
particular. All series shall be alike except that there may be variation as
to the following: (1) the rate of distribution, (2) the price at and the terms
and conditions on which shares shall be redeemed, (3) the amount payable upon
shares for distributions of any kind, (4) sinking fund provisions for the
redemption of shares, (5) the terms and conditions on which shares may be
converted if the shares of any series are issued with the privilege of
conversion, and (6) voting rights except as limited by law.
The Company currently does not have any plans to designate and issue
any series of Preferred Stock. The Company could authorize the issuance of a
series of preferred stock which would grant to holders preferred rights to the
assets of the Company upon liquidation, the right to receive dividend coupons
before dividends would be declared to Common Stockholders, and the right to
the redemption to such shares, together with a premium, prior to the
redemption of Common Stock. Common Stockholders have no redemption rights.
In addition, the Board could issue large blocks of voting stock to fend
against unwanted tender offers or hostile takeovers without further
shareholder approval.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
-----------------------------------------
The only statute, charter provision, bylaw, contract, or other
arrangement under which any controlling person, director or officers of the
Company is insured or indemnified in any manner against any liability which he
may incur in his capacity as such, is as follows:
a. Article VIII of the Company's Restated Articles of
Incorporation with Amendments provides as follows:
The Corporation may and shall indemnify each
director, officer and any employee or agent of
the Corporation, his heirs, executors and
administrators, against any and all expenses or
liability reasonably incurred by him in
connection with any action, suit or proceeding
to which he may be a party by reason of his
being or having been a director, officer,
employee or agent of the Corporation to the full
extent required or permitted by the Colorado
Corporation Code, as amended.
b. Article XI of the Company's Restated Articles of Incorporation
with Amendments provides as follows:
DIRECTORS' LIABILITY
a. A director of this corporation shall not be
liable to the corporation or its stockholders
for monetary damages for breach of fiduciary
duty as a director, except to the extent that
such exemption from liability or limitation
thereof is not permitted under the General
Corporation Law of the State of Colorado as the
same exists or may hereafter be amended.
b. Any repeal or modification of the foregoing
paragraph A by the stockholders of the
corporation shall not adversely affect any right
or protection of a director of the corporation
existing at the time of such repeal or
modification.
The By-Laws of the Company, as amended, provide for the
indemnification of officers and Directors to the maximum extent allowable
under Colorado law. Insofar as the indemnification for liabilities arising
under the Securities Act of 1933, as amended, may be permitted to Directors,
officers or persons controlling the Company pursuant to such provisions, the
Company has been informed that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable.
ITEM 13. FINANCIAL STATEMENTS
--------------------
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
---------------------------------------------
Effective June 12, 1996, the Board of Directors of the Company
decided to change the Company's independent accountant. The independent
accountant who was previously engaged as the principal accountant to audit the
Company's financial statements was Mitchell, Londer & Co., Certified Public
Accountants. The report of Mitchell, Londer & Co. covering the Company's
consolidated financial statements as of and for the period ended May 31, 1988
contained a going concern qualification. Other than the foregoing, none of
the reports of Mitchell, Londer & Co.'s on the financial statements of the
Company for periods reported on by Mitchell, Londer & Co., contained any
adverse opinion or disclaimer of opinion, or was qualified or modified as to
uncertainty, audit scope, or accounting principles. Nor have there been any
disagreements between the Company and Mitchell, Lander & Co. on any matter of
accounting principles or practices, financial statement disclosure, or
auditing scope or procedure.
The Company has retained the accounting firm of Schumacher and
Associates, Inc. to serve as the Company's principal accountant to audit the
Company's financial statements. This engagement was effective June 12, 1996.
Prior to its engagement as the Company's principal independent accountant,
Schumacher and Associates, Inc. had not been consulted by the Company either
with respect to the application of accounting principles to a specified
transaction or the type of audit opinion that might be rendered on the
Company's financial statements or on any matter which was the subject of any
prior disagreement between the Company and its previous certifying accountant.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
---------------------------------
FINANCIAL STATEMENTS
--------------------
The following financial statements are filed as part of this report:
1. Report of Independent Certified Public Accountant;
2. Balance Sheet as of March 31, 1997 and December 31, 1997 (unaudited;
3. Statement of Operations for the years ended March 31, 1997 and 1996
and nine months ended December 31, 1997 (unaudited);
4. Statement of Changes in Stockholders' Equity as of March 31, 1997
and December 31, 1997 (unaudited);
5. Statement of Cash Flow for the years ended March 31, 1997 and 1996
and nine months ended December 31, 1997 (unaudited);
6. Notes to Financial Statements.
<PAGE>
<PAGE>
INDEX TO FINANCIAL STATEMENTS
VERSAILLES CAPITAL CORPORATION
FINANCIAL STATEMENTS
with
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
March 31, 1997 and 1996
and
December 31, 1997 and 1996
Report of Independent Certified Public Accountants F-2
Financial Statements:
Balance Sheets as of March 31, 1997 and
December 31, 1997 (Unaudited) F-3
Statements of Operations for the Years
Ended March 31, 1997 and 1996 F-4
Statements of Operations for the Nine Months
Ended December 31, 1997 and 1996 (Unaudited) F-5
Statement of Changes in Stockholders'(Deficit) F-6
Statements of Cash Flows for the Years
Ended March 31, 1997 and 1996 F-7
Statements of Cash Flows for the Nine
Months Ended December 31, 1997 and 1996 (Unaudited) F-8
Notes to Financial Statements F-9
<PAGE>
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------
The Board of Directors
Versailles Capital Corporation
Denver, CO 80202
We have audited the accompanying balance sheet of Versailles Capital
Corporation as of March 31, 1997, and the related statements of operations,
stockholders' equity and cash flows for the two years ended March 31, 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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. We believe that our audits provide 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 Versailles Capital
Corporation as of March 31, 1997, and the results of its operations, changes
in its stockholders' equity and its cash flows for the two years ended March
31, 1997, in conformity with generally accepted accounting principles.
The accompanying balance sheet has been prepared assuming that the Company
will continue as a going concern. As described in Note 2 to the financial
statements, the Company has suffered recurring losses from operations and has
a net capital deficiency that raise substantial doubts about its ability to
continue as a going concern. The financial statements does not include any
adjustments that might result from the outcome of this uncertainty.
Schumacher & Associates, Inc.
Certified Public Accountants
12835 E. Arapahoe Road
Tower II, Suite 110
Englewood, Colorado 80112
April 23, 1997
<PAGE>
<PAGE>
<TABLE>
VERSAILLES CAPITAL CORPORATION
BALANCE SHEETS
<CAPTION>
March 31, December 31,
1997 1997
----------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
- ------
Current Assets: $ -- $ --
Total Current Assets -- --
---------- -----------
TOTAL ASSETS -- $ --
========== ===========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
- ---------------------------------------
Current Liabilities:
Accounts payable $ 10,194 $ 4,375
Advances from stockholders 2,000 7,461
---------- -----------
Total Current Liabilities 12,194 21,836
---------- -----------
TOTAL LIABILITIES 12,194 21,836
---------- -----------
Commitments and Contingencies
(Note 2) -- --
Stockholders' (Deficit):
Preferred Stock $.10 par value
50,000,000 shares authorized
none issued and outstanding -- --
Common Stock $.05 par value
100,000,000 shares authorized
1,284,116 shares issued and
outstanding 64,206 64,206
Additional paid-in capital 447,691 447,691
Accumulated (deficit) (524,091) (533,733)
---------- -----------
TOTAL STOCKHOLDERS' (DEFICIT) (12,194) (21,836)
---------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' (DEFICIT) $ -- $ --
---------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE>
<TABLE>
VERSAILLES CAPITAL CORPORATION
STATEMENTS OF OPERATIONS
<CAPTION>
Years Ended
March 31,
--------------------------
1997 1996
---------- -----------
<S> <C> <C>
Revenue $ -- $ --
---------- -----------
Expenses:
Accounting 4,210 494
Other 16,061 1,460
---------- -----------
20,271 1,954
---------- -----------
Net (Loss) $ (20,271) $ 1,954)
========== ===========
(Loss) Per Share $ (.02) $ nil
========== ===========
Weighted Average Shares
Outstanding 1,034,118 984,118
========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE>
<TABLE>
VERSAILLES CAPITAL CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Nine Months Ended
December 31,
--------------------------
1997 1996
---------- -----------
<S> <C> <C>
Revenue $ -- $ --
---------- -----------
Expenses:
Accounting 3,170 3,200
Other 6,472 12,045
---------- -----------
9,642 15,245
---------- -----------
Net (Loss) $ (9,642) $ (15,245)
========== ===========
(Loss) Per Share $ (.01) $ (.01)
========== ===========
Weighted Average Shares
Outstanding 1,284,116 1,034,118
========== ===========
</Table)
The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE>
</TABLE>
<TABLE>
VERSAILLES CAPITAL CORPORATION
STATEMENT OF CHANGES IN STOCKHOLDERS' (DEFICIT)
From March 31, 1995 through December 31, 1997
<CAPTION>
Preferred Stock Common Stock Additional Accumulated
---------------------- ---------------------- Paid -----------------------
No./Shares Amount No./Shares Amount in Capital Deficit Total
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at March 31, 1995 -- $ -- 984,118 $ 49,206 $ 447,691 $(501,866) $ (4,969)
Net loss - year for the
year ended March 31, 1996 -- -- -- -- -- (1,954) (1,954)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Balance at March 31, 1996 -- -- 984,118 49,206 447,691 (503,820) (6,923)
Common Stock issued for services -- -- 299,998 15,000 -- -- 15,000
Net loss for the year ended
March 31, 1997 -- -- -- -- -- (20,271) (20,271)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Balance at March 31, 1997 -- -- 1,284,116 64,206 447,691 (524,091) (12,194)
Net loss for the nine months
ended December 31, 1997
(Unaudited) -- -- -- -- -- (9,642) (9,642)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Balance at December 31, 1997
(Unaudited) -- $ -- 1,284,116 $ 64,206 $ 447,691 $(553,773) $ (21,836)
========== ========== ========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE>
<TABLE>
VERSAILLES CAPITAL CORPORATION
STATEMENTS OF CASH FLOWS
<CAPTION>
Years Ended March 31,
-------------------------
1997 1996
---------- ----------
<S> <C> <C>
Cash Flows Operating Activities:
Net loss $ (20,271) $ (1,954)
Increase (decrease) in
accounts payable 5,271 (46)
Common Stock issued for
services 15,000 --
---------- -----------
Net Cash (Used in) Operating
Activities -- (2,000)
---------- -----------
Cash Flows from Investing
Activities -- --
---------- -----------
Cash Flows from Financing
Activities -
Advances from stockholders -- 2,000
---------- -----------
Net Cash Provided by Financing
Activities -- 2,000
---------- -----------
(Decrease) in Cash -- --
Cash, Beginning of Year -- --
---------- -----------
Cash, End of Year $ -- $ --
========== ===========
Interest Paid $ -- $ --
========== ===========
Income Taxes Paid $ -- $ --
========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE>
<TABLE>
VERSAILLES CAPITAL CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Nine Months Ended
December 31,
-------------------------
1997 1996
---------- ----------
<S> <C> <C>
Cash Flows Operating Activities:
Net loss $ (9,642) $ (15,245)
Increase (decrease) in
accounts payable 4,181 15,245
---------- -----------
Net Cash (Used in) Operating
Activities (5,461) --
---------- -----------
Cash Flows from Investing
Activities -- --
---------- -----------
Cash Flows from Financing
Activities -
Advances from stockholders 5,461 --
---------- -----------
Net Cash Provided by
Financing Activities 5,461 --
---------- -----------
(Decrease) in Cash -- --
Cash, Beginning of Year -- --
---------- -----------
Cash, End of Year $ -- $ --
========== ===========
Interest Paid $ -- $ --
========== ===========
Income Taxes Paid $ -- $ --
========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
<PAGE>
VERSAILLES CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
March 31, 1997 and 1996
and
December 31, 1997 and 1996 (Unaudited)
(1) Summary of Accounting Policies
This summary of significant accounting policies of Versailles Capital
Corporation (Company) is presented to assist in understanding the
Company's financial statements. The financial statements and notes are
representations of the Company's management who is responsible for their
integrity and objectivity. These accounting policies conform to
generally accepted accounting principles and have been consistently
applied in the preparation of the financial statements.
(a) Organization and Principles of Consolidation
--------------------------------------------
Versailles Capital Corporation (Company) was incorporated under the
laws of Colorado on December 31, 1986. The Company is an inactive
entity other than it is looking for a business combination
candidate.
The Company has selected the last day of March as its year end.
(b) 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.
(c) Unaudited Financial Statements
------------------------------
The December 31, 1997 and 1996 financial statements included herein
have been prepared without audit. The management of the Company
believes that the unaudited financial statements contain all
adjustments, including normal recurring adjustments, necessary to
present fairly the financial position as of December 31, 1997, and
the results of operations and cash flows for the periods ended
December 31, 1997 and 1996.
(2) Basis of Presentation - Going Concern
-------------------------------------
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplates
continuation of the Company as a going concern. However, the Company has
sustained operating losses since its inception and has a net capital
deficiency. These matters raise substantial doubt about the Company's
ability to continue as a going concern. Management is attempting to
raise additional capital, and is looking for a business combination
candidate.
In view of theses matters, continuing as a going concern is dependent
upon the Company's ability to meet its financing
requirements, raise additional capital, and the success of its future
operations or completion of a successful business combination.
Management believes that actions planned and presently being taken to
revise the Company's operating and financial requirements provide the
opportunity for the Company to continue as a going concern.
(3) Income Taxes
------------
As of December 31, 1997, there are no current or deferred income taxes
payable. As of December 31, 1997, the Company has total deferred tax
assets of approximately $107,000 due to operating loss carryovers and the
depreciation timing differences described above. However, because of the
uncertainty of potential realization of these tax assets, the Company has
provided a valuation allowance for the entire $107,000. Thus, no tax
assets have been recorded in the financial statements as of December 31,
1997.
The Company has available at December 31, 1997, unused operating loss
carryovers of approximately $534,000 which may be applied against future
taxable income, expiring in various years through 2012. Change of
control could reduce or eliminate the ability to utilize the net
operation loss carryover.
(4) Advances from Stockholders
--------------------------
As of December 31, 1997 stockholders had advanced $7,461 to the
Company. The advances are uncollateralized, bear no interest and have
no written repayment terms. Included in accounts payable as of March
31, 1997 and December 31, 1997 is $4,990 and $11,461, respectively,
payable to a stock transfer agency owned by an officer/shareholder of
the Company. Operating expenses during the years ended March 31, 1997
and 1996 included $1,061 and $1,460, respectively, of stock transfer
fees charged by the related party. Operating expenses during the nine
month periods ended December 31, 1997 and 1996 included $600 and $800,
respectively, of stock transfer fees charged by the related party.
(5) Stock Split
-----------
In November 1996, the Company effected a 1-for-500 reverse stock split
changing the par value per share from $.0001 to $.05 per share. All
references to number of shares have been retroactively restated to
reflect this reverse stock split.
EXHIBITS
---------
Exhibit No. Title
- ---------- -----
3.1 Amended and Restated Articles of Incorporation
3.2 Amended and Restated By-Laws
* 16.0 Letter on change in certifying accountant.
- -----------------
* Filed herewith
<PAGE>
<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.
VERSAILLES CAPITAL CORPORATION
Date: February 25, 1998 By: /s/ David C. Walters
-------------------- ----------------------------------
David C. Walters, President
<PAGE>
EXHIBIT 16.0
------------
September 22, 1997
Mr. Clifford Neuman
Neuman & Drennen, LLC
Temple-Bowron House
1507 Pine Street
Boulder, CO 80302
Re: Versailles Capital Corporation
------------------------------
f/k/a Man O'War, Inc.
------------------------------
Dear Mr. Neuman:
As you noted in your letter, my former firm, whose name was different than
what you referred to, is, by definition, no longer in existence. Therefore it
is impossible to respond to your request.
Sincerely,
/s/Gary L. Mitchell
- -------------------
Gary L. Mitchell
