SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended January 31, 1996.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission File No. 33-21443
Galt Financial Corporation
---------------------------------------------------------
(Name of small business issuer as specified in its charter)
Colorado 84-1077246
- ------------------------------- ---------------
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
26 West Dry Creek Circle, #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
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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
The aggregate market value of the common voting stock held by
non-affiliates as of April 30, 1996: Not Determinable.
Shares outstanding of the issuer's common stock as of April 30, 1996:
17,816,667 shares.
The issuer's revenues for its most recent fiscal year: $ -0-
-----
<PAGE>
PART I
Item 1. Description of Business.
(a) General Development of Business.
Galt Financial Corporation (the "Company") was organized as a Colorado
corporation on June 15, 1987, in order to evaluate, structure and complete a
merger with, or acquisition of, prospects consisting of private companies,
partnerships or sole proprietorships. The Company was formed to seek to acquire
a controlling interest in such entities in contemplation of later completing an
acquisition.
The Company sold 2,000,000 Units at $.125 per Unit, for net proceeds of
$226,703 in a public offering which had its final closing on March 1, 1989. Each
Unit consisted of one share of the Company's $.0001 par value common stock and
one Class a Common Stock Purchase Warrant. The Class A Common Stock Purchase
Warrants expired without being exercised.
On May 9, 1990, the company acquired all of the outstanding common stock of
Metropolitan Golf Club, Inc. ("MGC") in exchange for 4,800,000 shares of Galt's
$.0001 par value common stock. MGC was incorporated in the State of Colorado on
June 29, 1989 and operated an indoor golf driving range and practice facility
which was closed in November 1990 and all of MGC's operations ceased in December
1990.
On March 24, 1995, the Company sold its MGC common stock to an unrelated
third party. Galt paid $1,000 to the buyer to complete the sale and in order to
dispose of the subsidiary corporation.
The Company was the subject of receivership proceedings which commenced in
October 1991 seeking the Company's dissolution. The receiver was attempting to
collect a $75,000 note receivable due to the Company from an entity owned by the
Company's Secretary/Treasurer. The proceeds were to be used to settle with the
Company's and MGC's creditors. During the course of the receivership Galt
received a judgment for collection of the $75,000 note receivable.
-2-
<PAGE>
In October 1993, the Company entered into an Amended Stipulation and
Agreement terminating the liquidation proceedings. The Amended Stipulation and
Agreement provided the following settlement terms.
(a) The Company's Secretary/Treasurer agreed to purchase numerous
unsecured claims against the Company and MGC. The claims totalled $24,146
and were settled by the Secretary/Treasurer for $9,140. In April 1994, the
Company paid the Secretary/Treasurer $24,146 for settlement of the claims.
(b) The related entity paid to the Receiver, for the benefit of the
Company, $18,000 to settle and compromise the judgment held by the Company.
The $18,000 was used to pay the costs, expenses and legal fees of the
Receiver and to pay the costs incurred by another creditor.
The Company wrote off the remaining note receivable balance of $57,000
and an additional $2,000 advance to the related entity resulting in a
$59,000 bad debt expense.
(c) The Company's current Secretary/Treasurer agreed to purchase all
of the shares of the Company's common stock owned (approximately 4,800,000)
by a former officer of the Company for $5,000.00.
-3-
<PAGE>
Effective June 30, 1995, the Company authorized the issuance of 216,667
shares of common stock to two persons who had invested an aggregate of $6,500 in
1990 but who had never received the shares they had purchased from the Company.
These shares have been included on the attached balance sheet and are
represented in the 17,816,667 shares shown as presently issued and outstanding.
(b) Financial Information about Industry Segments
The Registrant does not presently have separate industry segments.
(c) Narrative Description of the Business
The Company is continuing to look for an appropriate business acquisition.
General
The Company's business plan has been to seek one or more potential business
ventures, anywhere in the United States, which, in the opinion of management may
warrant involvement by the Company. The Company recognizes that because of its
limited financial, managerial and other resources, the type of suitable
potential business ventures which may be available to it will be extremely
limited. The Company's principal business objective will be to seek long-term
growth potential in the business venture in which it participates rather than to
seek immediate, short-term earnings. In seeking to attain the Company's business
objective, it will not restrict its search to any particular business or
industry, but may participate in a business venture of essentially any kind or
nature. It is emphasized that the business objectives discussed herein are
extremely general and are not intended to be restrictive upon the discretion of
management.
-4-
<PAGE>
The Company will be subject to certain reporting obligations to the
Securities and Exchange Commission and must submit certain information about
significant acquisitions including certified financial statements for up to two
prior fiscal years. Thus, it is the intention of management to look for
acquisitions which can meet these requirements.
The Company will not restrict its search for any specific kind of firms,
but may acquire a venture in its preliminary or development stage, may
participate in a business which is already in operation or in a business in
various stages of its corporate existence. It is impossible to predict at this
stage the status of any venture in which the Company may participate, in that
the venture may need additional capital, may merely desire to have its shares
publicly traded, or may seek other perceived advantages which the Company may
offer. In some instances, the business endeavors may involve the acquisition of
or merger with a corporation which does not need substantial additional cash but
which desires to establish a public trading market for its common stock.
The Company may acquire a business venture by conducting a reorganization
involving the issuance of securities in the Company. Due to the requirements of
certain provisions of the Internal Revenue Code of 1986 (as amended) in order to
obtain certain beneficial tax consequences in such reorganizations, the number
of shares held by all of the present shareholders of the Company prior to such
transaction or reorganization, may be substantially less than the total
outstanding shares held by such shareholders in any reorganized entity. As noted
above, such a transaction may be based upon the sole determination of management
without any vote or approval by the shareholders of the Company. The result of
any such reorganization could be dilution to the shareholders of the Company
prior to such reorganization. If the Company were to issue substantial
additional securities in any such reorganization, or otherwise, such issuance
may have an adverse effect on any trading market which may develop in the
Company's securities in the future.
-5-
<PAGE>
On April 22, 1996, the Company entered into a letter of intent to acquire
Perry Williams, Inc. ("PWI"). Under the terms of the letter of intent the
Company will issue 4,350,000 shares of its $.0001 par value common stock in
exchange for all of the issued and outstanding common stock of PWI. Prior to the
closing the Company will effect a 1 for 47.51 reverse split of its common stock.
As a condition of closing, PWI must complete a private placement of $300,000 and
have net proceeds of at least $250,000 after payment of commissions and
expenses. In addition, the Company plans to sell 175,000 common stock purchase
warrants each to Newport Capital Partners, Inc. and Creative Business Concepts,
Inc., a related party, for a total purchase price of $35 if the acquisition is
competed. The warrants will be exercisable at $4.00 per share.
The Company and PWI are responsible for their own costs of the acquisition.
If the acquisition is not consummated due to the failure of the Company or PWI
to perform its obligations under the agreement (including the $300,000 private
placement) or because of misrepresentations, then the failing party shall be
responsible to pay the other party's acquisition costs not to exceed $20,000.
(d) Financial Information about Foreign and Domestic Operations and Export
Sales.
The registrant currently has no foreign operations or export sales.
Item 2. Properties.
The Registrant presently has no significant properties or business
operations. The Registrant uses the mailing address of its President for its
office address.
-6-
<PAGE>
Item 3. Legal Proceedings.
The Company is not currently a party to any legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders through solicitation
of proxies or otherwise during the fourth quarter of the fiscal year covered by
this report.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
The common stock of the Company is not quoted or publicly traded and has
not traded for the last three calendar years to the best knowledge of the
Company's management.
(b) Holders.
The approximate number of record holders of the registrant's common stock
as of May 1, 1996 is 330.
(c) Dividends.
The registrant has not paid any cash dividends to date and does not
anticipate or contemplate paying dividends in the foreseeable future. It is the
present intention of management to utilize all available funds for the
development of the Company's business.
Item 6. Management's Discussion and Analysis or Plan of Operation.
Plan of Operation.
-7-
<PAGE>
The Company currently has no business operations. The Company will continue
to look for a business acquisition or merger. The Company has no significant
cash or other assets. Certain persons who are either shareholders or officers of
the Company have agreed to advance funds to the Company as needed to maintain
its corporate existence, continue its SEC filings and to pursue a business
acquisition.
Item 7. Financial Statements.
Audited financial statements as of January 31, 1996 and for the years ended
January 31, 1996 and 1995, are included herewith.
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
The registrant is not aware, and has not been advised by its accountants,
of any disagreement on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure. PART III
Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange Act.
(a) Identification of Directors.
The current directors of the Registrant will serve until the next annual
(or special in lieu of annual) meeting of shareholders at which directors are
elected and qualified. Name, period served and positions held with the Company
are as follows:
-8-
<PAGE>
Period Served Positions
Name As Director With Company
- ---- -------------- ------------
Earnest Mathis From March 31, President
1994 to present Director
Kenneth J. Wolf From March 31, Secretary,
1994, to present Treasurer and
Director
Gary J. McAdam From March 31, Director
1994, to present
(b) Identification of Executive Officers.
Same as above.
(c) Identification of Certain Significant Employees.
None.
(d) Family Relationships.
None.
(e) Business Experience.
(1) Background.
Earnest Mathis. From August 1993 to the present, Mr. Mathis has served as
Secretary and a director of Creative Business Concepts, Inc., a firm
specializing in venture capital and mergers and acquisitions. From January 1987
to the present, Mr. Mathis has owned Inverness Investments, a firm specializing
in mergers and acquisitions and investments in privately and publicly-held
companies. From May 1988 to the present, Mr. Mathis has served as President and
a director of Express Capital Concepts, Inc. From March 1991 and December 1991
to the present, Mr. Mathis has served as President and a director of Jefferson
Capital, Inc. and Galt Financial Corporation, respectively. From May 1994 to the
present, Mr. Mathis has served as President and a director of Dynasty Capital
Corporation. Express Capital Concepts, Inc., Jefferson Capital, Inc., Galt
Financial Corporation and Dynasty Capital Corporation are publicly-held inactive
companies.
-9-
<PAGE>
Kenneth J. Wolf. Since July, 1989, Mr. Wolf has been President of
Topographic Chocolate Company, a company located in Denver, Colorado which
designs and manufactures custom chocolates. Since January, 1989, Mr. Wolf has
served as President and a Director of Sage Resources, Inc., a blank-check
company which completed its public offering in October, 1990. From February,
1988 until February, 1989, he served as Treasurer, and From February, 1988 until
March, 1990, he served as Secretary and a Director of CoPilot Electronic
Products, Inc., (formerly Fenwick Financial, Inc.). From April, 1988 until
January 1990, he served as Secretary, Treasurer and a Director of Winston
Financial, Inc., a publicly-held, blank-check company. He served as Secretary,
Treasurer and a Director of Teton Investments, In., a publicly-held blank-check
company from September, 1987 until January, 1989. Since January, 1986, Mr. Wolf
has been self-employed as an attorney and financial consultant. From February,
1983 until December, 1985, her served as Executive Vice President (February,
1983 through June, 1985) and President (July, 1985 through December, 1985) and a
Director of Walk Thru Entertainment, Inc. ("Walk Thru"), a publicly-held company
which developed and presented an exhibit call "Walk Thru Rock." Walk Thru filed
for bankruptcy under Chapter XI in November, 1985. From 1980 until 1983, Mr.
Wolf served as secretary, director and in-house counsel of Fossil Fuels, Inc.,
of Denver Colorado, an oil and gas exploration company with four employees. From
1978 until 1980, Mr. Wolf acted as corporate counsel to Southwest Development
Company of Denver, Colorado, a real estate firm. Form 1975 until 1978, he was in
private legal practice in Denver, Colorado, specializing in corporate and real
estate. Mr. Wolf received his Bachelor of Arts Degree in Business Administration
in 1972 from the University of Michigan and received his law degree from Wayne
State University, Detroit, Michigan in 1975.
Gary J. McAdam. From February 1993 to present, Mr. McAdam has served as
President of Creative Business Concepts, Inc., a firm specializing in venture
capital and mergers and acquisitions. From 1979 to present, Mr. McAdam has
served as President/Director of Creative Investments Services, In., a firm
specializing in mergers and acquisitions and investments in privately and
publicly-held companies. From March 1994 to present, Mr. McAdam has served as a
director of Galt Financial Corporation. From May 1994 to present, Mr. McAdam has
served as a director of Dynasty Capital Corporation. During 1984 through 1986
Mr. McAdam was employed by J.W. Gant & Associates as a registered representative
and from 1981 through 1984, he was employed by E.J. Pittock Company as a
registered representative.
(2) Directorships.
-10-
<PAGE>
The current director holds no other directorships in any Company with a
class of securities registered pursuant to Section 12 of the Exchange Act or
subject to the requirements of Section 15(d) of such Act or any Company
registered as an investment Company under the Investment Company Act of 1940,
except as follows:
NAME COMPANY
---- -------
Kenneth J. Wolf Sage Resources, Inc.
Gary J. McAdam Dynasty Capital Corporation
Earnest Mathis Dynasty Capital Corporation
Item 10. Executive Compensation.
(a) Cash Compensation.
During the last fiscal year, none of the registrant's officers or directors
individually received any salary or wages. During the current fiscal year the
registrant has no present plans to pay compensation to officers or directors.
(b) Compensation Pursuant to Plans.
There are presently no retirement, stock option or other plans or
arrangements pursuant to which cash or non-cash compensation was paid or is
proposed to be paid or distributed in the future to any of the current executive
officers of the Registrant.
(c) Other Compensation.
There is no other compensation paid to executive officers.
-11-
<PAGE>
(d) Compensation of Directors.
None.
(e) Termination of Employment and Change of Control Arrangement.
There are no compensatory plans or arrangements pursuant to which any
executive officer will be paid compensation as a result of his termination or
change of employment with, or control of, the Registrant.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
(a) Security Ownership of Certain Beneficial Owners.
The following table sets forth, as of January 31, 1996, the beneficial
stock ownership of all persons known to the Registrant to own more than 5% of
its outstanding common stock.
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership (1) of Class
- ------------------- ------------------------ --------
Earnest Mathis 4,800,000 26.9%
Kenneth J. Wolf 5,223,750 29.3%
Gary J. McAdam 4,805,100 26.9%
All officers and directors
as a group (3 persons) 14,828,850 83.2%
(1) Certain of these shares may be held of record in names of entities
controlled by these persons.
(b) Security Ownership of Management.
See Item 11(a) above.
(c) Changes in Control.
-12-
<PAGE>
Except as described in this report, there are no arrangements, known to the
Registrant, including any pledge by any person of securities of the Registrant
or of any of its parents, the operation of which may at a subsequent date result
in a change in control of the Registrant except the letter of intent referred to
in Item 1 hereof.
Item 12. Certain Relationships and Related Transactions.
During the fiscal years ended January 31, 1994 and 1995, the Company
engaged in certain transactions between the Company, while in receivership, and
Kenneth J. Wolf, its Secretary/Treasurer. See Item 1, hereof.
On March 31, 1994, the Company sold 4,800,000 shares to Gary J. McAdam for
$17,500 and 4,800,000 to Earnest Mathis for $17,500, whereupon these persons
became directors of the Company.
During the fiscal year ended January 31, 1996, the Company's president and
entities he controls loaned $9,750 to the Company. The Company's
Secretary/Treasurer loaned $2,000 to the Company and a director of the Company
and entities he controls loaned $8,550 to the Company. These notes in the
aggregate amount of $20,300 are unsecured and due on demand.
Item 13. Exhibits.
(a) Exhibits - None.
(b) Reports on Form 8-K have not been filed during the last quarter of the
fiscal year covered by this report.
-13-
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
GALT FINANCIAL CORPORATION
Date: May 14, 1996 By: /S/ EARNEST MATHIS
-----------------------------------
Earnest Mathis, President
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and on the dates indicated.
Dated: May 14, 1996 By: /S/ EARNEST MATHIS
-----------------------------------
Earnest Mathis, principal
executive officer, principal
financial officer and director
Dated: May 14, 1996 By: /S/ GARY J. MC ADAM
-----------------------------------
Gary J. McAdam
<PAGE>
GALT FINANCIAL CORPORATION
FINANCIAL STATEMENTS AND AUDITORS' REPORT
FOR THE YEARS ENDED JANUARY 31, 1996 AND 1995
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Financial Statements Page
- -------------------- ----
Independent Auditors' Report F-2
Balance Sheet As Of January 31, 1996 F-3
Statements Of Operations For The Years
Ended January 31, 1996 and 1995 F-4
Statements Of Changes In Stockholders'
Equity (Deficit) For The Years Ended
January 31, 1996 and 1995 F-5
Statements Of Cash Flows For The Years
Ended January 31, 1996 and 1995 F-6
Notes To Financial Statements F-7
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Galt Financial Corporation
We have audited the accompanying balance sheet of Galt Financial Corporation as
of January 31, 1996, and the related statements of operations, changes in
stockholders' equity (deficit) and cash flows for the years ended January 31,
1996 and 1995. 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 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.
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 Galt Financial Corporation as
of January 31, 1996, and the results of its operations and its cash flows for
the years ended January 31, 1996 and 1995, 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, the Company's
ability to establish itself as a going concern is dependent upon the Company
obtaining sufficient financing to continue its activities and, ultimately, to
achieve profitable operations. These items raise substantial doubt about the
Company's ability to continue as a going concern.
Angell & Deering
Certified Public Accountants
Denver, Colorado
April 17, 1996, except
for Note 6 as to which
the date is April 22, 1996
F-2
<PAGE>
GALT FINANCIAL CORPORATION
BALANCE SHEET
JANUARY 31, 1996
ASSETS
Current Assets:
Cash $ 3,167
==========
Total Assets $ 3,167
==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable - Trade $ 78
Accrued interest - related parties 914
Notes payable - relates parties 20,300
----------
Total Current Liabilities 21,292
----------
Commitments and Contingencies --
Stockholders' Equity (Deficit):
Preferred stock: $.001 par value,
20,000,000 shares authorized, none
issued or outstanding --
Common stock: $.0001 par value,
100,000,000 shares authorized,
17,816,667 shares issued and
outstanding 1,782
Additional paid in capital 247,299
Accumulated deficit (267,206)
----------
Total Stockholders' Equity
(Deficit) (18,125)
----------
Total Liabilities and Stockholders'
Equity (Deficit) $ 3,167
==========
The accompanying notes are an integral
part of these financial statements.
F-3
<PAGE>
GALT FINANCIAL CORPORATION
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JANUARY 31, 1996 and 1995
1996 1995
---- ----
Revenue $ -- $ --
Operating expenses 18,003 16,672
----------- -----------
Loss From Operations (18,003) (16,672)
----------- -----------
Other Income (Expense):
Gain on disposal of subsidiary 68,663 --
Interest expense (914) --
----------- -----------
Total Other Income (Expense) 67,749 --
----------- -----------
Net Income (Loss) $ 49,746 $ (16,672)
=========== ===========
Net Income (Loss) Per Share of
Common Stock $ -- $ --
=========== ===========
Weighted Average Number of
Common Shares Outstanding 17,816,667 16,264,886
=========== ===========
The accompanying notes are an integral
part of these financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
GALT FINANCIAL CORPORATION
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED JANUARY 31, 1996 and 1995
Common Stock Additional
----------------------- Paid In Accumulated
Shares Amount Capital Deficit
-------- ------ ------- -----------
<S> <C> <C> <C> <C>
Balance at January 31, 1994 8,216,667 $ 822 $213,259 $(300,280)
Issuance of common stock
for cash 9,600,000 960 34,040 --
Net loss for the year -- -- -- (16,672)
---------- ------ -------- ---------
Balance at January 31, 1995 17,816,667 1,782 247,299 (316,952)
Net income for the year -- -- -- 49,746
---------- ------ -------- ---------
Balance at January 31, 1996 17,816,667 $1,782 $247,299 $(267,206)
========== ====== ======== =========
The accompanying notes are an integral
part of these financial statements.
F-5
</TABLE>
<PAGE>
GALT FINANCIAL CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JANUARY 31, 1996 and 1995
1996 1995
---- ----
Cash Flows From Operating Activities:
Net income (loss) $ 49,746 $(16,672)
Adjustments to reconcile net
loss to net cash (used) by
operating activities:
Gain on disposal of subsidiary (68,663) --
Changes in assets and
liabilities:
Increase (decrease) in accounts payable 78 (16,536)
Increase in accrued interest 914 --
-------- --------
Net Cash (Used) By Operating
Activities (17,925) (33,208)
-------- --------
Cash Flows From Investing Activities:
Disposal of subsidiary (1,000) --
-------- --------
Net Cash (Used) By Investing
Activities (1,000) --
-------- --------
Cash Flows From Financing Activities
Issuance of common stock -- 35,000
Proceeds from related party loans 20,300 --
-------- --------
Net Cash Provided By Financing
Activities 20,300 35,000
-------- --------
Net Increase in Cash and
Cash Equivalents 1,375 1,792
Cash and Cash Equivalents at
Beginning of Year 1,792 --
-------- --------
Cash and Cash Equivalents at
End of Year $ 3,167 $ 1,792
======== ========
Supplemental Disclosure of Cash Flow
Information:
Cash paid during the year for:
Interest $ -- $ --
Income taxes -- --
The accompanying notes are an integral
part of these financial statements.
F-6
<PAGE>
GALT FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. Organization and Summary of Significant Accounting Policies
Organization
Galt Financial Corporation (the "Company") was incorporated in the
State of Colorado on June 15, 1987. The Company intends to
evaluate, structure and complete a merger with, or acquisition of,
prospects consisting of private companies, partnerships or sole
proprietorships. The Company may seek to acquire a controlling
interest in such entities in contemplation of later completing an
acquisition.
On May 9, 1990, the Company acquired all of the outstanding common
stock of Metropolitan Golf Club, Inc. ("MGC") in exchange for
4,800,000 shares of Galt's $.0001 par value common stock. MGC was
incorporated in the State of Colorado on June 29, 1989 and operated
an indoor golf driving range and practice facility in Denver,
Colorado. The driving range and practice facility was closed in
November 1990 and all of MGC's operations ceased in December 1990.
On March 24, 1995, the Company sold its MGC common stock to an
unrelated third party. Galt paid $1,000 to the buyer to complete
the sale. At the time of sale MGC had no assets and liabilities of
$69,663. The sale resulted in a gain of $68,663 recognized by Galt.
Principles of Consolidation
The financial statements include the accounts of the Company and
its wholly owned subsidiary. All significant intercompany accounts
and transactions have been eliminated.
Going Concern Uncertainty
The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and
satisfaction of liabilities in the normal course of business.
Future operating expenses and investments needed to acquire
companies may be funded by loans from the Company's officers or
directors. The Company's ability to continue to meet its
obligations is dependent upon obtaining the above loans. This
factor as well as others indicates the Company may be unable to
continue as a going concern.
The financial statements do not include any adjustments relating to
the recoverability and classification of recorded asset amounts or
the classification of liabilities that might be necessary should
the Company be unable to continue as a going concern.
Estimates
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
F-7
<PAGE>
GALT FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. Organization and Summary of Significant Accounting Policies
Estimates
financial statements and the reported amount of revenues and
expenses during the reporting period. Actual results could differ
from those estimates.
Net Income (Loss) Per Common Share
The net income (loss) per common share is based on the weighted
average number of shares outstanding during the year.
Income Taxes
The Company has made no provision for income taxes because of
financial statement and tax losses. As of January 31, 1996 the
Company had net operating loss and capital loss carryforwards of
approximately $137,000 and $161,000, respectively. The net
operating loss and capital loss can be carried forward fifteen
years and five years, respectively to offset future taxable income.
The net operating loss carryforward expires in 2011 and the capital
loss carryforward expires in 2001.
At January 31, 1996 and 1995, the Company had a deferred tax asset
of approximately $27,500 and $69,500, respectively, resulting from
net operating loss carryforwards, which has been offset in its
entirety by a valuation allowance. The net change in the valuation
allowance for deferred tax assets was a decrease of $42,000 related
to benefits from net operating loss carryforwards.
In 1993, the Company adopted Statement of Financial Accounting
Standards No. 109 (SFAS No. 109), Accounting for Income Taxes.
Among other things, SFAS No. 109 requires that deferred income tax
balances be adjusted to, and maintained thereafter at, statutory
tax rates in effect when the taxes are expected to be paid.
Cash Equivalents
For purposes of the statements of cash flows, the Company considers
all highly liquid debt instruments purchased with a maturity of
three months or less to be cash equivalents.
2. Notes Payable - Related Parties
12% unsecured demand notes. $20,300
=======
3. Legal Proceedings
The Company was the subject of receivership proceedings which
commenced in October 1991 seeking the Company's dissolution. The
Receiver was attempting to collect a $75,000 note receivable due to
the Company from an entity owned by the Company's
Secretary/Treasurer. The proceeds were to be used to settle with
the Company's and MGC's creditors. During the course of the
receivership Galt received a judgement for collection of the
$75,000 note receivable.
F-8
<PAGE>
GALT FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
3. Legal Proceedings
In October 1993, the Company entered into an Amended Stipulation
and Agreement terminating the liquidation proceedings. The Amended
Stipulation and Agreement provided the following settlement terms:
I. The Company's Secretary/Treasurer agreed to purchase
numerous unsecured claims against the Company and MGC. The
claims totalled $24,146 and were settled by the
Secretary/Treasurer for $9,140. In April 1994, the Company
paid the Secretary/Treasurer $24,146 for settlement of the
claims.
II. The related entity paid to the Receiver, for the benefit
of the Company, $18,000 to settle and compromise the
judgement held by the Company. The $18,000 was used to pay
the costs, expenses and legal fees of the Receiver and to
pay the costs incurred by another creditor.
The Company wrote off the remaining note receivable
balance of $57,000 and an additional $2,000 advance to the
related entity resulting in a $59,000 bad debt expense.
III. The Company's current Secretary/Treasurer agreed to
purchase all of the shares of the Company's common stock
owned (approximately 4,800,000) by a former officer of the
Company for $5,000.
4. Preferred Stock
The authorized preferred stock of the Company consists of
20,000,000 shares, $.001 par value. The preferred stock may be
issued in series from time to time with such designation, rights,
preferences and limitations as the Board of Directors of the
Company may determine by resolution. The rights, preferences and
limitations of separate series of preferred stock may differ with
respect to such matters as may be determined by the Board of
Directors, including without limitation, the rate of dividends,
method and nature of payment of dividends, terms of redemption,
amounts payable on liquidation, sinking fund provisions (if any),
conversion rights (if any), and voting rights. Unless the nature of
a particular transaction and applicable statutes require approval,
the Board of Directors has the authority to issue these shares
without shareholder approval.
5. Related Party Transactions
The Company's President and entities he controls loaned $9,750 to
the Company (Note 2).
The Company's Secretary/Treasurer loaned $2,000 to the Company
(Note 2).
A director of the Company and entities he controls loaned $8,550 to
the Company (Note 2).
F-9
<PAGE>
GALT FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
6. Proposed Acquisition
On April 22, 1996, the Company entered into a letter of intent to
acquire Perry Williams, Inc. ("PWI"). Under the terms of the letter
of intent the Company will issue 4,350,000 shares of its $.0001 par
value common stock in exchange for all of the issued and
outstanding common stock of PWI. Prior to the closing the Company
will effect a 1 for 47.51 reverse split of its common stock. As a
condition of closing, PWI will complete a private placement of
$300,000 and will have net proceeds of at least $250,000 after
payment of commissions and expenses. In addition, the Company plans
to sell 175,000 common stock purchase warrants each to Newport
Capital Partners, Inc. and Creative Business Concepts, Inc., a
related party, for a total purchase price of $35 if the acquisition
is completed. The warrants will be exercisable at $4.00 per share.
The Company and PWI are responsible for their own costs of the
acquisition. If the acquisition is not consummated due to the
failure of the Company or PWI to perform its obligations under the
agreement (including the $300,000 private placement) or because of
misrepresentations, then the failing party shall be responsible to
pay the other party's acquisition costs not to exceed $20,000. The
acquisition is expected to close on or before June 22, 1996.
F-10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-END> JAN-31-1996
<CASH> 3,167
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,167
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,167
<CURRENT-LIABILITIES> 21,292
<BONDS> 0
0
0
<COMMON> 1,782
<OTHER-SE> (19,907)
<TOTAL-LIABILITY-AND-EQUITY> 3,167
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 18,003
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 914
<INCOME-PRETAX> 49,746
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 49,746
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>