U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
[X[ ANNUAL REPORT PURSUANT TO SECTION 13
OF THE SECURITIES EXCHANGE ACT
For the Fiscal Year Ended December 31, 1996
Commission File No. 33-25900
DONNEBROOKE CORPORATION
(Name of Small Business Issuer as specified in its Charter)
<TABLE>
<S> <C> <C>
Delaware 16910 Dallas Parkway, Suite 100, Dallas, Texas 75248 75-2228820
(State or Other Jurisdiction (Address of Principal Executive Office, (IRS Employer
of incorporation) including Zip Code) Identification No.)
</TABLE>
(972) 248-1922
(Registrant's telephone number, including area code)
Securities Registered under Section 12(b) of the Exchange Act:
Title of each Class Name of Each Exchange on which Registered
------------------- -----------------------------------------
None None
Securities registered Under Section 12(g) of the exchange Act: Common Stock,
$0.00001 Par Value
Check whether the issuer (1) has 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 No X
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of management's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this form 10-K. [ X ]
State issuer's revenues for its most recent fiscal year: $-0-.
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days: $-0-(stock is not quoted).
As of December 1, 1998 the issuer had 37,333,000 shares of common stock issued
and outstanding.
<PAGE>
PART I
Item 1. Description of Business.
- --------------------------------
General
Donnebrooke Corporation (the "Company") was incorporated on April 19,1988 under
the laws of the State of Delaware. The Company subsequently filed a registration
statement under The Securities Act of 1933, as amended, with the Securities and
Exchange Commission with respect to a distribution of its common stock to the
shareholders of Halter Venture Corporation, its parent. This distribution of the
Company's stock became effective February 15, 1989. The Company had not yet
engaged in any business operations. The business purpose of the Company was to
seek out and obtain an acquisition, merger or outright sale transaction, whereby
its shareholders would benefit.
Early in 1989 Albert Ray Allison III and his family purchased control of the
Company. During 1989 and 1990 the Company attempted to enter into the business
of owning, operating and managing various parcels of real estate and to own,
operate and manage shared tenant service operations tailored predominately for
the legal profession and related professions. The Company was not successful in
initiating these operations. Accordingly, the Company has never had any
substantial operations or substantial assets since its inception.
The Company's corporate charter was revoked in 1992 by the State of Delaware for
failure to file required franchise tax reports and to pay franchise taxes. On
October 16, 1998 Halter Capital Corporation acquired a controlling interest in
the Company and the current Board of Directors was appointed by the previous
Board of Directors, who then resigned. On October 26, 1998, the corporate
charter was revived.
It is the intention of the new management to bring its SEC periodic reporting to
date in order that the Company might be potentially attractive to a private
business that has interest in becoming a publicly-held company, without the
expense and time delay involved in distributing its securities to the public.
Proposed Business
The Company intends to locate and combine with an existing, privately-held
company, which is profitable, or, in management's view, has growth potential,
irrespective of the industry in which it is engaged. However, the Company does
not intend to combine with a private company that may be deemed to be an
investment company subject to the Investment Company Act of 1940. A combination
may be structured as a merger, consolidation, exchange of the Company's common
stock for stock or assets or any other form that will result in the combined
enterprise's becoming a publicly-held corporation.
Pending negotiation and consummation of a combination, the Company anticipates
that it will have, aside from carrying on its search for a combination partner,
no business activities, and, thus, will have no source of revenue. Should the
Company incur any significant liabilities prior to a combination with a private
company, it may not be able to satisfy such liabilities as they are incurred.
If the Company's management pursues one or more combination opportunities beyond
the preliminary negotiations stage and those negotiations are subsequently
terminated, it is foreseeable that such efforts will exhaust the Company's
ability to continue to seek such combination opportunities before any successful
combination can be consummated. In that event, the Company's common stock will
become worthless and holders of the Company's common stock will receive a
nominal distribution, if any, upon the Company's liquidation and dissolution.
2
<PAGE>
Combination Suitability Standards
In its pursuit for a combination partner, the Company's management
intends to consider only combination candidates, which are profitable, or, in
management's view, have growth potential. The Company's management does not
intend to pursue any combination proposal beyond the preliminary negotiation
stage with any combination candidate that does not furnish the Company with
audited financial statements for at least its most recent fiscal year and
unaudited financial statements for interim periods subsequent to the date of
such audited financial statements, or is in a position to provide such financial
statements in a timely manner. In the event such a combination candidate is
engaged in a high technology business, the Company may obtain reports from
independent organizations of recognized standing covering the technology being
developed and/or used by the candidate. The Company's limited financial
resources may make the acquisition of such reports difficult or even impossible
to obtain and, thus, there can be no assurance that the Company will have
sufficient funds to obtain such reports when considering combination proposals
or candidates. To the extent the Company is unable to obtain the advice or
reports from experts, the risks of any combined enterprise's being unsuccessful
will be enhanced. Furthermore, to the knowledge of the Company's officers and
directors, neither the candidate nor any of its directors, executive officers,
principal shareholders or general partners:
(1) will have been convicted of securities fraud, mail fraud, tax fraud,
embezzlement, bribery, or a similar criminal offense involving
misappropriation or theft of funds, or be the subject of a pending
investigation or indictment involving any of those offenses;
(2) will have been subject to a temporary or permanent injunction or
restraining order arising from unlawful transactions in securities,
whether as issuer, underwriter, broker, dealer, or investment advisor,
may be the subject of any pending investigation or a defendant in a
pending lawsuit arising from or based upon allegations of unlawful
transactions in securities; or
(3) will have been a defendant in a civi1 action which resulted in a final
judgement against it or him awarding damages or rescission based upon
unlawful practices or sales of securities.
The Company's officers and directors will make these determinations by
asking pertinent questions of the management of prospective combination
candidates. Such persons will also ask pertinent questions of others who may be
involved in the combination proceedings. However, the officers and directors of
the Company will not generally take other steps to verify independently
information obtained in this manner which is favorable. Unless something comes
to their attention that puts them on notice of a possible disqualification which
is being concealed from them, such persons will rely on information received
from the management of the prospective combination candidate and from others who
may be involved in the combination proceedings.
Item 2. Description of Property.
- --------------------------------
The Company has no properties.
Item 3. Legal Proceedings.
- ---------------------------
The Company is not a party to any material pending litigation nor is it
aware of any threatened legal proceeding.
3
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders.
- ------------------------------------------------------------
No matters were submitted to securities holders during the year ended
December 31, 1996..
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
- -----------------------------------------------------------------
Market Information
The stock does not trade on any exchange or the OTC market. There is no
known public market for this security. As of December 1, 1998, there were 723
holders on record of the Company's common stock, holding a total of 37,333,000
shares.
Dividend Policy
The Company has never paid any dividends on its common stock and does
not have any current plan to pay any dividends in the foreseeable future.
Item 6. Management's Discussion and Analysis of Financial Condition and Plan of
Operation.
- --------------------------------------------------------------------------------
Discussion of Financial Condition
The Company currently has no revenues, no operations and owns no
assets. The Company will remain illiquid until such time as a business
combination transaction occurs, if ever. No prediction of the future financial
condition of the Company can be made.
Due to the lack of sustaining operations from inception, the Company
is considered in the development stage and, as such, has generated no
significant operating revenues and has incurred cumulative operating losses of
approximately $133,000. Accordingly, the Company is dependent upon its current
management and/or significant stockholders to provide sufficient working capital
to preserve the integrity of the corporation during this phase.
Plan of Business
General. The Company intends to locate and combine with an existing,
privately-held company which is profitable or, in management's view, has growth
potential, irrespective of the industry in which it is engaged. However, the
Company does not intend to combine with a private company that may be deemed to
be an investment company subject to the Investment Company Act of 1940. A
combination may be structured as a merger, consolidation, exchange of the
Company's common stock for stock or assets or any other form that will result in
the combined enterprise's becoming a publicly-held corporation.
Pending negotiation and consummation of a combination, the Company
anticipates that it will have, aside from carrying on its search for a
combination partner, no business activities, and, thus, will have no source of
revenue. Should the Company incur any significant liabilities prior to a
combination with a private company, it may not be able to satisfy such
liabilities as they are incurred.
4
<PAGE>
If the Company's management pursues one or more combination
opportunities beyond the preliminary negotiations stage and those negotiations
are subsequently terminated, it is foreseeable that such efforts will exhaust
the Company's ability to continue to seek such combination opportunities before
any successful combination can be consummated. In that event, the Company's
common stock will become worthless and holders of the Company's common stock
will receive a nominal distribution, if any, upon the Company's liquidation and
dissolution.
Combination Suitability Standards. In its pursuit for a combination
partner, the Company's management intends to consider only combination
candidates which are profitable or, in management's view, have growth potential.
The Company's management does not intend to pursue any combination proposal
beyond the preliminary negotiation stage with any combination candidate which
does not furnish the Company with audited financial statements for at least its
most recent fiscal year and unaudited financial statements for interim periods
subsequent to the date of such audited financial statements, or is in a position
to provide such financial statements in a timely manner. In the event such a
combination candidate is engaged in a high technology business, the Company may
obtain reports from independent organizations of recognized standing covering
the technology being developed and/or used by the candidate. The Company's
limited financial resources may make the acquisition of such reports difficult
or even impossible to obtain and, thus, there can be no assurance that the
Company will have sufficient funds to obtain such reports when considering
combination proposals or candidates. To the extent the Company is unable to
obtain the advice or reports from experts, the risks of any combined
enterprise's being unsuccessful will be enhanced. Furthermore, to the knowledge
of the Company's officers and directors, neither the candidate nor any of its
directors, executive officers, principal shareholders or general partners:
(1) will have been convicted of securities fraud, mail fraud, tax
fraud, embezzlement, bribery, or a similar criminal offense
involving misappropriation or theft of funds, or be the subject of
a pending investigation or indictment involving any of those
offenses;
(2) will have been subject to a temporary or permanent injunction or
restraining order arising from unlawful transactions in
securities, whether as issuer, underwriter, broker, dealer, or
investment advisor, may be the subject of any pending
investigation or a defendant in a pending lawsuit arising from or
based upon allegations of unlawful transactions in securities; or
(3) will have been a defendant in a civil action which resulted in a
final judgement against it or him awarding damages or rescission
based upon unlawful practices or sales of securities.
The Company's officers and directors will make these determinations by asking
pertinent questions of the management of prospective combination candidates.
Such persons will also ask pertinent questions of others who may be involved in
the combination proceedings. However, the officers and directors of the Company
will not generally take other steps to verify independently information obtained
in this manner which is favorable. Unless something comes to their attention
which puts them on notice of a possible disqualification which is being
concealed from them, such persons will rely on information received from the
management of the prospective combination candidate and from others who may be
involved in the combination proceedings.
5
<PAGE>
Item 7. Financial Statements.
- -----------------------------
<TABLE>
Page
<S> <C>
Report of Independent Certified Public Accountants F-1
Balance Sheets as of December 31, 1996 and 1995 F-2
Statements of Operations F-3
for the years ended December 31, 1996 and 1995 and for the period
April 19, 1988 (date of inception) to December 31, 1996
Statement of Changes in Shareholder's Equity F-4
for the period from April 19, 1988
(date of inception) to December 30, 1996
Statements of Cash Flows F-6
for the years ended December 31, 1996 and 1995 and for the
period April 19, 1988 (date of Inception) to December 31,
1996
Notes to Financial Statement F-7
</TABLE>
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures.
- --------------------------------------------------------------------------------
Prior to the change of control on October 16, 1998, the last year for which the
Registrant had audited financial statements was for the period ended December
31, 1989. The independent certified public accounting firm of Sellers, Mitchell
& Tinsley, P.C. of Houston, Texas issued its unqualified opinion on these
financial statements on April 13, 1990. This independent certified public
accounting firm also issued a compilation report under the standards established
by the American Institute of Certified Public Accountants on the financial
statements contained in the Registrant's Form 10-Q as of May 1, 1990. This
independent certified public accounting firm performed no procedures of any type
on the Registrant's financial statements subsequent to May 1, 1990.
As of the date of this Form 10-K, the independent certified public accounting
firm of Sellers, Mitchell & Tinsley, P.C. is not licensed by the Texas State
Board of Accountancy as an operating unit and, therefore, cannot be contacted
for any matters related to the Registrant.
6
<PAGE>
The Registrant made no required periodic filings covering the periods from April
1, 1990 through December 31, 1997.
In order to comply with the appropriate reporting requirements of the Securities
Exchange Act of 1934, subsequent to the change of control discussed above, the
Registrant's Board of Directors engaged the independent certified public
accounting firm of S. W. Hatfield + Associates, Dallas, Texas, effective October
16, 1998.
During the fiscal years ended December 31, 1995 and 1996, there have been no
disagreements on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure or any other reportable
events.
PART III
Item 9. Directors. Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act.
- --------------------------------------------------------------------------------
The following table sets forth the officers and directors of the Company.
Name Position Age
Kevin B. Halter President, Treasurer and Director 63
Kevin B. Halter, Jr. Vice President, Secretary and Director 38
Set forth below is a description of the backgrounds of each of the officers and
directors of the Company.
Kevin B. Halter has served as President, Treasurer and Chief Executive Officer
of the Company since October 16, 1998. Mr. Halter has served as President, Chief
Executive Officer and Chairman of the Board of Millennia, Inc. since June 1994.
He also served as Vice Chairman of the Board of Millennia, Inc. from January
1994 until June 1994. In addition, Mr. Halter has served as Chairman of the
Board and Chief Executive Officer of Halter Capital Corporation, a
privately-held investment and consulting company, since 1987, and as its
President since June 1995. Mr. Halter is the father of Kevin B. Halter, Jr.
Kevin B. Halter, Jr. has served as Vice President and Secretary of the Company
since October 16, 1998. Mr. Halter has served as Vice President, Secretary and a
director of Millennia, Inc. since January 1994. He is also President of
Securities Transfer Corporation, a registered stock transfer company, a position
he has held since 1987. Mr. Halter has served as Vice President and Secretary of
Halter Capital Corporation since 1987. Mr. Halter is the son of Kevin B. Halter.
Item 10. Executive Compensation.
- --------------------------------
The Company's management is not currently compensated for services
provided to the Company, and no compensation has been accrued and none is
expected to be accrued in the future.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
- ------------------------------------------------------------------------
The following table set forth the names and addresses of each of the
persons known by the Company to own beneficially 10% or more of the common stock
of the Company, as well as the common stock ownership of each of the officers
and directors of the Company as of December 1, 1998.
7
<PAGE>
Name and Address Number of Shares Percentage of Ownership
Kevin B. Halter 603,968 1.6%
16910 Dallas Parkway
Suite 100
Dallas, Texas 75248
Kevin B. Halter, Jr. 67,356 (less than 1%)
16910 Dallas Parkway
Suite 100
Dallas, Texas 75248
Halter Capital Corporation 19,490,735(A) 52%
16910 Dallas Parkway
Suite 100
Dallas, Texas 75248
All officers and directors as
a group (2 persons) 671,324 1.8%
- --------------------------------------------------------------------------------
(A) Kevin B. Halter and Kevin B. Halter, Jr. serve as directors and officers of
Halter Capital Corporation and as a result may each be deemed to be the
beneficial owner of the 19,490,735 shares beneficially owned by Halter Capital
Corporation. However, pursuant to Rule 16a-3 promulgated under the Exchange Act,
they expressly disclaim that they are the beneficial owners, for the purpose of
Section 16 of the Exchange Act, of any such stock, other than those shares in
which they have an economic interest.
Item 12. Certain Relationships and Related Transactions.
- --------------------------------------------------------
The Company's Vice President, Kevin B. Halter, Jr., has agreed to provide funds
not exceeding $5000 to the Company to cover the Company's expenses relating to
its SEC periodic reporting and other minor corporate expenses.
Item 13. Exhibits and Reports on Form 8-K.
- ------------------------------------------
Exhibits: None
Reports on Form 8-K : None
8
<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.
Dated: December 3,1998
DONNEBROOKE CORPORATION
By: /s/ Kevin B. Halter
------------------------------
Kevin B. Halter, President
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
/s/ Kevin B. Halter December 3, 1998
-----------------------------------------
Kevin B. Halter, President,
(Chief Executive Officer,
Principal Financial Officer) and Director
/s/ Kevin B. Halter, Jr. December 3, 1998
-----------------------------------------
Kevin B. Halter, Jr., Vice President,
Secretary and Director
9
<PAGE>
DONNEBROOKE
CORPORATION
(a development stage company)
Financial Statements
and
Auditor's Report
December 31, 1996 and 1995
S. W. HATFIELD + ASSOCIATES
certified public accountants
Use our past to assist your future sm
<PAGE>
DONNEBROOKE CORPORATION
CONTENTS
Page
----
Report of Independent Certified Public Accountants F-1
Financial Statements
Balance Sheets as of December 31, 1996 and 1995 F-2
Statements of Operations F-3
for the years ended December 31, 1996 and 1995
and for the period April 19, 1988 (date of inception)
to December 31, 1996
Statement of Changes in Stockholders' Equity F-4
for the period from April 19, 1998 (date of inception)
to December 31, 1996
Statements of Cash Flows F-6
for the years ended December 31, 1996 and 1995
and for the period April 19, 1988 (date of inception)
to December 31, 1996
Notes to Financial Statements F-7
<PAGE>
S. W. HATFIELD + ASSOCIATES
certified public accountants
Members: American Institute of Certified Public Accountants
SEC Practice Section
Information Technology Section
Texas Society of Certified Public Accountants
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Donnebrooke Corporation
We have audited the accompanying balance sheets of Donnebrooke Corporation (a
Delaware corporation and a development stage company) as of December 31, 1996
and 1995 and the related statements of operations, changes in stockholders'
equity and cash flows for each of the two years then ended, respectively, and
for the period from April 19, 1988 (date of inception) through December 31,
1996. 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 Donnebrooke Corporation (a
development stage company) as of December 31, 1996 and 1995, and the results of
its operations and its cash flows for each of the two years then ended,
respectively, and for the period from April 19, 1988 (date of inception) through
December 31, 1996, in conformity with generally accepted accounting principles.
S. W. HATFIELD + ASSOCIATES
Dallas, Texas
October 26, 1998
Use our past to assist your future sm
P. O. Box 820395 9002 Green Oaks Circle, 2nd Floor
Dallas, Texas 75382-0395 Dallas, Texas 75243-7212
214-342-9635 (voice) (fax) 214-342-9601
800-244-0639 [email protected]
F-1
<PAGE>
<TABLE>
<CAPTION>
DONNEBROOKE CORPORATION
(a development stage company)
BALANCE SHEETS
December 31, 1996 and 1995
1996 1995
--------- ---------
<S> <C> <C>
ASSETS $ -- $ --
========= =========
LIABILITIES $ -- $ --
--------- ---------
STOCKHOLDERS' EQUITY Preferred stock - $0.00001 par value
10,000,000 shares authorized; none
issued and outstanding -- --
Common stock - $0.00001 par value
1,000,000,000 shares authorized
37,333,000 issued and outstanding 373 373
Additional paid-in capital 132,217 132,217
Deficit accumulated during
the development stage (132,590) (132,590)
--------- ---------
Total stockholders' equity -- --
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ -- $ --
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
DONNEBROOKE CORPORATION
(a development stage company)
STATEMENTS OF OPERATIONS
Years ended December 31, 1996 and 1995 and
Period from April 19, 1988 (date of inception) through December 31, 1996
Period from
April 19, 1988
(date of inception)
Year ended Year ended through
December 31, December 31, December 31,
1996 1995 1996
---------- ---------- ------------
<S> <C> <C> <C>
Revenues
Real estate management fees $ -- $ -- $ 41,253
---------- ---------- ------------
Expenses
General and administrative -- -- 45,685
Amortization of organization costs -- -- 1,208
---------- ---------- ------------
Total expenses -- -- 46,893
---------- ---------- ------------
Loss from operations -- -- (5,640)
Other expenses
Loss on abandonment of fixed assets -- -- (126,950)
---------- ---------- ------------
NET LOSS $ -- $ -- $ (132,590)
========== ========== ============
Net loss per weighted-average
share of common stock
outstanding nil nil nil
=== === ===
Weighted-average number
of shares of common
stock outstanding 37,333,000 37,333,000 36,531,629
========== ========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
DONNEBROOKE CORPORATION
(a development stage company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Period from April 19, 1988 (date of inception) through December 31, 1996
Deficit
accumulated
Additional during the
Common Stock paid-in development
Shares Amount capital stage Total
----------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Issuance of stock at formation
on April 19, 1988 16,000,000 $ 160 $ -- $ -- $ 160
Capital contributed to
support development -- -- 1,700 -- 1,700
Net loss for the period -- -- -- (1,728) (1,728)
----------- ----------- ----------- ----------- -----------
Balances at
December 31, 1988 16,000,000 160 1,700 (1,728) 132
Shares issued during
the year 21,333,000 213 130,517 -- 130,730
Shares issued into
escrow pending
acquisition of
real estate 17,303,000 -- -- -- --
Net loss for the year -- -- -- (5,520) (5,520)
----------- ----------- ----------- ----------- -----------
Balances at
December 31, 1989 54,636,000 373 132,217 (7,248) 125,342
Return of shares to
unissued status due
to non-performance
by the selling parties (17,303,000) -- -- -- --
Net loss for the year -- -- -- (124,633) (124,633)
----------- ----------- ----------- ----------- -----------
Balances at
December 31, 1990 37,333,000 373 132,217 (131,881) 709
Net loss for the year -- -- -- (242) (242)
----------- ----------- ----------- ----------- -----------
Balances at
December 31, 1991 37,333,000 $ 373 $ 132,217 $ (132,123) $ 467
=========== =========== =========== =========== ===========
</TABLE>
- Continued -
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
DONNEBROOKE CORPORATION
(a development stage company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - CONTINUED
Period from April 19, 1988 (date of inception) through December 31, 1996
Deficit
accumulated
Additional during the
Common Stock paid-in development
Shares Amount capital stage Total
---------- ---------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Balances at
December 31, 1991 37,333,000 $ 373 $ 132,217 $ (132,123) $ 467
Net loss for the year -- -- -- (242) (242)
---------- ---------- ---------- ---------- ----------
Balances at
December 31, 1992 37,333,000 373 132,217 (132,365) 225
Net loss for the year -- -- -- (221) (221)
---------- ---------- ---------- ---------- ----------
Balances at
December 31, 1993 37,333,000 373 132,217 (132,586) 4
Net loss for the year -- -- -- (4) (4)
---------- ---------- ---------- ---------- ----------
Balances at
December 31, 1994 37,333,000 373 132,217 (132,590) --
Net loss for the year -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Balances at
December 31, 1995 37,333,000 373 132,217 (132,590) --
Net loss for the year -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Balances at
December 31, 1996 37,333,000 $ 373 $ 132,217 $ (132,590) $ --
========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
DONNEBROOKE CORPORATION
(a development stage company)
STATEMENTS OF CASH FLOWS
Years ended December 31, 1996 and 1995 and
Period from April 19, 1988 (date of inception) through December 31, 1996
Period from
April 19, 1988
(date of inception)
Year ended Year ended through
December 31, December 31, December 31,
1997 1996 1998
------------ ------------- -------------------
<S> <C>
Cash Flows from Operating Activities
Net loss for the period $ -- $ -- $(132,590)
Adjustments to reconcile net loss
to net cash provided by operating
activities
Loss on abandonment of fixed assets -- -- 126,950
Amortization of organization costs -- -- 1,208
Payment of organization costs -- -- (1,208)
------ ------ ---------
Net cash used in operating activities -- -- (5,640)
------ ------ ---------
Cash Flows from Investing Activities -- -- --
------ ------ ---------
Cash Flows from Financing Activities
Issuance of common stock -- -- 3,940
Capital contributed to support development -- -- 1,700
------ ------ ---------
Net cash used in financing activities -- -- 5,640
------ ------ ---------
Increase in Cash -- -- --
Cash at beginning of period -- -- --
------ ------ ---------
Cash at end of period $ -- $ -- $ --
====== ====== =========
Supplemental Disclosure of
Interest and Income Taxes Paid
Interest paid for the period $ -- $ -- $ --
====== ====== =========
Income taxes paid for the period $ -- $ -- $ --
====== ====== =========
Supplemental Disclosure of
Non-cash Investing and
Financing Activities
Common stock exchanged for
office furniture and equipment $ -- $ -- $ 126,950
====== ====== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
DONNEBROOKE CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
NOTE A - Organization and Description of Business
Donnebrooke Corporation (Company) was incorporated on April 19, 1988 as
Alluristics, Inc. under the laws of the State of Delaware. During 1989 and 1990,
the Company attempted to enter the business of owning, operating and managing
various parcels of real estate and to own, operate and manage shared tenant
service operations tailored predominately for the legal profession and related
professionals. The Company was unsuccessful in initiating these operations.
Accordingly, the Company has had no substantial operations or substantial assets
since inception. The current business purpose of the Company is to seek out and
obtain a merger, acquisition or outright sale transaction whereby the Company's
stockholders will benefit. The Company is not engaged in any negotiations and
has not undertaken any steps to initiate the search for a merger or acquisition
candidate.
Due to the lack of sustaining operations from inception, the Company is
considered in the development stage and, as such, has generated no significant
operating revenues and has incurred cumulative operating losses of approximately
$132,590. Accordingly, the Company is fully dependent upon its current
management and/or significant stockholders to provide sufficient working capital
to preserve the integrity of the corporate entity during this phase. It is the
intent of management and significant stockholders to provide sufficient working
capital necessary to support and preserve the integrity of the corporate entity.
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 revenues and expenses during the reporting period.
Actual results could differ from those estimates.
NOTE B - Summary of Significant Accounting Policies
1. Cash and cash equivalents
-------------------------
The Company considers all cash on hand and in banks, including accounts in
book overdraft positions, certificates of deposit and other highly-liquid
investments with maturities of three months or less, when purchased, to be
cash and cash equivalents.
2. Organization costs
------------------
Organization costs were amortized using the straight-line basis.
3. Income taxes
------------
The Company files its own separate federal income tax return and uses the
asset and liability method of accounting for income taxes. Due to a
September 30, 1998 change in control involving in excess of 50.0% of the
outstanding common stock of the Company, the Company has no net operating
loss carryforwards available to offset financial statement or tax return
taxable income in future periods.
F-7
<PAGE>
DONNEBROOKE CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE B - Summary of Significant Accounting Policies - Continued
4. Loss per share
--------------
Loss per share is computed by dividing the annual net loss by the composite
weighted-average number of shares of common stock outstanding during the
year. As of December 31, 1996 and 1995, the Company has no issued and
outstanding securities, options or warrants that would be deemed
potentially dilutive in the current and future periods.
NOTE C - Related Party Transactions
For the period April 19, 1988 (date of inception) through December 31, 1988,
Halter Venture Corporation, the Company's initial former controlling
shareholder, provided office space and management services to the Company for an
aggregate fee of $1,700.
F-8
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