<PAGE>
MONOGENESIS CORPORATION
ANNUAL REPORT TO SHAREHOLDERS
December 31, 1996
<PAGE>
MONOGENESIS CORPORATION
AUDITED FINANCIAL STATEMENTS
-----------------------------
DECEMBER 31, 1996
<PAGE>
GEORGE E. CLARK
CERTIFIED PUBLIC ACCOUNTANT
6309 ROSWELL ROAD, NE
SUITE 2-B
ALANTA, GEORGIA 30328
(404)256-1218 . FAX (404) 256-5634
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
and Stockholders
Monogenesis Corporation
Walker, West Virginia
I have audited the accompanying statement of assets and liabilities of
Monogenesis Corporation, including the schedule of portfolio investments, as of
December 31, 1996, and the related statements of operations, cash flows and
changes in net assets for the year then ended, and the selected per share data
and ratios for each of the three years in the period then ended. These
financial statements and per share data and ratios are the responsibility of the
Company's management. My responsibility is to express an opinion on these
financial statements and per share data and ratios based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1996, by correspondence with
the custodian and broker. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. I believe that my audit
provides a reasonable basis for my opinion.
In my opinion, the financial statements and selected per share data and ratios
referred to above present fairly, in all material respects, the financial
position of Monogenesis Corporation as of December 31, 1996, and the results of
its operations, its cash flows, and the changes in its net assets for the year
then ended, and the selected per share data and ratios for each of the three
years in the period then ended in conformity with generally accepted accounting
principles.
/s/ George E. Clark
February 20, 1997
<PAGE>
<TABLE>
<CAPTION>
MONOGENESIS CORPORATION
STATEMENT OF ASSETS AND LIABILITIES
-----------------------------------
DECEMBER 13, 1996
<S> <C>
ASSETS
Investments in securities, at value-
identified cost $1.00 $ 306.25
Cash 1,471.61
------------
Total assets 1,777.86
------------
LIABILITIES
Accounts payable 20,161.84
Loans from shareholders 281.60
------------
Total liabilities 20,443.44
------------
NET ASSETS
Net assets (equivalent to $(9.11) per share
based on 2,050 shares of capital stock
outstanding) (Note 5) $ (18,665.58)
============
</TABLE>
The accompanying Notes to the Financial Statements are an integral
part of this statement.
"SEE ACCOUNTANT'S REPORT"
<PAGE>
<TABLE>
<CAPTION>
MONOGENESIS CORPORATION
STATEMENT OF OPERATIONS
-----------------------
FOR THE YEAR ENDED DECEMBER 31, 1996
<S> <C>
INVESTMENT INCOME
Income
Dividends $ --
Interest --
Other income --
-----------
Total income --
-----------
EXPENSES
Officer salaries --
Director's fees 500.00
Professional fees 13,473.52
Custodian, transfer agent and distribution fees 4,664.66
Other administrative expenses 16,844.20
Amortization of organization expenses 4,430.64
-----------
Total expenses 39,913.02
-----------
INVESTMENT INCOME--NET (39,913.02)
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
(Note 2)
Net realized gain on investments --
Change in unrealized appreciation of
investments for the year 275.05
-----------
Net gain on investments 275.05
-----------
NET (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $(39,637.97)
===========
</TABLE>
The accompanying Notes to the Financial Statements are an integral
part of this statement.
"SEE ACCOUNTANT'S REPORT"
<PAGE>
<TABLE>
<CAPTION>
MONOGENESIS CORPORATION
STATEMENT OF CASH FLOWS
-----------------------
FOR THE YEAR ENDED DECEMBER 31, 1996
<S> <C>
CASH FLOW FROM OPERATION ACTIVITIES
Net (decrease) in net assets $ (39,637.97)
Adjustments to reconcile net (decrease) in net
assets resulting from operations to net cash
provided by operating activities
Amortization of organization costs 4,430.64
Increase in unrealized appreciation of
investment securities (275.05)
Increase in accounts payable 4,664.80
-----------
Net cash provided by (used in)
operating activities (30,817.58)
CASH FLOWS FROM FINANCING ACTIVITIES --
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from capital stock transactions
and loans from stockholders 10,281.60
-----------
NET (DECREASE) IN CASH AND CASH EQUIVALENTS (20,535.98)
CASH BALANCE, BEGINNING OF YEAR 22,007.59
-----------
CASH BALANCE, END OF YEAR $ 1,471.61
===========
</TABLE>
The accompanying Notes to the Financial Statements are an integral part of this
statement.
"SEE ACCOUNTANT'S REPORT"
<PAGE>
<TABLE>
<CAPTION>
MONOGENESIS CORPORATION
STATEMENT OF CHANGES IN NET ASSETS
----------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996
1996 1995
----------- ----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Investment income--net $(39,913.02) $ 4,258.70
Net realized gain on investments - -
Change in unrealized appreciation 275.05 (55.80)
----------- ----------
Net increase in net assets
resulting from operations (39,637.97) 4,202.90
CAPITAL SHARE TRANSACTIONS 10,000.00 70.00
----------- ----------
Net increase (decrease)
in net assets (29,637.97) 4,272.90
NET ASSETS
Beginning of the year 10,972.39 6,699.49
----------- ----------
End of year $(18,665.58) $10,972.39
=========== ==========
</TABLE>
The accompanying Notes to the Financial Statements are an
integral part of this statement.
"SEE ACCOUNTANT'S REPORT
<PAGE>
<TABLE>
<CAPTION>
MONOGENESIS CORPORATION
SUPPLEMENTARY INFORMATION--STATEMENT OF CHANGES IN SURPLUS
----------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1996
COMMON PAID-IN ACCUMULATED
STOCK CAPITAL DEFICIT TOTAL
------ ---------- ----------- ----------
<S> <C> <C> <C> <C>
Balance at
beginning of year $22.31 $79,295.47 $ (68,375.59) $10,942.19
Additional stock
issued .10 .10
Stock cancelled (1.91) 1.91
Additional capital
contributed 9,999.90 9,999.90
Net income (loss) (39,913.02) (39,913.02)
------ ---------- ------------ -----------
Balance at
end of year $20.50 $89,297.28 $(108,288.61) $(18,970.83)
====== ========== ============ ===========
</TABLE>
"SEE ACCOUNTANT'S REPORT"
<PAGE>
<TABLE>
<CAPTION>
MONOGENESIS CORPORATION
SUPPLEMENTARY INFORMATION--SELECTED PER SHARE DATA AND RATIOS
1996 1995 1994
------- ------ -------
<S> <C> <C> <C>
PER SHARE DATA
Investment income $ - $11.20 $ -
Expenses 19.03 9.30 18.74
------- ------ -------
Investment income--net (19.03) 1.90 (18.74)
Additional contributions 4.88 .03 21.54
Distributions from
investment income--net - - -
Net realized & unrealized
gain (loss) on securities .13 (.02) (.55)
Distributions from realized
gains on securities - - -
------- ------ -------
Net increase/decrease in
net asset value (14.02) 1.91 2.25
Net asset value:
Beginning of year 4.91 3.00 .75
------- ------ -------
End of year $ (9.11) $ 4.91 $ 3.00
======= ======= =======
Per share market value,
End of period $ - $ - $ -
======= ======= =======
Total investment return - - -
======= ======= =======
RATIOS
Ratio of expenses to
average net assets (%) - 235 4600
Ratio of investment
income--net to
average net assets (%) - 48 -
Portfolio turnover ratio - - -
</TABLE>
"SEE ACCOUNTANT'S REPORT"
<PAGE>
<TABLE>
<CAPTION>
MONOGENESIS CORPORATION
INVESTMENTS IN SECURITIES
-------------------------
DECEMBER 31, 1996
Number
of shares Value
--------- -------
<S> <C> <C>
COMMON STOCKS - 100%
Health care - 100%
Meda, Inc. 350 $306.25
=======
</TABLE>
The accompanying Notes to the Financial Statements are an
integral part of this statement.
"SEE ACCOUNTANT'S REPORT"
<PAGE>
MONOGENESIS CORPORATION
NOTES TO FINANCIAL STATEMENTS
----------------------------
DECEMBER 31, 1996
(1) SIGNIFICANT ACCOUNTING POLICIES
-------------------------------
Monogenesis Corporation (the Company) is registered under the Investment
Company Act of 1940 as a nondiversified management investment company. The
Company's investment objectives as well as the nature and risk of its investment
transactions are set forth in the Company's registration statement.
Amortization--Organizational costs are amortized using the straight-line
method over a sixty month period.
Accrual of expenses--It is the Company's policy to accrue items of
expense recognized in the current period, but not paid until the subsequent
period.
Security valuation--Investments in securities in ensuing public companies
are originally valued at cost until such time as the securities are publicly
traded. Securities traded on a national securities exchange or reported on the
NASDAQ national market are stated at the last reported sales price on the day of
valuation. Other securities traded in the over-the-counter market and listed
securities for which no sale was reported on that date are stated at the last
quoted bid price.
Security transaction and investments income--Investment transactions are
accounted for on the trade date. Gain or loss on sales of securities and options
is determined on the basis of identified cost. Dividend income and distributions
to shareholders are recognized on the ex-dividend date, and interest income is
recognized on the accrual basis.
Federal income taxes--The Company does not qualify for the preferred tax
treatment of dividends paid to stockholders afforded by Subchapter M of the
Internal Revenue Code to most regulated investment companies. No provision for
income taxes is required for this year as the net investment loss exceeded
realized gain on sales of securities.
"SEE ACCOUNTANT'S REPORT"
<PAGE>
MONOGENESIS CORPORATION
NOTES TO FINANCIAL STATEMENTS
-----------------------------
DECEMBER 31, 1996
(2) INVESTMENT TRANSACTIONS
-----------------------
Purchases and sales of portfolio securities during the year were $0 and $0,
respectively. Net income on investments for the year ended December 31, 1996
1996, was $275.05. That amount represents the net increase in value of the
investments held during the year. All investment decisions are made by the
Company's President. Purchases, when they occur, are made from funds generated
through additional contributions to Paid-In Capital.
(3) DIVIDENDS
---------
The Company paid no dividends during the year. The Company only distributes
property dividends of stock that it acquires in ensuing public companies. Such
acquisitions of stock are made from Paid-In capital; therefore, ensuing stock
dividends are charged to Paid-In Capital.
(4) OFFICER/DIRECTOR COMPENSATION
-----------------------------
The Company paid no officer salaries during the year. $500 in director fees
were paid to one director.
(5) CAPITAL SHARE TRANSACTIONS
--------------------------
As of December 31, 1996, there were 3,000 shares of $.01 par value stock
authorized, 2,050 shares issued and outstanding, and Paid-In Capital aggregated
$89,297.28.
"SEE ACCOUNTANT'S REPORT"
<PAGE>
GEORGE E. CLARK
CERTIFIED PUBLIC ACCOUNTANT
6309 ROSWELL ROAD, NE
SUITE 2-B
ATLANTA, GEORGIA 30328
(404) 256-1218 . FAX (404) 256-5634
February 21, 1997
Board of Directors
and Stockholders
Monogenesis Corporation
Walker, West Virginia
In planning and performing my audit of the financial statements of Monogenesis
Corporation for the year ended December 31, 1996, I considered its internal
control structure, including procedures for safeguarding securities, in order
to determine my auditing procedures for the purpose of expressing my opinion on
the financial statements and to comply with the requirements of Form N-SAR, not
to provide assurance on the internal control structure.
The management of Monogenesis Corporation is responsible for establishing and
maintaining an internal control structure. In fulfilling this responsibility,
estimates and judgments by management are required to assess the expected
benefits and related costs of internal control structure policies and
procedures. Two of the objectives of an internal control structure are to
provide management with reasonable, but not absolute, assurance that assets are
safeguarded against loss from unauthorized use or disposition and that
transactions are executed in accordance with management's authorization and
recorded properly to permit preparation of financial statements in conformity
with generally accepted accounting principles.
Because of inherent limitations in any internal control structure, errors or
irregularities may occur and not be detected. Also, projection of any
evaluation of the structure to future periods is subject to the risk that it may
become inadequate because of changes in conditions or that the effectiveness of
the design and operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of the specific internal control structure
<PAGE>
Board of Directors
February 21, 1997
elements does not reduce to a relatively low level the risk that errors or
irregularities in amounts that would be material in relation to the financial
statements being audited may occur and not be detected within a timely period by
employees in the normal course of performing their assigned functions. However,
I noted no matters involving the internal control structure, including
procedures for safeguarding securities, that I consider to be material
weaknesses above as of December 31, 1994.
This report is intended solely for the information and use of management and the
Securities and Exchange Commission.
/s/ George E. Clark
- - -------------------------------
George E. Clark
Certified Public Accountant
