-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Az+rO+ZHQElEErB2iBkMABBWh5DLOg10K3GdzCkafjKFYwrBlwsXUP47+Bl3r45g m1HhqzgUoOA0hekwUZAUJg== 0000846535-97-000001.txt : 19970506 0000846535-97-000001.hdr.sgml : 19970506 ACCESSION NUMBER: 0000846535-97-000001 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960731 FILED AS OF DATE: 19970206 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: RICHMOND CAPITAL CORPORATION CENTRAL INDEX KEY: 0000846535 STANDARD INDUSTRIAL CLASSIFICATION: 5960 IRS NUMBER: 841104385 STATE OF INCORPORATION: CO FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 033-26798 FILM NUMBER: 97519317 BUSINESS ADDRESS: STREET 1: 12139 AIRLINE HWY CITY: BATON ROUGE STATE: LA ZIP: 70817 BUSINESS PHONE: 5047568989 MAIL ADDRESS: STREET 1: 12139 AIRLINE HWY CITY: BATON ROUGE STATE: LA ZIP: 70817 10-K/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended July 31, 1996 Commission file number 33-26798-D RICHMOND CAPITAL CORPORATION (exact name of registrant as specified in its' charter) Colorado (State or other jurisdiction of incorporation or organization) 84-1104385 (I.R.S. Employer Identification No.) 12139 Airline Highway Baton Rouge, Louisiana 70817-4410 (Address of principal executive offices) Registrant's telephone number, including area code: (504) 756-8989 Securities registered pursuant to Section 12(b) of Act: Name of Each Exchange on Title of Each Class Which Registered None None Securities registered pursuant to Section 12(g) of the Act: Name of Each Exchange on Title of Each Class Which Registered None None Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant'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] Indicate by check mark whether the Registrant (1)has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 Registrant's common stock held by nonaffiliates of the Registrant as of September 30, 1996 was $296,750. On such date, the average of the bid and asked prices of the common stock was $1.00 per share. The registrant had 1,787,300 shares of common stock, $.001 par value, outstanding as of September 30, 1996. PART I ITEM 1. BUSINESS Introduction and History Richmond Capital Corporation (the "Company") was incorporated under the laws of the State of Colorado in 1988 for the purpose of raising capital and to seek out business opportunities in which to acquire controlling interest. In October 1989, the Company completed its initial public offering of its common stock by issuing 305,750 common shares and related warrants of $.10 per share for aggregate proceeds of $30,575. In connection therewith, deferred offering costs of $16,298 were charged to paid-in capital. Each unit consisted of one share of common stock, one Class A warrant and one Class B warrant. Each Class A warrant entitled the holder to purchase one share of the company's common stock at $.30 per share, and each Class B warrant entitled the holder to purchase one share of the Company's common stock at $.50 per share. Each Class A warrant was exercisable commencing six months from the date of the final prospectus for a period of 12 months thereafter. Each Class B warrant was exercisable commencing six months from the date of the final prospectus for a period of 18 months thereafter. The Company has the right to redeem the warrants upon 20 days written notice at $.001 per warrant. The common stock and warrants were separately transferrable immediately after the closing of the offering. In June 1990, the Company redeemed all Class A and B warrants. Halter Capital Corporation, a Texas corporation (HCC), acquired control of the Company as of September 5, 1990 through the purchase of a majority of the Company's common stock. HCC, in two separate transactions, acquired 935,250 shares of the Company's common stock, representing 71.6% of the then- currently issued and outstanding voting securities of the Company. PTR Capital Corporation, a Delaware corporation (PTR), acquired control of the Company as of January 15, 1991 through the purchase of a majority of the Company's common stock, representing 70.8% of the then-currently issued and outstanding voting securities of the Company. The Company remained a development-stage enterprise from inception through July 31, 1990, as it identified and evaluated acquisition opportunities. No acquisition was made by the Company prior to July 16, 1991. All Systems Go, Inc. (ASG), a subsidiary of Richmond Capital Corporation, was incorporated in 1989 under the laws of Georgia to engage in the business of selling various types of computers and computer-related equipment and the repair and rebuilding of computer disk drives. ASG was inactive until April of 1991 when it actually began operations. On July 16, 1991, the Company acquired all of the issued and outstanding shares of common stock of ASG. At the closing of this acquisition, Jordan S. Davies, the sole shareholder of ASG, was elected President and Chairman of the Board of Directors of the Company. The Company decided during fiscal year ended July 31, 1992 not to pursue the repair and remanufacturing of computer disk drives. This decision was based on the additional capital requirements, shrinking window of opportunity for sales, and accelerated competition. As a result, the Company president and Chairman of the Board of Directors resigned and negotiated for the purchase of ASG, the wholly-owned subsidiary of Richmond Capital Corporation. The Company retained the telemarketing activities and began the telemarketing operations under Richmond Capital Corporation. On May 28, 1992 the sale was finalized whereby the Company sold all of its issued and outstanding shares of common stock of ASG (2000 shares) to Jordan S. Davies. As consideration for the sale, Richmond Capital Corporation received a note receivable for $82,000, furniture and equipment valued at $20,000 and the cancellation of Jordan S. Davies 1,000,000 shares of Richmond Capital Corporation common stock, representing 43.4% of the then-currently issued and outstanding voting securities of the Company. Mr. Davies filed for protection under the U.S. Bankruptcy laws. The $82,000 note and accrued interest were written off as bad debt in the year ended July 31, 1993. On July 1, 1994, the Company acquired all of the issued and outstanding shares of common stock of RCC of Louisiana, Inc. At the closing of this acquisition, Edward W. Prater, the sole shareholder of RCL, was elected Vice- President and Director of the Company. RCC of Louisiana, Inc. (RCL), a subsidiary of Richmond Capital Corporation, was incorporated in the State of Louisiana on August 10, 1993 to engage in the acquisition, development, and lease of real estate. Leasing began on July 8, 1994. The acquisition of RCL was accounted for on the purchase method. The Company issued 300,000 common shares with a fair market value of $230,000 for all of the outstanding shares of RCL which had a fair market value approximating $230,000. There were no goodwill, contingent payments, options or commitments specified in the acquisition agreement. During the year ended July 31, 1995, the management of the Company decided not to continue the real estate leasing operations which were included in RCL. This decision was made because real estate leases were with truck stops with video poker facilities, revenues were not as expected, and public support of video poker operations were diminishing. On January 31, 1995, the Company sold all of its issued and outstanding shares of RCL to the previous sole shareholder of RCL in exchange for the cancellation of his 300,000 shares of Richmond Capital Corporation common stock. The transaction represents a cancellation of 14.4% of the then currently issued and outstanding voting securities of the Company. No assets or liabilities of RCL were retained by the Company. Description of Business The Company purchases and resells various types of used computers, computer parts and computer-related equipment for Harris, Digital Equipment Corporation, Encore, Concurrent, Leeds & Northrupt, DCD-Cyber, Dydin Controls, Landis and Gyr systems. Marketing and Customers The Company utilizes mainly telephone solicitation, direct mail and advertising to market itself and its services to its customer base. The Company's customer base is comprised mainly of those entities which have a computer installed base of Harris, Digital Equipment Corporation, Encore, Concurrent, Leeds & Northrupt, CDC-Cyber, Aydin Controls, Landis and Gyr computers. The Company uses purchased mailing lists and telephone lists to derive its potential customer lists. During the current year, the Company hired additional telephone sales staff and committed significant resources toward the development and expansion of a wide base international used computer market. These additional costs in the current year are expected to significantly increase the sales and profits in future periods. Warranty and Customer Service The Company provides a repair, replace or full refund warranty for one hundred twenty (120) days from date of the sale. There were no warranty claims pending at July 31, 1996. Employees As of July 31, 1996, the Company employed seven people full-time including one executive officer. Employee relations are considered good and the Company has no collective bargaining contracts covering any of its employees. Competition The Company is involved in a market where many different companies provide the same basic services. There is no dominant company engaged in providing the same basic services as that of the Company. ITEM 2. PROPERTIES The Company maintains its sales offices and warehouse in approximately 10,500 square feet of leased office and warehouse space in Baton Rouge, Louisiana under a two-year lease which expires in 1997. ITEM 3. LEGAL PROCEEDINGS The Company has no pending legal proceedings. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of the Company's security holders during the fourth quarter of fiscal year ending July 31, 1996. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Company's common stock is traded in the general over-the-counter market and listed in the "Pink Sheets". The following table sets forth the quarterly high and low bid prices in the over-the counter market as reported for the period indicated. Fiscal Year ended July 31, 1996 High(1) Low(1) 1st Quarter $1.00 $1.00 2nd Quarter $1.00 $1.00 3rd Quarter $1.00 $1.00 4th Quarter $1.00 $1.00 (1) The prices set forth in the table above were provided by the National Quotation Bureau and reflect only the high and low bid prices on the last day of each quarter (October 31, 1995, January 31, 1996, April 30, 1996, and July 31, 1996) rather than the high and low bid prices over each entire quarter. During 1996, the price range for the Company's common stock averaged a bid of $1.00 per share. These prices may represent inter-dealer quotations without retail markups, markdowns, or commissions and may not necessarily represent actual transactions. As of July 31, 1996, the Company had 274 holders of record of its common shares. The Company has never paid cash dividends on its common stock and has no plans to pay cash dividends in the foreseeable future. ITEM 6. SELECTED FINANCIAL DATA July 31, 1996 1995 1994 1993 1992 Balance Sheet Data Total assets $269,359 $374,777 $621,281 $221,593 $297,173 Shareholders' equity 117,908 111,704 435,499 178,751 273,083 Income Statement Data Total revenue 1,466,173 941,948 675,686 729,156 1,038,311 Operating expenses 1,457,267 1,021,630 649,938 814,263 1,013,402 Net income (loss) from continuing operations 6,204 (67,091) 25,748 (85,107) 24,909 Net income (loss) from continuing operations per common share $0.00 ($.03) $.01 ($.06) $.07 Weighted average number of common shares outstanding 1,787,300 1,927,918 1,806,204 1,499,131 1,804,380 Common shares outstanding 1,787,300 1,787,300 2,087,300 1,787,300 1,305,750 Preferred shares outstanding - - - - 250,000 During 1988, 1989, and 1990, the Company was in the development stage, as more fully defined in Financial Accounting Standards Board Statement No. 7. There were no shares of the Company's sole class of preferred stock, $.01 par value, outstanding as of July 31, 1996, 1995, 1994 and 1993. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity The Company has $178,686 in current assets. This, along with revenue generated from sales revenue is deemed sufficient to fund all required expenditures for the next 12-month period. Capital Resources The Company's assets increased approximately $60,000 from the acquisition and upgrade of computer equipment used for sales and marketing of the product lines sold by the Company. Results of Operations From its inception on April 5, 1988, through July 31, 1990, the Company reported its activity as a development stage company, as more fully defined in Statement No. 7 of the Financial Accounting Standards Board. On July 16, 1991, the Company completed a merger in which ASG became a wholly owned subsidiary. The Company continued its telemarketing activity in ASG through November 1991. In December 1991, telemarketing activity was moved from ASG into Richmond Capital Corporation and the wholly owned subsidiary (ASG), which had the assets required for pursuing the repair and remanufacturing of computer hard disk drives, was sold. The Company's 1996 sales volume has increased over 1995 by approximately $600,000. The increase of 1995 over 1994 was $200,000. This continued increase was primarily due to the Company's increase in telephone sales staff. The gross margin on the new sales generated were greater than the gross margin in 1995. The gross margin in 1995 had declined from the prior year. Management believes as the new personnel become more familiar with the product lines, sales will continue to increase and profit margins will improve. Company Revenue The sales revenue reported in the financial statements reflects the total sales of used computers and computer related equipment through July 31, 1996. These sales through July 31, 1996 are approximately $600,000 greater than the 1995 and $800,000 greater than the year ended July 31, 1994. The increase resulted primarily from new sales of a larger and more experienced sales staff which negotiate the acquisition cost of the used computer equipment and also negotiate the sales price with the customer. Company Cost of Sales The cost of sales is directly related to the cost of the equipment purchased. Since the revenue is derived from the sale of used computers and computer equipment, the cost of sales will fluctuate with the going price of used computer equipment. There are no market price quotations for the equipment and therefore no industry standards or long term prior history for comparison. The cost of sales for the year ended July 31, 1996, 1995 and 1994 totaled 66%, 85% and 59%, respectively. It is management's belief that cost of sales decreased in the current year primarily because of the increase of experience in negotiating equipment acquisitions and sales by the new sales staff. The increase in cost of sales in the year ended July 31, 1995 was primarily a result of inexperienced new staff in negotiating the used equipment acquisitions. Management expects the results for future years to continue to increase once a full crew of completely trained sales force is established. Other Operating Expenses The other operating expenses are general in nature and are the basic expenses required to maintain an office and staff for administration and sales related functions and promote additional sales volume. While some of these expenses have significantly increased in dollar amount, these expenses as a percentage of sales have remained relatively constant over the last three years. Advertising and print costs have increased annually as a result of targeting new clients and increasing the advertising to generate new sales leads. Auto expenses and travel and lodging increased from efforts to increase marketing and sales by traveling to existing and potential customers and increased attendance at computer trade shows. Contributions significantly increased in the year end July 31, 1995 as a result of giving non-saleable inventory to charity. Salaries and contract labor increased as a result of adding additional sales force to increase sales. Office expenses have increased as a result of additional sales staff and a larger facility. Insurance increases have been primarily due to the increase in sales force needed to increase sales volume. Telephone costs are directly related to increases in sales since the primary source of sales is through telemarketing. Depreciation and Amortization Depreciation expense reflects the current period utility of the assets based on their useful lives. Depreciation expense decreased in the current year as a result of the reduction of depreciable assets in the sale of the wholly- owned subsidiary in the year ended July 31, 1995. There is no amortization for the current year. Rent Rent increased in the current year as a result of relocating to a larger facility. Rent is being expensed on a straight line basis over the term of the lease for office, warehouse and apartment space. Interest and Dividend Income/Expense There have been no material amounts of interest income earned or interest expense paid during the current or prior years. Interest income for the year totaled $800 and was from a loan to an officer of the Company. Dividends on investments totalled $4,500. Interest expense is for cash advances on two credit lines. Liquidity The Company believes its cash generated from operations, its ability to secure short term working capital needs, and the prospects of increasing sales of used computers and computer equipment will provide sufficient cash to meet current working capital needs. Capital is typically provided primarily through cash from operations and credit received from trade creditors. There were capital expenditures for property and equipment during the fiscal year ended July 31, 1996 and 1995 totaling $75,000 and $20,000. The Company relocated its offices in September 1995 and the capital expenditures were for leasehold improvements, new furniture and equipment and computer upgrades. No major capital expenditures are expected for fiscal 1997. The Company had no long-term debt at July 31, 1996. The Company had $72,000 of advances against lines of credit at July 31, 1996. These funds were used to fund the purchase of property and equipment. The Company does not anticipate the need for long-term borrowing for fiscal year 1997. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements required by this Item are included as part of Item 14 hereof. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There was no change in nor disagreements with the independent accountants on any matters of accounting principles or practices, financial statement disclosure or auditing scope or procedure for the fiscal year ended July 31, 1996. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Directors and Executive Officers All directors serve for a one-year period and until their respective successors are elected and qualified. Officers serve at the discretion of the Board of Directors. Positions(s) Name Age with the Company J. Keith Henderson 30 President, Treasurer and Director Daniel S. Gould 33 Vice-President and Secretary Michele L. Prater 33 Director Information concerning the business experience of each of the directors and executive officers of the Company is as follows: J. Keith Henderson is President, Treasurer and a Director of the Company. Since 1990, Mr. Henderson has been active in the day to day operations of mainframe computer sales within specialized niche markets. Daniel S. Gould is Vice-President and Secretary of the Company. Mr. Gould was associated with the law firm of McFarland, Gould, Lyons and Sullivan, P.A. for five (5) years. Michele L. Prater is a Director of the Company. Ms. Prater held several positions with the University of Tampa since 1985. She is a Director and Vice-President of PTR Capital Corporation, a private investment company which is a majority shareholder of the Company. ITEM 11. EXECUTIVE COMPENSATION None of the Officers or Directors have received cash compensation, bonuses, or deferred compensation which exceeded $100,000. The Company has no stock option, profit-sharing, bonus or similar remuneration plans or programs. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth as of October 28, 1995, the shares of the Company beneficially owned by each person known to management to be the beneficial owner of more than five percent (5%) of the outstanding shares by each officer and director and by all officers and directors of the Company as a group: Amount and Nature of Percent Name and address of Title of Beneficial of Beneficial Owner Class Ownership Class PTR Capital Corporation Common 925,000 51.75% 12139 Airline Highway Baton Rouge, Louisiana 70817 Larry K. Tuttle Common 461,550 14.07% Route 4, Box 252 King, North Carolina 37021 Eddie W. Prater Common 180,000 10.07% 4315 Aegean Drive Tampa, Florida 33611 Michele L. Prater Common 2,000 0.11% 12139 Airline Highway Baton Rouge, Louisiana 70817 J. Keith Henderson Common 50,000 2.80% 12139 Airline Highway Baton Rouge, Louisiana 70817 All Officers and Directors Common 52,000 2.91% as a Group (2 Persons) ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Since the beginning of the Registrant's last fiscal year, no transactions occurred which exceed $60,000: ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K (a) The following documents are filed as parts of this Report starting on page III-5: 1. Financial Statements Independent Auditor's Report Balance Sheets - July 31, 1996 and 1995 Statements of Income (Loss) for the years ended July 31, 1996 and 1995 Statements of Changes in Shareholders' Equity for the years ended July 31, 1996 and 1995 Statements of Cash Flows for the years ended July 31, 1996 and 1995 Notes to Financial Statements Independent Auditor's Report on Accompanying Information Schedule of Other Operating Expenses for the years ended July 31, 1996 and 1995 Independent Auditor's Report Balance Sheets - July 31, 1995 and 1994 Statements of Income (Loss) for the years ended July 31, 1995 and 1994 Statements of Changes in Shareholders' Equity for the years ended July 31,1995 and 1994 Statements of Cash Flows for the years ended July 31, 1995 and 1994 Notes to Financial Statements Independent Auditor's Report on Accompanying Information Schedule of Other Operating Expenses for the years ended July 31, 1995 and 1994 2. Schedules NONE 3. The exhibits are listed in the Index of Exhibits required by Item 601 of Regulation S-K at Item (c) below. (b) Reports on Form 8-K No reports on Form 8-K have been filed by the Company during the fiscal year. (c) Exhibits Exhibits marked with an asterisk (*) have heretofore been filed with the Commission and are incorporated herein by reference Exhibit Consecutive Number Exhibits Page No. 1.0 Underwriting Agreement * 1.2 Participating Dealer Agreement * 3.0 Registrant's Articles of Incorporation * 3.1 Bylaws * 4.0 Warrant Agreement * 4.2 A Warrant and B Warrant * 5.0 Opinion of R. Michael Sentel, Esquire, regarding the legality of the securities being registered * 10.0 Escrow of Proceeds Agreement with TecNational Bank,Denver, Colorado * 10.2 Commercial Lease Agreement, between Prime Investments, Inc. and Richmond Capital Corporation relating to certain premises leased to Richmond Capital Corporation located in Woodstock, Georgia * 10.3 Lease Rental Agreement between Home Management Associates,Inc. and Richmond Capital Corporation relating to certain premises leased to Richmond Capital Corporation located in Woodstock, Georgia * 10.4 Agreement of Lease between RCC of Louisiana, Inc and Bubaco Enterprises, Inc. relating to certain premises leased from RCC of Louisiana, Inc. for a truck stop operation * 10.5 Lease of Commercial Property between RCC of Louisiana, Inc. and Computer Technologies, Inc. related to certain premises leased from RCC of Louisiana, Inc. for a truck stop operation * 10.6 Commercial Lease Agreement between Bobbie B. Crump, Sr.and Richmond Capital Corporation relating to certain premises leased to Richmond Capital Corporation located in Baton Rouge, Louisiana * 16.0 Letter from Samson, Robbins & Associates regarding change in certifying accountants * 24.1 Consent of R. Michael Sentel, Esquire (included in Exhibit 5) * 24.2 Consent of Brenner & Ianne * As to any security holder requesting a copy of this Form 10-K, the Company will furnish any Exhibit indicated in the above list as filed with this Form 10-K upon payment to it of it expenses in furnishing such Exhibit. Independent Auditor's Report To the Board of Directors and Stockholders of Richmond Capital Corporation Baton Rouge, Louisiana We have audited the accompanying balance sheets of Richmond Capital Corporation as of July 31, 1996 and 1995, and the related statements of income (loss), changes in stockholders' equity and cash flows for the years then ended. 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 Richmond Capital Corporation as of July 31, 1996 and 1995, and the results of operations and cash flows for the years then ended in conformity with generally accepted accounting principles. /s/ Laney, Boteler & Killinger LANEY, BOTELER & KILLINGER Atlanta, Georgia September 6, 1996 RICHMOND CAPITAL CORPORATION Balance Sheets Assets July 31, __________________ 1996 1995 __________________ Current assets Cash and equivalents $ 18,682 $ 6,687 Investments 6,500 6,500 Receivables Accounts receivable - trade 83,202 241,921 Income tax refunds - 777 Deferred income taxes 20,414 22,507 __________________ 103,616 265,205 __________________ Inventory 49,888 54,222 __________________ Total current assets 178,686 332,614 __________________ Property and equipment Furniture, fixtures and equipment 103,520 52,514 Leasehold improvements 7,896 - __________________ 111,416 52,514 Less accumulated depreciation (38,145) (22,953) __________________ 73,271 29,561 Other Assets Notes receivable - officers 13,402 12,602 Deposits 4,000 - __________________ 17,402 12,602 __________________ $269,359 $374,777 ================== See notes to financial statements. RICHMOND CAPITAL CORPORATION Balance Sheets Liabilities and Stockholders' Equity July 31, ___________________ 1996 1995 ___________________ Current liabilities Notes payable - credit lines $ 72,278 $ - Accounts payable 39,872 164,871 Accounts payable-related party 37,155 98,202 Accrued payroll taxes 2,146 - ______________________ Total current liabilities 151,451 263,073 ______________________ Commitments Stockholders' equity Preferred stock, 1,000,000 shares, $.01 par authorized, no shares issued and outstanding at July 31, 1996 and 1995 - - Common stock, 100,000,000 shares, $.001 par authorized, 1,787,300 shares issued and outstanding at July 31, 1996 and 1995 1,787 1,787 Capital in excess of par value 262,635 262,635 Retained earnings (deficit) (146,514) (152,718) ___________________ Total stockholders' equity 117,908 111,704 ___________________ $ 269,359 $ 374,777 ==================== See notes to financial statements RICHMOND CAPITAL CORPORATION Statements of Income (Loss) Years Ended July 31, _______________________ 1996 1995 _______________________ Revenues Sales $1,466,173 $ 866,797 Rental income - 75,151 _______________________ 1,466,173 941,948 _______________________ Cost of sales Purchases 910,237 699,376 Freight and mailings 8,589 35,265 _______________________ 968,826 734,641 _______________________ Gross profit 497,347 207,307 _______________________ Other expenses Other operating expenses 414,372 220,831 Depreciation 6,808 23,505 Rent 57,261 42,653 Bad debt - 1,802 _______________________ 488,441 288,791 _______________________ Income (loss) from operations 8,906 (79,682) _______________________ Other income (deductions) Interest and dividend income 5,300 800 Interest expense (5,132) (3,751) _______________________ 168 (2,951) _______________________ Income (loss) from continuing operations 9,074 (84,435) Loss on sale of subsidiary - (32,348) _______________________ Income (loss) before taxes 9,074 (116,783) Income tax (provision) benefit (2,870) 23,988 _______________________ Net income (loss) $ 6,204 $ (92,795) ======================= Net income (loss) from continuing operations per common share $ .00 $ (0.03) Weighted average number of common shares outstanding 1,787,300 1,927,918 See notes to financial statements RICHMOND CAPITAL CORPORATION Statements of Changes in Stockholders' Equity Years ended July 31, 1996 and 1995 Capital in Retained Total Common stock issued Excess of Earnings Stockholders' ___________________ Shares Amount Par Value (Deficit) Equity _____________________________________________________________ Balance July 31, 1994 2,087,300 $2,087 $493,335 $ (59,923) $435,499 Net (loss) for year ended July 31, 1995 (92,795) (92,795) Shares of common stock cancelled in sale of subsidiary (300,000) (300) (230,700) - (231,000) ______________________________________________________________ Balance, July 31, 1995 1,787,300 1,787 262,635 (152,718) 111,704 Net income for year ended July 31, 1996 6,204 6,204 _____________________________________________________________ 1,787,300 $1,787 $262,635 $(146,514) $ 117,908 ============================================================= See notes to financial statements RICHMOND CAPITAL CORPORATION Statements of Cash Flows Years Ended July 31, _____________________ 1996 1995 _____________________ Cash flows from operating activities Net income (loss) $ 6,204 $ (92,795) Adjustments to reconcile net income (loss) to net cash provided by operating activities Depreciation 16,808 23,505 Loss on sale of subsidiary - 32,348 Decrease (increase) in accounts receivable 161,589 (82,861) Less decrease in subsidiary sold - 3,008 Decrease (increase) in inventory 4,334 (26,386) Increase (decrease) in accounts payable and accrued expenses (183,900) 191,226 Less decrease in subsidiary sold - (46,035) _____________________ Net cash provided by operating activities 5,035 2,010 _____________________ Cash flows from investing activities Purchases of property and equipment (75,060) (20,535) Decrease (increase) in deposits (4,000) - Proceeds on sale of equipment 14,542 - Decrease (increase) in officer loans (800) 11,002 ______________________ Net cash (used in) investing activities (65,318) (9,533) ______________________ Cash flows from financing activities Proceeds from credit lines 72,278 - Payments on long-term debt - (3,530) Net cash provided by (used in) ______________________ financing activities 72,278 (3,530) ______________________ Net increase (decrease) in cash 11,995 (11,053) Cash and cash equivalents, beginning of year 6,687 17,740 ______________________ Cash and cash equivalents, end of year $ 18,682 $ 6,687 ====================== See notes to financial statements RICHMOND CAPITAL CORPORATION Statements of Cash Flows (continued) SCHEDULE OF NON-CASH INVESTING AND FINANCING TRANSACTIONS On January 31, 1995, the Company sold RCC of Louisiana, Inc. (RCL) by reacquiring 300,000 common shares in exchange for all of the issued and outstanding stock of RCL. The fair market value of the 300,000 common shares was $230,000. Assets totalling $3777,736 and related debt of $110,405 previously acquired in the merger were sold in this transaction. No assets or liabilities of the subsidiary were retained by the Company. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest during the years ended July 31, 1996 and 1995 totalled $5,132 and $3,751, respectively. Income taxes paid during the years ended July 31, 1996 and 1995 totalled $0 and $10,267, respectively. See notes to financial statements RICHMOND CAPITAL CORPORATION Notes to Financial Statements July 31, 1996 and 1995 Note 1 - Summary of significant accounting policies Principles of consolidation The accompanying financial statements include the accounts of Richmond Capital Corporation (the Company) and its wholly-owned subsidiary, RCC of Louisiana, Inc. (RCL). All significant inter-company balances and transactions between the Company and the wholly-owned subsidiary were eliminated. On July 1, 1994, the Company acquired its interest in its wholly-owned subsidiary, RCC of Louisiana, Inc. On January 31, 1995, the Company sold its interest in the wholly-owned subsidiary. The financial statements for the year ended July 31, 1995, includes the operating activity of RCL through the date of the sale. Property, equipment and depreciation Property and equipment are stated at cost. Depreciation is provided using both straight-line and accelerated methods over the estimated useful lives of the assets, five to ten years for equipment and thirty-nine (39) years for building and improvements. Inventories Inventories consist of used computers, computer parts and peripheral equipment held for resale and are stated at the lower of cost (first-in, first-out) or market. Income taxes Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to the use of accelerated methods of recording depreciation for tax purposes and net operating loss carryforwards. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes also are recognized for operating losses that are available to offset future taxable income and tax credits that are available to offset future federal income taxes. Cash equivalents For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. RICHMOND CAPITAL CORPORATION Notes to Financial Statements July 31, 1996 and 1995 Note 1 - Summary of significant accounting policies (continued) Investments Investment assets consist of trading securities. The cost of the securities totaled $6,500 at July 31, 1996 and 1995. The market value of the securities as of July 31, 1996 and 1995 was $6,500. Revenue recognition policy The Company derives its income from the sale of used computers and computer- related equipment. Income is recognized when a sale has occurred merchandise delivered and the customer invoiced. The Company, through its wholly-owned subsidiary, also derived income from the lease of real estate holdings. Note 2 - Organization and description of the business Richmond Capital Corporation (the "Company") was incorporated under the laws of the State of Colorado on April 5, 1988, with the issuance of 1,000,000 shares of stock at $.01 per share. In October 1989, the Company completed a public offering of its common stock by issuing 305,750 common shares and related warrants at $.10 per unit for aggregate proceeds of $30,575. In June 1990, the Company called in all Class A and B warrants for redemption. PTR Capital Corporation (PTR), a Delaware corporation, acquired control of the Company as of January 15, 1991, through the purchase of a majority of the Company's common stock. The Company's primary business is acquisition and remarketing of used computers and computer related equipment. The Company evaluated, structured and completed a merger of a target company, RCC of Louisiana, Inc.(RCL), in July 1994, by issuing 300,000 shares of its common stock to the sole shareholder in exchange for all of the issued and outstanding shares of RCL. The transaction represented 14.4% of the issued and outstanding voting securities of the Company after the issuance of the new shares. RCL was incorporated in the State of Louisiana on August 10, 1993 to engage primarily in the acquisition, development and lease of real estate. Leasing began on July 8, 1995. The acquisition of RCL was accounted for by the purchase method. The Company issued 300,000 common shares with a fair market value of $230,000 for all of the outstanding shares of RCL which had a fair market value approximating $230,000. RICHMOND CAPITAL CORPORATION Notes to Financial Statements July 31, 1996 and 1995 Note 2 - Organization and description of the business (continued) During the year ended July 31, 1995, the management of the Company decided not to continue the real estate leasing operations which was included in RCL. This decision was made because the real estate leases were with truck stops with video poker facilities, revenues were not as expected, and public support of video poker operations were diminishing. On January 31, 1995, the Company sold all of its issued and outstanding shares of RCL to the previous sole shareholder of RCL in exchange for the cancellation of his 300,000 shares of Richmond Capital Corporation common stock. The transaction represents a cancellation of 14.4% of the then currently issued and outstanding voting securities of the Company. The Company recorded a loss on the sale of $32,348. Note 3 - Notes payable-credit lines Notes payable credit lines consist of the following at July 31, 1996 and 1995: 1996 1995 ______________________ Draws against a $50,000 credit line payable in monthly installments at a minimum of 3% of outstanding balance with interest at prime rate plus 2.0% (10.25% at July 31, 1996). Balance due on March 19, 1997. The loan is secured by a shareholder guarantee. $47,554 $ - Draws against a $25,000 unsecured credit line payable in monthly installment at a minimum of 2% of outstanding balance with interest at prime rate plus 6.75% (15% at July 31, 1996). Renewable in September 1997. 24,724 - ___________________ $72,278 $ - =================== RICHMOND CAPITAL CORPORATION Notes to Financial Statements July 31, 1996 and 1995 Note 4 - Commitments and contingencies The Company entered into an office and warehouse lease beginning September 1, 1995 and ending August 31, 1997. Monthly lease payments total $4,000. Future minimum lease commitments are as follows: For the year ended July 31, Amount ___________________________ ________ 1997 $48,000 1998 4,000 _______ $52,000 ======= Note 5 - Income taxes Income taxes are based on financial reporting income or loss. Differences between income and loss for financial and income tax reporting relate primarily to depreciation. At July 31, 1996 and 1995, the Company had the following net operating loss (NOL) carryforwards and resulting deferred income tax benefit based on federal and state statutory rates: NOL Tax Carryforward Benefit _____________________ Balance at July 31, 1995 $ 77,000 $ 23,988 Utilized at July 31, 1996 (15,000) (2,870) _____________________ Balance at July 31, 1996 $ 62,900 $ 21,118 ===================== Income tax expense consists of the following components: 1996 1995 ______________________ Current $ - $ - Deferred 2,870 - Tax benefit of net operating loss - (23,988) ______________________ Total tax expense (benefit) $2,870 $(23,988) ====================== RICHMOND CAPITAL CORPORATION Notes to Financial Statements July 31, 1996 and 1995 Note 6 - Related party transactions At July 31, 1996 and 1995, the Company had a note receivable from an officer of the Company of $10,000 plus accrued interest of $3,402 and $2,602 at July 31, 1996 and 1995, respectively. The principal and interest are due in full on July 31, 19967. At July 31, 1996 and 1995, the Company owed $37,155 and $98,202 for advances from an entity that is related through management affiliation. Note 7 - Warranties During the fiscal year ended July 31, 1995, the company established a warranty program that provides for repair, replacement or full refund for a period of one hundred-twenty (120) days from the date of sale. No warranty claims were filed during the year; and, at July 31, 1996 and 1995, no warranty claims were pending. Note 8 - Loss on sale of subsidiary On January 31, 1995, the Company sold its interest in its wholly-owned subsidiary. The Company recorded a loss on the sale, net of the income tax benefit, of $25,704. This represents a net loss of $.01 per common share. Note 9 - Advertising cost The Company expenses advertising costs as incurred. Advertising consists primarily of magazine and computer trade publication advertising for the lines of computer equipment that the Company sales. At July 31, 1996 and 1995, advertising costs totalled $16,971 and $11,264, respectively. Independent Auditor's Report on Accompanying Information The Board of Directors and Stockholders of Richmond Capital Corporation Baton Rouge, Louisiana Our audits were made for the purpose of forming an opinion on the financial statements taken as a whole. The information on the accompanying page is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. s/ Laney, Boteler & Killinger LANEY, BOTELER & KILLINGER Atlanta, Georgia September 6, 1996 RICHMOND CAPITAL CORPORATION Schedule of Other Operating Expenses Year Ended July 31, _____________________ 1996 1995 _____________________ Accounting and legal $ 19,090 $ 22,466 Advertising and print 16,971 11,264 Auto expense 12,391 3,989 Bank charges 622 763 Contributions 32 29,280 Contract labor 30,332 36,926 Dues and subscriptions 47 259 Equipment rental 1,244 86 Insurance 10,966 3,964 Office expense 19,448 7,507 Other operating expense 2,834 5,098 Penalties - 325 Postage and delivery 7,419 3,004 Repairs and service 6,303 2,076 Salaries 178,562 48,506 Taxes and licenses 14,109 4,967 Telephone 34,788 23,741 Travel and lodging 45,339 10,107 Utilities 13,875 6,503 _____________________ $414,372 $220,831 ===================== Independent Auditor's Report To the Board of Directors and Stockholders of Richmond Capital Corporation Baton Rouge, Louisiana We have audited the accompanying balance sheets of Richmond Capital Corporation as of July 31, 1995 and 1994, and the related statements of income (loss) and changes in stockholders' equity, and cash flows for the years then ended. 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 Richmond Capital Corporation as of July 31, 1995 and 1994, and the results of operations and cash flows for the years then ended in conformity with generally accepted accounting principles. s/Laney, Boteler & Killinger LANEY, BOTELER & KILLINGER Atlanta, Georgia September 21, 1995 RICHMOND CAPITAL CORPORATION Balance Sheets Assets July 31, _____________________ 1995 1994 _____________________ Current assets Cash and equivalents $ 6,687 $ 17,740 Investments 6,500 6,500 Receivables Accounts receivable - trade 241,921 182,344 Income tax refunds 777 - Deferred income taxes 22,507 - ___________________ 265,205 182,344 ___________________ Inventory 54,222 27,836 ___________________ Total current assets 332,614 234,420 ___________________ Property and equipment Land - 175,000 Building - 94,000 Furniture, fixtures and equipment 52,514 112,979 ____________________ 52,514 381,979 Less accumulated depreciation (22,953) (18,722) ___________________ 29,561 363,257 ___________________ Other Assets Notes receivable - officers 12,602 23,604 ___________________ $374,777 $621,281 =================== See notes to financial statements RICHMOND CAPITAL CORPORATION Balance Sheets Liabilities and Stockholders' Equity July 31, _____________________ 1995 1994 _____________________ Current liabilities Current portion - long-term debt $ - $ 8,672 Accounts payable 164,871 34,257 Accounts payable-related party 98,202 23,485 Accrued payroll taxes - 2,532 Income taxes payable - 10,092 Deferred income taxes - 1,481 ___________________ Total current liabilities 263,073 80,519 ___________________ Long-term debt - 105,263 ___________________ Commitments Stockholders' equity Preferred stock, 1,000,000 shares, $.01 par authorized, no shares issued and outstanding at July 31, 1995 and 1994, respectively - - Common stock, 100,000,000 shares, $.001 par authorized, 1,787,300 and 2,087,300 shares issued and outstanding at July 31, 1995 and 1994, respectively 1,787 2,087 Capital in excess of par value 262,635 493,335 Retained earnings (deficit) (152,718) (59,923) ___________________ Total stockholders' equity 111,704 435,499 ___________________ $374,777 $621,281 =================== See notes to financial RICHMOND CAPITAL CORPORATION Statements of Income (Loss) Years Ended July 31, ______________________ 1995 1994 ______________________ Revenues Sales $ 866,797 $ 660,105 Rental income 75,151 15,581 ______________________ 941,948 675,686 ______________________ Cost of sales Purchases 699,376 347,037 Freight and mailings 35,265 39,432 ______________________ 734,641 386,469 ______________________ Gross profit 207,307 289,217 ______________________ Other expenses Other operating expenses 220,831 178,018 Depreciation 23,505 10,163 Rent 42,653 52,960 Bad debt 1,802 - ______________________ 288,791 241,141 ______________________ Income (loss) from operations (79,682) 48,076 ______________________ Other income (deductions) Interest income 800 1,600 Interest expense (3,751) (13,456) Gain on sale of investments - 5,734 Market value decline on investments - (6,605) ______________________ (2,951) (12,727) ______________________ Income (loss) from continuing operations (84,435) 35,349 Loss on sale of subsidiary 32,348 - ______________________ Income (loss) before taxes (116,783) 35,349 Income tax (provision) benefit 23,988 (9,601) ______________________ Net income (loss) $ (92,795) $ 25,748 Net income (loss) from continuing operations per common share $ (0.03) $ 0.01 Weighted average number of common shares outstanding 1,927,918 1,806,204 See notes to financial statements RICHMOND CAPITAL CORPORATION Statements of Changes in Stockholders' Equity Years ended July 31, 1995 and 1994 Capital in Retained Total Common stock issued Excess of Earnings Stockholders' ___________________ Shares Amount Par Value (Deficit) Equity _________________________________________________________ Balance, July 31, 1993 1,787,300 $1,787 $262,635 $(85,671) $178,751 Net income for year ended July 31, 1994 25,748 25,748 Shares of common stock issued in merger of subsidiary 300,000 300 230,700 - 231,000 ___________________________________________________________ Balance, July 31, 1994 2,087,300 2,087 493,335 (59,923) 435,499 Net (loss) for year ended July 31, 1995 (92,795) (92,795) Shares of common stock cancelled in sale of subsidiary (300,000) (300) (230,700) - (231,000) Balance, July 31, 1995 1,787,300 $1,787 $262,635 $(152,718) $ 111,704 See notes to financial statements RICHMOND CAPITAL CORPORATION Statements of Cash Flows Years Ended July 31, ____________________ 1995 1994 ____________________ Cash flows from operating activities Net income (loss) $ (92,795) $ 25,748 Adjustments to reconcile net income (loss) to net cash provided by operating activities Depreciation 23,505 10,163 Gain on sale of investment - (5,734) Market value decline on investments - 6,605 Loss on sale of subsidiary 32,348 - Decrease (increase) in accounts receivable (82,861) (113,310) Less decrease in subsidiary sold 3,008 - Decrease (increase) in inventory (26,386) 48,000 Increase in accounts payable and accrued expenses 191,226 55,137 Less decrease in subsidiary sold (46,035) - ____________________ Net cash provided by operating activities 2,010 26,609 ____________________ Cash flows from investing activities Purchases of property and equipment (20,535) (150,000) Decrease in deposits - 3,382 Proceeds on sale of investments - 15,108 Decrease (increase) in officer loans 11,002 (1,600) ____________________ Net cash (used in) investing activities (9,533) (133,110) ____________________ Cash flows from financing activities Increase in capital in excess of par value - 31,000 Proceeds from long term debt - 120,000 Payments on long term debt (3,530) (32,197) ____________________ Net cash provided by (used in) financing activities (3,530) 118,803 ____________________ Net increase (decrease) in cash (11,053) 12,302 Cash and cash equivalents, beginning of year 17,740 5,438 ____________________ Cash and cash equivalents, end of year $ 6,687 $ 17,740 ==================== See notes to financial statements RICHMOND CAPITAL CORPORATION Statements of Cash Flows (continued) SCHEDULE OF NON-CASH INVESTING AND FINANCING TRANSACTIONS On January 31, 1995, the Company sold RCC of Louisiana, Inc. (RCL) by reacquiring 300,000 common shares in exchange for all of the issued and outstanding stock of RCL. The fair market value of the 300,000 common shares had a fair market value of approximately $230,000. Assets totalling $377,736 and related debt of $110,405 previously acquired in the merger were sold in this transaction. No assets or liabilities of the subsidiary were retained by the Company. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest during the years ended July 31, 1995 and 1994 totalled $3,751 and $13,456, respectively. Income taxes paid during the years ended July 31, 1995 and 1994 totalled $10,267 and $0, respectively. See notes to financial statements RICHMOND CAPITAL CORPORATION Notes to Financial Statements July 31, 1995 and 1994 Note 1 - Summary of significant accounting policies Principles of consolidation The accompanying financial statements include the accounts of Richmond Capital Corporation (the Company) and its wholly-owned subsidiary, RCC of Louisiana, Inc. (RCL). All significant inter-company balances and transactions between the Company and the wholly-owned subsidiary were eliminated. On July 1, 1994, the Company acquired its interest in its wholly-owned subsidiary, RCC of Louisiana, Inc. On January 31, 1995, the Company sold its interest in the wholly-owned subsidiary. The financial statements for the year ended July 31, 1995, includes the operating activity of RCL through the date of the sale. Property, equipment and depreciation Property and equipment are stated at cost. Depreciation is provided using the both straight-line and accelerated methods over the estimated useful lives of the assets (five to ten years) for equipment and thirty-nine (39) years for buildings. Inventories Inventories consist of used computers, computer parts and peripheral equipment held for resale and are stated at the lower of cost (first-in, first-out) or market. Income taxes Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to the use of accelerated methods of recording depreciation for tax purposes and net operating loss carryforwards. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes also are recognized for operating losses that are available to offset future taxable income and tax credits that are available to offset future federal income taxes. Cash equivalents For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. RICHMOND CAPITAL CORPORATION Notes to Financial Statements July 31, 1995 and 1994 Note 1 - Summary of significant accounting policies (continued) Investments Investment assets consist of trading securities. The cost of the securities totaled $13,105 and $22,479 at July 31, 1995 and 1994, respectively. Securities with a cost of $9,374 were sold and a gain recorded in the amount of $5,734 during the year ended July 31, 1994. The market value of the remaining securities as of July 31, 1995 and 1994 was $6,500. The market decline from cost of $6,605 was also recorded in 1994. Revenue recognition policy The Company derives its income from the sale of used computers and computer- related equipment. Income is recognized when a sale has occurred merchandise delivered and the customer invoiced. The Company, through its wholly-owned subsidiary, also derived income from the lease of real estate holdings. Note 2 - Organization and description of the business Richmond Capital Corporation (the "Company") was incorporated under the laws of the State of Colorado on April 5, 1988, with the issuance of 1,000,000 shares of stock at $.01 per share. In October 1989, the Company completed a public offering of its common stock by issuing 305,750 common shares and related warrants at $.10 per unit for aggregate proceeds of $30,575. In June 1990, the Company called in all Class A and B warrants for redemption. PTR Capital Corporation (PTR), a Delaware corporation, acquired control of the Company as of January 15, 1991, through the purchase of a majority of the Company's common stock. The Company's primary business is acquisition and remarketing of used computers and computer related equipment. The Company evaluated, structured and completed a merger of a target company, RCC of Louisiana, Inc.(RCL), in July 1994, by issuing 300,000 shares of its common stock to the sole shareholder in exchange for all of the issued and outstanding shares of RCL. The transaction represented 14.4% of the issued and outstanding voting securities of the Company. RCL was incorporated in the State of Louisiana on August 10, 1993 to engage primarily in the acquisition, development and lease of real estate. Leasing began on July 8, 1994. The acquisition of RCL was accounted for by the purchase method. The Company issued 300,000 common shares with a fair market value of $230,000 for all of the outstanding shares of RCL which had a fair market value approximating $230,000. RICHMOND CAPITAL CORPORATION Notes to Financial Statements July 31, 1995 and 1994 Note 2 - Organization and description of the business (continued) Since RCL, the acquired company began operations on July 8, 1994, the full period of operations were included in the income statement of the Company for the year ended July 31, 1994. There were no goodwill, contingent payments, options or commitments specified in the acquisition agreement. During the year ended July 31, 1995, the management of the Company decided not to continue the real estate leasing operations which was included in RCL. This decision was made because the real estate leases were with truck stops with video poker facilities, revenues were not as expected, and public support of video poker operations were diminishing. On January 31, 1995, the Company sold all of its issued and outstanding shares of RCL to the previous sole shareholder of RCL in exchange for the cancellation of his 300,000 shares of Richmond Capital Corporation common stock. The transaction represents a cancellation of 14.4% of the then currently issued and outstanding voting securities of the Company. The Company recorded a loss on the sales of $32,348. Note 3 - Long-term debt Long-term debt consist of the following at July 31, 1995 and 1994: 1995 1994 ____________________ Note payable to an individual, payable in monthly installments of $1,456 including interest at 8%. The note matures October 4, 2003 and is collateralized by land. This note was related to assets owned by RCL which was sold on January 31, 1995 (Note 2). $ - $113,935 ____________________ 113,935 Less current portion - 8,672 ____________________ - $105,263 ==================== RICHMOND CAPITAL CORPORATION Notes to Financial Statements July 31, 1995 and 1994 Note 4 - Commitments and contingencies The Company entered into an office and warehouse lease beginning September 1, 1995 and ending August 31, 1997. Monthly lease payments total $4,000. Future minimum lease commitments are as follows: For the year ended July 31, Amount _________________________________________ 1996 $40,000 1997 48,000 1998 8,000 _______ $96,000 ======= Note 5 - Income taxes Income taxes are based on financial reporting income or loss. Differences between income and loss for financial and income tax reporting relate primarily to depreciation. At July 31, 1995, the Company had net operating loss carryforwards totalling approximately $77,000 that expires in 2010 which may be offset against future taxable income. A tax benefit of $23,988 has been reported in the July 31, 1995 financial statements based on the federal and state statutory rates. Income tax expense consists of the following components: 1995 1994 ----------------------- Current $ - $10,092 Deferred - (491) Tax benefit of net operating loss (23,988) - ----------------------- Total tax expense (benefit) $(23,988) $ 9,601 ======================= Note 6 - Related party transactions At July 31, 1995 and 1994, the Company had notes receivable from officers of the Company totalling $10,000 and $20,000, respectively. Accrued interest at 8% per annum, totalled $2,602 and $3,604, respectively with the principal and interest due in full on July 31, 1997. At July 31, 1995 and 1994, the Company owed $98,202 and $23,485 for advances from an entity that is related through management affiliation. RICHMOND CAPITAL CORPORATION Notes to Financial Statements July 31, 1995 and 1994 Note 7 - Warranties During the fiscal year ended July 31, 1994, the company established a warranty program that provides for repair, replacement or full refund for a period of one hundred-twenty (120) days from the date of sale. No warranty claims were filed during the year; and, at July 31, 1995, no warranty claims were pending. Note 8 - Loss on sale of subsidiary On January 31, 1995, the Company sold its interest in its wholly-owned subsidiary. The Company recorded a loss on the sale of $32,348. This represents a net loss of $.01 per common share. Note 9 - Advertising costs The Company expenses advertising costs as incurred. Advertising consists primarily of magazine and computer trade publication advertisements for the lines of used computer equipment that the company sales. At July 31, 1995 and 1994, advertising costs totalled $11,264 and $5,903, respectively. Independent Auditor's Report on Accompanying Information The Board of Directors and Stockholders of Richmond Capital Corporation Baton Rouge, Louisiana Our audits were made for the purpose of forming an opinion on the financial statements taken as a whole. The information on the accompanying page is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. s/ Laney, Boteler & Killinger LANEY, BOTELER & KILLINGER Atlanta, Georgia September 21, 1995 RICHMOND CAPITAL CORPORATION Schedule of Other Operating Expenses Year Ended July 31, ___________________ 1995 1994 ___________________ Accounting and legal $ 22,466 $ 26,212 Advertising and print 11,264 5,903 Auto expense 3,989 5,625 Bank charges 763 275 Contributions 29,280 - Contract labor 36,926 11,248 Dues and subscriptions 259 4,935 Equipment rental 86 210 Insurance 3,964 4,433 Office expense 7,507 2,958 Other operating expense 5,098 5,972 Penalties 325 12 Postage and delivery 3,004 2,693 Repairs and service 2,076 14,083 Salaries 48,506 56,719 Taxes and licenses 4,967 2,965 Telephone 23,741 15,565 Travel and lodging 10,107 15,618 Utilities 6,503 2,592 ___________________ $220,831 $178,018 =================== SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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 on the 28th day of October 1996. RICHMOND CAPITAL CORPORATION (Registrant) By: J. Keith Henderson _____________________________________ J. Keith Henderson, President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on the 28th day of October, 1996. Signature Title signed J. Keith Henderson J. Keith Henderson President, Treasurer and Director signed Daniel S. Gould Vice-President and Daniel S. Gould Secretary signed Michele L. Prater Director Michele L. Prater EXHIBIT INDEX EXHIBIT METHOD OF FILING - - ------- ----------------------------- 27. Financial Data Schedule Filed herewith electronically EX-27 2
5 This schedule contains summary financial information extracted from the balance sheets and statements of operations found on the Company's Form 10-K and is qualified in its entirety by reference to such financial statements. 0000846535 RICHMOND CAPITAL CORPORATION YEAR JUL-31-1996 JUL-31-1996 18682 6500 103616 0 49888 178686 73271 0 269359 151451 0 1787 0 0 116121 269359 1466173 1466173 968826 968826 488441 0 5132 9074 2870 0 0 0 0 6204 .00 .00
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