SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] Annual report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the fiscal year ended September 30, 2001.
[ ] Transition report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from _______ to _______.
Commission file number: 000-27831
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GENESIS CAPITAL CORPORATION OF NEVADA
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(Exact name of small business issuer as specified in its charter)
Nevada 85-0415741
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2921 NW 6th Avenue, Miami, Florida 33127
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(Address of principal executive office) (Zip Code)
(305) 573-8882
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(Issuer's telephone number)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes XX No
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As of January 10, 2002, the number of outstanding shares of the issuer's common
stock, $0.001 par value was 159,949,548 shares.
1
TABLE OF CONTENTS
PART I
ITEM 1. DESCRIPTION OF BUSINESS.............................................3
ITEM 2. DESCRIPTION OF PROPERTY.............................................6
ITEM 3. LEGAL PROCEEDINGS...................................................6
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.................6
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS............6
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
or PLAN OF OPERATIONS.....................................10
ITEM 7. FINANCIAL STATEMENTS...............................................11
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS......................11
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS..........11
ITEM 10. EXECUTIVE COMPENSATION............................................12
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS & MANAGEMENT......12
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS....................13
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K..................................14
SIGNATURES..................................................................15
INDEX TO EXHIBITS...........................................................16
2
PART I
ITEM 1. DESCRIPTION OF BUSINESS
History
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The Company was formed as a Colorado corporation on September 19, 1983, under
the name Bugs, Inc., for the purpose of using microbial and other agents,
including metallurgy, to enhance oil and natural gas production and to
facilitate the recovery of certain metals. Its initial capitalization was
100,000,000 shares of $.001 par value common stock. In July 1989, the Company
approved Articles of Amendment changing its name to Genesis Services, Inc. In
September 1990, the Company approved additional Articles of Amendment changing
its name to Genesis Capital Corporation (sometimes referred to as the "Colorado
Corporation"). In July 1993, the Company decreased its authorized capital from
100,000,000 shares of $.001 par value common stock to 10,000,000 shares of $.01
par value common stock. At that same time, the Company created a class of
10,000,000 shares of no par value preferred stock.
Since 1994 the activities of the Company have been quite limited, because it
sold its wholly owned subsidiary, U.S. Staffing, Inc., during the 1994-95 fiscal
year. In January of 1996--after its sale--U.S. Staffing, Inc. filed for
bankruptcy and restrained the Colorado Corporation from collecting its note
receivable and claimed to own stock in the Colorado Corporation through its U.S.
Benefit Trust. The Company itself has never declared bankruptcy. In December
1997, the Colorado Corporation's shareholders voted unanimously to settle this
claim by issuing 4,500,000 shares of its common stock, restricted under Rule 144
of the Securities Act of 1933, to be held in trust for U.S. Benefit Trust (U.S.
Benefit Trust still owns these shares, though they have been reduced to 113
shares due to a 1:20 reverse stock split in 1997 and a 1:2000 reverse stock
split in 1999). Also at this time, the Company merged with Lincoln Health Fund,
Inc. (which owned land in Tarrant County, Texas which it planned to use in
building a retirement center), increased its authorized capital to 50,000,000
shares of common stock, and authorized a post-merger reverse split of its common
stock on a 1:20 basis. In December 1997, Reginald Davis and Jerry Conditt,
joined the Company.
On December 22, 1998, Genesis Capital Corporation of Nevada (sometimes referred
to as the "Nevada Corporation") was incorporated in Nevada for the purpose of
merging with the Colorado Corporation so as to effect a redomicile to Nevada and
a reverse split of the Company's common stock. The Nevada Corporation was
authorized to issue 50,000,000 shares of $.001 par value common stock and
10,000,000 shares of $.001 par value preferred stock. As part of the Company's
plan to seek an acquisition candidate, on January 11, 1999, the Company paid a
total of 600,000 shares of preferred stock to 5 persons, Ronald Welborn, Henry
Simon, David Newren, Richard Surber, and A-Z Professional Consultants, Inc., for
consulting services related to the redomicile and reverse split of the Company's
stock
On March 9, 1999, both the Colorado Corporation and the Nevada Corporation
signed Articles of Merger by which the Colorado Corporation's shareholders
received one share of new (Nevada) common stock for every 2,000 shares of old
(Colorado) common stock they owned. The shareholders of both corporations had
previously approved this proposal on due notice, and all outstanding shares of
the Colorado Corporation's common stock were purchased by the new Nevada
Corporation, effectively merging the Colorado Corporation into the Nevada
Corporation, reverse-splitting the Company's stock, and making the Nevada
Corporation the surviving entity. Holders of preferred stock in the old Colorado
Corporation received preferred stock in the new Nevada Corporation on a 1:1
basis. In March 1999, the Company
3
entered into Consulting Agreements with Hudson Consulting Group, Inc. and Global
Universal, Inc. to obtain additional assistance in finding and completing an
acquisition.
Later in March 1999, the Company began discussions about acquiring Motor Sports
on Dirt, Inc. ("Motor Sports"), which claimed to own NASCAR race tracks in the
South. The parties reached a preliminary agreement on the terms of acquisition,
in anticipation of which, on March 25, the Company authorized an offering for
10,000,000 shares of common stock under Rule 504 of Regulation D. The shares
were offered at Ten Cents ($.10) per share to raise up to but not more than
$1,000,000, and a Form D to that effect was filed with the SEC on March 26,
1999. Proceeds were to be used to pay expenses related to the acquisition of
Motor Sports and to pay off the Company's debts. By April 6, 1999, the Company
had sold 4,100,000 shares to five investors. 3,885,000 shares were paid toward
debts owed to consultants, Arce International, Inc., Hudson Consulting Group,
Inc., Chartwell Investments, Inc., and Global Universal, Inc., incurred for
services rendered before April 6, 1999 by introducing Motor Sports to the
Company and handling various accounting, corporate cleanup, and compliance
issues.
On April 6, 1999, the Company signed an Acquisition Agreement with Motor Sports
which would have effected the Company's acquisition of Motor Sports. According
to the Acquisition Agreement, a total of 11,790,000 shares of the Company's
common stock were to be issued to Motor Sports shareholders. However, Motor
Sports and/or its financial backers did not perform certain conditions of the
Acquisition Agreement, which led to extensive negotiations between the parties.
These negotiations yielded an Addendum #1 to the Acquisition Agreement dated May
10, a Debt Settlement Agreement dated June 11 (relating to matters raised in the
Acquisition Agreement), and a Settlement Agreement dated July 19, 1999 (which
the parties intended to resolve all outstanding issues). As a result of these
negotiations and agreements, the contemplated merger with Motor Sports was
finally canceled on or about September 28, 1999. As a result of the canceled
merger, all 11,790,000 shares of common stock, as well as all but 502,360 shares
of the stock issued under Rule 504, were canceled on September 28, 1999.
Also on September 28, 1999, the Company issued 250,000 shares of its common
stock, restricted under Rule 144, to Donald Walker as a settlement of all claims
under the Settlement Agreement dated July 19, 1999; 550,000 shares of common
stock, restricted under Rule 144 to Global Universal for new services relating
to new acquisition opportunities; and 532,640 shares of common stock, restricted
under Rule 144, to Hudson Consulting Group, Inc. for new assistance in preparing
the documents necessary to become a reporting company under the Securities
Exchange Act of 1934 as well as assistance relating to new acquisition
opportunities.
On August 30, 2001, the Company entered into a Stock Acquisition Agreement
("Acquisition Agreement") with Christopher Astrom; Hudson Consulting Group,
Inc.; and Global Universal, Inc, of Delaware pursuant to which Mr. Astrom was
granted the right to purchase 54,110,309 shares of common stock and 1,477,345
shares of preferred stock. Under the Acquisition Agreement, Mr. Astrom was to
pay $ 315,000 to the Company for the common and preferred stock and tender to
the Company all of the issued and outstanding common stock of Senior Lifestyle
Communities, Inc.("Communities"). The Acquisition Agreement closed October 30,
2001.
On October 30, 2001, the Company entered into a Share Exchange Agreement and
Plan of Reorganization ("Exchange Agreement") with Mr. Astrom and Communities,
the purpose of which was to accommodate the financing by Mr. Astrom of his
obligations under the Acquisition Agreement. To provide the financing on behalf
of Mr. Astrom, Communities issued its 8% Series SPA Senior Subordinated
Convertible Debentures in the initial amount of $ 360,000 to an non-affiliated
private source of financing. At the close of the Acquisition Agreement and the
Exchange Agreement, Communities became a wholly-owned subsidiary of the Company.
Communities owns all of the issued and outstanding common stock of Senior Adult
Lifestyle, Inc. ("Senior").
4
Pursuant to an Agreement executed on December 26, 2001, made effective as of
October 31, 2001 and a Statutory Warranty Deed dated October 30, 2001, the
Registrant, through Senior, acquired from National Residential Properties,
Inc.("National") all of the right, title and interest of National in (i) a
certain parcel of real property in Hebron, Connecticut; and (ii) four contracts
to purchase certain parcels of real property in Watertown, New Milford, Granby
and East Windsor, Connecticut. The Hebron property is subject to two mortgages
having an aggregate principal balance of $ 315,000.00, which mortgages Senior
assumed and agreed to pay as part of the consideration for the conveyance.
National and the Company have the same officers and directors and, accordingly,
they may be deemed "affiliates".
Prior to the conveyance of the Connecticut Properties, in May 2001 National,
through its then wholly-owned subsidiary, Connecticut Acquisitions Corp. No.1
("Acquisition Corp.") entered into a joint venture with Nathan Kahn and various
companies controlled by Mr. Kahn ("Kahn Entities") to develop the portion of the
Connecticut Properties ("Land Development Agreement') located in Hebron,
Connecticut ("Hebron Parcel"). The Land Development Agreement called for
Acquisition Corp. to fund the initial costs of acquisition and development and,
after the deduction of expenses from gross revenues, profits would be divided
50% to Acquisition Corp. and 50% to the Kahn Entities. On May 8, 2001, following
the acquisition of the Hebron Parcel, Acquisition Corp. was merged into
National. As a consequence of the conveyance of the Hebron Parcel by National to
Senior as part of the Connecticut Properties, Senior has assumed the obligations
of National under the Land Development Agreement.
As additional consideration for the conveyance to Senior, the Company agreed to
issue to National 20,000,000 shares of the Company's common stock ("Shares")
based on a value of $0.10 per share (determined on the basis of the average bid
price of the Company's common stock during the week immediately prior to the
effective date of October 31, 2001) for an agreed consideration of $ 2,000,000.
At the earlier of (a) the expiration of three (3) years from the date of the
conveyance, or (b) at the time that National has sold all of the Shares, if the
gross sales proceeds realized by National from the sale of the Shares is less
than $ 2,000,000, the Company will be required to issue to National such
additional shares of common stock in an amount based on the closing bid price as
quoted on the OTC Bulletin Board on the day before the date of such additional
share issuance as to make up the difference between said gross sales proceeds
and $ 2,000,000.
The Registrant intends to use the properties acquired to develop active adult
communities consisting of condominiums restricted to adults aged 55 years and
over.
National and the Company have the same officers and directors and, accordingly,
they may be deemed "affiliates".
Governmental Regulation
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The real property interests which the Company has acquired could subject it to
environmental, public health and safety, land use, trade, or other governmental
regulations and state or local taxation. Management will endeavor to ascertain
the effects of such government regulation on the prospective business of the
Company.
Competition
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The Company will be involved in intense competition with other business
entities, many of which will have a competitive edge over the Company by virtue
of their stronger financial resources and prior experience in business.
Employees
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The Company currently has no employees. The business of the Company will be
managed by its officer and directors, who may become employees of the Company.
The Company does not anticipate a need to engage any full-time employees at this
time. The need for employees and their availability will be addressed in
connection with the proposed development of the Company's real property.
5
ITEM 2. DESCRIPTION OF PROPERTY
The Company currently has an interest in certain real property located in
Hebron; Connecticut and in four contracts to purchase certain parcels of reals
property in Watertown, New Milford, Granby and East Windsor, Connecticut, which
the Company intends to use in developing its senior adult residential
condominiums. The Company shares office space and a phone number with National
Residential Properties, Inc. at 2621 NW 6th Avenue, Miami, Florida 33127
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any legal proceeding.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On or about August 27, 2001, the Company mailed to its shareholders an
Information Statement pursuant to Section 14C of the Securities Exchange Act of
1934 which described action to be taken upon written consent by the holders of a
majority of the issued and outstanding common and preferred stock of the Company
pursuant to the provisions of the Nevada Business Corporation Act. The action
taken by such written consent was the amendment of the Company's Articles of
Incorporation to increase the number of its authorized common stock to
500,000,000 and increase the number of its authorized preferred stock to
10,000,000.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company's common stock is traded on the OTC Bulletin Board under the symbol
"GNCP."
The table below sets forth the high and low bid prices for the Company's Common
Stock for each quarter of fiscal year 2000 and fiscal year 2001 (for fiscal
years ended September 30, 2000 and 2001, respectively). The quotations below
reflect inter-dealer prices, without retail mark-up, mark-down or commission and
may not represent actual transactions:
Quarter Ended High Low
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F.Y. 2000 3/31/00 $7.44 $2.50
- --------- 6/30/00 $4.00 $1.75
9/30/00 $2.38 $1.25
12/29/00 $0.22 $0.06
Quarter Ended High Low
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F.Y. 2001 3/31/01 $0.19 $0.09
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6/30/01 $0.18 $0.06
9/30/01 $0.13 $0.08
12/30/01 $0.22 $0.02
Record Holders
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There is only one class of common stock. As of January 9, 2002 there were 239
shareholders of record for the Company's common stock and a total of 159,499,548
shares of common stock issued.
The holders of the common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of stockholders. Holders of the common
stock have no preemptive rights and no right to convert their common stock into
any other securities. There are no redemption or sinking fund provisions
applicable to the common stock.
Dividends
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The Company has not declared any dividends since inception and does not
anticipate paying any dividends in the foreseeable future. The payment of
dividends is within the discretion of the Board of Directors and will depend on
the Company's earnings, capital requirements, financial condition, and other
relevant factors. There are no restrictions that currently limit the Company's
ability to pay dividends on its common stock other than those generally imposed
by applicable state law.
Recent Sales of Unregistered Securities
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The following is a list of unregistered securities sold by the Company within
the last three years including the date sold, the title of the securities, the
amount sold, the identity of the person who purchased the securities, the price
or other consideration paid for the securities, and the section of the
Securities Act of 1933 under which the sale was exempt from registration as well
as the factual basis for claiming such exemption.
On February 9, 1999, the Company issued a total of 600,000 shares of its
preferred stock to 5 persons (150,000 shares to Henry Simon, Esq.; 150,000
shares to David Newren; 150,000 shares to Ronald Welborn; 75,000 shares to
Richard Surber; and 75,000 shares to A Z Professional Consultants, Inc.) in
exchange for consulting services rendered, exempt pursuant to section 4(2) of
the Securities Act of 1933, based on the facts that the stock was offered in an
isolated private transaction by the Company and did not involve a public
offering of stock, there were only five offerees, all offerees were part of a
special, well- defined class of sophisticated financial advisors with special
knowledge of the Company, none of the offerees resold their stock to outsiders
or to the public markets-rather, they have all allowed the Company to buy back
their stock pursuant to the Debt Settlement Agreement attached as Exhibit
6(viii)), there was no subsequent or contemporaneous public offering of the
preferred stock, the stock was not broken down into small denominations, and the
negotiations for the sale took place directly between the offerees and the
Company.
On March 25, 1999, the Company issued a total of 502,360 shares (post 1:2000
reverse stock split) of its common stock at a price of $.10 per share--an
aggregate of $50,236--pursuant to Rule 504 of Regulation D of the Securities Act
of 1933 to 4 persons (215,000 shares to Erie Holdings, Ltd; 150,000 to Chartwell
7
Investments, Inc.; 100,000 to Arce International, Inc.; and 37,360 to Hudson
Consulting Group, Inc.). The Company relied on the following facts in
determining that Rule 504 Regulation D was available: (a) an opinion letter from
counsel to the effect that the stock was exempt from registration under federal
law and state law because Erie and Arce were offshore entities not subject to
state blue sky laws, Hudson was a Nevada Corporation exempt under Nevada Statute
Section 90.503(11) limiting the offering to 25 purchasers, and Chartwell was a
Texas corporation exempt under Texas Statute Section 581-5(I)(3) limiting the
offering to 15 persons; (b) the Company was not subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act; (c) the Company had a
specific business plan at the time to acquire a specific company, Motor Sports
on Dirt, Inc., to operate Nascar-style race tracks; (d) the aggregate offering
price of all shares offered under Rule 504 in the preceding 12 months did not
exceed $1,000,000 and (e) the Company filed a Form D within 15 days of the first
sale of the shares subject to the offering. The Company also offered to allow
investors to inspect the books and records of the Company.
On April 2, 1999, the Company issued a total of 230,000 shares of its common
stock (post 1:2000 reverse split) to five individuals (100,000 shares to David
Newren; 60,000 shares to Reginald Davis; 35,000 shares to Jerry Conditt; 20,000
shares to Fauniel Rowland, Esq.; and 15,000 shares to Jim Rolfe, Esq.) in
exchange for services rendered, exempt pursuant to section 4(2) of the
Securities Act of 1933, based on the facts that the issuance was an isolated
private transaction by the Company which did not involve a public offering,
there were only five offerees, the offerees were part of a special, well-defined
class of attorneys, consultants, and corporate officers who had rendered
services directly to the Company, none of the offerees have resold the stock but
all continue to hold the stock to this day, there was no subsequent or
contemporaneous public offering of the common stock, the stock was not broken
down into small denominations, and the negotiations for the sale took place
directly between the offerees and the Company.
On September 28, 1999, the Company issued a total of 1,332,640 shares of its
common stock to 3 persons (550,000 shares to Global Universal, Inc.; 532,640
shares to Hudson Consulting Group, Inc.; and 250,000 shares to Donald Walker) in
exchange for the following consideration: Global and Hudson for services
rendered in assisting with location and negotiation of mergers and acquisitions
for the Company, and Donald Walker in full and final settlement of disputed
claims relating to the failed merger with Motor Sports on Dirt, Inc. All
issuances were exempt pursuant to section 4(2) of the Securities Act of 1933,
based on the facts that the issuance was an isolated private transaction by the
Company which did not involve a public offering, there were only three offerees,
the offerees were part of a special, well-defined class of sophisticated
financial consultants and officers of Motor Sports, the offerees did not resell
the stock but continue to hold the stock to this day, there was no subsequent or
contemporaneous public offering of the common stock, the stock was not broken
down into small denominations, and the negotiations for the sale took place
directly between the offerees and the Company.
On February 4, 2000, the Company issued a total of 15,000 restricted shares of
its common stock to an attorney, Charles Barnhill, in exchange for legal
services rendered, exempt pursuant to section 4(2) of the Securities Act of
1933, based on the facts that the issuance was an isolated private transaction
by the Company which did not involve a public offering, there was only one
offeree, the offeree was part of a special, well-defined class of attorneys who
had rendered legal services directly to the Company, the offeree has not resold
the stock but continues to hold the stock to this day, there was no subsequent
or contemporaneous public offering of the common stock, the stock was not broken
down into small denominations, and the negotiations for the sale took place
directly between the offeree and the Company.
On February 11, 2000, the Company issued a total of 100,000 shares of restricted
common stock to Larry
8
Austin in exchange for a waiver of all his rights as a holder of the Company's
preferred stock, exempt pursuant to section 4(2) of the Securities Act of 1933,
based on the facts that the issuance was an isolated private transaction by the
Company which did not involve a public offering, there was only one offeree, the
offeree was part of a special, well-defined class of previous preferred stock
holders, there was no subsequent or contemporaneous public offering of the
common stock, the stock was not broken down into small denominations, and
negotiations for the sale took place directly between the offeree and the
Company.
On April 13, 2000, the Company issued a total of 30,000 shares of restricted
common stock to Crestline according to the terms of its convertible preferred
stock. Crestline had held shares of the convertible preferred stock and elected
to convert the shares into common stock, exempt pursuant to section 4(2) of the
Securities Act of 1933, based on the facts that the issuance was an isolated
private transaction by the Company which did not involve a public offering,
there was only one offeree, the offeree was part of a special, well-defined
class of previous preferred stock holders, there was no subsequent or
contemporaneous public offering of the common stock, the stock was not broken
down into small denominations, and negotiations for the sale took place directly
between the offeree and the Company.
On August 30, 2001, the Company issued to Christopher Astrom 54,110,309 shares
of common stock and 1,477,345 shares of preferred stock pursuant to the
Acquisition Agreement between the Company, Global Universal, Inc. of Delaware;
Hudson Consulting Group and Mr. Astrom, in consideration of the payment to the
Company of the sum of $ 315,000.00. The transaction was considered exempt from
the registration requirements of the Securities Act of 1933 in reliance on
section 4(2) thereof. The issuance of the common and preferred stock to Mr.
Astrom was a private transaction not involving a public offering and was part of
a negotiated transaction with a single offeree and purchaser.
Pursuant to an Agreement executed on December 26, 2001, the Company became
obligated to issue 20,000,000 shares of its common stock to National Residential
Properties, Inc. as partial consideration for the conveyance by National of all
of its right, title and interest in certain parcels of real property in the
State of Connecticut. As January 10, 2001, those have not yet been issued to
National Residential Properties, Inc. The transaction was considered exempt from
the registration requirements of the Securities Act of 1933 in reliance on
section 4(2) thereof. The issuance of the common stock to National Residential
Properties, Inc.was a private transaction not involving a public offering and
was part of a negotiated transaction with a single offeree and purchaser.
On or about October 30, 2001, Senior Lifestyle Communities, Inc. ("Communities")
issued its 8% Senior Subordinated Convertible Redeemable Debentures
("Debentures") in the aggregate principal amount of $ 1,000,000 to Sea Lion
Investors LLC; Equity Planners LLC; and Myrtle Holdings LLC. The Debentures were
issued pursuant to Regulation D Rule 504(b) (iii). The Debentures permit the
holders thereof to convert all or any amount over $ 5,000.00 of the principal
face amount of the Debentures into shares of common stock at a conversion price
of 70% of the per share price valued in accordance with the book value of the
common stock or 70% of the lowest closing bid price as quoted on the OTC
Bulletin, if the shares of Communities, or its successors or assigns, are quoted
in the OTC Bulletin Board. Subsequent to the issuance of the Debentures,
Communities became the wholly-owned subsidiary of the Company. The Company has
assumed all of the obligations of Communities under the Debentures.
9
On December 13, 2001, the Company entered into an Escrow Agreement with Sroya
Holdings LLC, as escrow agent ("Sroya"), and Sea Lion Investors LLC; Equity
Planners LLC; and Myrtle Holdings LLC, the purpose of which was to amend and
supplement the October 30, 2001 agreement among Communities and the Debenture
holders. Pursuant to the Escrow Agreement, the Company deposited 100,000,000
shares of its common stock ("Escrow Shares") with Sroya to ensure the timely
delivery of the Company's common stock upon the exercise of the conversion
privileges by the Debenture holders under the Debentures issued on October
31,2001. Under the Escrow Agreement, Sroya, as escrow agent, does not have an
interest in either the Debentures or the Escrow Shares and neither is Stroya
considered a shareholder of the Company by virtue of holding the Escrow Shares.
However, for purposes of the determining the number of shares of the Company's
common stock are issued and outstanding, the Escrow Shares are considered issued
and outstanding. The Escrow Shares were deposited with Sroya pursuant to
Regulation D Rule 540 (b) (iii) and Section 3 (a)(9) of the Securities Act of
1933 as a result of the assumption by the Company of all of the obligations
under of Communities under the Debentures, including the obligation to repay the
principal and interest and the conversion privileges. The issuance of the Escrow
Shares to the Debenture holders upon the exercise of the conversion privileges
under the Debentures and any subsequent sale of the Escrow Shares could have a
material adverse affect on the Company's common stock and cause its market price
to decline substantially.
ITEM 6. PLAN OF OPERATIONS
The Company's plan of operations for the coming year is to begin the development
of its real estate holdings in Connecticut. Initially, this will involve
obtaining zoning and site approvals from local governmental authorities. The
Company does not expect to generate any meaningful revenues in the coming year.
In order to complete the initial phase of development involving site approval
and zoning, the Company will need approximately $ 150,000. To complete the
entire real development project, the Company will need substantial additional
financing in an amount not yet determined. The funds necessary to undertake the
plan of operations could be in the form of either the sale by the Company of
equity securities or the obtaining conventional construction debt financing. At
present, the Company has no understandings, commitments or agreements with
respect to any such financing, either equity or debt. There is no assurance that
such financing will be available to the Company on acceptable terms.
The Company does not expect to hire any employees during the next 12 months.
ITEM 7. FINANCIAL STATEMENTS
As used herein, the term "Company" refers to Genesis Capital Corporation of
Nevada, a Nevada corporation, and its subsidiaries and predecessors unless
otherwise indicated. Consolidated, audited, condensed financial statements
including a balance sheet for the Company as of the year ended September 30,
2001 and audited statements of income, cash flows and changes in shareholders'
equity up to the date of such balance sheet and the comparable period of the
preceding year are attached hereto as Pages F-1 through F-11 and are
incorporated herein by this reference.
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ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
In its two most recent fiscal years or any later interim period, the Company has
had no disagreements with its independent accountants. On November 6, 2001, the
Company dismissed Clyde Bailey, P.C. as the Company's principal accountant.
Effective November 6, 2001, the Company engaged Bagell Josephs & Company as its
principal accountants.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS
The following persons constitute all of the Company's Executive Officers and
Directors:
Name Age Position
---- --- --------
Richard Astrom 54 President/CEO and Director
Christopher Astrom 30 Vice President/Secretary/
Treasurer and Director
Richard S. Astrom Since 1995, Mr. Astrom has served as
President and Chief Executive Officer of National Residential Properties, Inc.
Mr. Astrom is also a director of Vacation Ownership Marketing, Inc., a
construction contracting firm. Mr. Astrom became President, Chief Executive
Officer and a director of the Company on November 1, 2001. Mr. Astrom has been
an active real estate broker in Florida since 1969. Mr. Astrom is a graduate of
the University of Miami with a Bachelors Degree in Business Administration.
Christopher Astrom Since 1995, Mr. Astrom has served as
Vice-President and Corporate Secretary of National Residential Properties, Inc.
with responsibilities for property acquisitions. Mr. Astrom is the Corporate
Secretary and a director of Vacation Ownership Marketing, Inc., a construction
contracting firm. Mr. Astrom became Corporate Secretary, Treasurer and a
director of the Company on November 1, 2001. Mr. Astrom graduated from the
University of Florida with a Bachelors Degree in Business Administration from
the School of Business. Mr. Astrom is the son of Richard Astrom.
All executive officers are elected by the Board and hold office until the next
Annual Meeting of stockholders and until their successors are elected and
qualify.
ITEM 10. EXECUTIVE COMPENSATION
No cash compensation was paid to any of the Company's executive officers during
the fiscal years ended September 30, 2000 or 2001. No cash compensation has been
paid to any of the executive officers since the beginning of 1999, and it is not
expected any such compensation will be paid in the near future.
The Company has no agreement or understanding, express or implied, with any
officer, director, or principal stockholder, or their affiliates or associates,
regarding employment with the Company or compensation for services. The Company
has no plan, agreement, or understanding, express or implied, with any officer,
director, or principal stockholder, or their affiliates or associates, regarding
the issuance to such persons of any shares of the Company's authorized and
unissued common stock. There is no understanding between the Company and any of
its present stockholders regarding the sale of a portion or all of the common
stock currently held by them in connection with any future participation by the
Company in a business. There are no other plans, understandings, or arrangements
whereby any of the
19
Company's officers, directors, or principal stockholders, or any of their
affiliates or associates, would receive funds, stock, or other assets in
connection with the Company's participation in a business. No advances have been
made or contemplated by the Company to any of its officers, directors, or
principal stockholders, or any of their affiliates or associates.
There is no policy that prevents management from adopting a plan or agreement in
the future that would provide for cash or stock based compensation for services
rendered to the Company.
Compensation of Directors
- -------------------------
There is no standard arrangement to compensate directors for their services as
directors of the Company.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS &
MANAGEMENT
The following table sets forth, as of January 14, 2001, the number and
percentage of outstanding shares of common stock which, according to the
information supplied to the Company, were beneficially owned by (i) each current
director of the Company, (ii) each current executive officer of the Company,
(iii) all current directors and executive officers of the Company as a group,
and (iv) each person who, to the knowledge of the Company, is the beneficial
owner of more than 5% of the Company's outstanding common stock. Except as
otherwise indicated, the persons named in the table below have sole voting and
dispositive power with respect to all shares beneficially owned, subject to
community property laws (where applicable).
Title of Class Name and Address of Beneficial Amount and nature of Percent of Class
Ownership Beneficial Ownership
- ---------------- -------------------------------- -------------------- ----------------
Common Richard Astrom 20,000,000 (a) 12.5 %
Stock
Common Christopher Astrom 54,110,309(a) 34%
Stock
Common National Residential Properties, 20,000,000 (a) 12.5%
Stock Inc.
Common All Executive Officers and 74,110,309 46.5%
Stock Directors as a Group (2 persons)
(a) These shares are obligated to be issued to National Residential
Properties, Inc. ("National"), but have not yet been issued by the
Company. Richard Astrom is the President, a director, and controlling
shareholder of National, and could be considered the beneficial owner
of the shares to be issued to National. Christopher Astrom is an
officer and director of National and could be also considered the
beneficial owner of the shares to be issued to National.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
20
Pursuant to an Agreement executed on December 26, 2001, made effective as of
October 31, 2001 and a Statutory Warranty Deed dated October 30, 2001, the
Company, through its subsidiary Senior Adult Lifestyle, Inc.("Senior"), acquired
from National Residential Properties, Inc.("National") all of the right, title
and interest of National in (i) a certain parcel of real property in Hebron,
Connecticut; and (ii) four contracts to purchase certain parcels of real
property in Watertown, New Milford, Granley and East Windsor, Connecticut. The
Hebron property is subject to two mortgages having an aggregate principal
balance of $ 315,000.00, which mortgages Senior assumed and agreed to pay as
part of the consideration for the conveyance.
The Company intends to use the properties acquired to develop active adult
communities consisting of condominiums restricted to adults aged 55 years and
over.
As additional consideration for the conveyance to Senior, the Company agreed to
issue to National 20,000,000 shares of the Company's common stock ("Shares")
based on a value of $0.10 per share (determined on the basis of the average bid
price of the Company's common stock during the week immediately prior to the
effective date of October 31,2001) for an agreed consideration of $ 2,000,000.
At the earlier of (a) the expiration of three (3) years from the date of the
conveyance, or (b) at the time that National has sold all of the Shares, if the
gross sales proceeds realized by National from the sale of the Shares is less
than $ 2,000,000, the Company will be required to issue to National such
additional shares of common stock in an amount based on the closing bid price as
quoted on the OTC Bulletin Board on the day before the date of such additional
share issuance as to make up the difference between said gross sales proceeds
and $ 2,000,000.
Richard Astrom and his son, Christopher Astrom are the sole officers and
directors of the Company, Senior and National.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. Exhibits required to be attached by Item 601 of Regulation
S-B are listed in the Index to Exhibits on page 22 of this Form 10-KSB,
and are incorporated herein by this reference.
(b) Reports on Form 8-K. The following reports on Form 8-K were filed
during the period covered by this Form 10-KSB:
January 10, 2002 Item 2. Acquisition or Disposition of Assets
------------------------------------
November 14, 2001 Item 1. Changes in Control of Registrant;
--------------------------------
Item 4. Changes in Registrant's Certifying
----------------------------------
Accountants
------------
August 17, 2001 Item 5. Other Events
------------
21
INDEX TO FINANCIAL STATEMENTS
Page
---------
Independent Auditors' Report F-1 - F-2
Financial Statements:
Balance Sheets as of September 30, 2001 and 2000 F-3 - F-4
Statements of Operations for the Years
Ended September 30, 2001 and 2000 F-5
Statements of Changes in Stockholders' Equity (Deficit)
For the Years Ended September 30, 2001 and 2000 F-6
Statements of Cash Flows for the Years Ended
September 30, 2001 and 2000 F-7
Notes to Financial Statements F-8 - F-14
22
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, hereunto duly
authorized, this 15th day of January, 2002.
GENESIS CAPITAL CORPORATION OF NEVADA
/s/ Richard Astrom
- --------------------------------------
Richard Astrom
President and Director
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.
Signature Title Date
/s/ Richard Astrom President,
- -------------------------------------- Chief Executive Officer
Richard Astrom and Director Jan. 15, 2002
/s/ Christopher Astrom Director Jan. 15, 2002
- --------------------------------------
Christopher Astrom
23
INDEX TO EXHIBITS
EXHIBIT
NO. DESCRIPTION
- --- -----------
Articles of Incorporation and By-laws
3(i) * Articles of Incorporation of Genesis Capital
Corporation of Nevada, a Nevada corporation, filed
with the State of Nevada on December 22, 1998.
3(i) Certificate of Amendment of Genesis Capital
Corporation of Nevada, filed with the State of Nevada
on September 17, 2001.
3(ii) * By-laws of Genesis Capital Corporation.
Plan of Reorganization
2.1 * Stock Acquisition Agreement dated August 30, 2001
between Genesis Capital Corporation of Nevada,
Christopher Astrom, Hudson Consulting Group, Inc. and
Global Universal Inc. of Delaware.
2.2 * Share Exchange Agreement and Plan of Reorganization
dated October 30, 2001 between Genesis Capital
Corporation of Nevada, Senior Lifestyle Communities,
Inc.,and Christopher Astrom.
2.3 * Agreement dated as of October 31, 2001 between
Genesis Capital Corporation of Nevada and National
Residential Properties, Inc.
Material Contracts
10.1 * Consulting Agreement between the Company and Reginald
Davis, Esq., dated March 19, 1999.
10.2 * Consulting Agreement between the Company and Jerry
Conditt, dated March 19, 1999.
10.3 * Consulting Agreement between the Company and Global
Universal, Inc., dated March 19, 1999 (including
secured promissory note for $133,000).
10.4 * Consulting Agreement between the Company and Hudson
Consulting Group, Inc., dated March 19, 1999
(including secured promissory note for $67,000).
10.5 * Security Agreement between the Company and Global
Universal, Inc., dated March 19, 1999, in which the
Company granted Global a security interest in 830,000
shares of its common stock to secure its promissory
note for $133,000.
24
10.6 * Security Agreement between the Company and Hudson
Consulting Group, Inc., dated March 19, 1999, in
which the Company granted Hudson a security interest
in 670,000 shares of common stock to secure its
promissory note for $67,000.
10.7 Land Development Agreement between Connecticut
Acquisition Corp. No. 1; Loveland Hills, LLC; Ct
Adult Condominiums, LLC; Nathan Kahn; Echo Lake,
Watertown, LLLC; Carlson Farms, New Milford, LLC; and
Coleman Farms, East Windsor, LLLC
10.8 Escrow Agreement dated as of December 13, 2001
between Genesis Capital Corporation of Nevada and
Equity Planners LLC; Sea Lion Investors LLC; Myrtle
Holdings LLC; and Sroya Holdings Company, Inc.
* Incorporated herein by reference from the referenced filings previously made
by the Company.
25
GENESIS CAPITAL CORPORATION OF NEVADA
INDEX TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
PAGE(S)
---------
Independent Auditors' Report F-1 - F-2
Financial Statements:
Balance Sheets as of September 30, 2001 and 2000 F-3 - F-4
Statements of Operations for the Years
Ended September 30, 2001 and 2000 F-5
Statements of Changes in Stockholders' Equity (Deficit)
For the Years Ended September 30, 2001 and 2000 F-6
Statements of Cash Flows for the Years Ended
September 30, 2001 and 2000 F-7
Notes to Financial Statements F-8 - F-14
INDEPENDENT AUDITORS' REPORT
To the Stockholders of
Genesis Capital Corporation of Nevada
Miami, Florida
We have audited the accompanying balance sheet of Genesis Capital Corporation of
Nevada (the "Company") as of September 30, 2001 and the related statements of
operations, changes in stockholders' equity (deficit), and cash flows for the
year then ended. These financial statements are the responsibility of
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. 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 audit provides a
reasonable basis for our opinion.
The accompanying financial statements for September 30, 2001 have been prepared
assuming the Company will continue as a going concern. As discussed in Note 6 to
the financial statements, the Company has raised certain issues that lead to
substantial doubt about its ability to continue as a going concern. Management's
plans in regards to these matters are also discussed in Note 6. The financial
statements do not include any adjustments that might result from the outcome of
these uncertainties.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Genesis Capital Corporation of
Nevada as of September 30, 2001, and the results of its statements of
operations, changes in stockholders' equity (deficit), and cash flows for the
year then ended in conformity with accounting principles generally accepted in
the United States of America.
F-1
The balance sheet of Genesis Capital Corporation of Nevada as of September 30,
2000, and the related statements of operations, changes in stockholders' equity
and cash flows for the year then ended were audited by Clyde Bailey, P.C. Clyde
Bailey, P.C. issued an unqualified opinion on those financial statements dated
January 12, 2001.
/s/BAGELL, JOSEPHS & COMPANY, L.L.C.
BAGELL, JOSEPHS & COMPANY, L.L.C.
Gibbsboro, New Jersey
January 14, 2002
F-2
GENESIS CAPITAL CORPORATION OF NEVADA
BALANCE SHEETS
SEPTEMBER 30, 2001 AND 2000
ASSETS
2001 2000
------------ -------------
CURRENT ASSETS
Cash in Bank $ - $ -
------------ -------------
Total current assets $ - $ -
------------ -------------
MARKETABLE SECURITIES, at Market Value - 195,000
DEFERRED TAX BENEFIT - 156,051
------------ -------------
TOTAL ASSETS $ - $ 351,051
============ =============
The accompanying notes are an integral part of the financial statements.
F-3
GENESIS CAPITAL CORPORATION OF NEVADA
BALANCE SHEETS
SEPTEMBER 30, 2001 AND 2000
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
2001 2000
------------ -------------
LIABILITIES
CURRENT LIABILITIES
Accounts Payable and Accrued Expenses $ 168,250 $ 72,500
------------ -------------
Total current liabilities 168,250 72,500
------------ -------------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock, $.001 Par Value, 10,000,000 shares authorized
and 77,755 shares issued and outstanding at September 30, 2001
and 2000, respectively 78 78
Common Stock, $.001 Par Value, 500,000,000 and 50,000,000
shares authorized and 2,247,911 and 2,217,911 shares issued
and outstanding at September 30, 2001 and 2000, respectively 2,248 2,218
Accumulated Other Comprehensive Income (Loss) (600,000) (267,300)
Additional Paid-in Capital 9,210,549 9,195,579
Deficit (8,781,125) (8,652,024)
------------ -------------
Total stockholders' equity (deficit) (168,250) 278,551
------------ -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) $ - $ 351,051
============ =============
The accompanying notes are an integral part of the financial statements.
F-4
GENESIS CAPITAL CORPORATION OF NEVADA
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED
SEPTEMBER 30, 2001 AND 2000
2001 2000
---------------- ----------------
REVENUES $ - $ -
---------------- ----------------
EXPENSES
Occupancy and property expenses 36,000 3,842
Directors fees 18,000 18,000
Management fees 18,000 18,500
Administrative and other expenses 57,101 45
---------------- ----------------
129,101 40,387
---------------- ----------------
LOSS BEFORE INCOME TAX BENEFIT (129,101) (40,387)
INCOME TAX BENEFIT - 13,732
---------------- ----------------
NET LOSS $(129,101) $ (26,655)
================ ================
NET LOSS PER BASIC AND DILUTED SHARES $ (0.058) $ (0.021)
================ ================
WEIGHTED AVERAGE BASIC SHARES OUTSTANDING 2,222,911 2,217,911
================ ================
The accompanying notes are an integral part of the financial statements.
F-5
GENESIS CAPITAL CORPORATION OF NEVADA
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
SEPTEMBER 30, 2001 AND 2000
Accumulated
Other Additional
Preferred Stock Common Stock Comprehensive Paid-in Accumulated
Shares Amount Shares Amount Income(Loss) Capital Deficit Total
--------- -------- --------- -------- ----------- ----------- ------------ -----------
Balance, September 30, 1999 932,755 $ 933 2,067,911 $ 2,068 $ - $ 9,194,829 $(8,625,369) $ 572,461
Conversion of Preferred Stock to
Common Stock (105,000) (105) 105,000 105 - - - -
Shares issued for legal services - - 45,000 45 - - - 45
Cancelled shares (750,000) (750) - - - 750 - -
Unrealized loss on securities - - - - (267,300) - - (267,300)
Net loss - - - - - - (26,655) (26,655)
--------- -------- --------- -------- ----------- ----------- ------------ -----------
Balance, September 30, 2000 77,755 78 2,217,911 2,218 (267,300) 9,195,579 (8,652,024) 278,551
Shares issued for services - - 30,000 30 - 14,970 - 15,000
Unrealized loss on securities - - - - (332,700) - - (332,700)
Net loss - - - - - - (129,101) (129,101)
--------- -------- --------- -------- ----------- ----------- ------------ -----------
Balance, September 30, 2001 77,755 $ 78 2,247,911 $ 2,248 $ (600,000) $ 9,210,549 $(8,781,125) $ (168,250)
========= ======== ========= ======== =========== =========== ============ ===========
The accompanying notes are an integral part of the financial statements.
F-6
GENESIS CAPITAL CORPORATION OF NEVADA
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000
2001 2000
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(129,101) $ (26,655)
---------- ----------
Adjustments to reconcile net loss to net cash
used in operating activities
Common stock issued for services 15,000 45
Net adjustment to write-off marketable security and
deferred tax 18,351 -
Changes in assets and liabilities
Accrued expenses, net 95,750 26,610
---------- ----------
Total adjustments 129,101 26,655
---------- ----------
Net cash used in operating activities - -
---------- ----------
NET CHANGE IN CASH AND CASH EQUIVALENTS - -
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD - -
---------- ----------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ - $ -
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
None $ - $ -
========== ==========
SUPPLEMENTAL DISCLOSURE OF NONCASH
FINANCING ACTIVITIES:
Common stock issued for services $ 15,000 $ 45
========== ==========
Write off of marketable security and deferred tax assets
Deferred tax asset (156,051)
Marketable security (195,000)
Comprehensive loss 332,700
----------
Net adjustment (18,351)
==========
The accompanying notes are an integral part of the financial statements.
F-7
GENESIS CAPITAL CORPORATION OF NEVADA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2001 AND 2000
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
--------------------------------------
Genesis Capital Corporation of Nevada (the "Company") was
incorporated in the State of Colorado in 1983. The Company has
a total of 500,000,000 and 50,000,000 authorized common shares
at September 30, 2001 and 2000, respectively, (par value
$.001) with 2,247,911 and 2,217,911 shares issued and
outstanding at September 30, 2001 and 2000, respectively, and
10,000,000 shares authorized preferred stock (par value of
$.001) with 77,755 shares issued and outstanding as of
September 30, 2001 and 2000.
In December, 1997, the Company merged with Lincoln Health
Fund, Inc. which is the company that owned land in Tarrant
County, Texas (See Note 3). In March, 1999, the company filed
an Articles of Merger in the State of Nevada and to change the
par value of its common stock. For the fiscal years ended
September 30, 2001 and 2000, the Company had only minimal
activity recorded.
As detailed in Note 7, the Company entered into a Stock
Acquisition Agreement with Christopher Astrom, Hudson
Consulting Group, Inc. and Global Universal, Inc. of Delaware
dated August 30, 2001, which closed on October 30, 2001. This
Stock Acquisition Agreement enabled Senior Lifestyle
Communities, Inc. to acquire 95% of the issued and outstanding
shares of common and preferred stock of the Company for
$315,000, enough money to pay Hudson Consulting Group, Inc.
and Global Universal, Inc. of Delaware their fees in
connection with this acquisition.
In addition to the Stock Acquisition Agreement, the Company
and Senior Lifestyle Communities, Inc. entered into a Share
Exchange Agreement and Plan of Reorganization.
Senior Lifestyle Communities, Inc. is a Nevada Corporation
engaged in the development of senior adult residences,
incorporated in August, 2001. In addition to Senior Lifestyle
Communities, Inc., the Company has Senior Adult Lifestyles,
Inc. a wholly-owned subsidiary effective October 30, 2001.
F-8
GENESIS CAPITAL CORPORATION OF NEVADA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2001 AND 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Use of Estimates
----------------
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States
of America requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosures 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.
Revenue and Cost Recognition
----------------------------
The Company's financial statements are prepared using the
accrual method of accounting. Under this method, revenues are
recognized when earned and expenses are recognized when
incurred.
Cash and Cash Equivalents
-------------------------
The Company considers all highly liquid debt instruments and
other short-term investments with an initial maturity of three
months or less to be cash equivalents.
Reclassifications
-----------------
Certain amounts for the years ended September 30, 2000, have
been reclassified to conform with the presentation of the
September 30, 2001 amounts. The reclassifications have no
effect on net income for the year ended September 30, 2000.
Income Taxes
------------
The Company has adopted the provisions of Financial Accounting
Standards Board Statement No. 109, Accounting for Income
Taxes. The Company accounts for income taxes pursuant to the
provisions of the Financial Accounting Standards Board
Statement No. 109, Accounting for Income Taxes, which requires
an asset and liability approach to calculating deferred income
taxes. The asset and liability approach requires the
recognition of deferred tax liabilities and assets for the
expected future tax consequences of temporary differences
between the carrying amounts and the tax basis of assets and
liabilities.
F-9
GENESIS CAPITAL CORPORATION OF NEVADA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2001 AND 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
------------------------------------------------------
Fair Value of Financial Instruments
The carrying amount reported in the balance sheets for cash
and cash equivalents, accounts payable and accrued expenses
approximate fair value because of the immediate or short-term
maturity of these financial instruments.
Marketable Securities
---------------------
In accordance with Statement of Financial Accounting Standards
No. 115, Accounting for Certain Investments in Debt and Equity
Securities, (SFAS 115), the Company classifies its investment
portfolio according to the provisions of SFAS 115 as either
securities being held to maturity, trading, or available for
sale. At September 30, 2000, the Company classified its
investment portfolio as available for sale and held to
maturity. Securities available for sale are carried at their
fair value with unrealized gains and losses included in
stockholders' equity.
Gain or losses from the sale or redemption of the securities
are determined using the specific identification method
calculating deferred income taxes. The asset and liability
approach requires the recognition of deferred tax liabilities
and assets for the expected future tax consequences of
temporary differences between the carrying amounts and the tax
basis of assets and liabilities.
Earnings (Loss) Per Share of Common Stock
-----------------------------------------
Historical net income (loss) per common share is computed
using the weighted average number of common shares
outstanding. Diluted earnings per share (EPS) includes
additional dilution from common stock equivalents, such as
stock issuable pursuant to the exercise of stock options and
warrants. Common stock equivalents were not included in the
computation of diluted earnings per share when the Company
reported a loss because to do so would be antidilutive for
periods presented.
F-10
GENESIS CAPITAL CORPORATION OF NEVADA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2001 AND 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
------------------------------------------------------
Earnings (Loss) Per Share of Common Stock (Continued)
-----------------------------------------------------
The following is a reconciliation of the computation for basic
and diluted EPS:
September 30, September 30,
2001 2000
----- -----
Net Loss ($ 129,101) ($ 26,655)
------------ -----------
Weighted-average common shares
outstanding (Basic) 2,247,911 2,217,911
Weighted-average common stock
equivalents:
Stock options - -
Warrants - -
------------ -----------
Weighted-average common shares
outstanding (Diluted) 2,247,911 2,217,911
============ ===========
Options and warrants outstanding to purchase stock were not
included in the computation of diluted EPS because inclusion
would have been antidilutive.
Comprehensive Income
--------------------
Statement of Financial Accounting Standards (SFAS) No. 130,
Reporting Comprehensive Income, establishes standards for
reporting and display of comprehensive income, its components
and accumulated balances. Comprehensive income is defined to
include all changes in equity except those resulting from
investments by owners and distributions to owners. Among other
disclosures, SFAS No. 130 requires that all items that are
required to be recognized under current accounting standards
as components of comprehensive income to be reported in a
financial statement that is displayed with the same prominence
as other financial statements.
F-11
GENESIS CAPITAL CORPORATION OF NEVADA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2001 AND 2000
NOTE 3- MARKETABLE SECURITIES
---------------------
In February of 2000, an acquisition agreement was completed
between the Company and Power Exploration, Inc. (Power) for
100% of the issued and outstanding shares of the Lincoln
Health Fund, Inc. (a Delaware Corporation Lincoln), a wholly
owned subsidiary of the Company, for 600,000 shares of Power's
common stock. The major asset of Lincoln was 10,687 acres of
vacant land in Ft. Worth, Texas. The value of stock received
is being classified as a marketable security, available for
sale.
As a result of this transaction, the property taxes that had
been accrued for the land were included in the acquisition
agreement and assumed by Lincoln. The accrued property taxes
were reversed in the financial statements for September 30,
2000.
The marketable security, the 600,000 shares of Power has been
valued at $-0- at September 30, 2001. The value was written
down, due to the fact that Power is a going concern entity,
and the trading value of Power's stock is virtually zero.
As noted, all losses for investments that are classified as
available for sale are reflected in the stockholders' equity
section of the balance sheet as a component of comprehensive
income.
At September 30, 2000, the marketable security was valued at
$195,000.
NOTE 4- COMMON STOCK
------------
The Company filed a plan of merger in the State of Nevada with
an effective date of March 9, 1999. As part of the agreement,
the Board of Directors approved a 2000 to 1 reverse stock
split be recorded with any fractional shares rounded up. Also,
the par value of the Nevada corporation was changed to $.001
par value. In the quarter ended March 31, 2000, 150,000 shares
of stock were issued. A total of 105,000 shares was issued as
conversion of preferred stock and 45,000 shares for legal
services during the current fiscal year. The value of the
stock issued for legal services was valued as par value.
For the year ended September 30, 2001, the total number of
authorized shares increased from 50,000,000 to 500,000,000 on
September 17, 2001. Additionally, the Company issued 30,000
shares for consulting services.
F-12
GENESIS CAPITAL CORPORATION OF NEVADA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2001 AND 2000
NOTE 5- PREFERRED STOCK
---------------
The Company's preferred stock contains a designation of $.60
cumulative convertible Preferred Stock. A total of 10,000,000
shares are authorized with 77,755 issued and outstanding as of
September 30, 2001 and September 30, 2000. The holders of the
Convertible Preferred Stock shall be entitled to receive, when
declared by the Board of Directors, dividends of $.60 per
share and no more. Also, the preferred stock is eligible to be
converted to common stock at the rate of 10 shares of common
stock for each share of preferred stock. In the year ended
September 30, 2000, a total of 105,000 shares of preferred
stock was converted into common stock.
NOTE 6- GOING CONCERN
-------------
As shown in the accompanying financial statements, the Company
incurred net losses for the years ended September 30, 2001 and
2000 and has built up substantial deficits. There is no
guarantee whether the Company will be able to generate enough
revenue and/or raise capital to support those operations. This
raises substantial doubt about the Company's ability to
continue as a going concern.
Management also states that they are confident that they can
initiate new operations and raise the appropriate funds to
continue in its pursuit of a reverse merger or similar
transaction.
The financial statements do not include any adjustments that
might result from the outcome of these uncertainties.
NOTE 7- SUBSEQUENT EVENTS
-----------------
The Company entered into a Stock Acquisition Agreement with
Christopher Astrom, Hudson Consulting Group, Inc. and Global
Universal, Inc. of Delaware dated August 30, 2001, which
closed on October 30, 2001. This stock acquisition agreement
enabled Senior Lifestyle Communities, Inc. to acquire 95% of
the issued and outstanding shares of common and preferred
stock of the Company for $315,000, enough money to pay Hudson
Consulting Group, Inc. and Global Universal, Inc. of Delaware
their fees in connection with this acquisition. The agreement
became effective on October 30, 2001.
F-13
GENESIS CAPITAL CORPORATION OF NEVADA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2001 AND 2000
NOTE 7- SUBSEQUENT EVENTS (CONTINUED)
-----------------------------
In addition to the Stock Acquisition Agreement, the Company
and Senior Lifestyle Communities, Inc. entered into a Share
Exchange Agreement and Plan of Reorganization.
Upon these agreements with Senior Lifestyle Communities, Inc.,
the Company on November 1, 2001 assumed by assignment, the
obligation of certain 8% Series SPA Senior Subordinated
Convertible Debentures in the face amount of $1,000,000
received by assignment from Senior Lifestyle Communities, Inc.
and Sea Lion Investors, LLC, Equity Planners LLC, and Myrtle
Holdings, LLC (collectively "Purchasers"), each a Colorado
limited liability company, issue the Company's debentures of
Senior Lifestyle Communities, Inc.
The proceeds of the debentures of Senior Lifestyle
Communities, Inc. were used to acquire the Company, and pay
all amounts due to the professionals engaged in the
transaction and cash flow for the development of senior
residential properties including a development located in
Connecticut.
Additionally, upon the closing of the transaction, certain
accounts payables were forgiven.
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