Item 1. Business ------- --------
On October 3, 1990, GVC Venture Corp. (the "Company"), through its wholly owned subsidiary Preston Engravers, Inc. ("Preston"), completed the purchase of the assets of the Preston Engravers' Division of Quincy Technologies, Inc. Preston was engaged in the manufacture of rotary cutting die tools. Unless otherwise indicated herein, references to the Company include the Company's subsidiaries. On August 27, 1993, Preston sold substantially all of its operating assets to Roto-Die Company, Inc. ("Roto-Die") and Roto-Die assumed certain of Preston's liabilities.
The Company currently engages in no operating activities other than seeking potential opportunities for an acquisition, sale, merger or liquidation. Management , while it looks at many opportunities, investigated at length two opportunities. Neither of these resulted in any meeting of the minds and all activity to these two appears to have ceased.
Employees ---------
The Company currently has no full time employees.
Executive Officers of the Registrant ------------------------------------
Name Position Presently Held with Company ---- ------------------------------------
Russell Banks Chairman of the Board of Directors (Chief Executive Officer) and Director
Gordon L. Banks President and Director
Marc J. Hanover Vice President Finance, Secretary and Treasurer (Principal Chief Financial Officer and Accounting Officer)
Russell Banks, 82, has served as the Company's Chief Executive Officer since its inception, first as President of the Company until June 1988 and since then as Chairman of the Board of Directors, devoting part of his time (less than 5%), to the management of the Company. From 1961 through June 8, 1995, Mr. Banks's principal occupation was as President, Chief Executive Officer and a Director of Grow Group, Inc. Imperial Chemical Industries PLC ("ICI") acquired Grow Group, Inc, by means of a cash tender offer in June 1995. Mr. Banks had been retained as a consultant to ICI for a year.
Gordon L. Banks, 46, has served as President of the Company since June 1988, after service as Vice President of the Company since its inception.
Marc J. Hanover, 51, has served as Vice President Finance and Treasurer of the Company since its inception.
None of the above Officers have received any remuneration from the Company since December 1993 and devote only a minimal amount of time to the affairs of the Company other than seeking potential opportunities, etc.
Item 2.
Item 2. Properties ------- ----------
The Company's mailing address is 425 East 58th Street, Suite 31C, New York, NY 10022-2300.
Item 3.
Item 3. Legal Proceedings ------- -----------------
The Company is not aware of, nor is it a party to, any legal proceeding.
Item 4.
Item 4. Submission of matters to a Vote of Security Holders ------------ ----------------------------------------------------
No matters were submitted to shareholders during the twelve months ended June 30, 2001.
PART II
Item 5.
Item 5. Market for Registrant's Common Equity and related ------- ------------------------------------------------- Stockholder Matters -------------------
The Company's Common Stock was quoted through the National Association of Securities Dealers Automated Quotations Systems (NASDAQ) under the symbol GPAX until August 6, 1992, at which time it was deleted from such system for failure to meet NASDAQ's minimum bid requirements. The Company is currently quoted on the NASDAQ Bulletin Board. The following table sets forth the high and low bid prices for the Company's Common Stock for each quarterly period during the two fiscal years ended June 30, 2001 and 2000, as reported by the Bulletin Board. The prices are without markups, markdowns or commissions.
Fiscal 2001 High Low ----------- ---- --- First Quarter 1) Second Quarter 2) Third Quarter 3) Fourth Quarter 4)
Fiscal 2000 ----------- First Quarter No trades reported for the Quarter Second Quarter 5) Third Quarter 6) Fourth Quarter 7)
1) During the First Quarter there were trades on three occasions. The high price was $ .01 per share and the low price was $ .001 per share.
2) During the Second Quarter there were trades on three occasions. The high price was $ .05 per share and the low price was $ .001 per share.
3) During the Third Quarter there were three trades at $ .001 per share.
4) During the Fourth Quarter there were trades on two occasions. The high price was $ .003 per share and the low price was $ .001 per share.
5) During the Second Quarter there were trades on seven occasions. The high price was $ .125 per share and the low price was $ .001 per share.
6) During the Third Quarter there were trades on three occasions. The high price was $ .02 per and the low price was $ .01 per share.
7) During the Fourth Quarter there were trades on five occasions. The high price was $ .01 per share and the low price was $ .001 per share.
To date the Company has not paid any cash dividends, and it is not anticipated that dividends will be paid in the foreseeable future.
As of September 20, 2001, there were approximately 3,807 holders on record of the Company's Common Stock.
Item 6.
Item 6. Selected Financial Data ------- -----------------------
The following table sets forth selected financial information relating to the consolidated results of operations and financial position of the Company and its subsidiaries for each of the five years ended June 30, 2001. These statements should be read in conjunction with the Consolidated Financial Statements of the Company and notes thereto contained in Item 8 of this Report.
(1) After fiscal 1994 to date, the Company continues to have no revenues as it is engaged in no operating activities. (2) Based upon the weighted average shares of Common Stock outstanding of 3,948,044 in 2001, 3,198,043 shares in 2000, 3,114,710 shares in 1999, 3,008,176 shares in 1998, and 2,439,523 shares in 1997.
Item 7.
Item 7. Management's Discussion and Analysis of Financial ------ Condition and Results of Operations -----------------------------------
The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements and notes thereto contained in Item 8
Item 8. Financial Statements and Supplementary Data ------- -------------------------------------------
The following consolidated financial statements of the Company identified below are contained in this report on the pages indicated:
Page ----
Report of Independent Auditors .......................................... 8
Consolidated Financial Statements:
Consolidated Balance Sheets as of June 30, 2001 and 2000.............................................. 9
Consolidated Statements of Operations for the years ended June 30, 2001, 2000 and 1999................... 10
Consolidated Statements of Stockholders' Equity (Deficit) for the years ended June 30, 2001, 2000 and 1999................................................... 11
Consolidated Statements of Cash Flows for the years ended June 30, 2001, 2000, and 1999.................. 12
Notes to Consolidated Financial Statements................. 13
All other schedules for which provision is made in the applicable accounting regulation of the Securities Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted.
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders GVC Venture Corp. and Subsidiaries
We have audited the accompanying consolidated balance sheets of GVC Venture Corp. and subsidiaries (collectively, the "Company") as of June 30, 2001 and 2000, and the related consolidated statements of operations, stockholders' equity (deficit), and cash flows for each of the three years in the period ended June 30, 2001. 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 auditing standards generally accepted in the United States. 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 consolidated financial position of GVC Venture Corp. and subsidiaries at June 30, 2001 and 2000, and the results of their operations and their cash flows for each of the three years in the period ended June 30, 2001 in conformity with accounting principles generally accepted in the United States.
/s/Ernst & Young LLP
New York, New York August 31, 2001
See Notes to Consolidated Financial Statements
GVC VENTURE CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note A - Accounting Policies and Basis of Presentation ------------------------------------------------------
The Company currently engages in no operating activities other than seeking potential opportunities for an acquisition, sale, merger or liquidation.
Consolidated: The Consolidated Financial Statements include the accounts of the Company and its subsidiaries. Significant intercompany transactions and accounts have been eliminated in consolidations.
Income Taxes: The Company has operating loss carryforwards of $12,283,000 which expire as follows; $110,000 - 2002; $4,025,000 - 2003; $5,161,000 - 2004; $499,000 - 2005; $329,000 - 2006; $301,000 - 2007; $571,000 - 2008; $929,000 - 2009; $99,000 - 2010; $34,000 - 2011, $34,000 - 2012, $34,000 - 2013, $40,000 - 2014, $37,000 - 2015 and $80,000 - 2016.
A full valuation allowance has been recorded as a reserve against deferred tax assets due to the Company's history of operating losses.
Depreciation: Depreciation is computed principally by the straight-line method over the estimated useful lives of the assets.
Net Loss Per Share: Basic and diluted loss per share is based on the weighted average number of shares outstanding in fiscal 2001, 2000 and 1999. Basic and diluted loss per share are equivalent for all periods presented, as there is a loss from operations in each period.
Cash Equivalents: The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
Note B - Commitments and Contingencies: ---------------------------------------
Rental expenses for leases for continuing operations was $0, $0 and $0 in 2001, 2000 and 1999, respectively. Future minimum rental commitments at June 30, 2001 were $0.
Note C - Accounts Payable and Accrued Expense ---------------------------------------------
Accounts payable, accrued expenses and other current liabilities consist of the following: June 30, June 30, 2001 2000 ---- ---- (In thousands) ------------------------------- Trade creditors $ 5 $ 2 Professional fees 8 9 State & Local Taxes 13 13 ------- ------- Total $ 26 $ 24 ======= =======
Note D - Incentive Plan -----------------------
The Company has an incentive plan covering 1,250,000 shares of its common stock for restricted stock awards and stock options.
In fiscal 1999 options to purchase 10,000 shares were granted. No options were granted during fiscal 2000. In fiscal 2001 options to purchase 25,000 shares were granted. At June 30, 2001, there were options to purchase 10,000 and 25,000 shares issued and outstanding at an exercise price of $.22 and $.10 per share, respectively.
Note E - Quasi Reorganization -----------------------------
In 1990, the Company established a new basis for accounting for assets, liabilities and stockholders' equity. There were no changes in the historical asset values of the Company as fair values were not significantly different and as a result, the paid-in-capital and the deficit of the Company were reduced by $26,070,000.
Item 9.
Item 9. Changes in and Disagreements with Accountants on ------- Accounting and Financial Disclosures. ------------------------------------------------
None
Part III
Item 10.
Item 10. Directors and Executing Officers of the Registrant -------- --------------------------------------------------
The following information is given with respect to each director and executive officer of the company. Position presently held with Company.
Russell Banks Chairman of the Board of Directors (Chief Executive Officer) and Director
John J. Hoey Director
Cornelius J. Reid, Jr. Director
Gordon L. Banks President and Director
Marc J. Hanover Vice President Finance, Secretary and Treasurer
Russell Banks, 82, has served as the Company's Chief Executive Officer since its inception, first as President of the Company until June 1988 and since then as Chairman of the Board of Directors, devoting part of his time (less than 5%), to the management of the Company. From 1961 through June 8, 1995, Mr. Banks's principal occupation was as President, Chief Executive Officer and a Director of Grow Group, Inc. Imperial
Chemical Industries PLC ("ICI") acquired Grow Group, Inc, by means of a cash tender offer in June 1995. Mr. Banks had been retained as a consultant to ICI for a year.
Gordon L. Banks, 46, has served as President of the Company since June 1988, after service as Vice President of the Company since its inception.
John J. Hoey, 62, was President, Chief Executive Officer and Director of Hondo Oil & Gas Inc. ("Hondo"), a publicly quoted oil and gas company, until it was merged into Lonmin, Plc. (UK) on December 23, 1998. He became a Director of Hondo in June 1993 and CEO on December 1, 1993. He is also the President of Beneficial Capital Corp., which wholly owns, controls, or has a significant equity interest in public and private oil and gas companies, proprietary schools, brew pubs, etc. He has been a Director of Beneficial Capital Corp. for more than the past five years. Mr. Hoey also served as President and a director of Atlantic Refining and Marketing Corp., a marketer of refined petroleum products, for more than five years prior to its sale to Sun Company in November 1988 and Atlantic Fuels Marketing Corp. (formerly Ultramar Petroleum Inc.) prior to its liquidation and sale of operating divisions in 1991.
Cornelius J. Reid., 77, has, since November 1989, been Vice Chairman of AON Insurance Services of New York and, for more than five years prior thereto was Chairman, Chief Executive Officer and a Director of Rollins Hudig Hall of New York, Inc. (formerly Rollins Burdick Hunter), an insurance brokerage firm. Rollins Hudig Hall provided insurance brokerage services for the Company.
Marc J. Hanover, 51, has served as Vice President Finance, Treasurer and Secretary of the Company since its inception.
Gordon L. Banks is the son of Russell Banks. Marc J. Hanover is the nephew of Russell Banks' wife. None of the other directors or officers are related.
Pursuant to a Warrant Agreement entered into between Grow (since acquired by "ICI") and the Company in connection with the distribution on June 17, 1987 of the Company's common stock by Grow to its shareholders, the Company has agreed to use its best efforts to cause Russell Banks (or, if he no longer is an Officer of Grow, a person approved by Grow) to be nominated and elected to serve on the Company's Board of Directors. This obligation continues so long as Grow holds the warrant issued under the Warrant Agreement or shares issued upon the exercise of such warrants representing in the aggregate at least 5% of the outstanding Common Stock of the Company. In addition, in view of Grow's investment in the Company (including capital contributions and the foregoing warrant), and to provide continuity of management, the Board of Directors of Grow and the Company have requested Russell Banks to serve as Chief Executive Officer of the Company and to spend a portion of his time in the management of the Company. The Warrant expired on June 30, 1998 and accordingly the company believes that Grow (and/or ICI) no longer has any rights or interest in the matter discussed above.
Item 11.
Item 11. Executive Compensation --------
Set forth below is information pertaining to the compensation awarded by the Company to its executive officers in fiscal 1997 and 1998.
* No salaries have been paid since December 1993.
No options have been exercised and there are 10,000 and 25,000 options outstanding at $.22 and $.10 per share, respectively.
Standard Remuneration of Directors
The Company has discontinued its practice of paying non-employee directors an annual retainer of $5,000 and a fee of $500 for participating in each Board or Committee meeting. It is anticipating that the payment of such retainer and fees will be resumed after the Company has acquired a business. All directors are reimbursed for expenses incurred in attending Board and Committee meetings.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners -------- and Management -----------------------------------------------
The following table sets forth information, at September 20, 2001 as to the only person (including any "group" as the term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) known by the Company to own beneficially more than five percent of the outstanding shares of Common Stock of the Company, its only class of voting securities:
---------------------------------
(1) Percent of class for the named person assumes the issuance of the shares subject to the exercisable portion of the options or warrants held by such person but not other stock issuances (other than presently outstanding stock).
(2) Includes 294,156 shares of common stock owned by a trust of which Mr. Banks is the trustee.
The following table sets forth information, at September 20, 2001, as to the beneficial ownership of the Company's Common Stock by (i) each director of the Company, (ii) directors and officers of the Company as a group:
Item 13.
Item 13. Certain Relationships and Related Transactions -------- ----------------------------------------------
None
Item 14.
Item 14. Exhibits, Financial Statement Schedules, and Reports On Form 8-K. ----------------------------------------------------
(a) (1) Financial Statements. ------------------------------
The Consolidated Financial Statements of the Company identified below are contained in Item 8 of this Report on the pages indicated:
The schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted.
Exhibits --------
++2.1 Purchase Agreement dated as of August 29, 1990 by and among Quincy Technologies, Inc. and Preston Acquisition Inc. (Exhibit 2.1)
^2.2 Purchase Agreement dated as of August 27, 1993 by and between Preston and Roto-Die (Exhibit 2.2)
*3.1 Restated Certificate of Incorporation of the Company. (Annex C to the company's information as part or its registration of securities on Form 10)
+3.2 By Laws of the Company, as amended (Exhibit 3.2).
*4.1 Certificate of Common Stock, par value $.10 per share, of the Company (Exhibit 4.1).
X10.1 Warrant Agreement dated June 1, 1987 between Grow and the Company (Exhibit 10.1).
!10.2 Form of Subordinated Convertible Debenture issued by Preston, a subsidiary of the Registrant (Exhibit 10.2).
!10.3 Form of equipment lease between Preston, a subsidiary of the Registrant and Lessor (Exhibit 10.3).
!10.4 Registrant's Executive Incentive Plan, as amended (Exhibit 10.4).
(b) Reports on Form 8-K -------------------
On September 9, 1993 the Company filed a current Report on Form 8-K disclosing under Item 2 the Disposition of Certain Assets.
+ Filed as the parenthetically indicated exhibit to Company's Annual Report on Form 10-K for the year ended June 30, 1990, File No. 0-15862.
* Filed as the parenthetically indicated exhibit to Amendment No. 1 to the Company's Registration of Securities on Form 10, File 10, File No. 0-15862
X Filed as the parenthetically indicated exhibit to the Company's Annual Report on Form 10-K for the year ended June 30, 1987, File No. 0-15862.
++ Filed as the parenthetically indicated exhibit to the Company's current report in Form 8-K dated on or about October 3, 1990, File No. 0-15862.
! Filed as the parenthetically indicated exhibit to the Company's Annual Report on Form 10-K for the year ended June 30, 1992.
^ Filed as the parenthetically indicated exhibit to the Company's registration on Form 8-K dated September 9, 1993.
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.
GVC VENTURE CORP.
Dated: September 20, 2001 By: /s/Russell Banks ------------------------- Russell Banks, Chairman
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 and on the dates indicated.
By: /s/Russell Banks ------------------------- Russell Banks, Chairman of the Board of Directors (Principal Executive Officer) and Director Date: September 20, 2001
By: /s/Gordon Banks ------------------------- Gordon Banks, President and Director Date: September 20, 2001
By: /s/Marc Hanover ------------------------- Marc Hanover, Vice-President Finance and Treasurer (Principal Chief Financial Officer and Accounting Officer Date: September 20, 2001
By: /s/John J. Hoey ------------------------- John J. Hoey, Director Director Date: September 20, 2001
By: /s/Cornelius J. Reid, Jr. ----------------------------- Cornelius J. Reid, Jr. Director Date: September 20, 2001
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.
GVC VENTURE CORP.
Dated: September 20, 2001 By: /s/Russell Banks ------------------------- Russell Banks, Chairman
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 and on the dates indicated.
By: /s/Russell Banks ------------------------- Russell Banks, Chairman of the Board of Directors (Principal Executive Officer) and Director Date: September 20, 2001
By: /s/Gordon Banks ------------------------- Gordon Banks, President and Director Date: September 20, 2001
By: /s/Marc Hanover ------------------------- Marc Hanover, Vice-President Finance and Treasurer (Principal Chief Financial Officer and Accounting Officer Date: September 20, 2001
By: /s/John J. Hoey ------------------------- John J. Hoey, Director Director Date: September 20, 2001
By: /s/Cornelius J. Reid, Jr. ----------------------------- Cornelius J. Reid, Jr. Director Date: September 20, 2001