ITEM 1. DESCRIPTION OF BUSINESS
Pegasus Industries, Inc., formerly known as Pathfinder Corporation, a Nevada corporation (the "Company") is a holding company that, prior to February 1995 had no operating activities. As discussed below, the Company made a series of acquisitions prior to 1995 which were later rescinded, or alternatively are inactive and carried at no value on the Company's financial statements. In February 1995 the Company acquired Zearl T. Young, Incorporated ("ZTY") and experienced a change in both management and ownership control in connection with the acquisition. (See "Acquisition of ZTY" below).
The Company was originally incorporated as a Nevada corporation on November 1968 under the name Helistructures Corporation as a wholly owned subsidiary of American International, Inc. (formerly American Mining and Development Company). In January 1974, the Company changed its name from Helistructures Corporation to Midas International and in 1982 the name was changed from Midas International, Inc. to MII, Inc.
In December 1985 the Company filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code in the Central District of California. In December 1990, pursuant to the Plan of reorganization of the Company approved by the Bankruptcy court, the Company issued 19,454,000 shares of common stock to unsecured creditors for cancellation of $1,018,000 in debt. In August 1990 the Company changed its name from MII, Inc. to Pathfinder Corporation. In 1990 the Company initiated a reverse stock split whereby all outstanding shares were reversed by a factor of 1 for 100 with the stipulation that no shareholder be reduced to less than 10 post-split shares. In connection with this stipulation, the Company issued 48,576 pre-split common shares. From 1973 to 1991 the Company's activities consisted primarily of the management of its interests in various uranium mining claims.
On March 13, 1995 the Company changed its name from Pathfinder Corporation to Pegasus Industries, Inc. in connection with the acquisition of ZTY and the resulting change of control. Additionally, the Company's executive offices were moved to Dallas, Texas as a result of the change in control.
Acquisition and Disposition of Oil and Gas Interest - ---------------------------------------------------
n September 1992 the Company acquired certain oil and gas producing properties for 699,997 shares of its common stock. In 1994 the Company rescinded the acquisition and cancelled the 699,997 shares of stock it issued due to difficulties the Company encountered in obtaining clear title to the oil and gas properties.
In January 1994, the Company authorized the purchase of an office building valued at $700,000 for 700,000 shares of common stock of the Company from certain officers and directors of the Company. In February 1994 the Company rescinded the transaction and cancelled all 700,000 shares of stock issued related to the purchase.
Acquisition of Zearl T. Young, Incorporated and Change of Control - -----------------------------------------------------------------
Effective February 28, 1995, the Company acquired 100% of the outstanding common stock of Zearl T. Young, Incorporated ("ZTY") from Pegasus Ventures, Inc. ("Ventures"), a privately held Texas corporation, pursuant to a Stock Exchange Agreement in exchange for the issuance of 11,500,000 shares of the Company's common stock.
In connection with the transaction, Mr. Boudreau and Mr. Schleizer were elected to fill two of the three seats of the Company's board of directors. Kevin Chisholm, a certified public accountant in private practice, was elected to fill the remaining seat. Mr. Boudreau was subsequently elected by the Company's board to fill the positions of Chairman of the Board, President and Secretary of the Company. Mr. Schleizer was elected Chief Financial Officer and Treasurer of the Company. Mr. Boudreau resigned his position as President and Director effective December 31, 1995. Mr. Chisholm resigned his position as director effective the same date.
ZTY liquidated its assets in August and September 1997 under a Liquidation Agreement with its primary secured lender. ZTY closed the remaining stores in September 1997 after auctioning off its remaining assets.
The Company purchased certain written off accounts receivable from ZTY in October 1995 for $300,000 which ZTY utilized to pay down its indebtedness as part of a loan restructuring. The Company continues to collect those accounts as its sole ongoing business activity.
Environmental Matters - ---------------------
Compliance with the applicable federal, state and local environmental regulations has not had, and the Company does not believe that in the future such compliance will have, a material effect on its financial position, results of operations, expenditures or competitive position.
Competition - -----------
The retail merchandise trade in which ZTY was engaged is highly competitive. ZTY was unable to successfully compete due to increased competition from discount retailers and small loan companies. Despite several attempts to restructure its indebtedness and raise equity, ZTY ceased operations in September 1997.
The Company continues to collect the accounts purchased in October 1995 from ZTY. Inasmuch as the sole function of the Company is collection of bad debts from specific customers, it faces no direct competition. The Company is offering no new financing or products for sale.
Employees - ---------
As of December 31, 1997, ZTY employed 1 person in New Mexico engaged in collecting accounts. The Company currently has one employee in Dallas, Texas in an executive capacity.
ITEM 2.
ITEM 2. DESCRIPTION OF PROPERTY
The Company's headquarters are at 400 N. St. Paul, Suite 950, Dallas, Texas 75201.
ZTY owned a 5,500 square foot office building in Hobbs, New Mexico that served as its corporate office which it abandoned to the secured lender in September 1997.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any material pending litigation.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted during the fourth quarter of the fiscal year covered by this report to a vote of security holders, through solicitation of proxies or otherwise.
PART II
ITEM 5.
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The Company's Common Stock, $.01 par value ("Common Stock") is traded on an interdealer basis under the symbol PIND (formerly "PTHF"). The following table set forth the high and low bid price of the Common Stock for the period indicated as quoted from the NASDAQ Bulletin Board Listing.
There is an absence of an established public trading market, therefore the market forthe Common Stock is limited, sporadic and highly volatile.
Though no dividend restrictions exist relative to the Company's paying cash dividends, the Company has never paid cash dividends on its stock and does not anticipate doing so in the foreseeable future. Rather,the Company has determined to utilize any earnings in the operation of its business. Such policy is subject to change based on current industry and market conditions, as well as other factors beyond the control of the Company.
As of December 31, 1997, there were 6,221 shareholders of record of the Common Stock.
ITEM 6.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of significant factors which have affected registrant's financial position and operations during the year ended December 31, 1997 as compared to December 31, 1996.
In September 1997 the Company liquidated the assets of its wholly owned subsidiary Zearl T. Young, Inc. ("ZTY") under an agreement with ZTY's secured lender. ZTY ceased operations on September 6, 1997. Accordingly, the following discussions of the Company's Consolidated Statement of Operations and Liquidity and Capital Resources has been restated for the years ended December 31, 1997 and December 31, 1996 reflecting the operation of ZTY as a loss from discontinued operations.
Results of Operations - ---------------------
Financing Income for the year ended December 31, 1997 was $123,006 as compared to $162,079 for the prior year. The 24% decrease is primarily due to the business disruption of the store closings of ZTY resulting in loss of employees and a move to a new location in Hobbs, New Mexico.
Interest expense decreased from $23,465 to $15,855 for the year due to a reduction in the Company's note payable.
Expenses were $64,085 for 1997 as compared to $77,511 for the prior year due to reduced staff. Operating Income for 1997 was $43,066 compared to $61,103 for the earlier year.
The Company reported a loss from discontinued operations in 1997 of $2,859,234 which was due primarily to the closing of ZTY's business in September 1997. The loss included a $1,154,112 loss on the sale of ZTY's contract finance receivables on August 5, 1997. ZTY sold the portfolio which has a face value of $3,630,305 and a book value of $2,914,810 for $1,760,698 to World Acceptance Corp., a company based in North Carolina. The loss compared to a restated loss from discontinued operations of $2,376,722 reflecting ZTY's net operating results for 1996.
Liquidity and Capital Resources - -------------------------------
Total Assets for the year ended December 31, 1997 decreased to $37,751 from $5,217,801 at December 31, 1996 reflecting the liquidation of substantially all of the Company's assets which were held by ZTY.
Total liabilities at December 31, 1997 total $5,296,752 of which $5,165,637 represent unpaid obligations of ZTY for which the parent corporation is not responsible for and is not obligated to pay. Liabilities of the Company, excluding ZTY total $131,115 of which $129,821 represents a note payable by the Company to a lender under a term agreement requiring payments of $5,000 per month increasing to $8,000 per month by December 31, 1998. The Company is current on its obligations at December 31, 1997.
ITEM 7.
ITEM 7. FINANCIAL STATEMENTS AND SELECTED FINANCIAL DATA
The following selected financial data of the Company for fiscal years 1997, 1996 and 1995 should be read in conjunction with the financial statements and related notes included in Item 8
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTABILITY AND FINANCIAL DISCLOSURE
The Company has had no changes in or disagreements with its independent auditors during the fiscal year ended December 31, 1997.
ITEM 9.
ITEM 9. DIRECTORS AND OFFICERS OF THE REGISTRANT
As of December 31, 1997, following were the directors and officers of the Company:
Compliance with Section 16(a) - -----------------------------
Section 16(a) of the Securities Exchange Act of 1934 ("Exchange Act") requires the Company's directors, officers and persons who own more than ten percent of a registered class of the Company's equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Directors, officers and greater than ten percent beneficial owners are required by applicable regulations to furnish the Company with copies of all forms they file with the Commission pursuant to Section 16(a). The Company is not aware of any beneficial owner of more than ten percent of its registered Common Stock for purposes of Section 16(a).
Based solely upon a review of the copies of the forms furnished to the Company, the Company believes that during 1997 all filing requirements applicable to its directors and executive officers were satisfied.
ITEM 10.
ITEM 10. EXECUTIVE COMPENSATION
Executives received compensation from the Company during 1997 as follows:
ITEM 11.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of December 31, 1997 there were 14,343,091 common shares of the Company, the Company's only class of voting securities. The Company has no knowledge of any arrangements which could affect the Company.
The following table will identify as of December 31, 1997, the number and percentage of outstanding shares of common stock owned by (i) each person known to the Company who owns more than five percent of the outstanding common stock, (ii) each officer and director of the Company, and (iii) officers and directors of the Company as a group:
*Mssrs. Boudreau and Schleizer each beneficially own 50% of the common stock of Ventures which owns the 45% interest in the Company per the above table. In March 1996, Ventures distributed 1,995,840 shares of the Company stock to the John R. Boudreau Separate Property Living Trust and 1,995,840 shares to The Schleizer Family Trust.
ITEM 12.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases office space and equipment from an affiliated company owned by a shareholder for $750 per month. The Company also utilizes the same affiliate to perform accounting and administrative services on a contractual basis. Compensation paid to such affiliate in 1997 was $3,905.
PART IV
ITEM 13.
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES & REPORTS ON FORM 8-K
Documents filed as part of this report:
(a) Financial Statements
Statement Name Page No.
Pegasus Industries, Inc.
Report of Independent Certified Public Accountants............ Balance Sheet................................................. Statement of Operations....................................... Statement of Stockholders' Equity............................. Statement of Cash Flows....................................... Notes to Financial Statements.................................
(b) Reports on Form 8K
None
(c) Exhibits
Zearl T. Young, Incorporated
Liquidation Agreement................................................... 30 Zearl T. Young, Incorporated dba Western Auto Auction Sales Summaries .. 35 Norwest Letter - Sales of Accounts Receivable........................... 37
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 March 2, 1998.
PEGASUS INDUSTRIES, INC.
By: /s/ Robert W. Schleizer ------------------------------ Robert W. Schleizer, 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 capacities and on the dates indicated.
/s/ Robert W. Schleizer - ------------------------------ Robert W. Schleizer, President (1) April 13, 1998
(1) Principal executive officer
26th PLACE 2601 E. THOMAS RD. PHONE: (602) 266-2646 Clancy and Co., P.L.L.C. SUITE 110 FAX: (602)224-9496 Certified Public Accountants PHOENIX, AZ 85016 E-MAIL: CLANCYPLLC@AOL.COM
INDEPENDENT AUDITORS REPORT
Board of Directors Pegasus Industries, Inc. Dallas, Texas 75201
We have audited the accompanying consolidated balance sheet of Pegasus Industries, Inc., as of December 31, 1997 and 1996, and the related consolidated statements of operations, 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 audit.
We conducted our audit 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 audit of the financial statements provides 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 Pegasus Industries, Inc., as of December 31, 1997 and 1996, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raises doubt about the Company's ability to continue as a going concern. Management's plan in regard to these matters is also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Clancy and Co. Clancy and Co., P.L.L.C. Phoenix, Arizona March 3, 1998
PEGASUS INDUSTRIES, INC. CONSOLIDATED BALANCE SHEET DECEMBER 31, 1997 AND 1996
ASSETS
The accompanying notes are an integral part of these financial statements.
PEGASUS INDUSTRIES, INC. CONSOLIDATED BALANCE SHEET DECEMBER 31, 1997 AND 1996
LIABILITIES AND STOCKHOLDERS EQUITY
The accompanying notes are an integral part of these financial statements.
PEGASUS INDUSTRIES, INC. CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
The accompanying notes are an integral part of these financial statements.
PEGASUS INDUSTRIES, INC. CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
The accompanying notes are an integral part of these financial statements.
PEGASUS INDUSTRIES, INC. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
The accompanying notes are an integral part of these financial statements.
PEGASUS INDUSTRIES, INC. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
The accompanying notes are an integral part of these financial statements.
PEGASUS INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 1997 and 1996
NOTE 1 - ORGANIZATION ------------
Pegasus Industries, Inc. (The Company), was incorporated under the name Helistructures Corporation on November 25, 1968 under the laws of the State of Nevada with an authorized capital of 2,500 shares of common stock with no par value. On January 12, 1973, the Company filed restated Articles of Incorporation changing its name to Midas International, Inc. and increasing its authorized capital to 125,000 shares of common stock with a par value of $.20. The restated articles supersede the original Articles of Incorporation and all amendments heretofore made thereto prior to this date.
On December 14, 1982, the Company amended its Articles of Incorporation changing its name to MII Holdings, Inc. and increasing its capital to 20,000,000 shares of common stock with a par value of $.01.
In December, 1985, the Company applied for and was allowed protection under Chapter 11 of the Bankruptcy Court in the Central District of California. On December 19, 1989, the Bankruptcy court accepted the Order of Confirmation of the Trustee's second amended Chapter 11 plan of Reorganization which in effect returned all assets of the Company to creditors for cancellation of all debt. The Company issued a total of 19,454,500 shares of common stock to the unsecured creditors for cancellation of $1,018,000 of debt.
On January 19, 1990, the Company amended its Articles of Incorporation increasing its authorized capital to 50,000,000 shares of common stock with a value of $.01.
On August 7, 1990, the Company amended its Articles of Incorporation changing its name to Pathfinder Corporation and authorizing a reverse split of 100 to 1 with the stipulation that no shareholders be reduced to less than 10 shares, the Company issued an additional 48,576 shares to maintain the 10 share minimum.
On September 30, 1992, the Company acquired oil and gas producing properties for 699,997 shares of common stock. On September 12, 1994, the purchase agreement was rescinded and the shares of common stock were returned and canceled.
On March 30, 1995, the Company amended its Articles of Incorporation changing its name to Pegasus Industries, Inc.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The Company has suffered recurring losses from operations, has a net capital deficiency and is in several loan agreement items, that raises doubt about the Company's ability to continue as a going concern.
PEGASUS INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 1997 and 1996
NOTE 1 - ORGANIZATION (CONTINUED) ------------------------
The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The Company's principal subsidiary ceased operations on September 6, 1997.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES -------------------------------
A. Basis of Financial Statement Presentation -----------------------------------------
The records of the Company (A Corporation) are maintained using the accrual method of accounting.
B. Principles of Consolidation ---------------------------
The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Zearl T. Young, Inc. Intercompany transactions have been eliminated in consolidation.
C. Company's Activities and Operating Cycle ----------------------------------------
The Company's business consists of the sale of retail consumer products, primarily consumer durable goods such as furniture, appliances, carpets and electronics and the related financing of those purchases with consumer finance contracts. The Company experiences the normal cyclical fluctuations of most retailers with operations during the fourth quarter (October through December) comprising a disproportionate portion of its annual revenues and gross profits.
D. Cash and Cash Equivalents -------------------------
The Company considers all highly liquid debt instruments with a maturity of three months or less to be cash and cash equivalents.
E. Inventories -----------
The Company determines its inventory using the lower of cost (first-in, first- out) or market.
PEGASUS INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 1997 and 1996
NOTE 2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) -------------------------------------------
F. Property, Equipment and Depreciation ------------------------------------
The cost of property and equipment is depreciated over the useful lives of the related assets. The straight line method is utilized for substantially all assets for financial reporting, but accelerated methods are used for income tax reporting. The estimated lives used in determining depreciation are:
G. Investment in Life Insurance ----------------------------
The Company's investment in corporate owned life insurance policies is reported net of policy loans. The net life insurance expense, including interest expense, is included in General and Administrative Expense in the Statement of Operations. The policies have been pledged to lenders. During September 1997, the policies were assigned to lenders in connection with the closing of the Company's principal segment.
H. Earnings or (Loss) Per Share ----------------------------
Earnings or (loss) per share is computed using the weighted averaged number of shares of common stock outstanding.
I. Use of Estimates ---------------- Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing the financial statements.
J. Presentation ------------
Certain accounts from prior years have been reclassified to conform with the current year's presentation.
K. Pending Accounting Pronouncements ---------------------------------
It is anticipated that current pending accounting pronouncements will not have an adverse impact on the financial statements of the Company.
PEGASUS INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 1997 and 1996
NOTE 3 - RECEIVABLES -----------
During the year ended December 31, 1996, the Company's revenue and receivables were from retail sales to customers in the Lea County, New Mexico trade area through several retail outlets selling a variety of merchandise and services. During September 1997, this segment of the Company's business was closed. Receivables consist of the following at December 31, 1996:
The following is an aging of receivables at December 31, 1996:
NOTE 4 INVESTMENT IN COOPERATIVE SECURITIES ------------------------------------
In 1996, the Company did business with a supplier which operated as a cooperative. Under the cooperative structure, purchasers received restricted stock and notes. The stock and notes are recorded at cost by the Company. The stock is subject to certain buy-sell restrictions. The notes have maturities dated December 31,1999. During September 197, this segment of the Company's business was discontinued. The balance is as follows at December 31, 1996:
PEGASUS INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 1997 and 1996
NOTE 5 PROPERTY AND EQUIPMENT ----------------------
Property and equipment consists of the following at December 31, 1997 and 1996:
Depreciation expense charged to operations in 1997 and 1996 was $400 and $79,077, respectively.
Expenditures for repairs and maintenance and minor renewal and improvements are charged to operations in the year incurred. Major renewals and improvements are capitalized. During September 1997, all of the property and equipment of this segment of the Company's business was sold.
NOTE 6 FINANCING CONTRACTS RECEIVABLE ------------------------------
The Company finances customer purchases on various terms not exceeding 36 months. Interest charged varies and currently is 21%. There were 9,699 customer contracts outstanding at December 31, 1996. The contracts are secured by furniture, appliances or other consumer products purchased. On August 5, 1997, the Company sold all Financing Contracts receivable. During September 1997, this segment of the Company's business was discontinued. At December 31, 1996, the balance consists of:
PEGASUS INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 1997 and 1996
NOTE 7 - INCOME TAXES ------------
As of December 31, 1997 and 1996, the Company has net operating losses of approximately $8,946,990 and $6,127,977, which will expire in the years 2011 and 2012, if not utilized. The estimated deferred income tax benefit net of a valuation allowance for doubtful realization, consists of:
NOTE 8 - ACCOUNTS PAYABLE ----------------
The following is an aging of accounts payable at December 31, 1997 and 1996.
NOTE 9 - SHORT TERM DEBT ---------------
PEGASUS INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 1997 and 1996
At December 31, 1996, the Company had available for future use a standby letter of credit in the amount of $50,000. The maturity date on the standby letter of credit is January 31, 1997. Note was renewed when matured. The Parent Company has no responsibility for any of the debts of its principal subsidiary, Zearl T. Young, Inc.
NOTE 10 - PREFERRED STOCKHOLDERS' EQUITY IN SUBSIDIARY --------------------------------------------
As a part of the bankruptcy (Chapter 11) plan and quasi-reorganization of the Company's subsidiary, all common shares of the then-existing shareholders of the subsidiary were canceled, with the existing shareholders accepting preferred shares in the subsidiary and allowing the subsidiary to issue new common stock tot he new shareholders who purchased the subsidiary as of November 1, 1994, all prior to the merger with the Company.
PEGASUS INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 1997 and 1996
NOTE 11 - TRANSACTIONS WITH RELATED PARTIES ---------------------------------
The Company's principal subsidiary rents all but one of its buildings from Young's Investment Corporation. Young's Investment Corporation is 100% owned by Zearl T. Young, who owns 50% of the Series A preferred stock of Zearl T. Young, Inc., a wholly owned subsidiary of the Company. The amount of rent was $240,000 for the years ended December 31, 1997 and 1996. The Company was in arrears, in rent payments, as of December 31, 1997 and 1996 in the amount of $181,275 and $120,000. The Company pays certain expenses related to the buildings, such as property taxes, insurance and repairs and maintenance.
The Company's principal subsidiary also pays management and director fees to companies that are related through common ownership. These amounts totaled $0 in 1997, $48,000 in 1996 and $72,000 in 1995.
NOTE 12 - DISCONTINUED OPERATIONS ------------------------
The following is a condensed balance sheet and statement of operations of its wholly owned subsidiary, Zearl T. Young, Inc., at December 31, 1997 and 1996:
PEGASUS INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 1997 and 1996
NOTE 12 - DISCONTINUED OPERATIONS (CONTINUED) -----------------------------------
NOTE 13 - SUBSEQUENT EVENTS -----------------
On March 6, 1996, the Board of Directors adopted a resolution to issue a new class of preferred stock, with the rights, privileges and preferences to be determined at a future date.
On September 6, 1997, the Company's principal subsidiary ceased operations and sold all of its assets.