UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549
                                   FORM 10-KSB

(Mark One)
[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934 [Fee Required]

For the fiscal year ended          June 30, 1996
                          ------------------------------

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
     EXCHANGE ACT OF 1934 [No Fee Required]

For the transition period from            to

Commission file number 1-10320

                             FBR CAPITAL CORPORATION
                 (Name of small business issuer in its charter)

             Nevada                                      13-3465289
-------------------------------            ------------------------------------
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
 incorporation or organization)
  
14988 N. 78th Way, Suite 203, Scottsdale, Arizona                  85260
-------------------------------------------------               ----------
   (Address of principal executive offices)                     (Zip Code)

Issuer's telephone number:   (602) 922-5213
                           ------------------
Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:

         Title of each class
         -------------------
         Common Stock, par value $.005 per share

     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the Securities  Exchange Act of 1934 during the preceding
12 months (or for such shorter  period that the issuer was required to file such
reports),  and (2) has been subject to such filing  requirements for the past 90
days.     Yes [X]   No [ ]

     Check if there is no disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-B contained  herein,  and will not be contained,  to the best of
issuer's knowledge,  in definitive proxy or information statements  incorporated
by  reference  in Part III of this  Form  10-KSB or any  amendment  to this Form
10-KSB.       [ ]

     State issuer's revenues for its most recent fiscal year:   $7,583,494

     As of September 30, 1996,  the aggregate  market value of the  Registrant's
Common Stock (based on the reported  last sale price on the OTC Bulletin  Board)
held by non-affiliates of the Registrant was $2,315,302.

     Transitional Small Business Disclosure Format:    Yes [  ]    No [X]

     As of September 30, 1996,  4,636,705  shares of  Registrant's  Common Stock
were outstanding.



<PAGE>
                                     PART I

ITEM 1.   BUSINESS.

Historical Overview

     The Company was  incorporated  under the laws of Nevada in 1988. Until June
28, 1996, it was engaged in the business of developing and marketing fragrances,
cosmetics, skin treatment and personal care products.

     Sale of Assets. On June 28, 1996,  effective for accounting  purposes as of
June 30, 1996, the Company sold to Parlux Fragrances, Inc. ("Parlux"),  pursuant
to the Asset Purchase  Agreement  dated January 31, 1996 between the Company and
Parlux, virtually all of the assets,  properties and rights owned by the Company
in connection with its business ("Asset Sale") in consideration for (i) $750,000
in cash, (ii) 370,000 shares of the Common Stock of Parlux ("Parlux Stock"), and
(iii) the  assumption  by Parlux of (a)  liabilities  under  certain  leases for
periods  from and after the closing  date,  (b)  liabilities  of the Company set
forth on the  Company's  balance sheet dated  September 30, 1995 (but  expressly
excluding  any  liability   with  respect  to  the  Company's  10%   Convertible
Subordinated Promissory Notes due January 15, 1996 ("Notes")) to the extent such
liabilities  existed on the closing  date,  (c)  additional  liabilities  of the
Company of the types  reflected  on the  balance  sheet as the same arose in the
ordinary course of the business between  September 30, 1995 and the closing date
and which are reflected on the Company's closing date balance sheet, and (d) all
obligations  under  contracts,  customer  orders,  purchase  orders,  and  other
agreements and commitments  that were included in the assets acquired by Parlux.
Parlux did not assume the following  liabilities of the Company: (i) liabilities
and  obligations to the Company's  employees,  (ii) legal,  accounting and other
fees,  taxes and other expenses  incurred in connection with the sale of assets,
(iii) taxes (other than income  taxes) for periods prior to the closing date and
income taxes for all periods,  (iv)  liabilities and obligations with respect to
assets not acquired and (v) liabilities and obligations  arising from pending or
threatened  litigation  or claims  against  the  Company.  Pursuant to the Asset
Purchase  Agreement,  the Company agreed to indemnify Parlux with respect to any
claims caused by or arising from (i) any  misrepresentation,  breach of warranty
or  breach  of any term or  provision  of the Asset  Purchase  Agreement  by the
Company to a maximum amount of $3,700,000  (which amount, at September 30, 1996,
was in excess of the value of the Company's assets), provided such claim is made
in writing within two years after the closing,  (ii) any liabilities not assumed
by Parlux or (iii) liabilities (other than assumed liabilities) arising from the
operation of the Company's  business  prior to the closing.  Conversely,  Parlux
agreed to indemnify the Company with respect to claims caused by or arising from
(i) any misrepresentation, breach of warranty or breach of any term or provision
of the Asset  Purchase  Agreement  by  Parlux,  provided  such  claim is made in
writing  within two years after the  closing,  (ii) any  liabilities  assumed by
Parlux, or (iii) any liability arising from the operation of the business of the
Company by Parlux after the closing.  No indemnification  rights are enforceable
until the aggregate amounts of claims subject to such rights in favor of a party
exceeds $10,000.

     In connection  with the  transaction,  Parlux  entered into a  Registration
Rights  Agreement in favor of the Company pursuant to which Parlux agreed to use
its best efforts to register the Parlux Stock under the  Securities Act of 1933,
as  amended,  on demand and at any time Parlux  proposed to register  any of its
equity securities under the Securities Act, without cost to the Company. On July
1, 1996, the Company made a demand on Parlux to register the Parlux Stock and it
was registered in August 1996.

     Completion of Exchange Offer.  Simultaneously with the closing of the Asset
Sale, the Company  completed an exchange offer with the holders of the Company's
Notes ("Exchange Offer"),  pursuant to which the holders of $5,040,750 aggregate
principal  amount (97.7% of the principal  amount  outstanding)  tendered  their
Notes in exchange  for an aggregate of 594,550  shares of the  Company's  Common
Stock,   par  value   $.005  per  share,   and  517  shares  of  the   Company's
newly-authorized  Series A Preferred Stock ("Preferred  Stock"),  at an exchange
ratio of 2,300 shares of the  Company's  Common Stock and two shares of Series A
Preferred Stock for each $19,500 principal amount Note. The total amount of debt
(including principal and unpaid but accrued interest) discharged pursuant to the
exchange amounted to $5,970,472.

                                       2

<PAGE>

     Change in  Management.  In connection  with the  completion of the Exchange
Offer,  all of the officers and directors of the Company resigned and Charles D.
Snead,  Jr. and Stephen T. Meadow  assumed  their  positions as directors of the
Company,   to  which  they  had  been   elected  at  the   Special   Meeting  of
Stockholders,of  the  Company  held on May 31,  1996.  Simultaneously  with  the
closing of the Exchange Offer,  Mr. Snead was appointed  President and Treasurer
(and principal  executive,  accounting and financial officer) and Mr. Meadow was
appointed Secretary of the Company.

     Change  in Name.  On July 1,  1996,  the  Company  filed a  Certificate  of
Amendment  to its  Articles of  Incorporation  to change its name from  "Richard
Barrie Fragrances, Inc." to "FBR Capital Corporation."
Description of Present Business.

Description of Present Business

     Since the Asset Sale,  the  Company's  operations  have been limited to the
conduct  of  administrative  activities  such as moving its  principal  place of
business,  establishing new bank accounts,  paying indebtedness  remaining after
the Asset  Sale and other  general  corporate  activities.  It has also begun to
identify and conduct discussions with respect to a possible business combination
with one or more  entities  interested  in  acquiring  or being  acquired by the
Company.  The Company is free to investigate  businesses of essentially any kind
or nature,  including but not limited to,  finance,  technology,  manufacturing,
service,  research and  development,  healthcare,  communications,  insurance or
transportation. While the company has not chosen any particular area of business
in which it may propose to engage and has not conducted any market  studies with
respect to any business, property or industry, the directors of the Company have
considered the strengths and weaknesses of the Company and  established  certain
initial  criteria  for its  search.  The  Company  will  first  seek a  business
combination  with a company  having a  business  or line of  products  with good
prospects for future profits and growth. In view of the Company's small size and
book  value,  the  appropriate  candidate  is  expected  to  be an  emerging  or
developing company. The prospective candidate should desire to become a publicly
listed  company  through  utilization  of the quotation of the Company's  Common
Stock on the NASD's OTC  Bulletin  Board.  It should  also have an  interest  in
acquiring  the  Company's  cash and  should  qualify  to use the  Company's  net
operating loss carryforwards ("NOLs"). Subject to possible limitations, the NOLs
might be available to reduce taxes on future income,  provided that the combined
business  continues  in the same  line of  business  in which  the  Company  was
formerly  engaged.  Utilization of the NOLs may be a value enhancing element for
the Company but may be very difficult to accomplish. Accordingly, this criterion
will not limit the types of businesses included in the Company's search.

     Several  companies have been  identified  which appear to meet the criteria
set forth above and  discussions  are in progress with one of them.  There is no
assurance of the  availability,  viability or success of any  acquisition or the
results of  operations  of the Company in  connection  with any  acquisition  or
business  venture.  Even if a suitable  candidate for a business  combination is
found and  negotiations  are  successfully  completed,  there is no assurance of
successful  operations  after the combination has been effected or that existing
stockholders of the Company will not suffer substantial dilution of their equity
position,  either upon the business combination itself or upon the completion of
any additional financing which may be necessary.

     The Company does not believe that it is an investment  company  required to
register  as such under the  Investment  Company Act of 1940,  as  amended.  The
Company  intends  to  take  such  steps  as  may  be  necessary  to  avoid  such
registration.  If the Company has not  concluded a business  combination  before
June 28, 1997,  that is, one year after the Asset Sale,  and if,  because of its
continued  ownership  of the  Parlux  Stock  or  other  securities,  it would be
required to register or seek an exemption  from such  registration,  the Company
anticipates  that it will  sell,  transfer  or  otherwise  divest  itself of its
ownership   thereof,   redeem  any  outstanding   Preferred  Stock  and  make  a
determination  as to  whether  to  liquidate  and  distribute  its  assets or to
continue to seek out viable business combinations.

     The Company  continues to hold the Parlux Stock and on September  30, 1996,
it had  approximately  $180,000 in cash in banks and  approximately  $400,000 in
U.S. Government Treasury bills maturing in February,  1997. The Parlux Stock may
be sold to the public pursuant to a currently effective  Registration  Statement
under the Securities Act of 1933, covering those shares, as well as other shares

                                       3

<PAGE>

of Parlux  held by  parties  unrelated  to the  Company.  Under the terms of the
Company's outstanding Preferred Shares, however, no sale of the Company's assets
having a fair market value of $250,000 or more, either alone or in the aggregate
with all other sales of Company assets, may be sold without the prior consent of
the holders of a majority of the Preferred  Stock unless the net proceeds of the
sale are applied to the payment of the  Redemption  Price  ($5,600 per share) of
the  Preferred  Stock.  The  aggregate  Redemption  Price of the 517  shares  of
Preferred Stock outstanding is $2,895,200 and the holders of the Preferred Stock
have a liquidation preference in that amount. The Company is obligated to redeem
all of the Preferred Stock by June 27, 1997. If such redemption is not effected,
the  holders of a majority of the  Preferred  Stock have the right to demand the
liquidation  of the Company and the  application  of its assets to satisfy their
liquidation preference.

     On June 28, 1996, the market value of the Parlux Stock was $8.00 per share,
and the  aggregate  value  would  have  been  sufficient  to pay  the  aggregate
Redemption  Price.  At that  time,  however,  the  Parlux  Stock  had  not  been
registered  for  resale  under  the  Securities  Act of 1933  and,  accordingly,
transfer  thereof was restricted.  The Parlux Stock was registered on August 12,
1996,  on which date the last sale price had  declined  to $7.625 per share.  On
September  30,  1996,  the last sale price was $4.75 per share.  If, by June 27,
1997, the mandatory  redemption date for the Preferred Shares,  the market price
of the Parlux Stock has not substantially  recovered,  or if some  accommodation
cannot be reached  between the Company and the holders of the  Preferred  Stock,
the Company will probably be required to pay  substantially  all of its cash, in
addition  to the  proceeds  of any sale of the  Parlux  Stock,  to  fulfill  its
obligation to pay the Redemption Price. Any significant  reduction in the amount
of its available cash will probably reduce the Company's value as an acquisition
candidate  for other  businesses  and the  Company's  opportunities  to effect a
favorable acquisition transaction will be substantially reduced.

Employees

     In  connection  with the Asset Sale,  all  employees  of the  Company  were
terminated  and the  Company  has no  employees.  The  Company's  two  executive
officers  provide  certain  services to the  Company on a part-time  consultancy
basis.


ITEM 2.   PROPERTIES

     Since July 1, 1996,  the Company's  activities  have been  conducted by its
directors  at  offices  maintained  or made  available  to them for  other  work
unrelated to the Company.  The Company's  current executive office is located in
an office made  available to Mr.  Snead at no expense.  Although the Company has
not been  required  to pay any rent for this  office to date,  in the future the
Company may be required to pay fair market rent for its  executive  office.  The
Company  believes  that this office  arrangement  is adequate for the  Company's
needs.


ITEM 3.   LEGAL PROCEEDINGS.

          None.


ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     The information required by Item 4 was previously reported in Item 5 to the
Company's  Current Report on Form 8-K, dated July 15, 1996,  filed in connection
with the Asset Sale which occurred on June 28, 1996.

                                       4


<PAGE>

                                     PART II

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

 The Company's  Common Stock was traded on the Pacific Stock  Exchange under the
symbol "RBF" until April 3, 1996, when trading was suspended  pending  delisting
of the Common  Stock  because  of the  Company's  failure to meet the  financial
requirements for continued listing. After delisting, the Common Stock was traded
on the NASD's OTC Bulletin Board, where it is quoted under the symbol "FBRR."

 Set forth below are the high and low sales prices of the Company's Common Stock
for the periods indicated as reported by the Pacific Stock Exchange (for periods
prior to the fourth quarter of fiscal 1996), and as reported by the OTC Bulletin
Board (for the fourth quarter of fiscal 1996):

Period                                    High($)                  Low($)
------                                    -------                  ------
Fiscal 1996
   Fourth Quarter                         0.5625                   0.2525
   Third Quarter                          0.25                     0.15625
    Second Quarter                         0.50                     0.125
   First Quarter                          1.125                    0.3125

Fiscal 1995
   Fourth Quarter                         1.875                    0.875
   Third Quarter                          1.875                    1.00
   Second Quarter                         2.75                     1.75
   First Quarter                          2.125                    1.50


     As of September 30, 1996, there were 302 holders of record of the Company's
Common Stock.

     The Company has never paid any cash dividends. Because of the status of the
Company's  business  described  in Item 1, it is highly  unlikely  that any cash
dividends will be paid on the Common Stock in the foreseeable future.


ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS.

Plan of Operations

     The Company has not conducted any operations in the normal course since the
Asset Sale on June 28, 1996. Accordingly, the results of its previous operations
are not material.  The reasons for the Asset Sale and the  discontinuance of the
Company's  business were previously  reported in the Company's Proxy  Statement,
dated April 22, 1996, with respect to the Special  Meeting of Stockholders  held
on May 31, 1996,  for the purpose of approving,  among other  things,  the Asset
Sale.

     Upon the  consummation  of the Asset Sale and Exchange Offer and payment of
certain  previously  billed  related  expenses,  the Company  had  approximately
$680,000 in cash. Of that amount, approximately $56,000 was applied to discharge
certain accounts payable,  including legal fees for June 1996 and accounting and
consulting  fees  previously  incurred.  On September 30, 1996,  the Company had
approximately  $180,000 in cash and  approximately  $400,000 in U.S.  Government
Treasury Bills. The Company expects that it will earn approximately $22,000 from
interest during the remainder of the current (1997) fiscal year.

                                       5

<PAGE>

     Corporate  and  administrative  expenses  for the  current  fiscal year are
expected to be  approximately  $165,000;  including  $82,000 in fees and expense
reimbursement  to the directors,  $55,000 for accounting  fees for audit and tax
returns,  $5,000  for  office  and  telephone  expense,  $20,000  for  liability
insurance and approximately $3,000 for miscellaneous expense. Funds to pay those
expenses are expected to be derived from interest  income earned during the year
and from the Company's cash on hand.

     Pursuant to the Exchange Offer,  the Company settled its obligations  under
all outstanding Notes,  excluding obligations to three holders not participating
in the  Exchange  Offer,  who hold Notes in the  aggregate  principal  amount of
$117,000. After threatening litigation,  two of the three holders, with Notes in
the aggregate principal amount of $97,500, have agreed to settle,  collectively,
for $62,000 in cash,  11,500 shares of the Company's Common Stock and three-year
warrants to purchase  12,500 shares of the Company's  Common Stock for $2.00 per
share.  The Company  believes that the remaining holder of the last Note, in the
principal  amount of $19,500,  will also accept a  settlement  of the  Company's
obligations  on terms not  requiring  the full cash payment of the amount due on
the  Note.  Funds  for  these  settlements  are  expected  to be taken  from the
Company's cash on hand.

     The Preferred  Stock has a liquidation  preference of $5,600 per share,  or
$2,895,200  in the  aggregate.  The Company is obligated to redeem the Preferred
Stock  by  June  27,  1997  at a  Redemption  Price  equal  to  the  liquidation
preference.  While it was anticipated,  at the time of the Asset Sale, that that
price could be paid out of the proceeds of the  contemplated  sale of the Parlux
Stock, the market value of that stock has substantially declined since the Asset
Sale and there is no  assurance  that the Company  will not be required to apply
all of its cash and the  proceeds of the  disposition  of all of its  Government
securities to meet the  redemption  requirement,  in which case the Company will
have no assets.  If the Company does not effect a mandatory  redemption  by June
27, 1996,  the holders of a majority of the Preferred  Stock will have the right
to demand  liquidation of the Company and receive their liquidation  preference.
Holders of the Series A Preferred  Stock have no voting  rights except the right
to vote as a class with respect to (i) any sale of Company  assets having a fair
market  value of $250,000  or more,  alone or in the  aggregate  with all of the
sales of the Company's  assets,  unless all of the net proceeds of such sale are
applied to the payment of the redemption  price of the Series A Preferred Stock;
(ii) any amendments to the Company's  Articles of  Incorporation;  and (iii) the
issuance of any shares of the  Company's  capital stock (other than any issuance
pursuant to outstanding  rights or options)  unless the Series A Preferred Stock
will be  redeemed  in  connection  with the  transaction  pursuant to which such
shares are to be issued.  For all  matters on which the  holders of the Series A
Preferred Stock are entitled to vote as a class, the affirmative vote of holders
holding a majority of the Series A Preferred  Stock  outstanding is required for
approval of such matter. The Series A Preferred Stock has no right to dividends.


ITEM 7.   FINANCIAL STATEMENTS.

          Index to Financial Statements:

 Report of Independent Public Accountants..................................F-1
 Balance Sheets at June 30, 1996 and 1995..................................F-2
 Statements of Operations -- 
    Years ended June 30, 1996 and 1995.....................................F-3
 Statements of Stockholders' Equity --
    Years ended June 30, 1996 and 1995.....................................F-4
 Statements of Cash Flows -- 
    Years ended June 30, 1996 and 1995.....................................F-5
 Notes to Financial Statements.....................................F-6 to F-13

                                       6

<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To FBR Capital Corporation:

We have  audited the  accompanying  balance  sheets of FBR  Capital  Corporation
(formerly Richard Barrie Fragrances, Inc.) (a Nevada corporation) as of June 30,
1996 and 1995, and the related  statements of operations,  stockholders'  equity
and cash flows for the two years then ended. These financial  statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position  of FBR  Capital  Corporation
(formerly Richard Barrie Fragrances, Inc.) as of June 30, 1996 and 1995, and the
results  of its  operations  and its cash  flows for the two years then ended in
conformity with generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  described  in  Note 4 to the
financial  statements,  the  holders  of the  Company's  preferred  stock have a
liquidation preference of $5,600 per share, or $2,895,200 in the aggregate.  The
Company  is  obligated  to  redeem  the  preferred  stock by June 27,  1997 at a
redemption price equal to the liquidation preference. There is no assurance that
the  Company  will not be  required  to apply all of its  assets  (due to recent
decreases in the market  value of the  Company's  investment  in common stock of
Parlux Fragrances, Inc.) to meet the redemption requirements,  in which case the
Company  could  have no  assets.  If the  Company  does not  effect a  mandatory
redemption by June 27, 1997,  the holders of a majority of the  preferred  stock
will  have the right to demand  liquidation  of the  Company  and  receive  this
liquidation  preference.  This  condition  raises  substantial  doubt  about the
Company's  ability to continue as a going concern.  The financial  statements do
not include any adjustments  relating to the recoverability or classification of
asset carrying  amounts or the amount and  classification  of  liabilities  that
might result should the Company be unable to continue as a going concern.

                                                  ARTHUR ANDERSEN LLP

Melville, New York
September 20, 1996


                                       F-1

<PAGE>
                             FBR CAPITAL CORPORATION
                   (formerly Richard Barrie Fragrances, Inc.)
                                 BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                           June 30,        June 30,
ASSETS                                                                       1996            1995
------                                                                      ------          ------
<S>                                                                      <C>             <C>   
CURRENT ASSETS:
   Cash and cash equivalents                                             $   61,871      $  339,715
   Investment in common stock of Parlux Fragrances, Inc. (Note 2)         3,746,250             -
   Accounts receivable, net                                                    -           1,770,190
   Amount receivable from acquiror of discontinued operations (Note 2)      750,000             -
   Inventory                                                                   -           2,415,000
   Promotional merchandise                                                     -             325,721
   Other current assets                                                       6,991          354,067
                                                                          ---------        ---------
                  Total current assets                                    4,565,112        5,204,693

PROPERTY, PLANT AND EQUIPMENT, at cost, less accumulated
   depreciation and amortization of $538,031 at June 30, 1995                  -           1,174,102

DEBT ISSUANCE COSTS, at cost, less accumulated amortization of
   $313,000 and $231,068, respectively                                         -              81,932

OTHER ASSETS                                                                   -           1,825,404
                                                                          ---------        ---------
                  Total assets                                           $4,565,112       $8,286,131
                                                                          =========        =========

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

CURRENT LIABILITIES:
   Accounts payable                                                      $  121,789       $  389,033
   Accrued expenses                                                         180,417        2,016,585
   Convertible notes payable - current portion                              117,000        5,157,750
                                                                          ---------        ---------
                  Total current liabilities                                 419,206        7,563,368
                                                                          ---------        ---------
COMMITMENTS AND CONTINGENCIES (Note 8)

SERIES A PREFERRED STOCK:
   $.01 par value, 529 shares authorized, 517 and 0 shares issued 
   and outstanding, respectively, at liquidation value of $5,600 
   per share (Note 4)                                                     2,895,200             -
                                                                          ---------        ---------
STOCKHOLDERS' EQUITY:
   Preferred stock, $.01 par value, 10,000,000 shares authorized, no shares
     outstanding except 517 shares issued as Series A Preferred Stock          -                -
   Common stock, $.005 par value, 16,666,667 shares authorized, 4,636,698
     and 4,419,548 shares issued and outstanding, respectively               23,183           22,097
   Additional paid-in capital                                             7,241,768        6,982,738
   Accumulated deficit                                                   (6,014,245)      (6,282,072)
                                                                          ---------        ---------
                  Total stockholders' equity                              1,250,706          722,763
                                                                          ---------        ---------
                  Total liabilities and stockholders' equity             $4,565,112       $8,286,131
                                                                          =========        =========

The accompanying notes are an integral part of these balance sheets.
</TABLE>


                                       F-2


<PAGE>

                             FBR CAPITAL CORPORATION
                   (formerly Richard Barrie Fragrances, Inc.)

                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                      For the years ended June 30,
                                                   ---------------------------------

                                                       1996                  1995
                                                       ----                  ----
<S>                                                <C>                    <C>   
Loss from the operations of discontinued 
  operations (Notes 1 and 2)                       $(4,828,165)           $ (876,400)
                                                                                        
Gain on disposal of assets of discontinued 
  operations (Notes 1 and 2)                         2,280,836                  -
                                                     ---------   
Loss before extraordinary item                      (2,547,329)             (876,400)
                                               
Gain on extinguishment of debt (Note 4)              2,815,156                  -
                                                     ---------             ---------
                 Net income (loss)                  $  267,827            $ (876,400)
                                                      ========             =========
Earnings (loss) per share:

  Loss per share from discontinued operations       $    (0.58)           $    (0.20)
                                                                                 
  Earnings per share from extraordinary item              0.64                   -
                                                     ---------             ---------
                 Net earnings (loss) per share      $     0.06            $    (0.20)
                                                     =========             =========
Weighted Average Common Shares Outstanding           4,420,738             4,419,548
                                                     =========             =========

The accompanying notes are an integral part of these statements.

</TABLE>

                                       F-3

<PAGE>
                             FBR CAPITAL CORPORATION
                   (formerly Richard Barrie Fragrances, Inc.)

                       STATEMENTS OF STOCKHOLDERS' EQUITY

                   FOR THE YEARS ENDED JUNE 30, 1996 AND 1995
<TABLE>
<CAPTION>
                                                              Common Stock             
                                                               ($.005 par)         Additional          
                                                      ------------------------      Paid-in          Accumulated
                                                       Shares           Amount       Capital           Deficit         Total
                                                       ------           ------     ----------        -----------       -----
<S>                                                  <C>              <C>          <C>              <C>             <C>
BALANCES, July 1, 1994                               4,419,548        $ 22,097     $7,003,988       $(5,405,672)    $1,620,413

  Additional costs related to issuance of 
     shares through private placement offering            -               -           (21,250)             -           (21,250)
  Net loss for the year ended June 30, 1995               -               -              -             (876,400)      (876,400)
                                                     ---------         -------      ---------        ----------      ---------
BALANCES, June 30, 1995                              4,419,548          22,097      6,982,738        (6,282,072)       722,763

  Contribution of common stock by former 
     President (Note 4)                               (377,400)         (1,887)         1,887              -              -

  Issuance of common stock to convertible 
     note holders (Note 4)                             594,550           2,973        257,143              -           260,116

  Net income for the year ended June 30, 1996             -               -              -             267,827         267,827
                                                     ---------         -------      ---------          -------         -------
BALANCES, June 30, 1996                              4,636,698        $ 23,183     $7,241,768      $(6,014,245)     $1,250,706
                                                     =========         =======      =========       ==========       =========

The accompanying notes are an integral part of these statements.

</TABLE>


                                       F-4


<PAGE>
                             FBR CAPITAL CORPORATION
                   (formerly Richard Barrie Fragrances, Inc.)
                            STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>


                                                                                                For the years ended June 30,
                                                                                             ----------------------------------
                                                                                                   1996                 1995
                                                                                                   ----                 ----
<S>                                                                                           <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income (loss)                                                                          $    267,827          $  (876,400)
                                                                                               -----------           ----------
   Adjustments to reconcile net income (loss) to net cash used in operating activities:
     Gain on termination agreement (Note 1)                                                           -                (876,712)
     Gain on disposal of assets of discontinued operations (Note 2)                             (2,280,836)                -
     Gain on extinguishment of debt (Note 4)                                                    (2,815,156)                -
     Write-off of other assets                                                                   1,025,404                 -
     Depreciation and amortization                                                                 428,065              483,164
     Changes in operating assets and liabilities:
       Decrease (increase) in accounts receivable                                                1,394,232             (599,507)
       Decrease (increase) in inventory and promotional merchandise                                856,247           (2,697,379)
       Decrease (increase) in other current assets                                                 326,380             (117,644)
       Decrease (increase) in other assets                                                         800,000             (201,792)
       (Decrease) increase in accounts payable and accrued expenses                                (32,806)           3,022,474
                                                                                                 ---------           ----------
         Total adjustments                                                                        (298,470)            (987,396)
                                                                                                 ---------           ----------
         Net cash used in operating activities                                                     (30,643)          (1,863,796)
                                                                                                 ---------           ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Payments in connection with sale of assets (Note 2)                                            (178,511)                -
   Purchase of property, plant and equipment                                                       (68,690)             (35,899)
   Proceeds from sale of property, plant and equipment                                                -                   1,845
                                                                                                 ---------           ----------
         Net cash used in investing activities                                                    (247,201)            (34,054)
                                                                                                 ---------           ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Repayment of notes payable to Muelhens Inc.                                                        -              (1,123,883)
   Net proceeds from private placement of shares, net of share issuance costs                         -                 (21,250)
                                                                                                 ---------           ----------
         Net cash used in financing activities                                                        -              (1,145,133)
                                                                                                 ---------           ----------
         Net decrease in cash and cash equivalents                                                (277,844)          (3,042,983)

CASH AND CASH EQUIVALENTS, beginning of year                                                       339,715            3,382,698
                                                                                                 ---------           ----------
CASH AND CASH EQUIVALENTS, end of year                                                          $   61,871          $   339,715
                                                                                                 =========           ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
   Cash paid during the year for-
     Interest                                                                                   $     -             $   561,792
                                                                                                 =========           ==========
     Income taxes                                                                               $     -             $      -
                                                                                                 =========           ==========
NON-CASH INVESTING AND FINANCING ACTIVITIES:
   Acquisition of investment shares in sale transaction (Note 2)                                $3,746,250                 -
       Amount receivable from Parlux on sale transaction (Note 2)                                  750,000                 -
       Issuance of Series A mandatory redeemable preferred stock in debt 
               extinguishment transaction (Note 4)                                               2,895,200                 -
   Issuance of common stock in debt extinguishment transaction (Note 4)                            260,116                 -
       Contribution of common stock by former President in debt extinguishment 
               transaction (Note 4)                                                                  1,887                 -
   Extinguishment of convertible notes payable and accrued interest (Note 4)                     5,970,472                 -


The accompanying notes are an integral part of these statements.

</TABLE>

                                       F-5



<PAGE>
                             FBR CAPITOL CORPORATION
                   (formerly Richard Barrie Fragrances, Inc.)

                          NOTES TO FINANCIAL STATEMENTS

                             JUNE 30, 1996 AND 1995


1.    ORGANIZATION AND BUSINESS:

FBR  Capital  Corporation  (formerly  Richard  Barrie  Fragrances,   Inc.)  (the
"Company")  was  incorporated  in the state of Nevada on June 6,  1988,  for the
original  purpose  of  developing,   manufacturing  and  marketing   fragrances,
cosmetics,  skin  treatment and personal care  products sold  primarily  through
department and specialty stores and drugstores.  On July 1, 1996,  following the
sale  transaction  described  in Note 2,  the  Company  filed a  Certificate  of
Amendment  to its  Articles of  Incorporation  to change its name from  "Richard
Barrie  Fragrances,  Inc." to "FBR Capital  Corporation"  as  authorized  by the
stockholders  of the  Company.  The  Company  is  now a  publicly  held  "shell"
corporation with no specific business operations.

Prior to December  1993,  all of the Company's  products  were marketed  under a
licensing  agreement  with  Mikhail  Baryshnikov  (the  "Baryshnikov  License").
Effective  December 14, 1993, the Company entered into  distribution  agreements
with Muelhens KG ("Muelhens"),  a worldwide marketer of fragrance,  cosmetic and
skin treatment  products,  and one of Muelhens'  subsidiaries,  Laboratories Dr.
N.G.  Payot,  S.A.  ("Payot").  Pursuant  to these  agreements,  the Company was
appointed  the  exclusive  United States  distributor  for the fragrance  brands
Moments and Experiences by Priscilla Presley,  Sabatini and Magnetic by Gabriela
Sabatini,  4711  Original  Eau de  Cologne,  and the  Payot  cosmetic  and  skin
treatment  line.  In  addition,   the  Company   purchased  from  Muelhens  Inc.
("Muelhens-USA"),   another   subsidiary  of  Muelhens  KG,  certain  inventory,
promotional merchandise and fixed assets.

On June 6, 1995,  the parties to the  distribution  agreements  described  above
agreed to terminate the  distribution  agreements,  effective June 30, 1995, and
Muelhens-USA  agreed to repurchase  from the Company,  effective  June 30, 1995,
inventory  and related  materials  held by the Company  related to the  products
under the distribution agreements. In addition, Muelhens-USA agreed to establish
in favor of the Company an $876,712 credit in consideration for credits given by
the Company to retailers for returns accepted by the Company of products sold by
Muelhens-USA  prior to December  14, 1993.  The Company was  permitted to offset
against  any  amounts  owed by the  Company to  Muelhens-affiliated  parties the
amount  owed  by  Muelhens-USA  to  the  Company   pursuant  to  the  repurchase
arrangement,  as well as the  amount of the credit  established  in favor of the
Company.  The effect of the  transaction  was that the Company  was  relieved of
approximately   $5,211,718  in  debt  obligations  to  the   Muelhens-affiliated
companies at June 30, 1995.

Based on the structure of this termination transaction, it was the intent of the
parties  that no cash  payment was to be  exchanged  for such amounts due to and
from the parties to the termination  agreement and,  accordingly,  these amounts
have been presented net in the  accompanying  balance sheet as of June 30, 1995.
The Company's gain of $876,712 under the  termination  agreement has been offset
against  the sales  returns  to which the  amount  related  in the  accompanying
statement of operations for fiscal 1995.


                                       F-6

<PAGE>

2.   DISPOSITION OF ASSETS AND DISCONTINUED OPERATIONS:

Effective  June  30,  1996,  the  Company  sold  virtually  all of  the  assets,
properties  and rights owned by the Company in  connection  with its business to
Parlux  Fragrances,  Inc.  ("Parlux") in consideration for (i) $750,000 in cash,
(ii) 370,000  shares of the common stock of Parlux,  and (iii) the assumption by
Parlux of certain  liabilities,  excluding  any  liability  with  respect to the
Company's 10% Convertible  Subordinated  Promissory  Notes due January 15, 1996.
The cash received from the sale  transaction was remitted to the Company on July
1,  1996.  Accordingly,  this  amount  is  reflected  as  a  receivable  in  the
accompanying  balance  sheet as of June 30,  1996.  The  common  stock of Parlux
received from the sale transaction is reflected, at its fair market value, as an
investment in the accompanying balance sheet as of June 30, 1996.

In connection with the  transaction,  Parlux entered into a Registration  Rights
Agreement  in favor of the Company  pursuant to which  Parlux  agreed to use its
best efforts to register  the shares of Parlux  stock paid to the Company  under
the  Securities  Act of 1933,  on  demand  and at any time  Parlux  proposes  to
register any of its equity  securities under the Securities Act, without cost to
the Company. Parlux registered the Parlux stock in August 1996.

As a result of this transaction,  the Company's primary  operations have ceased,
and the Company has changed its name (Note 1) and is now a publicly held "shell"
corporation with no specific business operations. Accordingly, the statements of
operations  have been  presented on a basis which  reflects the Company's  prior
business as discontinued operations in each of the years presented.

3.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Cash and Cash Equivalents

Cash and cash  equivalents  consist of cash in banks,  as well as certain highly
liquid investments with original maturities of less than three months.

Investments

Effective January 1, 1994, the Company adopted Statement of Financial Accounting
Standards  ("SFAS") No. 115,  "Accounting  for Certain  Investments  in Debt and
Equity Securities", which requires that marketable equity securities, other than
equity securities accounted for by the equity method, be reported at fair value.
For those  securities  which are  classified as trading  securities,  unrealized
gains and losses are reported in the statement of income.  Unrealized  gains and
losses from those securities which are classified as available-for-sale  will be
reported  as  a  separate  component  of  stockholders'  equity.  The  Company's
investment in Parlux common stock (Note 2) was acquired as of June 30, 1996, and
valued based on the closing price on June 28, 1996, the last trading date of the
fiscal year.  Accordingly,  the  investment  in Parlux stock is presented in the
accompanying balance sheet at its fair market value, and there are no unrealized
gains  or  losses  associated  with  changes  in the fair  market  value of this
investment.  Subsequent to June 30, 1996, the fair market value of Parlux common
stock, based on quoted market prices, decreased significantly.  At September 20,
1996, this decrease would have resulted in an unrealized  loss of  approximately
$1,850,000, which would be presented as a component of stockholders' equity.

Doubtful Accounts and Sales Returns

Prior to the sale  transaction  described in Note 2, the Company had established
reserves for doubtful accounts and sales returns on its balance sheet.

                                       F-7

<PAGE>

Accounts receivable, net, consisted of:
                                                               June 30, 1995
                                                               -------------
      Accounts receivable                                        $1,887,542
      Less-
         Allowance for doubtful accounts                            (67,352)
         Allowance for sales returns and chargebacks                (50,000)
                                                                  ---------
      Accounts receivable, net                                   $1,770,190
                                                                  =========
Inventory and Promotional Merchandise
-------------------------------------
Inventory and promotional merchandise included only
those items which were salable or usable in future  
periods and were stated at the lower of cost
(first-in, first-out) or market.

Inventory consisted of:
                                                               June 30, 1995
                                                               -------------
      Raw materials                                              $1,105,653
      Work-in-progress                                              313,646
      Finished goods                                                995,701
                                                                  ---------
                                                                 $2,415,000
                                                                  =========
Property, Plant and Equipment
-----------------------------
Property, plant and equipment consisted of:
                                                               June 30, 1995
                                                               -------------
         Machinery and equipment                                 $  964,752
         Leasehold improvements                                     374,284
         Furniture and fixtures                                     192,911
         Computer and office equipment                              180,186
                                                                  ---------
                                                                  1,712,133

         Less: Accumulated depreciation and amortization           (538,031)
                                                                  ---------
         Property, plant and equipment, net                      $1,174,102
                                                                  =========

Depreciation charges were computed on a straight-line basis over the estimated 
useful lives of the assets, which ranges from four to seven years. Leasehold 
improvements were amortized on a straight-line basis over the lesser of the 
term of the lease or the useful lives of the assets, generally five years.

Accrued Expenses

Included  in  accrued  expenses  as of June 30,  1996 and  1995 is  $21,596  and
$237,096 of accrued interest due on the Convertible Notes (see Note 4).

                                       F-8

<PAGE>

Earnings (Loss) Per Share

Earnings  (loss) per share was  computed by dividing  the  Company's  net income
(loss) from discontinued operations and from extraordinary items by the weighted
average  number of common shares  outstanding  during the period.  The impact of
outstanding  warrants and stock options has not been included in the calculation
as such effect,  if  included,  would be  antidilutive  for both fiscal 1996 and
1995.

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  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.

Recently Issued Accounting Standards

During March 1995, the Financial  Accounting Standards Board issued Statement of
Financial  Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment
of  Long-Lived  Assets  and for  Long-Lived  Assets  to be  Disposed  Of."  This
statement  establishes  financial  accounting  and  reporting  standards for the
impairment of long-lived assets, certain identifiable intangibles,  and goodwill
related  to those  assets to be held and used,  and for  long-lived  assets  and
certain identifiable  intangibles to be disposed of. This statement is effective
for financial  statements  for fiscal years  beginning  after December 15, 1995,
although  earlier  application  is  encouraged.  It is the  Company's  policy to
account for these assets at the lower of amortized  cost or fair value.  As part
of an  ongoing  review  of  the  valuation  and  amortization  of  such  assets,
management will assess the carrying value of such assets on a continuing  basis.
If this review  indicates  that the assets will not be recoverable as determined
by a nondiscounted  cash flow analysis over the remaining  amortization  period,
the  carrying  value of these assets  would be reduced to their  estimated  fair
market  values.  The Company  does not expect the impact of the adoption of this
pronouncement to be material to its financial position or results of operations.

During October 1995, the Financial  Accounting  Standards  Board issued SFAS No.
123,  "Accounting  for Stock Based  Compensation."  This  statement  establishes
financial   accounting  and  reporting   standards  for   stock-based   employee
compensation plans. SFAS No. 123 encourages entities to adopt a fair value based
method of accounting for stock compensation  plans.  However,  SFAS No. 123 also
permits the Company to continue to measure compensation costs under pre-existing
accounting  pronouncements.  If the fair value based method of accounting is not
adopted,  SFAS No. 123 requires pro forma  disclosures  of net income (loss) and
net income  (loss) per common  share in the notes to financial  statements.  The
accounting  requirements of SFAS No. 123 are effective for transactions  entered
into in fiscal  years that begin after  December  15,  1995,  though they may be
adopted on issuance.  The disclosure  requirements of SFAS No. 123 are effective
for financial  statements for fiscal years beginning after December 15, 1995, or
for an  earlier  fiscal  year for which SFAS No. 123 is  initially  adopted  for
recognizing  compensation  cost. The Company has not yet quantified the expected
impact of the adoption of this pronouncement.

Reclassifications

Certain  prior year  amounts have been  reclassified  to conform to current year
presentation,  including  the  presentation  of all revenues and expenses of its
prior business (see Note 2) as discontinued operations.

                                       F-9

<PAGE>

4.    PRIVATE PLACEMENT AND EXTINGUISHMENT OF RELATED DEBT:

Private Placement

On December 14, 1993, the Company  consummated  an initial  closing of a private
placement of its securities,  selling 221.5 Units ("Units") at $25,125 per Unit,
yielding  gross proceeds to the Company of  $5,565,187.50.  On January 13, 1994,
the Company  consummated  a second and final  closing of its private  placement,
selling an  additional  43 Units and yielding  gross  proceeds to the Company of
$1,080,375.  Accordingly,  at the two closings, the Company sold an aggregate of
264.5  Units,  derived  total gross  proceeds of  $6,645,562.50  and derived net
proceeds of $5,915,180.50.

Each Unit consisted of a $19,500  principal amount 10% Convertible  Subordinated
Promissory Note (the "Convertible  Notes") due January 15, 1996, 2,500 shares of
common stock and 1,667 Common Stock Purchase Warrants (the "Warrants")  expiring
January 15, 1996. The Convertible  Notes are  convertible  into shares of common
stock at a conversion price of $4.50 per share, which was reduced by their terms
to $2.25 per share  effective  August 13, 1994. The Warrants are  exercisable at
$10.50 per share.

In  connection  with this private  placement,  on January 13, 1994,  the Company
issued to the Placement Agent  five-year  Warrants to purchase up to 26.45 Units
at an exercise price of $30,150 per Unit ("Placement Agent Warrants"). Effective
as of February 3, 1994,  the  Placement  Agent  Warrants  were  exchanged by the
Placement Agent for warrants issued to its designees as follows: (a) warrants to
purchase  66,225  shares at $2.70 per share;  (b)  warrants to purchase  114,617
shares at $5.40 per share;  and (c) warrants to purchase  44,083 shares at $9.00
per share.  The holders of the Placement Agent Warrants were granted both demand
and "piggy-back" registration rights with respect to the common stock underlying
the Placement Agent Warrants.

Extinguishment of Debt in Exchange Offer

Simultaneously  with the closing of the sale of assets  described in Note 2, the
Company  completed  an exchange  offer with certain  holders of the  Convertible
Notes  pursuant to which the holders of 258.5  Units,  or  $5,040,750  aggregate
principal  amount of Convertible  Notes,  tendered their  Convertible  Notes, in
exchange for an aggregate of 594,550  shares of the  Company's  Common Stock and
517  shares of the  Company's  newly-authorized  Series A  Mandatory  Redeemable
Preferred  Stock,  at an exchange rate of 2,300 shares of the  Company's  Common
Stock and two shares of Series A Mandatory  Redeemable  Preferred Stock for each
$19,500  principal amount  Convertible Note. The total amount of debt (including
principal and accrued but unpaid interest) extinguished pursuant to the exchange
aggregated  $5,970,472.  This  amount,  less  the  value  of  the  common  stock
($260,116) and the Series A Mandatory  Redeemable  Preferred Stock  ($2,895,200)
issued  in  the  exchange  offer,   resulting  in  an   extraordinary   gain  on
extinguishment of debt in the amount of $2,815,156.

Issuance of Series A Preferred Stock in Exchange Offer

The Series A Preferred  Stock  described  above has a liquidation  preference of
$5,600 per share,  or $2,895,200 in the  aggregate.  The Company is obligated to
redeem the Series A Preferred Stock one year from the date of issuance (June 27,
1997).  If the Company  does not effect a mandatory  redemption  within such one
year period, the holders of a majority of the Series A Preferred Stock will have
the right to demand  liquidation  of the Company and receive  their  liquidation
preference.  The Company has the right to call the Series A Preferred  Stock for
redemption  at any  time  at the  redemption  price.  Holders  of the  Series  A
Preferred  Stock have no voting  rights except the right to vote as a class with
respect to (i) any sale of Company assets having a fair market value of $250,000
or  more,  alone or in the  aggregate  with  all of the  sales of the  Company's
assets,  unless all of the net  proceeds of such sale are applied to the payment
of the redemption price of the Series A Preferred Stock;  (ii) any amendments to

                                      F-10

<PAGE>

the Company's Articles of Incorporation; and (iii) the issuance of any shares of
the  Company's  capital stock (other than any issuance  pursuant to  outstanding
rights or  options)  unless the Series A  Preferred  Stock will be  redeemed  in
connection with the transaction  pursuant to which such shares are to be issued.
For all  matters  on which  the  holders  of the  Series A  Preferred  Stock are
entitled to vote as a class,  the  affirmative  vote of holders of a majority of
the Series A  Preferred  Stock  outstanding  is  required  for  approval of such
matter. The Series A Preferred Stock has no right to dividends.

As  described  above,  the  holders  of the  Company's  preferred  stock  have a
liquidation preference of $5,600 per share, or $2,895,200 in the aggregate.  The
Company  is  obligated  to  redeem  the  preferred  stock by June 27,  1997 at a
redemption price equal to the liquidation preference. There is no assurance that
the  Company  will not be  required  to apply all of its  assets  (due to recent
decreases in the market  value of the  Company's  investment  in common stock of
Parlux  Fragrances,  Inc.; see Note 3) to meet the redemption  requirements,  in
which case the Company  could have no assets.  If the Company  does not effect a
mandatory  redemption  by June  27,  1997,  the  holders  of a  majority  of the
preferred  stock will have the right to demand  liquidation  of the  Company and
receive this liquidation  preference.  This condition raises  substantial  doubt
about the  Company's  ability to  continue  as a going  concern.  The  financial
statements  do not include any  adjustments  relating to the  recoverability  or
classification  of asset carrying  amounts or the amount and  classification  of
liabilities  that might  result  should the  Company be unable to  continue as a
going concern.

Contribution to Capital

In connection with the completion of the exchange offer described above, Richard
Barrie,  formerly  President and a director of the Company (Note 5), contributed
377,400 shares of the Company's  Common Stock owned by him to the capital of the
Company. These shares resumed the status of authorized,  but unissued, shares of
the  Company's  Common  Stock  and  were  re-issued  in the  exchange  offer  to
Convertible Noteholders.

5.   CHANGE IN MANAGEMENT:

In connection with the completion of the exchange offer, all of the officers and
directors  of the Company  resigned  and  Charles D.  Snead,  Jr. and Stephen T.
Meadow assumed their  positions as directors of the Company,  to which they were
elected at a Special  Meeting of  Stockholders  of the  Company  held on May 31,
1996. Simultaneously with the closing of the exchange offer described in Note 4,
Mr. Snead was  appointed  President  and  Treasurer  (and  principal  executive,
accounting and financial officer) and Mr. Meadow was appointed  Secretary of the
Company.

6.    STOCK OPTION PLANS AND OUTSTANDING OPTIONS:

1988 Stock Option Plan

In November  1988,  the Company  adopted the 1988 Stock Option Plan ("1988 Stock
Option  Plan").  The 1988 Stock Option Plan provides for the granting of options
to  purchase up to 66,667  shares of common  stock to the  Company's  employees,
directors  and  consultants.  Options  under the 1988 Stock  Option  Plan may be
incentive  options  which are  intended  to qualify  under  Section  422A of the
Internal Revenue Code of 1986, as amended,  and non-qualified stock options. The
1988  Stock  Option  Plan is  administered  by the  Board  of  Directors,  which
determines the persons to whom options will be granted, the number to be granted
and the specific terms of each option,  including the vesting and exercisability
thereof.

                                      F-11

<PAGE>

Options granted may not have terms exceeding ten years (five years for incentive
stock  options  granted to a holder of 10% or more of the total  voting power of
common stock) and may not provide for an option exercise price of less than 100%
of the fair market  value (110% of the fair market value for  incentive  options
granted to a holder of 10% or more of the total voting power of common stock) of
the Company's common stock on the date of grant.  Options are neither assignable
nor transferable.  The 1988 Stock Option Plan terminates in November 1998 unless
terminated earlier by the Company's Board of Directors.

Transactions involving the 1988 Stock Option Plan are summarized as follows:

                                             For the Years Ended June 30,
                                             ----------------------------
                                                1996              1995
                                                ----              ----

Outstanding at beginning of period             19,333            36,000
   Granted                                       -                 -
   Exercised                                     -                 -
   Canceled                                      -              (16,667)
                                               ------            ------
Outstanding at end of period                   19,333            19,333
                                               ======            ======

   Exercisable ($0.75 - $1.125 per share)      19,333            17,666
                                               ======            ======

In  connection  with the change in  management  described  in Note 5, all of the
outstanding options issued pursuant to this plan expired in July 1996.

Non-Employee Director Compensation Plan

On  September  20,  1993,  the  Company   adopted  the   Non-Employee   Director
Compensation  Plan,  pursuant  to  which  the  Company  granted  to each of four
directors  ten-year  options to  purchase  15,000  shares of common  stock at an
exercise  price of $2.25 per share (the closing price of the common stock on the
Pacific Stock  Exchange on the date of grant).  The options are  exercisable  as
follows: 33 1/3% immediately as of the grant of the option; 33 1/3% on and after
the first  anniversary of the grant;  and the remaining 33 1/3% on and after the
second anniversary. On April 17, 1995, the Company reduced the exercise price of
these outstanding options to three of such directors (with respect to options to
purchase an  aggregate of 45,000  shares) to $1.4375  (the closing  price of the
common stock on the Pacific Stock  Exchange on the date of the  reduction).  The
exercise  price of outstanding  options to purchase the remaining  15,000 shares
(which are held by a director who resigned in February 1995) was not reduced. On
April 17, 1995, the Company also granted options to another director to purchase
15,000  shares of common stock at an exercise  price of $1.4375.  These  options
expired upon such director's resignation on August 28, 1995.

In  connection  with the change in  management  described  in Note 5, all of the
outstanding  options issued  pursuant to this plan expired in July 1996,  except
for  options  to  purchase  15,000  shares at $2.25  per share  held by a former
director, who resigned in February 1995. The holder of these options was granted
"piggy-back"  registration  rights with respect to the common  stock  underlying
such options.

Other Employee Options

On April 17, 1995,  the Company  granted,  outside of the 1988 Stock Option Plan
and the  Non-Employee  Director  Compensation  Plan, to six  employees  ten-year
options to purchase an aggregate of 65,000 shares of common stock at an exercise
price of $1.4375.  These options were  exercisable as follows:  50% on and after
the first  anniversary  of the  grant,  and the  remaining  50% on and after the
second  anniversary.  All of these options were  voluntarily  surrendered by the
option holders in October 1995.

                                      F-12

<PAGE>

Effective June 28, 1996, the Company  granted,  outside of the 1988 Stock Option
Plan and the Non-Employee  Director  Compensation Plan, to its two new directors
and officers  (Note 5) ten-year  options to purchase,  respectively,  30,000 and
10,000 shares of common stock at an exercise price of $.4375.  These options are
immediately  exercisable,  and "piggy-back"  registration rights were granted to
the option holders with respect to the common stock underlying such options.

7.    INCOME TAXES:

The Company is in an accumulated loss position for both financial  reporting and
income tax purposes.  Historically, no federal tax benefit has been recorded due
to the  uncertainty of the Company's  ability to realize  benefits by generating
taxable  income  in the  future.  The  Company  had a tax loss  carryforward  of
approximately $6 million for financial reporting purposes and approximately $6.4
million for tax purposes at June 30, 1996.  These  carryforwards  expire through
2011.  Due to the change in control of the Company  resulting from the Company's
various equity transactions, certain restrictions exist as to the use of the net
operating loss carryforwards to offset future taxable income.

Although the Company has significant net operating loss carryforwards  available
to offset  future  book and taxable  income,  due to the  uncertainty  as to the
Company's  future earnings and the annual  restrictions  which exist relating to
the utilization of the tax operating loss carryforwards  previously  incurred, a
full  valuation  allowance  has been  provided to offset any deferred tax assets
which would arise.

8.    COMMITMENTS AND CONTINGENCIES:

Licensing Agreement

The Company had been engaged in license agreements with Mikhail Baryshnikov (the
"Baryshnikov license") and Worldvision,  a subsidiary of Spelling Entertainment,
Inc.  (the  "Melrose  license")  which  granted the Company the right to use the
licenser's  name  or  characters  in  the  promotion  of its  production  of its
products.  The  Company  paid  royalties  based on a  percentage  of net  sales.
Concurrent  with the sale of assets  (Notes 1 and 2), the Company is no longer a
party to such license agreements.

Consulting Agreement

The Company has entered into  consulting  agreements  with its two new principal
officers  (Note 5),  pursuant to which they will  receive  annual  compensation,
ranging  from  $36,000 to $60,000 per year and from $18,000 to $24,000 per year,
respectively,  depending on time devoted to the affairs of the Company.  Both of
these  consulting  agreements  are in effect  until the next  annual  meeting of
shareholders and until their respective successors are elected and qualified.


                                      F-13

<PAGE>



ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE.

          None.


                                    PART III

ITEM 9.   DIRECTORS AND EXECUTIVE OFFICERS; PROMOTERS AND CONTROL
          PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Information Concerning Directors and Executive Officers

Name                         Age       Position
----                         ---       --------

Charles D. Snead, Jr.        64       President (and principal executive,
                                      financial and  accounting officer)
                                      and Director

Stephen T. Meadow            69       Secretary and Director


       Stephen T.  Meadow  has,  since  1962,  been an  attorney  in the private
practice of law in Phoenix, Arizona, specializing in the fields of corporate and
securities law.

       Charles D. Snead is an  attorney  and a business  and mining  consultant.
From  October  1991  through  June 1994,  Mr. Snead was Chairman of the Board of
Siskon Gold Corporation, of which he has since continued to be a Director. Prior
to October,  1991, he was Chairman,  President  and Chief  Executive  Officer of
Callahan Mining Corporation, then located in Phoenix, Arizona.

       Directors  hold  office  until the next annual  meeting of the  Company's
stockholders and until their successors are elected and qualified.  Officers are
elected  annually by the Board of Directors  and serve at the  discretion of the
Board.

Compliance with Section 16(a) of the Exchange Act

       Section  16(a)  of the  Securities  Exchange  Act of  1934,  as  amended,
requires the Company's officers, directors and persons who beneficially own more
than ten percent of the Company's  Common Stock to file reports of ownership and
changes in ownership with the Securities and Exchange Commission and the Pacific
Stock Exchange. These reporting persons also are required to furnish the Company
with copies of all Section 16(a) forms they file.  To the  Company's  knowledge,
based  solely on its  review of the  copies of such  forms  furnished  to it and
representations  that no other reports were required,  the Company believes that
all Section 16(a)  reporting  requirements  were complied with during the fiscal
year  ended  June 30,  1996,  except  that  Richard  and Lynn  Barrie,  formerly
executive  officers and  directors  of the  Company,  filed one report late that
reflected  Mr.  Barrie's  contribution  to the capital of the Company of certain
shares owned by him on June 28, 1996,  and Ronald  Stein,  formerly an executive
officer of the  Company,  filed one report  late that  reflected  his receipt of
shares of Common Stock in exchange for his Note  pursuant to the Exchange  Offer
on June 28, 1996.

ITEM 10.       EXECUTIVE COMPENSATION

       The Company has no executive employees.  Its two directors,  who are also
its only  officers,  perform  their  duties on a  consulting  basis and are paid

                                       20

<PAGE>

consulting fees, in addition to reimbursement of reasonable expenses incurred in
the performance of duties for the Company. Messrs. Snead and Meadow each receive
consulting fees calculated at the rate of $75 per hour, with Mr. Snead receiving
a minimum  fee of $3,000 per month and a maximum  fee of $5,000  and Mr.  Meadow
receiving  a minimum  fee of $1,500  per month and a maximum  fee of $2,000  per
month. Mr. Snead's consultancy arrangement commenced in March 1996 in connection
with the Asset Sale.  In fiscal 1996,  Mr.  Snead  received  consulting  fees of
$7,575.  In  addition,  in March 1996,  Messrs.  Snead and Meadow were  granted,
effective  upon the closing of the Asset  Sale,  ten-year  options to  purchase,
respectively,  30,000 and 10,000  shares of Common  Stock at an  exercise  price
equal to the market  price on the closing  date of the Asset Sale (or $.4375 per
share). These options are immediately  exercisable and "piggyback"  registration
rights were granted to each of them with respect to the Common Stock  underlying
such options.

       Compensation  for  Former  Executive.  The  following  table  sets  forth
information concerning  compensation for fiscal 1996, 1995 and 1994 earned by or
paid to the Company's former chief executive  officer,  Richard Barrie, the only
executive officer whose compensation exceeded $100,000 in fiscal 1996:

-------------------------------------------------------------------------------
                           SUMMARY COMPENSATION TABLE
-------------------------------------------------------------------------------
                                                  Annual Compensation
                                         --------------------------------------
                                                                Other Annual
        Name and                         Salary       Bonus     Compensation(1)
   Principal Occupation         Year       ($)         ($)           ($)
-------------------------------------------------------------------------------
Richard Barrie,                 1996     234,150       -0-          5,490
   President and                1995     227,950       -0-          1,922
   Chief Executive Officer      1994     198,125      16,000       66,500(2)
-------------------------------------------------------------------------------

(1)    Mr.  Barrie  routinely  received  other  benefits  from the Company,  the
       aggregate  amounts of which during the years indicated did not exceed 10%
       of the salary and bonus set forth above.

(2)    For fiscal 1996 and 1995 represents the imputed  economic  benefit to Mr.
       Barrie of premiums paid for a "split dollar"  insurance policy (discussed
       below) insuring his life. For fiscal 1994,  represents  reimbursement for
       premiums paid on insurance  policies insuring his life for the benefit of
       his family.  In fiscal 1994 also represents  reimbursement  of $58,500 in
       personal relocation expenses.

Compensation Arrangements for Former Chief Executive Officer.  Effective October
1, 1993, the Company entered into a three-year employment agreement with Richard
Barrie pursuant to which he would be paid an annual salary of $180,000 per year,
which  increased to $225,000  effective  December 15, 1994,  with annual cost of
living  adjustments  based upon the consumer  price index.  The  agreement  also
provided for the Company to reimburse Mr. Barrie (up to $8,000 per year) for the
cost of private life insurance through June 30, 1994. In August 1994 the Company
purchased for Mr. Barrie a $6,000,000  "split  dollar"  insurance  policy on his
life, which provides a $3,000,000 "key man" death benefit payable to the Company
and a $3,000,000 death benefit payable to Mr. Barrie's designated beneficiaries.
The policy was  structured  to provide  for  repayment  of the  premiums  to the
Company upon the earlier of Mr.  Barrie's  death or attainment of the age of 67.
The policy was  further  structured  to provide  Mr.  Barrie  with a  retirement
benefit from the cash  surrender  value of the policy.  In  connection  with the
Exchange Offer,  this agreement was terminated upon Mr. Barrie's  resignation on
June 28, 1996.


ITEM 11.       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

               The  following  table  sets  forth  certain   information  as  of
September  30,  1996 with  respect  to (i) those  person or groups  known to the
Company to  beneficially  own more than 5% of the Company's  Common Stock,  (ii)

                                       21

<PAGE>

each director,  (iii) each former executive officer whose compensation  exceeded
$100,000 in fiscal 1996, and (iv) all current directors and officers as a group.
The  information is determined in accordance with Rule 13d-3  promulgated  under
the  Securities  Exchange  Act of 1934 based upon  information  furnished by the
persons listed or contained in filings made by them with the Securities Exchange
Commission.  Except as indicated  below,  the  stockholders  listed possess sole
voting and investment power with respect to their shares.

                              Amount and Nature of
Beneficial Owner              Beneficial Ownership         Percent of Class
----------------              --------------------         ----------------

Stephen T. Meadow...................16,100(1)                      *

Charles D. Snead, Jr................30,000(2)                      *

Richard Barrie.....................104,823(3)                     2.3%

All Directors and Executive 
Officers as a Group (2 persons).... 46,100(4)                      *

---------------------------------
*      Less than one percent.

(1)    Includes 1,500 shares owned by Mr. Meadow's spouse and 10,000 shares 
       issuable upon exercise of presently exercisable options.

(2)    Includes 30,000 shares issuable upon the exercise of presently 
       exercisable options.

(3)    Includes  4,823 shares  owned by Lynn  Barrie,  Mr.  Barrie's  wife,  who
       possesses sole voting and investment power with respect to such shares.

(4)    Includes an aggregate of 40,000 shares issuable upon exercise of
       presently exercisable options.  See Notes (1) and (2).

                                     PART IV

ITEM 12.       CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

       In  connection  with the  completion of the Exchange  Offer,  on June 28,
1996,  Richard  Barrie,  formerly  President  and a  director  of  the  Company,
contributed to the capital of the Company 377,400 shares of the Company's Common
Stock owned by him.

       In the Exchange Offer, on June 28, 1996, Stephen T. Meadow,  currently an
officer and director of the Company,  and a pension trust of which Ronald Stein,
formerly  an officer of the  Company  was the  beneficiary,  each  tendered  for
exchange,  respectively,  Notes in the principal  amount of $39,000 and $19,500.
Pursuant to the terms of the Exchange Offer, they received,  respectively, 4,600
and 2,300 shares of Common Stock and four and two shares of Preferred Stock.


ITEM 13.       EXHIBITS AND REPORTS ON FORM 8-K.

               (a)     Exhibits Filed

                       See Exhibit Index appearing later in this Report.

               (b)     Reports on Form 8-K

                       The  Company  filed a Report on Form 8-K,  dated July 15,
                       1996, to report,  among other things,  an  Acquisition or
                       Disposition  of Assets under Item 2 thereof  occurring on
                       June 28, 1996.

                                       22

<PAGE>

                                   SIGNATURES

               In accordance with Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                       FBR CAPITAL CORPORATION
                                       (Registrant)


Dated:  October 11, 1996                By: /s/ Charles D. Snead, Jr.
                                           --------------------------------
                                           Charles D. Snead, Jr., President


               In  accordance  with 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.


Signatures                       Title                      Date
----------                       -----                      ----


/s/ Stephen T. Meadow            Director                   October 11, 1996
----------------------------
Stephen T. Meadow



/s/ Charles D. Snead, Jr.        President (Principal 
----------------------------     Executive Financial        October 11, 1996
Charles D. Snead, Jr.            and Accounting Officer)
                                 and Director


                                       23


<PAGE>
                                 EXHIBIT INDEX

Exhibit                                               By Reference     No. in
Number   Description                                 from Document     Document
------   -----------                                 --------------    --------
3.1      Registrant's Article of Incorporation            A             3.1

3.1.1    Registrant's Amendment to its Articles of        A             3.1.1
         Incorporation, dated November 7, 1988

3.1.2    Registrant's Amendment to its Articles of        B             3.1.2
         Incorporation, dated June 25, 1991

3.1.3    Registrant's Certificate of Reverse Stock        C             3.1.3
         Split, dated February 15, 1994

3.1.4    Registrant's Certificate of Designation of       D             3.1.4
         Series A Preferred Stock, dated June 27, 1996

3.1.5    Registrant's Amendment to Articles of            D             3.15
         Incorporation, dated June 25, 1996

3.2      Amended By-Laws of the Registrant                C             3.2

4.1      Registrant's Form of Common Stock                A             4.1
         Certificate

4.6      Registrant's Form of 10% Convertible             E             4.7
         Subordinated Promissory Note issued to
         purchasers of the Registrant's securities in
         a private placement of the Registrant's
         securities which closed on December 14,
         1993 and January 13, 1994.

4.7      Registrant's Form of Warrant to purchase         E             4.8
         shares of Registrant's Common Stock at an
         exercise price of $.90 per share dated
         February 3, 1994.

4.7.1    Schedule of omitted documents in the form        E             4.8.1
         of Exhibit 4.7, including material detail in
         which such documents differ from Exhibit 4.7.

10.1     Registrant's 1988 Stock Option Plan              A            10.1

10.2     Stock Option Agreement, dated September          E            10.17
         20, 1993, between Registrant and Patrick
         McEnany.

10.2.1   Amendment to Stock Option Agreement,        [filed herewith]    --
         dated February 21, 1995, between
         Registrant and Patrick McEnany

10.3     Asset Purchase Agreement between the             F            10.17
         Company and Parlux Fragrances, Inc.,
         dated January 31, 1996

                                       23

<PAGE>


Exhibit                                               By Reference     No. in
Number   Description                                 from Document     Document
------   -----------                                 --------------    --------

10.4     Registration Rights Agreement between the        F            10.18
         Company and Parlux Fragrances, Inc.,
         dated June 28, 1996

27       Financial Data Schedule (6/30/96)           [filed herewith]    --


-------------------------------

A      Form S-18 Registration Statement No. 33-25704-NY.

B      Form 10-K Annual Report of the  Registrant  for the fiscal year ended
       June 30, 1991.

C      Form 10-KSB  Annual  Report of the  Registrant  for the fiscal year ended
       June 30, 1994.

D      Form 8-K Current Report reporting event on June 28, 1996.

E      Form 10-QSB  Quarterly  Report of the  Registrant  for the fiscal quarter
       ended December 31, 1993.

F      Form 10-QSB  Quarterly  Report of the  Registrant  for the fiscal quarter
       ended December 31, 1995.


                                       24

<PAGE>