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, 1998
                          ------------------------------

[     ]   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 33-58694
                      ----------

                             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) 483-1466
                          ------------------

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:   $ 0

As of September 25, 1998, 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 $1,015,460.

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

As of September 25, 1998, 4,648,205  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.  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."

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") for consideration of (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 June 30, 1997, 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.

On June 28,  1996,  the market  value of the Parlux Stock was $10.125 per share,
and the  aggregate  value  would  have  been  sufficient  to pay  the  aggregate
Redemption Price of $2,895,200.  At that time, however, the Parlux Stock had not
been  registered for resale under the  Securities Act of 1933 and,  accordingly,
transfer 
                                       2
<PAGE>
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
25, 1998, the last sale price was $1.59 per share.

Completion of Exchange Offer.  Simultaneously with the closing of the Asset Sale
on June 28, 1996,  the Company  completed an exchange  offer with the holders of
the Company's  Notes ("1996 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.

Change in  Management.  In connection  with the  completion of the 1996 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 1996
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.

Further  Disposition of Assets. On June 18, 1997, the Company disposed of assets
in the  completion  of an exchange  offer  commenced on February 25, 1997 ("1997
Exchange  Offer") with the holders of the  Company's  Series A Preferred  Shares
("Preferred  Stock"),  pursuant  to which the  holders  tendered  515  shares of
Preferred  Stock (99.6% of the Preferred  Stock  outstanding) in exchange for an
aggregate of 341,445  shares of Parlux  Fragrances,  Inc.  common stock ("Parlux
Stock") owned by the Company, at an exchange ratio of 663 shares of Parlux Stock
for each share of  Preferred  Stock.  The Company  offered to  exchange  342,771
shares of Parlux stock for all 517 shares of Preferred Stock outstanding,  while
retaining 27,229 Parlux shares.

The Company made the 1997 Exchange Offer because it was required under the terms
of the Preferred Stock to redeem those shares by June 27, 1997, for an aggregate
redemption price of $2,895,200  ($5,600 per share).  The holders of the majority
of the  Preferred  Stock had the right to require that the Company be liquidated
after that date and could  require that the proceeds of the  disposition  of its
assets be applied to payment of the redemption  price. As previously  noted, the
market price of the Parlux Stock  declined substantially before being registered
for resale and has been insufficient,  even when added to the amount of cash the
Company had on hand to provide sufficient funds to pay the redemption price.

In the judgment of the Company's  Board of Directors,  the possibility of such a
liquidation  made the Company a significantly  less attractive  merger candidate
than it would  otherwise  be and hindered  the Company in  negotiating  any such
transaction.  Accordingly,  the Board of Directors  determined  to undertake the
1997 Exchange Offer, which has been completed,  thereby  eliminating all but two
(2) shares of Preferred  Stock and the  possibility of such a liquidation.  With
the completion of this  transaction,  in the judgment of the Board of Directors,
the Company has become a more attractive acquisition vehicle.  However, there is
no  assurance  that the  Company  will  ever  enter  into a  favorable  business
combination,  that such a transaction  will have a favorable effect on the value
of the Company's  common stock or that any such transaction will yield a benefit
to preferred  shareholders equal or greater than the amount of value surrendered
as a result of participating in the 1997 Exchange Offer. 
                                       3
<PAGE>
The effect of the consummation of the 1997 Exchange Offer is that the holders of
the tendered  Preferred  Stock who have  received  their Parlux Shares no longer
have any claim on the assets of the Company or any right to cause liquidation of
the  Company or to acquire  any of its assets,  which  consist of the  Company's
remaining  27,229  shares  of  Parlux  Stock,  its cash  and its  U.S.  Treasury
securities.  The Company  eliminated  potential  redemption  price  claims in an
aggregate  amount of $2,884,000  by  exchanging  Parlux Shares with an aggregate
value of  $768,251  based on the  closing  price of  Parlux  Shares  at June 18,
1997.Tender of the Preferred Stock also  constituted a grant of a release to the
officers, directors, employees and agents of the Company with respect to any and
all claims which the tendering holder had or thereafter may have with respect to
the  Preferred  Stock,  the rights of the holders  thereof and the 1997 Exchange
Offer.

Description of Present Business.

Since the Asset Sale in June 1996, the Company's operations have been limited to
the conduct of administrative  activities such as paying indebtedness  remaining
after the Asset Sale,  acquiring  outstanding Notes,  settling a claim for prior
services,  preparing and filing  federal and state tax returns and quarterly SEC
filings,  undertaking  and  completing the 1997 Exchange Offer and other general
corporate activities. Also, during this period, the Company has been identifying
and conducting  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,  the directors of the Company have considered
the strengths  and  weaknesses of the Company and  established  certain  initial
criteria for its search.  The Company is seeking 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. Other
priority  candidates  may be those desiring to become a public company and those
which have an interest in acquiring  the Company's  cash and net operating  loss
carry forwards.

A number of companies have been identified which in the judgment of the Board of
Directors meet the criteria set forth above and discussions  have been held with
several of them.

It  has  been  the  Company's  experience  that  substantially  all  prospective
candidates  for entering into  business  combinations  with the Company  require
additional  funds  in an  amount  greater  than  the  Company  now  has on  hand
(approximately $305,000 assuming liquidation of the Company's Treasury Bills and
Parlux  shares  at  current  prices).  The  Company  itself  does  not  have the
capability to raise additional  funds and is therefore  dependent on the efforts
of outside  investment  banking firms to do so. Three  investment  banking firms
whose clients own a substantial  number of the Company's  shares have  expressed
interest  in  assisting  the  Company  in that  regard  provided  that they (the
investment  banking firms)  believe that any  prospective  transaction  would be
appealing and advantageous to their respective  clients.  None of these firms is
obligated  in any way to assist the  Company  in  raising  funds and there is no
assurance  they will agree to apply their efforts to do so or that they or their
clients will be favorably disposed toward any proposed business combination with
the Company.

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 continues to hold 27,229 shares of Parlux Stock and on September 25,
1998, had approximately  $1,880 in cash in banks and approximately  $279,000 in
U.S. Government Treasury Bills maturing in November, 1998.
                                       4
<PAGE>
Employees

In connection with the Asset Sale on June 28, 1996, 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.

No matter was 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.   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 has been
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, and as reported by the OTC Bulletin Board (for all of
fiscal 1997 and all of fiscal 1998):

Period                                  High($)           Low($)
------                                  -------           ------

Fiscal 1998

           Fourth Quarter                0.5625           0.25

           Third Quarter                 0.5625           0.25

           Second Quarter                0.875            0.25

           First Quarter                 0.5625           0.25

                                       5
<PAGE>
Fiscal 1997

           Fourth Quarter                0.625            0.26

           Third Quarter                 0.375            0.20

           Second Quarter                0.47             0.15

           First Quarter                 0.53             0.36
        
As of  September  25,  1998,  there were 141 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.

Recent Sales of Unregistered securities

During the fiscal year ended June 30, 1998, the Company made the following sales
of unregistered securities:

NONE

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.
                                       6
<PAGE>
Upon the  consummation  of the Asset Sale and 1996 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.  Corporate and administrative  expenses for
the fiscal year ended June 30, 1997 totaled  approximately  $165,000,  including
$81,750 in fees and expense reimbursement to Officers and Directors, $10,400 for
accounting fees for audit and tax returns,  $22,500 for legal fees,  $17,000 for
liability insurance and $8,900 for stock transfer fees and printing expense. The
Company earned $21,459 of interest income during the 1997 fiscal year.

Corporate  and  administrative  expenses for the fiscal year ended June 30, 1998
totaled   approximately   $120,000,   including  $67,700  in  fees  and  expense
reimbursement  to Officers and Directors,  $23,000 for accounting fees for audit
and tax returns,  $3,150 for legal fees,  $15,200 for  liability  insurance  and
$8,100 for stock transfer fees and printing expense.  The Company earned $17,250
of interest income during the 1998 fiscal year.

Corporate and  administrative  expenses for the current fiscal year are expected
to  be   approximately   $105,000,   including   $66,000  in  fees  and  expense
reimbursement  to the directors,  $10,000 for accounting  fees for audit and tax
returns,  $3,000 for legal fees,  $10,000 for  liability  insurance,  $7,800 for
stock  transfer  fees  and  printing  expense  and   approximately   $4,000  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.
The Company expects that it will earn approximately $12,000 from interest during
the 1999 fiscal year.

Pursuant to the 1996 Exchange Offer,  the Company settled its obligations  under
all outstanding Notes,  excluding obligations to three holders not participating
in the 1996 Exchange Offer, who held 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, 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 that settlement are expected to be taken from the Company's
cash on hand.

Pursuant to the 1997 Exchange Offer,  the Company settled its obligations  under
all outstanding shares of Preferred Stock,  excluding  obligations to one holder
not  participating in the 1997 Exchange Offer, who holds two shares of Preferred
Stock. The Preferred Stock has a liquidation  preference of $5,600 per share, or
$11,200 in the aggregate.  The 1997 Exchange Offer was communicated to the above
holder at his last known address.  The Company has confirmed that the address to
which the offer was sent is a proper address for the holder, but all attempts by
the   Company  and  its   representatives   to  contact  the  holder  have  been
unsuccessful.  No demand has been made by the holder for  liquidation or payment
in the amount of the 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.
                                       7
<PAGE>
ITEM 7.   FINANCIAL STATEMENTS.

     Index to Financial Statements:

     Report of Independent Public Accountants...............................F-1
     Balance Sheet at June 30, 1998 and 1997................................F-2
     Statements of Operations -- Years ended June 30, 1998 and 1997.........F-3
     Statements of Stockholders' Equity --
       Years ended June 30, 1998 and 1997...................................F-4
     Statements of Cash Flows -- Years ended June 30, 1998 and 1997...F-5 & F-6
     Notes to Financial Statements...................................F-6 to F-13
                                       8
<PAGE>
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS




To FBR Capital Corporation:


We have audited the  accompanying  balance sheet of FBR Capital  Corporation  (a
Nevada  corporation)  as of  June  30,  1998,  and  the  related  statements  of
operations, stockholders' equity and cash flows for each of the two years in the
period ended June 30, 1998. The 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 audit 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 FBR Capital  Corporation as of
June 30, 1998,  and the results of its operations and its cash flows for each of
the two years in the period  ended June 30, 1998 in  conformity  with  generally
accepted accounting principles.




                                                        ARTHUR ANDERSEN LLP

Phoenix, Arizona,
September 25, 1998.
                                      F-1
<PAGE>
                             FBR CAPITAL CORPORATION

                                  BALANCE SHEET
                                  JUNE 30, 1998



ASSETS

CURRENT ASSETS:
   Cash and cash equivalents                                        $    15,223
   Investment in U.S. Government Treasury Bills (Note 3)                275,670
   Investment in common stock of Parlux Fragrances, Inc. (Note 3)        53,541
   Other current assets                                                   4,536
                                                                    -----------

TOTAL ASSETS                                                        $   348,970
                                                                    ===========


LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Accounts payable                                                 $     4,691
   Accrued expenses                                                       9,449
   Convertible notes payable (Note 4)                                    19,500
                                                                    -----------

              Total current liabilities                                  33,640

Series A Redeemable preferred Stock:
   $0.01 par value, 529 share authorized,
    2 shares issued and outstanding at
    liquidation value of $5,600 per share (Note 6)                       11,200
                                                                    -----------

STOCKHOLDERS' EQUITY:
   Preferred stock, $.01 par value;
      10,000,000 shares authorized;
      no shares outstanding                                                --
   Common stock, $.005 par value;
      16,777,667 shares authorized;
      4,648,198 shares issued and outstanding                            23,241
   Additional paid-in capital                                         9,337,192
   Accumulated deficit                                               (8,834,150)
   Unrealized loss on investment (Note 6)                              (222,153)
                                                                    -----------

              Total stockholders' equity                                304,130
                                                                    -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                          $   348,970
                                                                    ===========

       The accompanying notes are an integral part of this balance sheet.
                                       F-2
<PAGE>
                             FBR CAPITAL CORPORATION

                            STATEMENTS OF OPERATIONS
                       YEARS ENDED JUNE 30, 1998 and 1997
<TABLE>
<CAPTION>
                                                                    1998           1997
<S>                                                             <C>            <C>      
Operating expenses                                              $  (122,268)   $  (160,228)
                                                                -----------    -----------


Other income (expense):
   Other income                                                       1,304         57,468
   Realized loss on disposal of Parlux common stock                    --       (2,677,898)
   Interest income                                                   17,251         21,459
   Interest expense                                                  (2,925)        (7,453)
                                                                -----------    -----------

              Other income (expense), net                            15,630     (2,606,424)
                                                                -----------    -----------

Loss before extraordinary item                                     (106,638)    (2,766,652)
Extraordinary gain on extinguishment of debt (Note 4)                  --           53,385
                                                                -----------    -----------

Net loss                                                        $  (106,638)   $(2,713,267)
                                                                ===========    ===========

Income (loss) per common and common share equivalent:
   Loss before extraordinary item                                      (.02)          (.59)
   Extraordinary item                                                  --              .01
                                                                -----------    -----------

Net loss per share (basic and diluted)                          $      (.02)   $      (.58)
                                                                ===========    ===========

Weighted average common share and common share
 equivalents outstanding                                          4,648,198      4,648,198
                                                                ===========    ===========
</TABLE>
   The accompanying notes are an integral part of these financial statements.
                                       F-3
<PAGE>
                             FBR CAPITAL CORPORATION

                       STATEMENTS OF STOCKHOLDERS' EQUITY
                       YEARS ENDED JUNE 30, 1998 AND 1997
<TABLE>
<CAPTION>
                                                    Common Stock            Additional                   Unrealized
                                                    ------------             Paid-In      Accumulated     Loss on
                                                Shares         Amount        Capital        Deficit      Investment        Total
                                                ------         ------        -------        -------      ----------        -----
<S>                                            <C>          <C>            <C>           <C>            <C>            <C>        
Balance at June 30, 1996                       4,636,698         23,183      7,241,768    (6,014,245)          --        1,250,706

Issuance of common stock to convertible
 note holders (Note 4)                            11,500             58          4,082          --             --            4,140

Unrealized loss on investment in common
 stock of Parlux Fragrances, Inc. (Note 6)          --             --             --            --         (212,727)      (212,727)

Realized gain on disposition of Series A
 Preferred Stock (Note 6)                           --             --        2,091,342          --             --        2,091,342

Net loss                                            --             --             --      (2,713,267)          --       (2,713,267)
                                             -----------    -----------    -----------   -----------    -----------    -----------

Balance at June 30, 1997                       4,648,198    $    23,241    $ 9,337,192   $(8,727,512)   $  (212,727)   $   420,194

Unrealized loss on investment in common
 stock of Parlux Fragrances, Inc. (Note 6)          --             --             --            --           (9,426)        (9,426)

Net loss                                            --             --             --        (106,638)          --         (106,638)
                                             -----------    -----------    -----------   -----------    -----------    -----------

Balance at June 30, 1998                       4,648,198    $    23,241    $ 9,337,192   $(8,834,150)   $  (222,153)   $   304,130
                                             ===========    ===========    ===========   ===========    ===========    ===========

</TABLE>
   The accompanying notes are an integral part of these financial statements.
                                       F-4
<PAGE>
                             FBR CAPITAL CORPORATION

                            STATEMENTS OF CASH FLOWS
                       YEARS ENDED JUNE 30, 1998 and 1997
<TABLE>
<CAPTION>
                                                                           1998           1997
<S>                                                                    <C>            <C>        
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                            $  (106,638)   $(2,713,267)
                                                                       -----------    -----------
   Adjustments to reconcile net income (loss) to net cash used
    in operating activities:
      Realized loss on disposal of Parlux common stock                        --        2,677,898
      Extraordinary gain on extinguishment of debt                            --          (53,385)
      Changes in operating assets and liabilities:
        Increase (Decrease) in other current assets                          1,282         (1,173)
        Increase (Decrease) in accounts payable and accrued expenses         2,078       (261,117)
                                                                       -----------    -----------

              Total adjustments                                              3,360      2,362,223
                                                                       -----------    -----------

              Net cash used in operating activities                       (103,278)      (351,044)
                                                                       -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Receipt of amount due from acquiror of discontinued operations             --          750,000
   Redemption of (Investment in) U.S. Government Treasury Bills, net       108,263       (388,089)
                                                                       -----------    -----------

              Net cash provided by investing activities                    108,263        361,911
                                                                       -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Repayment of convertible notes payable                                     --          (62,500)
                                                                       -----------    -----------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                             4,985        (51,633)

CASH AND CASH EQUIVALENTS, beginning of year                                10,238         61,871
                                                                       -----------    -----------

CASH AND CASH EQUIVALENTS, end of year                                 $    15,223    $    10,238
                                                                       ===========    ===========
</TABLE>
   The accompanying notes are an integral part of these financial statements.
                                       F-5
<PAGE>
                             FBR CAPITAL CORPORATION

                      STATEMENTS OF CASH FLOWS (CONTINUED)
                       YEARS ENDED JUNE 30, 1998 and 1997
<TABLE>
<CAPTION>
                                                                         1998         1997
<S>                                                                   <C>          <C>       
Non-cash financing activities:

   Issuance of common stock in exchange for outstanding debt          $     --         35,000
   Extinguishment of convertible notes payable and accrued interest         --      2,884,000
</TABLE>


   In 1997, the Company completed an exchange offer to the holders of its Series
   A Preferred Stock to exchange for each share of Series A Preferred Stock, 663
   shares of the common stock of Parlux Fragrances, Inc. ("Parlux Shares") owned
   by the Company.  Tenders  were  received for 515 shares of Series A Preferred
   Stock outstanding and the exchange was completed.  The Company  transferred a
   total  of  341,445  Parlux  Shares  in  exchange  for the  tendered  Series A
   Preferred Stock.

   The accompanying notes are an integral part of these financial statements.
                                       F-6
<PAGE>
                             FBR CAPITAL CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 1998



1. ORGANIZATION AND BUSINESS

FBR  Capital  Corporation  (the  Company)  was  incorporated  as Richard  Barrie
Fragrances,  Inc.  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  transaction
described below, 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.

Effective June 30, 1996, the Company sold virtually all of the assets (the Asset
Sale),  properties  and  rights  owned by the  Company  in  connection  with its
business to Parlux  Fragrances,  Inc. (Parlux) for consideration of (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.  The common stock of Parlux  received from the sale
transaction  is classified as an  investment  (see Note 2), in the  accompanying
balance sheet as of June 30, 1998.

The Company has been seeking to identify a possible  business  combination  with
one or more entities  interested in acquiring or being  acquired by the Company.
While the Company has not chosen any particular area of business in which it may
propose to engage,  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  which in the  business  judgment of the Board of
Directors  has 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.

A number of companies have been identified which in the judgment of the Board of
Directors could meet the criteria set forth above and discussions have been held
with many 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.  
                                       F-7
<PAGE>
                             FBR CAPITAL CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 1998




Management believes that the Company's cash reserves are adequate to support its
current  operations  for the year ending June 30, 1999.  However,  if management
decides to merge with or acquire a business this may require additional capital.
There can be no assurance,  however, that the Company will be able to raise such
a capital when and if it is needed.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents and Investments
-----------------------------------------

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
-----------

The Company's  investments  are accounted  for in accordance  with  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 accounting for by the equity method, be
reported at fair value.  Unrealized gains and losses from those securities which
are  classified as  available-for-sale  are reported as a separate  component of
stockholders'  equity.  The  Company's  investment  in  Parlux  common  stock is
classified as available-for-sale (see Note 3).

Accrued Expenses
----------------

Included in accrued expenses as of June 30, 1998 and 1997, is $2,925 and $6,524,
respectively,  of accrued interest due on the Convertible Note Payable (see Note
4).

Loss Per Share
--------------

Effective  July 1, 1998, the Company  adopted SFAS No. 128,  Earnings Per Share.
The  Company  was  required  to change the method  currently  used to  calculate
earnings (loss) per share and to restate all prior periods. The new requirements
include a  calculation  of basic  earnings  per share,  from which the  dilutive
effect of stock  options and  warrants  are  excluded  and diluted  earnings per
share, which includes the diluted effect of stock options and warrants.  For the
years ended June 30, 1998 and 1997, no common share  equivalents were considered
in the diluted calculation as their effect was antidilutive.
                                       F-8
<PAGE>
                             FBR CAPITAL CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 1998




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 Standard
-----------------------------------

During  1995,  the  Financial  Accounting  Standards  Board issued SFAS No. 123,
Accounting for Stock- Based Compensation which defines a fair value based method
of accounting  for an employee  stock option or similar  equity  instrument  and
encourages  all  entities  to adopt that method of  accounting  for all of their
employee stock compensation plans. However, it also allows an entity to continue
to measure  compensation cost related to stock options issued to employees under
these plans using the method of accounting  prescribed by Accounting  Principles
Board  Opinion No. 25 (APB No. 25),  Accounting  for Stock Issued to  Employees.
Entities electing to continue  accounting for stock-based  compensation under in
APB No. 25 must make pro forma  disclosures  of net income  (loss) and  earnings
(loss) per share,  as if the fair value based  method of  accounting  defined in
SFAS No. 123 has been applied.

The Company has elected to account for its stock-based  compensation plans under
APB No. 25;  therefore,  no compensation  cost is recognized in the accompanying
financial statement for stock-based employee awards.

Due to the small number of stock options or similar equity instruments issued or
outstanding  during the last two fiscal  years,  net income  (loss) and earnings
(loss) per share for the years  ended June 30,  1998 and 1997 is not  materially
different if calculated pursuant to SFAS No. 123.

3. INVESTMENTS

Investments,  which  are  classified  as  available  for  sale,  consist  of the
following at June 30, 1998:

                                                                     Unrealized
                                          Market Value     Cost     Holding Loss

   U.S. Government Treasury Bills           $275,670     $275,670     $      0
   Investment in common stock of
    Parlux Fragrances, Inc.                   53,541      275,694      222,153
                                            --------     --------     --------

                                            $329,211     $551,364     $222,153
                                            ========     ========     ========
                                       F-9
<PAGE>
                             FBR CAPITAL CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 1998



4.  CONVERTIBLE NOTES PAYABLE

On January  13,  1994,  the  Company  entered  into a series of 10%  convertible
subordinated  promissory  notes due January 15,  1996 (the  Convertible  Notes),
totalling  $5,157,750.  On June 30, 1996,  simultaneous  with the closing of the
Asset Sale, the Company  completed an exchange offer  (Exchange  Offer),  in the
aggregate principal amount of $5,040,750 with certain holders of the Convertible
Notes.

On October 21, 1996,  the Company  completed  the  extinguishment  of $97,500 of
Convertible Notes in exchange for an aggregate of $62,500 in cash, 11,500 shares
of the  Company's  Common  Stock  (market  value  of $.36 per  share),  and five
three-year  Warrants (the  Warrants)  each to purchase up to 2,500 shares of the
Company's  Common  Stock at $2 per share.  The total  amount of debt  (including
principal and accrued but unpaid interest of $22,525)  extinguished  pursuant to
the exchange aggregated $120,025.  This amount, less the cash paid, value of the
Common  Stock and the  Warrants  issued in the  exchange  offer,  resulted in an
extraordinary  gain on the  extinguishment  of debt in the amount of $53,385 for
the year ended June 30, 1997.

The Company believes that the remaining holder of the Convertible  Notes, 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  Convertible  Note.  Funds for this settlement are expected to come from the
Company's cash on hand.

5. STOCK OPTION PLANS

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, or 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.

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.
                                      F-10
<PAGE>
                             FBR CAPITAL CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 1998



In  connection  with the change in  management  described  in Note 1, all of the
outstanding options issued pursuant to this plan expired in July 1996.

Director Compensation Plan
--------------------------

In June 1996, the Company  granted,  to its two directors and officers  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.

In January 1997, the Company granted to one of its directors  five-year  options
to  purchase  30,000  shares of common  stock at an  exercise  price of $.31 per
share.  The options are immediately  exercisable and  "piggy-back"  registration
rights  were  granted  to the option  holder  with  respect to the common  stock
underlying such options.

The  following  assumptions  apply to the  Company's  valuation of stock options
issued:

Risk free interest rate                        6.73%
Expected dividend yield                        None
Expected lives                                 10 years
Expected volatility                            82.25%

Due to the small number of stock options or similar equity instruments issued or
outstanding  during the last two fiscal  years,  net income (loss) per share for
the years ended June 30, 1998 and 1997 is not materially different if calculated
pursuant to SFAS No. 123.

A summary of the activity  under the  Company's  stock option plans is presented
below:
<TABLE>
<CAPTION>
                                                       Year ended June 30,
                                      ----------------------------------------------------
                                                1998                       1997
                                      -------------------------  -------------------------
                                       Number  Weighted Average  Number   Weighted Average
                                         of      Option Price      of       Option Price
                                       Shares     Per Share      Shares       Per Share
<S>                                   <C>         <C>            <C>          <C>      
Options outstanding, beginning
 of year                               70,000       $.38       134,333        $1.16
Granted                                  --          --         30,000          .31
Cancelled/expired                        --          --        (94,333)        1.46
Exercised                                --          --           --            --

Options outstanding, end of year       70,000       $.38        70,000        $ .38
                                       ======       ====        ======        =====

Options exercisable, end of year       70,000       $.38        70,000        $ .38
                                       ======       ====        ======        =====
</TABLE>
The weighted average remaining contractual life at June 30, 1998 was six years.
                                      F-11
<PAGE>
                             FBR CAPITAL CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 1998




6. PREFERRED STOCK EXCHANGE

On February 25,  1997,  the Company made an offer to the holders of its Series A
Preferred  Stock  ("Series A  Preferred  Stock") to  exchange  for each share of
Series A Preferred Stock,  663 shares of The common stock of Parlux  Fragrances,
Inc. ("Parlux Shares"),  valued at $792,658,  owned by the Company. The exchange
offer was  subject to  acceptance  by the holders of not less than 506 shares of
Series A Preferred Stock (97.87% of the outstanding shares) prior to termination
of the exchange offer, as extended, on April 30, 1997. Tenders were received for
all 515 shares of Series A Preferred  Stock.  Consummation of the exchange offer
eliminates  the  possibility  that the holders of Series A  Preferred  Stock can
cause  liquidation  of the  Company to secure  partial  payment of an  aggregate
redemption  price of  $2,895,200  with  respect  to the 517  shares  of Series A
Preferred  Stock  outstanding.  This  transaction  resulted  in a  gain  on  the
redemption  of the  Series A  Preferred  Stock  of  $2,091,342,  which  has been
recorded as a component of additional paid-in capital.

7. OUTSTANDING WARRANTS

At June 30, 1998, the Company had outstanding warrants to purchase 12,500 shares
of the Company's common stock,  respectively,  at $2 per share. The warrants are
currently exercisable and expire October 15, 1999.

8. INCOME TAXES

The Company  accounts  for income  taxes under the  provisions  of  Statement of
Financial Accounting Standards No. 109 (SFAS 109),  Accounting for Income Taxes.
SFAS 109 requires the use of an asset and liability  approach in accounting  for
income  taxes.  Deferred tax assets and  liabilities  are recorded  based on the
differences  between  the  financial  statement  and tax  bases  of  assets  and
liabilities  and the tax rates in effect when these  differences are expected to
reverse.  These differences  include  unrealized loss on investments at June 30,
1998 and 1997.

The Company is in an acculmulated loss position for tax purposes.  Historically,
no tax benefit has been recorded due to the uncertainty of the Company's ability
to realize such benefits by generating taxable income in the future. The Company
has a net operating loss carryforward of approximately  $6.5 million at June 30,
1998. These  carryforwards  expire through 2013. Due to the change in control of
the Company  resulting from the Company's various equity  transactions,  certain
limitations  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  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 Company's net operating loss  carryforwards  a full valuation
allowance has been provided to offset the Company's net deferred tax asset.
                                      F-12
<PAGE>
                             FBR CAPITAL CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 1998


9. COMMITMENTS AND CONTINGENCIES

Consulting Agreement
--------------------

The  Company has  entered  into  consulting  agreements  with its two  principal
officers, 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.

Contingencies
-------------

During  November  1996,  the  Company  received a request for payment of claimed
amounts totaling  approximately  $137,000  purported to be owed to Muelhens GMBH
with whom the Company had a  distribution  agreement  from December 1993 to June
30, 1995.  As set forth in the  Company's  Annual  Report on Form 10-KSB for the
fiscal year ended June 30, 1996,  distribution agreements with Muelhens GMBH and
affiliated  parties  were  terminated  effective  June 30,  1995 on a basis that
relieved the Company of  obligations  to  Muelhen's  affiliated  companies.  The
Company  believes  that  the  claimed  amounts  were  included  in the  numerous
transactions  resolved  in the  termination  arrangements  in June  1995  and so
advised the attorneys for the claimant by letter of March 11, 1997.  The Company
has  heard  nothing  further  from  the  claiment  or its  attorneys  and is not
presently able to determine whether this request for payment will be pursued and
what amount, if, any ultimately may be due and owing thereon.

10. YEAR 2000 ISSUE:

Many computer  programs  utilize a two-digit  format to identify the  applicable
year. Without modification, any date sensitive software beyond December 31, 1999
could  fail as the date  would  be reset to year  1900.  This  could  result  in
disruptions to operations and the inability to process  financial  transactions.
The Company  currently  has no  operations  and will not be subject to potential
disruptions  in this area unless and until it  completes a business  combination
with  another  entity that has  operations  or  otherwise  acquires an operating
business.  The Company's financial transactions are currently kept and performed
on systems that according to their suppliers have been updated to avoid any Year
2000 problems. On any potential business  combination,  if any, the Company will
access the operations and systems of the potential  partner to determine whether
there are any potential Year 2000 problems.
                                      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.          66              President (and principal
                                                        executive, financial and
                                                        accounting officer) and
                                                        Director
          
          Stephen T. Meadow             71              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 and continued as a Director until March 1997.  Prior to
October,  1991,  he was  Chairman,  President  and Chief  Executive  Officer  of
Callahan Mining Corporation.

       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.  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,
1998.
                                       9
<PAGE>
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
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.  Because of a substantial  increase in the time required to attend to the
affairs of the Company  during the pendancy of the 1997 Exchange Offer and other
matters,  the Board of Directors  increased Mr. Snead's consulting fee to $6,000
per month for the  months  of  February,  March  and  April  1997.  Mr.  Snead's
consultancy  arrangement  commenced in March 1996 in  connection  with the Asset
Sale and Mr. Meadow's consultancy  arrangement commenced in July 1996. Mr. Snead
received  consulting fees of $60,681 in fiscal 1997 and $ 49,413 in fiscal 1998.
Mr.  Meadow  received  consulting  fees of $ 18,000 in  fiscal  1997 and fees of
$18,000 in fiscal 1998.  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). In addition, on January 22, 1997, The Board of Directors granted Mr.
Snead an option  for a period of five  years  from that date to  purchase  up to
30,000  shares of the Company's  common stock at a price of $.31 per share,  the
closing market price on such date. These options are immediately exercisable and
"piggy-back"  registration  rights were  granted to each of them with respect to
the Common Stock underlying such options.

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

       The following  table sets forth certain  information  as of September 30,
1997  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) each director
and (iii) 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       
Beneficial Owner                               Nature of        Percent of Class
----------------                               Beneficial       ----------------
                                               ----------
                                               Ownership
                                               ---------

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

Charles D. Snead, Jr.......................    60,000(2)             1.3%

All Directors and Executive Officers           
as a Group (2 persons).....................    76,100(3)             1.6%
                                       10
<PAGE>
*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 60,000 shares issuable upon the exercise of presently  exercisable
     options.

(3)  Includes an aggregate of 70,000 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 1996 Exchange  Offer,  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 1996 Exchange Offer,  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 1996 Exchange  Offer,  they received,  respectively,  4,600 and
2,300 shares of Common Stock and four and two shares of Preferred  Stock. In the
1997 Exchange  Offer,  Mr. Meadow and the aforesaid  pension trust each tendered
for  exchange,  respectively,  the four and two  shares of  Preferred  Stock and
received, respectively, 2652 and 1326 shares of Parlux 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 18,
                       1997, to report,  among other things,  an  Acquisition or
                       Disposition  of Assets under Item 2 thereof  occurring on
                       June 18, 1997.
                                       11
<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:  September 25, 1998                   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                    September 25, 1998
--------------------------------
Stephen T. Meadow



/s/ Charles D. Snead, Jr.         President (Principal        September 25, 1998
--------------------------------  Executive Financial and
Charles D. Snead, Jr.             Accounting Officer) and
                                  Director
                                    12
<PAGE>
                                  EXHIBIT INDEX
                                  -------------

Exhibit   Description                               By Reference      No. in
Number    -----------                              from Document     Document
------                                             -------------     --------
                                                                     
3.1       Registrant's Article of Incorporation          A             3.1
                                                                     
3.1.1     Registrant's Amendment to its                  A             3.1.1
          Articles of Incorporation, dated                           
          November 7, 1988                                           
                                                                     
3.1.2     Registrant's Amendment to its x                B             3.1.2
          Articles of Incorporation, dated June                      
          25, 1991                                                   
                                                                     
3.1.3     Registrant's Certificate of Reverse            C             3.1.3
          Stock Split, dated February 15, 1994                       
                                                                     
3.1.4     Registrant's Certificate of Designation        D             3.1.4
          of 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                          
          Certificate                                    A             4.1
                                                                     
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                E             4.8
          purchase 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               E             4.8.1
          the form 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                  E             10.17
          September 20, 1993, between                                
          Registrant and Patrick McEnany.                            
                                       13
<PAGE>
Exhibit   Description                               By Reference      No. in
Number    -----------                              from Document     Document
------                                             -------------     --------

10.2.1    Amendment to Stock Option                      G              --
          Agreement, dated February 21, 1995,                        
          between Registrant and Patrick                             
          McEnany                                                    
                                                                     
10.3      Asset Purchase Agreement between               F             10.17
          the Company and Parlux Fragrances,                         
          Inc., dated January 31,                                    
          1996                                                       
                                                                     
10.4      Registration Rights Agreement                  F             10.18
          between the Company and Parlux                             
          Fragrances, Inc., dated June 28,                           
          1996                                                       
                                                                     
27        Financial Data Schedule (6/30/98)           [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.

G    Form 10-KSB Annual Report of the  Registrant for the fiscal year ended June
     30, 1996
                                       14