ITEM 1. THE BUSINESS
GENERAL
The Registrant was incorporated under the laws of the State of Delaware on November 20, 1988, and issued 500,000 shares of its $.0001 par value Common Stock (the "Common Stock") to TRIM-A-LAWN on January 23, 1989, for $1,000 cash. The Company was organized with a view toward (a) the distribution of the 500,000 shares of the Company's Common Stock to the shareholders of TRIM-A-LAWN and (b) the subsequent search for, location of and combination of the Company with a privately-held business enterprise. The Company has no current business operations, except for the activities of its officers in searching for a potential combination partner. The Company has limited assets and no operating income. Since inception, the costs associated with the company's search for a mergercandidate have been and will be paid by the company, first, and Capital Investment Managers, Inc., on a discretionary basis. The Company's offices are located at at 3900 Paradise Road, Suite 263, Las Vegas, Nevada 89109, and its telephone number is (702) 734-8721.
The Company proposes to combine with an existing, privately-held company which is profitable and, in Management's view has growth potential (irrespective of the industry in which it is engaged). A Combination may be structured as a merger, consolidation, exchange of the Company's Common Stock for stock or assets or any other form which will result in the combined enterprise's being a publicly-held corporation. The Company will pursue a combination with a company that satisfies its combination suitability standards by advertising in one or more newspapers or magazines to establish contact with, or by otherwise contacting, selected privately-held companies which are profitable and are believed to have growth potential. There are no assurances that Management of the Company will be able to locate a suitable combination partner or that a combination can be structured on terms acceptable to the Company.
Pending negotiation and consummation of a combination, the Company anticipates that it will have limited business activities, will have no significant sources of revenue and will incur no significant expenses or liabilities not required to be advanced on behalf of the Company by S. Gregory Smith pursuant to his 1989-Employment Agreement. Nevertheless, should necessary funds be available, the Company will engage attorneys, accountants and/or other consultants to evaluate and assist in completing a potential combination.
CAPITAL EXPENDITURES
The Registrant plans no significant expenditures.
EMPLOYEES
At December 31, 1995 the Registrant had no full time employees other than the executive officers listed below.
ITEM 2.
ITEM 2. PROPERTIES
At December 31, 1995 the Registrant did not own property.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
The Registrant is not a party to any material legal proceedings, nor to the Registrant's knowledge, are there any other material legal proceedings contemplated against it.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to security holders for a vote during the fourth quarter or the past fiscal year covered by this report.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
There is no established public trading market for the Registrant's Common Stock. As of December 31, 1995, there were 1,325,000 shares of the Registrant's Common Stock outstanding and approximately 423 shareholders of record.
The Registrant has never declared or paid any cash dividend on its shares of Common Stock., and does not anticipate paying dividends in the foreseeable future.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
See the Financial Statements of the Registrant in Item 8.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Registrant is in the development stage with a view towards combining with an existing, privately-held Registrant which is profitable and, in management's opinion, has growth potential. The Registrant has no significant assets, revenues or expenses; and the Registrant is not expected to have significant operations until a business combination is effected.
LIQUIDITY AND CAPITAL RESOURCES
There have been no material changes in the financial condition of the Registrant since its inception, nor is a material change anticipated until the Registrant is able to identify and consummate a business combination.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENTS SCHEDULES ARE ALL SET FORTH AS EXHIBIT "A" ATTACHED HERETO.
All other schedules are not submitted because they are not applicable or not required or because the information is included in the financial statements or notes thereto.
REPORT OF MANAGEMENT
The financial statements have been prepared by management and have been audited by McBride & Company, the Registrant's independent auditors, whose report follows. The management of the Registrant is responsible for the financial information and representations contained in the financial statements and other sections of the annual report. Management believes that the financial statements have been prepared in conformity with generally accepted accounting principles appropriate under the circumstances to reflect, in all material respects, the substance of events and transactions that should be included. In preparing the financial statements, it is necessary that management make informed estimates and judgments based upon currently available information of the effects of certain events and transactions.
In meeting its responsibility for the reliability of the financial statements, management depends on the Registrant's system of internal accounting control. This system is designed to provide reasonable assurance that assets are safeguarded and transactions are executed in accordance with management's authorization and properly recorded. In designing control procedures, management recognizes that errors or irregularities may nevertheless occur. Also, estimates and judgments are required to assess and balance the relative cost and expected benefits of the controls. Management believes that the Registrant's accounting controls provide reasonable assurance that errors or irregularities that could be material to the financial statements are prevented or would be detected within a timely period by employees in the normal course of performing their assigned functions.
ITEM 9.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table lists all of the Directors and Executive Officers of the Registrant, and provides certain information concerning each such person, including the number of shares of Common Stock of the Registrant beneficially owned directly or indirectly by such person at the close of business as of December 31, 1995. As of December 31, 1995 there were 1,325,000 shares of the Registrant's Common Stock, $.0001 par value, outstanding.
- --------------- NOTES: 1. Thomas R. Brooksbank is the principal and owner of Brooksbank & Associates, the registered owner of 200,000 shares of the Registrant's common stock as set forth above.
(1) Principal Occupation
Thomas A. Hantges - Elected as a Director on March 7, 1995. Appointed as the President and Treasurer of the Registrant on March 7, 1995 following the resignation by S. Gregory Smith. Mr. Hantges is the President of USA Partners, Inc., which is the General Partner of USA Partners Limited, a Nevada limited partnership which acts as the General Partner of the USA Capital Land Fund Limited Partnership. He is currently the President, Director and 100% owner of USA Commercial Real Estate Group, USA Mortgage Company, Inc., and USA Development, Inc., all Nevada corporations. Mr. Hantges was the President and Treasurer of USA Financial Services of Nevada, Inc. until August 25, 1995. Mr. Hantges, a 29 year resident of Las Vegas, received his B.S. degree in Hotel Administration in 1973 and his Masters Degree in Business Administration in 1979 both from the University of Nevada at Las Vegas. Mr. Hantges has been in the securities industry since 1980. Prior to entering the Securities industry, Mr. Hantges held positions as an assistant hotel manager for the Riviera and Stardust hotels in Las Vegas, Nevada. Mr. Hantges has served as Vice President for Rauscher Pierce Refsnes, Inc., Smith Barney, Prudential Bache Securities all New York Stock Exchange member firms. Mr. Hantges holds both Series 7 and Series 24 licenses issued by the NASD, is licensed with the Insurance Division for the State of Nevada as a broker and a salesman, and is licensed as a corporate broker by the Nevada Real Estate Division. He is also licensed through the Financial
Institutions Division of the State of Nevada Department of Business and Industry as the "qualified employee" for USA Mortgage Company, Inc.
Thomas R. Brooksbank - Elected as a Director on March 7, 1995. Appointed as Secretary of the Registrant on March 7, 1995 following the resignation by S. Gregory Smith. Mr. Brooksbank is the principal of Brooksbank & Associates, Attorneys at Law, a commercial and financial institution collection law firm; Mr. Brooksbank was admitted to the State Bar of Nevada in 1987 and the State of Bar of Arizona in 1995. Mr. Brooksbank received a Bachelor of Science degree in 1975 from the University of Maryland, DDS in 1981 and his Juris Doctor degree from California Western School of Law in 1986 graduating magna cum laude.
E. C. Kaufer - Elected as a Director on September 1, 1995 following the resignation of David M. Berkowitz. Mr. Kaufer is a Certified Fraud Examiner and President of Crisis Management Inc., a fraud detection and financial recovery firm. Mr. Kaufer's concentration has been in the institutional creditor area. Mr. Kaufer received a degree in Finance and Marketing from the Northern Arizona University in 1969 and an MBA from Northern Arizona University in 1973.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
COMPENSATION OF OFFICERS
No executive officer of the Registrant received any compensation during the fiscal year ended December 31, 1995.
EMPLOYMENT CONTRACTS/STOCK INCENTIVE PLANS
No employment contracts or stock incentive plans were adopted or granted by the Registrant during the fiscal year ended December 31, 1995.
COMPENSATION OF DIRECTORS
There were no regular meetings of the Board of Directors and no director of the Registrant received any compensation during the fiscal year ended December 31, 1995.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, to the extent known by the Registrant, as to the persons and companies who owned beneficially more than five percent (5%) of the outstanding shares of the Common Stock of the Registrant at the close of business on December 31, 1995, and the beneficial ownership of the Registrant, as a group, as of such date. The number of shares held by each Director is set forth in Item 10 hereinabove.
Amount and Nature of
- --------------- NOTES: 1. Capital Investment Managers, Inc., is controlled by S. Gregory Smith, the President and Director of the Registrant as of December 31, 1994.
2. The Hantges Children's Education Trust is the beneficial owner of 12,806 shares of the common stock of the Registrant. These shares are separate and distinct from those owned by Thomas A Hantges. The Hantges Education Trusts is an Irrevocable Trust with an independent third party Trustee, Helen Miller. Thomas A. Hantges does not have direct or indirect control over the 12,806 shares beneficially owned by the Trust.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents filed as a part of this report:
(1) Financial Statements and Supplementary Data:
The financial statements filed as a part of this report are attached hereto as Exhibit 1, and are listed in the "Index to Financial Statements" at Item 8.
(2) Financial Statements Schedules:
The financial statements schedules filed as a part of this report are attached as Exhibit 1 and are listed in the "Index to Financial Statements" at Item 8.
(b) No reports on Form 8-K were filed during the last quarter of the period covered by this report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the Undersigned, thereunto duly authorized.
CAPITAL ADVISORS ACQUISITION CORP. (REGISTRANT)
Date: July 1, 1996 \s\ Thomas Hantges ------------------------------------ By: Thomas Hantges President
Date: July 1, 1996 \s\ Thomas R. Brooksbank ------------------------------------ By: Thomas R. Brooksbank Chief Financial Officer
CAPITAL ADVISORS ACQUISITION CORP. FINANCIAL STATEMENTS DECEMBER 31, 1995, AND 1994 (WITH AUDITORS' REPORT THEREON) REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors Capital Advisors Acquisition Corp. Fort Worth, Texas
We have audited the accompanying balance sheets of Capital Advisors Acquisition Corp. (a Delaware corporation in the development stage), as of December 31, 1995 and 1994, and the related statements of operations, stockholders' equity, and cash flows as of December 31, 1995, 1994 and 1993. 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. The statements of operations, stockholders' equity and cash flows of Capital Advisors Acquisition Corp. as of December 31, 1991 and from November 22, 1988 (inception), were audited by other auditors whose report dated February 29, 1992, expressed an unqualified opinion on those financial statements.
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 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 Capital Advisors Acquisition Corp. as of December 31, 1994 and 1993, and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles.
MCBRIDE & REEVES CPA'S
April 13, 1996 Las Vegas, Nevada CAPITAL ADVISORS ACQUISITION CORP. (A DEVELOPMENT STAGE COMPANY) BALANCE SHEETS DECEMBER 31, 1995 AND 1994
The accompanying notes are an integral part of the financial statements.
CAPITAL ADVISORS ACQUISITION CORP. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, 1993 AND FOR THE PERIOD FROM NOVEMBER 22, 1988 (INCEPTION), TO DECEMBER 31, 1995
The accompanying notes are an integral part of the financial statements.
CAPITAL ADVISORS ACQUISITION CORP. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, 1993 AND FOR THE PERIOD FROM NOVEMBER 22, 1988 (INCEPTION), TO DECEMBER 31, 1995
The accompanying notes are an integral part of the financial statements.
CAPITAL ADVISORS ACQUISITION CORP. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, 1993, AND FOR THE PERIOD FROM NOVEMBER 22, 1988 (INCEPTION), TO DECEMBER 31, 1995
The accompanying notes are an integral part of the financial statements.
CAPITAL ADVISORS ACQUISITION CORP. (A DEVELOPMENT STAGE COMPANY) NOTE TO FINANCIAL STATEMENTS DECEMBER 31, 1995 AND 1994
(1) Summary of Organization and Significant Accounting Policies
(a) Organization
The Company was organized as a Delaware corporation on November 22, 1988.
On January 30, 1989, the Company was registered (Form S-1) with the Securities and Exchange Commission, file number 033-26344.
From the date of inception, through the registration with the Securities and Exchange Commission, through December 31, 1995 the Company has had minimal business operations.
(b) Capital Stock
The authorized, issued and outstanding shares of capital stock at December 31, 1995, were as follows:
Preferred stock; $1.00 par value; 1,000,000 shares authorized, none issued and outstanding.
Common Stock; $.0001 par value; authorized 50,000,000 shares; 1,325,000 shares issued and outstanding.
(c) Earnings Per Share
Earnings per share of common stock was computed by dividing net income (loss) by the weighted average number of common shares outstanding for the year (1,325,000 shares).
(d) Dividends Per Share
No dividends have been paid as of December 31, 1995.
(2) Convertible Debentures
On December 31, 1988, the Company issued to Capital Investment Managers, Inc., an affiliate of each of the officers of the Company by common ownership, 8% convertible debentures totaling $3,750. The debentures were exercised March 7, 1989 and were converted to common stock of the Company at a conversion rate of $.015 in common stock value per each $1.00 in debenture. The conversion resulted in the issuance of an additional 250,000 shares of common stock of the Company.
CAPITAL ADVISORS ACQUISITION CORP. (A DEVELOPMENT STAGE COMPANY) NOTE TO FINANCIAL STATEMENTS DECEMBER 31, 1995 AND 1994
(3) Stock Bonus Plan
The Company has established a Stock Bonus Plan for the benefit of its employees. The plan allows for the award of a maximum of 750,000 common shares of the Company in any one year. On December 25, 1988, the Company provided 250,000 shares of common stock to officers of the Company. No other stock bonus awards have occurred through December 31, 1994.
(4) Related Party Transactions
There are certain operating costs incurred by the Company that were paid directly by stockholders for the Company. These costs are de minimis and the parties paying the costs do not intend to be repaid or reimbursed by the Company. The expenses paid by related parties for 1994 amounted to $4,272 and is recorded as additional paid in capital.
In addition, their were certain operating costs incurred by the Company that were paid for with the issuance of common stock. 100,000 shares of common stock were issued in exchange for legal services in the amount of $5,000.
During 1995, The Company issued 225,000 shares of common stock for directors' fees. The transaction was recorded at The Companys' market value of the shares of zero.
(5) Liquidation of Subsidiary
During the year ended December 31, 1991, the Company liquidated its investment in Continental Commerce Corporation, another development stage company. The transaction resulted in a loss on the investment of $2,500 and cash received of $1,500. The cash proceeds were distributed to shareholders for reimbursement of various professional fees paid on behalf of the Company.
(6) Income Taxes
The Company accounts for income taxes in accordance with Statement of Financial Accounting Standard 109, "Accounting for Income Taxes" which requires the use of the "liability method" of accounting for income taxes. Under the liability method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.