<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 0-17432
------------
ORANGE COUNTY VENTURES, INC.
----------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 95-3915600
- ---------------------------------- -------------------------
(State or other jurisdiction of (I.R.S. Employer Identifi-
incorporation or organization) cation Number)
17922 SKY PARK CIRCLE DRIVE, SUITE A, IRVINE, CALIFORNIA 92714
--------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (714) 660-7972
------------------
Securities registered pursuant to Section 12(b) of the Act: NONE
--------
Securities registered pursuant to Section 12(g) of the Act: NONE
--------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the proceeding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
X YES NO
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
Estimated aggregate market value of the voting stock held by nonaffiliates
of the registrant: 0, or negligible (See Item 3, Legal Proceedings).
At March 27, 1996, the Registrant had 9,800,250 shares of its common stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE: Part IV incorporates by reference
certain exhibits filed with the Registrant's Registration Statement on Form S-18
(No. 33-25085-LA).
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The following selected financial information was abstracted from the
financial statements and notes thereto included elsewhere in this Form 10-K/A
and from previously published financial information of the Company not appearing
herein. Such selected financial information should be read in conjunction with
the Consolidated Financial Statements and Notes thereto appearing elsewhere
herein.
YEAR ENDED DECEMBER 31
----------------------
BALANCE SHEET DATA 1995 1994 1993
---- ---- ----
Working Capital $ (1,409) $ (929,127) $ (645,191)
Total Assets 363 835,684 982,761
Long Term Obligations 0 0 163,475
Shareholders Equity (1,409) (278,512) 113,277
OPERATING STATEMENT DATA
Net Revenues 751,415 2,004,326 1,853,702
Arbitration Settlement 78,000
Operating Expenses 28,258 1,619,898 1,550,413
General and Administrative
Expenses 324,787 353,385
Site Development Write-Off 34,000
Interest Expense, Net 30,724 62,467
Legal Judgment - Stanton 273,255 0
Total Costs and Expenses 28,258 2,552,643 2,000,265
------ --------- ---------
Reorganization Items:
Professional Fees 53,720 0
Loss on Transfer of Assets 93,731 0
Net Loss $ (3,258) $ (391,789) $ ( 68,563)
------ --------- ---------
Net Loss Per Share $ ( .00) $ ( .07) $ ( .01)
------ --------- ---------
Weighted Average Shares Outstanding 9,800,250 5,800,250 5,800,250
-2-
<PAGE>
As of May 6, 1995 the Company no longer has any revenue producing
operations. No comparisons to prior periods can be made since the operations of
the Company ceased on May 5, 1995.
Until May 5, 1995 the Company had both revenues and expenses from its
operating subsidiary ACC Motor Club, Inc. These revenues and expenses are
reflected in column (2) figures. All cash flow for the period of January 1,
1995 through May 5, 1995 were used for the benefit of the creditor's under the
Chapter 11 proceedings.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
MATERIAL CHANGES IN RESULTS OF OPERATIONS.
As of May 6, 1995 the Company no longer had any revenue producing
operations. No comparisons to prior periods can be made since the operations of
the Company ceased on May 5, 1995.
Under the Chapter 11 Plan all operations were for the benefit of creditors,
and thus, none of the funds were used for distribution to the shareholders.
Since May 6, 1995 the Company has incurred expenses associated with the
audit of their 1994 fiscal year, legal fees in association with the transfer of
the subsidiary and filing of necessary documents. In addition, the Company
incurs certain legal expenses as a result of its attempts to sell the shell.
MATERIAL CHANGES IN FINANCIAL CONDITION
As a result of the conclusion of the bankruptcy case, all operating assets
of the Company were transferred to the Plan Proponent.
The Company continues to exist as a shell with no operations. The Company
continues to incur certain expenses while it attempts to find a merger candidate
for the shell.
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<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ORANGE COUNTY VENTURES, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
Page
----
Independent Auditors' Report..................................................5
Consolidated Balance Sheet as of December 31, 1995 and 1994...................7
Consolidated Statements of Operations for the Years Ended
December 31, 1995, 1994 and 1993............................................9
Consolidated Statements of Stockholders' Equity (Deficit)
for the Years ended December 31, 1995, 1994 and 1993.......................10
Consolidated Statement of Cash Flows for the
Years ended December 31, 1995, 1994 and 1993...............................11
Notes to Consolidated Financial Statements...................................13
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<PAGE>
DONALD R. STERNER
CERTIFIED PUBLIC ACCOUNTANT
A PROFESSIONAL CORPORATION
1334 PARK VIEW AVENUE, SUITE 100
MANHATTAN BEACH, CALIFORNIA 90266
TEL: (310) 546-6113 FAX: (310)546-5630
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of Orange County
Ventures, Inc. (Formerly, Auto Chek Centers, Inc.):
We have audited the accompanying consolidated balance sheet of Orange County
Ventures, Inc. (formerly, Auto Chek Centers, Inc.) and its subsidiary (the
Company) as of December 31, 1995, and the related consolidated statements of
operations, stockholders' equity (deficit), and cash flows for the year then
ended. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit. The consolidated financial
statements of Orange County Ventures, Inc. (formerly Auto Chek Centers Inc.) as
of December 31, 1994 and 1993, were audited by other auditors whose report,
dated July 18, 1995, expressed an unqualified opinion on those consolidated
statements.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 1995 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Orange
County Ventures, Inc. (formerly, Auto Chek Centers, Inc.) and its subsidiary at
December 31, 1995, and the results of their operations and their cash flows for
the year then ended in conformity with generally accepted accounting principals.
-5-
<PAGE>
As discussed in Note 1 to the consolidated financial statements, the Company's
Plan of Reorganization was confirmed by the U.S. Bankruptcy Court on May 5,
1995. As part of the Plan of Reorganization, the Company sold the outstanding
common stock of its wholly owned subsidiary which conducted substantially all of
the Company's operations. Accordingly, as of May 5, 1995, the Company has no
operations. As discussed in Note 9 to the consolidated financial statements, on
December 5, 1996, the Company signed a letter of intent to merge with another
company subject to the terms of the agreement and approval of the stockholders
of both companies.
/s/ Donald R. Sterner
December 20, 1996
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<PAGE>
ORANGE COUNTY VENTURES, INC.
(Formerly, Auto Chek Centers, Inc.)
CONSOLIDATED BALANCE SHEETS
December 31, 1995 and 1994
ASSETS
1995 1994
-------- --------
Current assets:
Cash $363 $139,962
Prepaid expenses and other assets 29,111
Smog certificate inventory 15,996
------- ----------
Total current assets 363 185,069
------- ----------
Property and equipment (Notes 1,2, and 3)
Leasehold improvements 1,128,030
Store fixtures and equipment 502,924
Office furniture and equipment 88,519
------- ----------
1,719,473
Less accumulated depreciation and
amortization (1,140,566)
------- ----------
Property and equipment, net 578,907
------- ----------
Other assets:
Deposits 71,708
------- ----------
Total other assets 71,708
------- ----------
Total $363 $835,684
------- ----------
------- ----------
Continued
-7-
<PAGE>
ORANGE COUNTY VENTURES, INC.
(Formerly, Auto Chek Centers, Inc.)
CONSOLIDATED BALANCE SHEETS - Continued
December 31, 1995 and 1994
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
1995 1994
------- -------
Liabilities not subject to compromise:
Current liabilities:
Accounts payable $1,772 $6,400
Accrued compensation 30,164
Accrued liabilities 39,216
Notes payable (Note 3) 24,104
---------- ---------
Total current liabilities 1,772 99,884
---------- ---------
Liabilities subject to compromise (Notes 1,4 and 6) 1,014,312
---------- ---------
Commitments and contingencies (Note 5)
Stockholders' equity (deficit ) (Notes 7 and 9):
Common stock, $.01 par value;
authorized, 10,000,000 shares; issued
and outstanding, 9,800,250 shares at
December 31, 1995 and 5,800,250 shares
at December 31, 1994 68,002 58,002
Paid - in capital 2,362,508 2,362,508
Accumulated deficit (2,431,919) (2,699,022)
---------- ---------
Total stockholders' equity (deficit) (1,409) (278,512)
---------- ---------
Total $363 $835,684
---------- ---------
---------- ---------
See accompanying notes to consolidated financial statements
-8-
<PAGE>
ORANGE COUNTY VENTURES, INC.
(Formerly, Auto Chek Centers, Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1995, 1994 and 1993
1995 1994 1993
--------- -------- --------
Discontinued operations as of
May 5, 1995 (Note 1):
Net revenues (Note 2) $751,415 $2,004,326 $1,853,702
--------- ---------- ----------
Costs and expenses:
Operating costs 545,389 1,619,898 1,584,413
General and administrative 137,140 324,787 353,385
--------- ---------- ----------
Total costs and expenses 682,529 1,944,685 1,937,798
--------- ---------- ----------
Other (income) expense:
Legal judgment (Note 5) 273,255 (78,000)
Interest expense, net 30,724 62,467
--------- ---------- ----------
Total other (income) expense 303,979 (15,533)
--------- ---------- ----------
Income (loss) before reorganization
items 68,886 (244,338) (68,563)
--------- ---------- ----------
Reorganization items (Notes 1 and 6):
Professional fees 64,595 53,720
Loss on transfer of assets 93,731
Loss on sale of assets 524,654
Income from debt forgiveness (787,466)
--------- ---------- ----------
Total reorganization items (198,217) 147,451
--------- ---------- ----------
Net income (loss) (Note 8) $267,103 ($391,789) ($68,563)
--------- ---------- ----------
--------- ---------- ----------
Net income (loss) per share (Note 2) $0.04 ($0.07) ($0.01)
--------- ---------- ----------
--------- ---------- ----------
Weighted average shares
outstanding (Note 2) 6,466,917 5,800,250 5,800,250
--------- ---------- ----------
--------- ---------- ----------
See accompanying notes to consolidated financial statements
-9-
<PAGE>
ORANGE COUNTY VENTURES, INC.
(Formerly, Auto Chek Centers, Inc.)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
For the Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
Number of
Common share Common Paid - in Accumulated
Outstanding Stock Capital Deficit Total
------------ -------- ----------- ------------- --------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1993 5,800,250 $58,002 $2,362,508 ($2,238,670) $181,840
Net loss (68,563) (68,563)
----------- ------- ---------- ----------- --------
Balance at December 31, 1993 5,800,250 58,002 2,362,508 (2,307,233) 113,277
Net loss (391,789) (391,789)
----------- ------- ---------- ----------- --------
Balance at December 31, 1994 5,800,250 58,002 2,362,508 (2,699,022) (278,512)
Common stock issuance (Note 7) 4,000,000 10,000 10,000
Net income 267,103 267,103
----------- ------- ---------- ----------- --------
Balance at December 31, 1995 9,800,250 $68,002 $2,362,508 ($2,431,919) ($1,409)
----------- ------- ---------- ----------- --------
----------- ------- ---------- ----------- --------
</TABLE>
See accompanying notes to consolidated financial statements
-10-
<PAGE>
ORANGE COUNTY VENTURES, INC.
(Formerly, Auto Chek Centers, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
-------- --------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income ( loss) from discontinued
operations $267,103 ($391,789) ($68,563)
Adjustments to reconcile net income
(loss) to net cash provided by
discontinued operations:
Depreciation and amortization 30,661 173,479 214,876
Loss on disposal of property and
equipment 674,654 93,731 15,607
Income from debt forgiveness (1,014,312)
Changes in operating assets and
liabilities:
Prepaid expenses and other assets (9,742) (17,128) 10,847
Smog certificate invent 149 (1,331) 4,886
Accounts payable (4,628) 32,796 (50,521)
Accrued compensation (30,164) 20,226 (19,719)
Accrued liabilities (39,216) 291,687 (5,458)
---------- --------- --------
Net cash provided by discontinued
operations (125,495) 201,671 101,955
---------- --------- --------
Cash flows from investing activities:
Purchases of property and equipment (6,883)
Deposits and other assets 4,118 13,169
---------- --------- --------
Net cash provided by investing activities 4,118 6,286
---------- --------- --------
</TABLE>
Continued
-11-
<PAGE>
ORANGE COUNTY VENTURES, INC.
(Formerly, Auto Chek Centers, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
For the Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
------ -------- --------
<S> <C> <C> <C>
Cash flows from financing activities:
Proceeds from issuance of common
stock 10,000
Proceeds from notes payable to
stockholders 67,500
Repayment of notes payable to
stockholders (15,690) (55,390)
Repayment of notes payable (24,104) (14,307) (58,818)
Principal payments on line of credit
from stockholder (70,000) (70,000)
--------- -------- --------
Net cash used in financing activities (14,104) (99,997) (116,708)
--------- -------- --------
Net increase (decrease) in cash (139,599) 105,792 (8,467)
Cash at beginning of year 139,962 34,170 42,637
--------- -------- --------
Cash at end of year $363 $139,962 $34,170
--------- -------- --------
--------- -------- --------
Supplemental disclosure of cash flow
information:
Interest paid $34,904 $57,223
--------- -------- --------
--------- -------- --------
Income taxes paid $1,600 $1,600 $1,600
--------- -------- --------
--------- -------- --------
</TABLE>
Supplemental schedule of noncash
investing and financing activities:
During 1994, the Company transferred to the lessor of the land underlying
one of the Company's sites, the building and leasehold improvements in
such site with a carrying value of $93,731 in exchange for the
modification of the leases and related terms.
See accompanying notes to consolidated financial statements
-12-
<PAGE>
ORANGE COUNTY VENTURES, INC.
(Formerly, Auto Chek Centers, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1995, 1994 and 1993
NOTE 1 - GENERAL AND BASIS OF PRESENTATION
GENERAL
Orange County Ventures, Inc. (formerly, Auto Chek Centers, Inc.), a Delaware
corporation, and its wholly owned subsidiary ( collectively referred to as the
"Company") provided motor vehicle emission testing and computerized motor
vehicle registration services through six company-owned service centers in
Southern California. Operations were discontinued on May 5, 1995.
BANKRUPTCY FILING
On August 16, 1994, the Company filed a voluntary petition of reorganization
with the U.S. Bankruptcy Court in the Central District of California (the
Bankruptcy Court) for protection under Chapter 11 of Title 11 of the U.S.
Bankruptcy Code (the Bankruptcy Code). The Company was subsequently authorized
to conduct its business operations as a debtor - in - possession subject to the
jurisdiction of the Bankruptcy Court.
Under Chapter 11 of the Bankruptcy Code, certain claims against the Company
in existence prior to the filing of the petition for relief under the federal
bankruptcy laws are stayed while the Company continues operations as a debtor -
in - possession. These claims are reflected in the December 31, 1994
consolidated balance sheet as "liabilities subject to compromise" (see Note 6 ).
Claims secured against the Company's assets (secured claims) also are stayed,
although the holders of such claims have the right to move the Bankruptcy
Court for relief from the stay.
Continued
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<PAGE>
ORANGE COUNTY VENTURES, INC.
(Formerly, Auto Chek Centers, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
For the Years Ended December 31, 1995, 1994 and 1993
NOTE 1 - GENERAL AND BASIS OF PRESENTATION - CONTINUED
PLAN OF REORGANIZATION AND DISCONTINUED OPERATIONS
On May 5, 1995, the Company's Plan of Reorganization (the Plan) was confirmed
by the Bankruptcy Court. The Plan included, among other things, the following
provisions:
(a) All of the outstanding common stock of the Company's wholly -
owned subsidiary, ACC Motor Club, Inc., all other assets of
the Company and all of the principal operations of the Company
were sold to two officers and one employee of the Company
in exchange for $200,000 in cash. The purchasers also
assumed all liabilities of the Company as of that date.
(b) All operating leases for sites and equipment were assumed
by the purchasers.
(c) The Company changed its name to Orange County Ventures, Inc.
(d) The proceeds from the sale of the subsidiary were used to
satisfy the Company's obligations for pre - petition and post -
petition liabilities.
Accordingly, subsequent to May 5, 1995, the Company no longer has any
operations. The consolidated financial statements for all years presented
reflect the Company's former business as discontinued operations. The
Company intends to seek a merger with another company.
Continued
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<PAGE>
ORANGE COUNTY VENTURES, INC.
(Formerly, Auto Chek Centers, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
For the Years Ended December 31, 1995, 1994 and 1993
NOTE 1 - GENERAL AND BASIS OF PRESENTATION - CONTINUED
BASIS OF PRESENTATION
The consolidated financial statements are stated in conformity with accounting
principles generally accepted in the United States of America. There would
be no material differences affecting the consolidated financial statements had
they been presented in conformity with accounting principals generally accepted
in Canada. The rates of exchange of one U. S. dollar for an equivalent amount
of Canadian currency at December 31, 1994 and 1993 were $1.40 and $1.33,
respectively.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Orange County
Ventures, Inc. (formerly, Auto Chek Centers, Inc.) and its wholly owned
subsidiary. All significant intercompany accounts have been eliminated in
consolidation.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost and are depreciated over the
estimated useful lives of the related assets, generally five to ten years.
Leasehold improvements are amortized over the shorter of their useful lives
or the life of the lease. Depreciation and amortization are computed using the
straight - line method.
REVENUE RECOGNITION
Testing and registration service revenue is recognized when such service is
rendered. Substantially all revenues are derived from testing services.
Continued
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<PAGE>
ORANGE COUNTY VENTURES, INC.
(Formerly, Auto Chek Centers, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
For the Years Ended December 31, 1995, 1994 and 1993
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 (SFAS No. 109), Accounting for
Income Taxes. This statement requires recognition of deferred tax liabilities
and assets for the future consequences of events that have been recognized
in the Company's consolidated financial statements or tax returns. Measurement
of deferred items is based on enacted tax laws. In the event the future
consequences of differences between financial reporting basis and the tax
basis of the Company's assets and liabilities result in deferred tax assets,
SFAS No. 109 requires evaluation of the probability of realization of the future
benefits indicated by such assets. A valuation allowance related to a deferred
tax asset is recorded when it is more likely than not that some portion or all
of the deferred tax asset will not be realized.
NET INCOME (LOSS) PER SHARE
Net income (loss) per share is computed based on the weighted average
number of common shares outstanding. Outstanding warrants and options are
antidilutive for all years presented and, accordingly, are not included in the
net loss per share computations.
NOTE 3 - NOTES PAYABLE
1995 1994
------------------------
Equipment note payable to a bank in monthly
installments of approximately $2,270, including
interest, calculated at 2% above the bank's
reference rate, collateralized by equipment
with a cost of approximately $200,000. $24,104
Less current portion (24,104)
------------
$0
------------
------------
Continued
-16-
<PAGE>
ORANGE COUNTY VENTURES, INC.
(Formerly, Auto Chek Centers, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
For the Years Ended December 31, 1995, 1994 and 1993
NOTE 4 - RELATED PARTY TRANSACTIONS
LINE OF CREDIT FROM STOCKHOLDER
Effective December 16, 1989, a stockholder agreed to lend the Company a
maximum of $500,000. During 1991, the maximum borrowings under this
agreement were reduced to $295,000. The Company is required to pay
$10,000 a month plus interest, computed at 1% above a bank's prime interest
rate. The outstanding balance under this agreement at December 31, 1994
was $155,000 and is included in liabilities subject to compromise in the
accompanying consolidated balance sheet as of December 31, 1994 (see
Note 6).
LEASES FROM STOCKHOLDERS AND AFFILIATES
The Company leases from stockholders or entities affiliated with stockholders
certain sites on which the Company has constructed and operates smog
testing centers (see Notes 1 and 5).
NOTE 5 - COMMITMENTS AND CONTINGENCIES
The Company leases its corporate offices, smog testing centers and certain
equipment under noncancellable operating leases, which expire on various
dates through 2009. Certain of the smog testing centers are constructed and
operated on sites which are leased from stockholders or entities affiliated
with the stockholders. The monthly lease obligation for the Company's sites
is equal to the greater of the fixed minimum lease payments or payments based
upon a percentage of monthly gross receipts. On May 5, 1995, the purchaser of
ACC Motor Club assumed such leases (see Note 1).
Total rent expense charged to operations for the years ended December 31,
1995, 1994, and 1993 was $121,755, $380,552, and $363,563, respectively, of
which $69,400, $219,173, and $176,904, respectively, was paid to related
parties. Contingent rentals were insignificant during the periods presented.
Continued
-17-
<PAGE>
ORANGE COUNTY VENTURES, INC.
(Formerly, Auto Chek Centers, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
For the Years Ended December 31, 1995, 1994 and 1993
NOTE 5 - COMMITMENTS AND CONTINGENCIES - Continued
LITIGATION
The Company was a defendant in a lawsuit whereby the plaintiff was seeking
recovery of past and future rents in excess of $400,000 relating to the lease
premises which the Company abandoned during 1991. During 1994, the court
awarded the plaintiff damages in the amount of $273,254, which are included
in liabilities subject to compromise in the accompanying consolidated
balance sheet as of December 31, 1994 (see Note 6).
A claim filed against the Company in connection with the termination of a
franchise agreement was settled in binding arbitration during 1991 in favor of
the Company. The award for legal fees and punitive damages of $78,000 was
received in 1993 and accordingly, was recognized by the Company in the
accompanying consolidated statement of operations for the year ended
December 31, 1993.
NOTE 6 - LIABILITIES SUBJECT TO COMPROMISE
Liabilities subject to compromise as a result of filing for protection under
Chapter 11 of the U.S. Bankruptcy Code (see Note 1) consist of the following
at December 31, 1994:
Accounts payable $192,969
Accrued liabilities 16,870
Legal judgement 273,254
Notes payable to stockholders 333,070
Line of credit from stockholder 155,000
Accrued compensation 43,149
------------
$1,014,312
------------
------------
Continued
-18-
<PAGE>
ORANGE COUNTY VENTURES, INC.
(Formerly, Auto Chek Centers, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
For the Years Ended December 31, 1995, 1994 and 1993
NOTE 7 - COMMON STOCK ISSUANCE, WARRANTS AND STOCK OPTIONS
COMMON STOCK TRANSACTION
On October 30, 1995, the Company issued 4,000,000 shares of common stock
of the Company to the purchaser of ACC Motor Club, Inc. (the former wholly -
owned subsidiary of the Company) at an issuance price of $.0025 pre share
for a total consideration of $10,000. The stock issuance was conditioned upon
the agreement that the shares would be redeemed by the Company at the
issuance price upon the merger of Orange County Ventures, Inc. with
another company.
WARRANTS AND STOCK OPTIONS
Effective January 1, 1994, options were granted to an officer and to two
employees of the Company to purchase a total of 125,000 shares of the
Company's common stock at $.15 Canadian per share (equivalent to $.11 U.S.
per share at December 31, 1994), exercisable for a period of ten years. At
the date of issuance, the exercise price of the options approximated the fair
value of the underlying shares. None of the options had been exercised as
of December 31, 1995. All previously issued options and warrants expired
during 1993.
NOTE 8 - INCOME TAXES
There was no income tax provisions, other than state minimum taxes of $1,600,
for the years ended December 31, 1995,1994, and 1993 as a result of the losses
from operations. Income tax expense differed from the expected income tax
benefit by applying the statutory federal tax rate primarily as a result of the
change in the beginning - of - the - year balance of the valuation allowance for
deferred tax assets allocated to income tax benefit.
Continued
-19-
<PAGE>
ORANGE COUNTY VENTURES, INC.
(Formerly, Auto Chek Centers, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
For the Years Ended December 31, 1995, 1994 and 1993
NOTE 8 - INCOME TAXES - CONTINUED
The tax effects of temporary differences that give rise to significant portions
of the deferred taxes at December 31, 1995 is presented below:
Deferred tax assets:
Net operating loss carryforward $822,000
Less valuation allowance (822,000)
------------
Net deferred tax $0
------------
------------
The valuation allowance for deferred tax assets as of January 1, 1995 was
approximately $929,000. The net change in the total valuation allowance for
the year ended December 31, 1995 was a decrease of $107,000.
At December 31, 1995, the Company had net operating loss carryforwards for
federal and state income tax purposes of $2,248,000 and $937,000, respectively,
which expire through the year 2009.
Due to the change in ownership provision of the Tax Reform Act of 1986, net
operating loss carryforwards for federal income tax reporting purposes are
subject to annual limitations. Should a change in ownership occur, net
operating loss carryforwards may be limited as to use in future years.
NOTE 9 - SUBSEQUENT EVENT
On December 5, 1996, the Company signed a letter of intent to merge with
another company pursuant to a tax free exchange through a plan of
reorganization in accordance with Section 351 of the Internal Revenue Code.
Under the Plan of Reorganization, the 4,000,000 shares of common stock issued
by the Company during 1995 would be repurchased by the Company at the
issuance price and canceled, and the remaining 5,800,250 shares outstanding
would be reverse split (1) new share for (5.8) old shares resulting in
1,000,000 shares issued and outstanding. The Company would then acquire all of
the issued and outstanding shares of the other company in exchange for 9,000,000
shares of the common stock of the Company. The effect of this merger is that
the present stockholders of the Company would have a 10% ownership interest
in the merged company. The Plan of Reorganization and Merger is subject to
the approval of the stockholders of both companies.
-20-
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) LIST OF EXHIBITS FILED AS A PART OF THIS REPORT.
*3.1 Certificate of Incorporation of the Company, filed as Exhibit 3.1
to the Company's Registration Statement on Form S-18 (No.
33-25085-LA), effective December 14, 1988 and incorporated herein
by this reference.
*3.2 Bylaws of the Company, filed as Exhibit 3.2 to the Registration
Statement on Form S-18 (No. 33-25085-LA), effective December 14,
1988, and incorporated herein by this reference.
*10.4 CVR Software License and maintenance Agreement, filed as Exhibit
10.5 to the Company's Registration Statement on Form S-18 (No.
33-25085-LA), effective December 14, 1988, and incorporated
herein by this reference.
*10.6 Ground Lease for West Los Angeles Center dated July 2, 1984 and
Amendment dated April 30, 1986 between the Company and Kramerson
Ltd., a California Limited Partnership, filed as Exhibit 10.7 to
the Company's Registration Statement on Form S-18 (No.
33-25085-LA), effective December 14, 1988, and incorporated
herein by this reference.
*10.7 Ground Lease for Fullerton Center dated January 15, 1986 and
Amendment thereto dated May 12, 1985 between the Company and
Snyder Investment Trust, filed as Exhibit 10.8 to the Company's
Registration Statement on Form S-18 (No. 33-25085-LA), effective
December 14, 1988, and incorporated herein by this reference.
*10.8 Standard Industrial Lease for Stanton Center dated June 20, 1986,
between the Company and Michael K. Daskalakis, M.D., filed as
Exhibit 10.9 to the Company's Registration Statement on Form S-18
(No. 33-25085-LA), effective December 14, 1988, and incorporated
herein by this reference.
-21-
<PAGE>
*10.9 Ground Lease for the Hollywood Center dated January 1, 1988,
between the Company and W.G.K., Inc., a California corporation,
filed as Exhibit 10.10 to the Company's Registration Statement on
Form S-18 (No. 33-25085-LA), effective December 14, 1988, and
incorporated herein by this reference.
*10.10 Ground Lease for the Covina Center dated June 30, 1988, between
the Company and Abrose Wehner, filed as Exhibit 10.11 to the
Company's Registration Statement on Form S-18 (No. 33-25085-LA),
effective December 14, 1988, and incorporated herein by this
reference.
*10.11 Ground Lease for the Manhattan Beach Center dated December 7,
1988, between the Company and L.J. McEntyre and C.M. McEntyre,
filed as Exhibit 10.13 to the Company's Registration Statement on
Form S-18 (No. 33-25085-LA), effective December 14, 1988, and
incorporated herein by this reference.
*10.13 Commitment Letter dated December 14, 1989, by and between
Lawrence Goodman and Auto Chek Centers, Inc., and Loan Agreement
dated December 16, 1989, by and between Lawrence Goodman and Auto
Chek Centers, Inc., filed as Exhibit 10.12 to the Company's 1989
Annual Report on Form 10-K and incorporated herein by this
reference.
*10.14 Ground Lease for the Santa Ana Center dated October 31, 1989
between the Company and the Fishman Family Trust, filed as
Exhibit 10.13 to the Company's Quarterly Report on Form 10-Q for
the period ended March 31, 1990, and incorporated herein by this
reference
*10.15 Ground Lease for the San Diego Center dated April 4, 1990,
between the Company and Dixieline Lumber Company, a Delaware
corporation, filed as Exhibit 10.14 to the Company's Quarterly
Report on Form 10-Q for the period ended March 31, 1990, and
incorporated herein by this reference.
*10.16 Ground Lease for the La Jolla Center dated April 25, 1990 between
the Company and VTL, Inc., a Nevada corporation, filed as Exhibit
10.15 to the Company's quarterly Report on Form 10-Q for the
period ended June 30, 1990, and incorporated herein by this
reference.
*10.17 Ground Lease for the Torrance Center dated July 9, 1990, between
the Company and Jiffy Lube International of Maryland, Inc., filed
as Exhibit 10.16 to the Company's Quarterly Report on Form 10-Q
for the period ended September 30, 1990, and incorporated herein
by this reference.
*10.18 Corporate Offices Sublease Agreement dated February 6, 1991
between the Company and Morgan & Morgan, Inc., filed as Exhibit
10.18 to the Company's 1990 Annual report on form 10-K and
incorporated herein by this reference.
-22-
<PAGE>
*10.19 Amendment to Ground Lease for Santa Ana Center dated May 17,
1990, filed as Exhibit 10.19 to the Company's 1990 Annual Report
on Form 10-K and incorporated herein by this reference.
*10.20 Note - Installment dated January 1, 1990 and General Security
Agreement dated December 9, 1987 for $500,000 loan from the Bank
of Montecito, filed as Exhibit 10.20 to the Company's 1990 Annual
report on Form 10-K and incorporated herein by this reference.
*10.22 Note - Installment dated August 20, 1990 and General Security
Agreement dated August 20, 1990 for $102,000 loan from The Bank
of Montecito, filed as Exhibit 10.22 to the Company's 1990 Annual
Report on Form 10-K and incorporated herein by this reference.
*10.23 Amendment to the Commitment Letter dated December 14, 1989 by and
between Lawrence Goodman and Auto Chek Centers, Inc. and Loan
Agreement dated December 16, 1989 by and between Lawrence Goodman
and Auto Chek Centers, Inc., filed as Exhibit 10.23 to the
Company's 1992 Annual Report on Form 10-K and incorporated herein
by this reference.
*10.24 Corporate Offices Lease Agreement dated August 13, 1993 between
the Company and Koll Management Services.
*22.1 Subsidiaries of the Company: ACC Motor Club (formerly Auto Chek
Smog Laboratories I, Inc.), a California corporation, dba ACC,
Auto Chek and Auto Convenience Centers.
*10.25 Rental agreement between WGK Inc. and Auto Chek Centers, Inc.
dated December 1, 1994.
*10.26 Notice of Hearing on Confirmation of Proposed Chapter 11 Plan,
etc. First Amended Plan of Reorganization.
*10.27 Stipulation for an Order Conditioning the Automatic Stay and
order Thereon between VW Credit and Auto Chek Centers, Inc.
*10.28 Amendment to Lease for the Fullerton Center dated November 17,
1995.
*10.29 Amendment to the Ground Lease for the Manhattan Beach Center
dated October 19, 1994.
*10.30 Amendment to the Ground Lease for the Santa Ana Center dated
January 5, 1995.
-23-
<PAGE>
*10.31 Plan of Reorganization.
*10.32 Findings of Fact and Conclusion of Law on Confirmation of Chapter
11 Plan; Order thereon.
27.1 Financial Data Schedule
*Previously filed.
(b) REPORTS ON FORM 8-K.
Inapplicable.
-24-
<PAGE>
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.
ORANGE COUNTY VENTURES, INC.
Dated: March 11, 1997 By: /S/ RICHARD G. FUCHS
--------- -------------------------------------
Richard G. Fuchs, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
President, CEO, CFO
and Chairman of the
/s/ RICHARD G. FUCHS Board March 11, 1997
- --------------------------- ---------
Richard G. Fuchs
Vice President,
/s/ JOHN E. WILSON Secretary and Director March 11, 1997
- --------------------------- ---------
John E. Wilson
-25-
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