===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended: December 31, 1996
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From ____ to ____
---------------------------------------------
Commission File Number: 033-26344
CAPITAL ADVISORS ACQUISITION CORP.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 75-2254748
- ------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
4180 La Jolla Village Drive, Suite 500, La Jolla, California 92037
- ------------------------------------------------------------ -----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (619) 457-3800
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 preceding 12 months (or 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. Yes /X/ 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 II of this Form 10-K or any amendments to this
Form 10-K. /X/
As of December 31, 1996, there were 3,519,777 shares of the Registrant's
Common Stock, $.0001 par value, outstanding. The aggregate market value of
shares of Common Stock held by non-affiliates of the Registrant cannot be
determined since there has been no market for such Common Stock during the past
year.
===============================================================================
<PAGE>
CAPITAL ADVISORS ACQUISITION CORP.
FORM 10-K
For The Fiscal Year Ended December 31, 1996
INDEX
Page
----
PART I
Item 1. Business .................................................. 1
Item 2. Properties ................................................ 1
Item 3. Legal Proceedings ......................................... 1
Item 4. Submission of Matters to a Vote of Security Holders ....... 2
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters ........................................ 3
Item 6. Selected Financial Data .................................... 3
Item 7. Management Discussion and Analysis of Financial Condition
and Results of Operations .................................. 3
Item 8. Financial Statements and Supplementary Data ................. 4
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure .................................... 4
PART III
Item 10. Directors and Executive Officers of the Registrant .......... 14
Item 11. Executive Compensation ...................................... 15
Item 12. Security Ownership of Certain Beneficial Owners
and Management .............................................. 16
Item 13. Certain Relationships and Related Transactions .............. 16
PART IV
Item 14. Exhibits, Financial Statements Schedules and Reports
on Form 8-K ................................................. 17
Signatures .................................................. 18
<PAGE>
PART I
Item 1. THE BUSINESS
General
The Registrant was incorporated under the laws of the State of Delaware on
November 22, 1988, and issued 500,000 shares of its Common Stock, $.0001 par
value (the "Common Stock") to ANova Capital Corporation on December 1, 1988, for
$1,000 cash. The Registrant was organized with a view toward (a) the
distribution of the 500,000 shares of the Registrant's Common Stock to the
shareholders of ANova and (b) the subsequent search for, location of and
combination of the Registrant with a privately-held business enterprise. The
Registrant has no current business operations, except for the activities of its
officers, directors and consultants in searching for a potential combination
partner. The Registrant has limited assets and no operating income. Since
inception, the costs associated with the Registrant's search for a merger
candidate have been and will be paid by the Registrant and by the officers and
directors, on a discretionary basis. The Registrant's offices are located at
4180 La Jolla Village Drive, Suite 500, La Jolla, California 92037.
The Registrant 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 Registrant'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 Registrant will pursue a
combination with a company or business enterprise 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 Registrant will be able to locate a
suitable combination partner or that a combination can be structured on terms
acceptable to the Registrant.
Pending negotiation and consummation of a combination, the Registrant
anticipates that it will have limited business activities, will have no
significant sources of revenue and will incur no significant expenses or
liabilities. If expenses are incurred and funds are necessary the Registrant may
undertake a private placement of its common stock or borrow the necessary
capital from its officers and directors. Should necessary funds be available,
the Registrant 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
As of December 31, 1996 the Registrant had no full or part time employees.
ITEM 2. PROPERTIES
As of December 31, 1996 the Registrant did not own any property.
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.
Page 1
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the fiscal year covered by this report, the
Registrant held its 1996 Annual Meeting of Shareholders and submitted various
matters to be voted on by the shareholders. The 1996 Annual Meeting of
Shareholders was held on Tuesday, October 29, 1996, at 4:00 p.m., at 3900
Paradise Road, Suite 263, Las Vegas, Nevada, pursuant written notice. As of the
Record Date, October 15, 1996, there were issued and outstanding 1,975,000
shares (pre-reverse split) of the Registrant's common stock entitled to vote at
said annual meeting. There were present in person or by proxy 1,134,003 shares
at said meeting. The matters submitted to the vote of the shareholders and the
results of said vote are as follows:
(1) Proposal No. 1 was the election of four (4) directors for the ensuing
year and term ending December 31, 1997. The nominees for directors were, Thomas
R. Brooksbank, George G. Chachas, James E. Franklin and E.C. Kaufer. All four
nominees were elected as directors to serve for the ensuing year with votes for
the election of directors being cast as follows:
<TABLE>
<CAPTION>
Nominees Name Votes For Votes Withheld
- ------------- ------------ ----------------
<S> <C> <C>
Thomas R. Brooksbank 1,134,003 None
George G. Chachas 1,134,003 None
James E. Franklin 1,134,003 None
E.C. Kaufer 1,134,003 None
</TABLE>
(2) Proposal No. 2 was to ratify and approve the appointment of McBride &
Reeves as independent auditors of the Registrant for the fiscal years 1996 and
1997. The shareholders approved the appointment of McBride & Reeves as
independent auditors of the Registrant for the fiscal years 1996 and 1997, with
1,134,003 votes cast in favor of such appointment and no votes against or
abstaining.
(3) Proposal No. 3 was to ratify and approve the amendment and restatement
of the Certificate of Incorporation in its entirety in order to correct the
errors on the original Certificate of Incorporation and to eliminate the
Registrant's class of preferred stock in its entirety. The shareholders approved
and adopted proposal no. 3 with 1,134,003 votes cast in favor of said proposal
and no votes against or abstaining.
(4) Proposal No. 4 was to ratify and approve the amendment and restatement
of the Bylaws of the Registrant to clarify the rights and ability of the
Registrant's directors and shareholders to take action on behalf of the
Registrant. The shareholders approved and adopted proposal no. 4 with 1,134,003
votes cast in favor of said proposal and no votes against or abstaining.
(5) Proposal No. 5 was to ratify and approve a one (1) for one hundred
(100) reverse split of the shares of the Common Stock of the Registrant
effective on the seventh day following the Annual Meeting of Shareholders. The
shareholders approved and adopted proposal no. 5 with 1,084,003 votes cast in
favor of said proposal, no votes cast against said proposal and 50,000 votes
abstaining. The one (1) for 100 reverse split of the issued and outstanding
shares of Common Stock of the Registrant became effective on the close of
business on November 5, 1997.
(6) Proposal No. 6 was to ratify, adopt and approve the 1996-1997 Stock
Compensation Plan in order to allow the Registrant to compensate such attorneys,
accountants and consultants as necessary to maintain the Registrant's federal
and state corporate, securities and tax filings and in seeking out a combination
partner for the Registrant. The shareholders approved and adopted proposal no. 6
with 1,083,003 votes cast in favor of said proposal, no votes cast against said
proposal and 51,000 votes abstaining.
Page 2
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
Market for Common Stock
There is no established public trading market for the Registrant's Common
Stock. As of December 31, 1996, there were 3,519,777 shares of the Registrant's
Common Stock issued and outstanding and approximately 425 shareholders.
Dividends
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. SELECTED FINANCIAL DATA
Financial Highlights
<TABLE>
<CAPTION>
For Years Ended December 31,
1996 1995 1994 1993 1992
---- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net Revenues .................. $0.00 $0.00 $0.00 $0.00 $0.00
Net Income .................... (81,102) 0.00 (9,272) 0.00 0.00
Earnings per share ............ ( 0.13) 0.00 ( 0.84) 0.00 0.00
Return on net revenues......... 0.00 0.00 0.00 0.00 0.00
Cash and short-term investments.. 1,858 0.00 0.00 0.00 0.00
Total assets..................... 1,858 0.00 0.00 0.00 0.00
Stockholders' equity............. 1,858 0.00 0.00 0.00 0.00
</TABLE>
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 company or business enterprise 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
With the exception with the sale $10,000 raised in September 1996 through
the sale of a total of 500,000 shares (pre-reverse split) of the Registrant's
Common Stock to Thomas R. Brooksbank, George G. Chachas, James E. Franklin and
Thomas Hantges, 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.
However, it should be noted the working capital of the Registrant is
extremely low and thus the Registrant may have to undertake an additional
private placement of its Common Stock on short notice if additional funds are
needed by the Registrant.
Page 3
<PAGE>
Results of Operations
For the year ended December 31, 1996 the Registrant had a loss of $80,102
or $0.13 per share. This compares with a net income of $0.00, or $0.00 per
share, for the previous year ended December 31, 1995. It should be noted that
the loss per share of common stock was computed by dividing the net loss by the
weighted average number of shares of common stock outstanding for the year and
prior periods. For 1996 the weighted average number of shares of Common Stock
was 623,886 shares after accounting for a 1 for 100 reverse stock split approved
on October 29, 1996 and effective November 5, 1996.
There are two main reasons for the Registrant's net loss incurred in 1996.
First, the Registrant had no revenue in 1996. Second, the Registrant incurred
certain legal and consulting services, which totaled $76,500, in 1996. The
$76,500 accounted for 96% of the operating costs of the Company. The
Registrant's common stock was issued in exchange for these services, and thus no
cash was expended by the Registrant in for these services. A portion of the cash
raised in September 1996 was expended in bringing current the past due filing
fees, taxes, processing fees and auditor fees with the Securities and Exchange
Commission, state of Delaware, proxy companies and the Registrant's independent
auditors, respectively.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Financial Statements
Page
----
Report of Independent Accountants .................................... 5
Balance Sheets - for the Years ended December 31, 1996 and 1995....... 6
Statement of Operations............................................... 7
Statement of Stockholders' Equity..................................... 8-9
Statement of Cash Flows............................................... 10
Notes to Financial Statements......................................... 11-13
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.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
Page 4
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors
Capital Advisors Acquisition Corp.
La Jolla, California
We have audited the accompanying balance sheets of Capital Advisors Acquisition
Corp. (a Delaware corporation in the development stage), as of December 31, 1996
and 1995, and the related statements of operations, stockholders' equity, and
cash flows as of December 31, 1996, 1995 and 1994. 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, 1996 and 1995, and the results of its operations and
its cash flows for the years then ended, in conformity with generally accepted
accounting principles.
/S/ MCBRIDE & REEVES, CPA'S
March 14, 1997
Las Vegas, Nevada
Page 5
<PAGE>
Capital Advisors Acquisition Corp.
(A Development Stage Company)
Balance Sheets
December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
-------- -------
<S> <C> <C>
Assets
Cash $ 1,858 $ -
--------- --------
Total Assets $ 1,858 $ -
========= ========
Liabilities
Accrued liabilities $ 460 $ -
---------- --------
Stockholders' Equity
- --------------------
Stockholders' equity:
Preferred stock, $1.00 par value
1,000,000 shares authorized, none
issued & outstanding (Note 1) - -
Common stock, $.0001 par value 60,000,000
shares authorized, 3,519,777 issued
& outstanding (Note 1) 500 85
Additional paid-in capital 95,022 13,937
Deficit accumulated during
development stage ( 94,124) ( 14,022)
----------- -----------
Total Liabilities and
Stockholders' Equity $ 1,858 $ -
=========== =========
</TABLE>
The accompanying notes are an integral part of the financial statements
Page 6
<PAGE>
Capital Advisors Acquisition CORP.
(A Development Stage Company)
Statements of Operations
For the Years Ended December 31, 1996, 1995 and 1994, and
For the Period from November 22, 1988 (inception),
to December 31, 1996
<TABLE>
<CAPTION>
November 22,
1988
(Inception) to
December 31,
1996 1995 1994 1996
------- --------- --------- -------------
<S> <C> <C> <C> <C>
Revenue $ - $ - $ - $ 4,100
--------- --------- --------- -------------
Expenses
General and administrative
(Note 4) 80,102 - 9,272 95,724
Loss on investment
transaction - - - 2,500
--------- --------- --------- -------------
Net Loss before income taxes ( 80,102) - ( 9,272) ( 94,124)
Income tax benefit(Note 6) - - - -
--------- --------- --------- -------------
Net Loss $( 80,102) $ - $( 9,272) $ (94,124)
========== ========= ========== =============
Net Loss per common
shares (as restated
for reverse stock split) $ (0.13) $ - $ (0.84) $ 0.15)
========== ========== ========== =============
Weighted average common
shares outstanding
(Note 1) 623,886 13,250 11,000 623,886
========== ========== ========== =============
</TABLE>
The accompanying notes are an integral part of the financial statements
Page 7
<PAGE>
Capital Advisors Acquisition Corp.
(A Development Stage Company)
Statements of Stockholders' Equity
For the Years Ended December 31, 1996, 1995 and 1994, and
For the Period From November 22, 1988 (inception),
to December 31, 1996
<TABLE>
<CAPTION>
Accumulated
Number Deficit
of Additional During
Common Paid-In Development
Shares Amount Capital Stage Total
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, December 21, 1988 500,000 $ 50 $ 950 $( 3,750) $( 2,750)
Stock issued under stock
bonus plan (Note 2) 250,000 - - - -
Stock issued form converted
debentures(Note 3) 250,000 25 3,725 - 3,750 -
Net Income 1989 - - - ( 3,981) 3,981
--------- -------- --------- -------- --------
Balance December 31, 1989 1,000,000 75 4,675 231 4,981
Net Loss 1990 - - - ( 981) ( 981)
--------- -------- --------- -------- --------
Balance December 31, 1990 1,000,000 75 4,675 ( 750) 4,000
Net Loss 1991 - - - (4,000) (4,000)
--------- -------- --------- -------- --------
Net Loss 1992 and 1993 - - - - -
Stock issued for legal
fees (Note 4) 100,000 10 4,990 - 5,000
Additional paid in capital
for accounting fees (Note 4) - - 4,272 - 4,272
Net Loss 1994 - - - ( 9,272) (9,272)
--------- -------- --------- -------- --------
Balance December 31, 1994 1,000,000 85 13,937 ( 14,022) -
Net Loss 1995 - - - - -
Stock issued for diectors'
fees (Note 4) 225,000 - - - -
--------- -------- --------- -------- --------
Balance December 31, 1995 1,325,000 85 13,937 ( 14,022) -
Stock issued for legal
and consulting
fees (Note 4) 150,000 15 1,485 - 1,500
Stock issued for cash 500,000 50 9,950 - 10,000
Stock reverse split
(Note 1) (1,955,223) - - - -
</TABLE>
The accompanying notes are an integral part of the financial statements
Page 8
<PAGE>
Capital Advisors Acquisition Corp.
(A Development Stage Company)
Statements of Stockholders' Equity (continued)
For the Years Ended December 31, 1996, 1995 and 1994, and
For the Period From November 22, 1988 (inception),
to December 31, 1996
<TABLE>
<CAPTION>
Accumulated
Number Deficit
of Additional During
Common Paid-In Development
Shares Amount Capital Stage Total
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Stock issued for legal and
consulting services
(Note 4) 3,500,000 350 69,650 - 70,000
Net Loss 1996 - - - (80,102) (80,102)
--------- -------- --------- -------- --------
Balance December 31, 1996 3,519,777 $ 500 $ 95,022 $(94,124) $ 1,398
========= ======== ========= ========= =======
</TABLE>
The accompanying notes are an integral part of the financial statements
Page 9
<PAGE>
Capital Advisors Acquisition Corp.
(A Development Stage Company)
Statements of Cash Flows
For the Years Ended December 31, 1996, 1995 and 1994, and
For the Period from November 22, 1988 (inception),
to December 31, 1996
<TABLE>
<CAPTION>
November 22,
1988
(Inception) to
December 31,
1996 1995 1994 1996
------- --------- --------- -------------
<S> <C> <C> <C> <C>
Net Cash Flows from
Operating Activities:
Net Loss $(80,102) $ - $ (9,272) $ ( 94,124)
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Increase in accounts
payable 460 - - 460
Issuance of stock
for services 71,500 - 5,000 76,500
Loss on Investment - - - 2,500
--------- --------- ----------- ------------
Net cash used in
operating activities ( 8,124) - ( 4,272) ( 14,664)
Cash flows used in
investing activities: - - - ( 2,500)
Cash Flows used in
financing activities:
Stock issued for cash 10,000 - - 10,000
Additional paid in
capital - - 4,272 9,022
--------- --------- ----------- ------------
Net increase in cash
(decrease) in cash 1,858 - - 1,858
Cash, beginning of period - - - -
Cash, end of period 1,858 - - 1,858
========= ========== ============ ===========
Supplemental disclosures:
Interest paid $ - $ - $ - $ -
========= ========== ============ ===========
Taxes paid $ - $ - $ - $ -
========= ========== ============ ===========
</TABLE>
The accompanying notes are an integral part of the financial statements
Page 10
<PAGE>
Capital Advisors Acquisition Corp.
(A Development Stage Company)
Notes the to Financial Statements
December 31, 1996 and 1995
(1) Summary of Organization and Significant Accounting Policies
(a) Organization
The Company was organized as a Delaware corporation on November 22, 1988 and
re-organized on October 29, 1996. The Company's intention is to combine with a
privately-held business enterprise.
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, and subsequently through December 31, 1996 the Company has
had no business operations (except minimal operating costs) and has no planned
business activities, except for the identification of and merger with a
privately-held business enterprise.
(b) Capital Stock
The authorized, issued and outstanding shares of capital stock at December 31,
1996 were as follows:
Preferred stock: $1.00 par value; 1,000,000 shares authorized, eliminated as a
class of stock October 29, 1996 by amendment to the articles of incorporation.
Common Stock: $.0001 par value; authorized 50,000,000 shares, increased to
60,000,000 shares October 29, 1996 by amendment to the articles of
incorporation; 3,519,777 shares issued and outstanding.
(c) Loss Per Share
Loss per share of common stock was computed by dividing the net loss by the
weighted average number of shares of common stock outstanding for the year and
for prior periods (623,886 shares after accounting for a 1 for 100 reverse split
approved October 29, 1996 and effective November 5, 1996).
(d) Dividends Per Share
No dividends have been paid as of December 31, 1996.
Page 11
<PAGE>
Capital Advisors Acquisition Corp.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1996 and 1995
(2) Stock Compensation Plan
On October 5, 1996 the Company amended and extended to December 31, 1997 it's
Stock Compensation Plan for the benefit of its employees and certain contract
service providers. The plan allows for the award of a maximum of 4,000,000
common shares of the Company. On April 7, 1989, the Company provided 250,000
shares of common stock to officers of the Company. On November 19, 1996 the
Company provided 3,500,000 shares of common stock to officers of the Company and
to certain attorneys and consultants who had rendered services to the Company.
No other stock compensation awards have occurred through December 31, 1996.
(3) Convertible Debentures
On January 23, 1989, 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 April 17,
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 if common stock of the Company.
(4) Related Party Transactions
Certain operating costs incurred by the Company were paid for by the issuance of
common stock. At December 31, 1996, 3,501,600 shares of common stock had been
issued in exchange for legal and consulting services in the amount of $76,500.
During 1995, the Company issued 225,000 shares of common stock to the directors
of the Company, which the Company has valued and recorded at the market value of
the Company, or zero.
There were certain operating costs incurred by the Company that were paid
directly by stockholders. These costs are de minimis and the parties paying the
costs do not expect to be repaid or reimbursed by the Company. The expenses paid
by related parties in 1994 amounted to $ 4,025 and are recorded as additional
paid in capital.
(5) 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 and to the effects of operating loss and tax credit
carry-forwards. 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.
Page 12
<PAGE>
Capital Advisors Acquisition Corp.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1996 and 1995
(5) Income Taxes (continued)
At December 31, 1996 the Company's deferred tax asset position is as follows:
Deferred income taxes $ 32,686
Valuation allowance ( 32,686)
----------
Income tax benefi $ -
==========
At December 31, 1996 the Company's deferred tax assets are solely attributable
to the future tax benefits of operating losses carried forward which expire as
follows:
<TABLE>
<CAPTION>
Loss Expiring
---------- -----------
<S> <C>
$ 6,880 2004
120 2005
9,025 2009
80,112 2011
----------
$ 96,137
</TABLE>
Page 13
<PAGE>
PART III
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, 1996. As of December 31, 1996 there were 3,519,777 shares of the
Registrant's Common Stock, $.0001 par value, outstanding.
<TABLE>
<CAPTION>
Amount and
Position Nature of Percent
with Beneficial of
Name Age Since Registrant Ownership Class
- --------------------- ----- ----- -------------- ----------- -------
<S> <C> <C> <C> <C> <C>
Thomas R. Brooksbank 42 1995 President, 858,887 24.40%
Chief Financial
Officer and
Director
James E. Franklin 32 1996 Vice President 858,886 24.40%
and Director
E.C. Kaufer 35 1995 Director 25,250 0.72%
George G. Chachas 34 1996 Secretary 858,887 24.40%
and Director
</TABLE>
- ------------
Notes: 1. Thomas R. Brooksbank is the principal and owner of Brooksbank &
Associates, the registered owner of 858,887 shares of the Registrant's common
stock as set forth above.
Principal Occupation
Thomas R. Brooksbank - Mr. Brooksbank was elected as Director on March 7, 1995.
Mr. Brooksbank was subsequently elected President and Chief Financial Officer of
the Company on July 27, 1996, following the resignation of Thomas A. Hantges.
Mr. Brooksbank is the principal and owner 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.
James F. Franklin - Mr. Franklin was elected as Director and Vice President on
July 27, 1996 following the resignation of Thomas Hantges. Mr. Franklin is the
founder and President and Chief Executive Officer of IPO Consultants, a company
who provides investment banking and other services which assist Companies in
raising capital, going public or finding a merger candidate.
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 financial recovery firm.
Mr. Kaufer's concentration has been in the institutional credit 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.
Page 14
<PAGE>
George G. Chachas - Mr. Chachas was elected as a Director and Secretary of the
Company on March 11, 1996. Mr. Chachas is partner with the law firm of Wenthur &
Chachas is La Jolla, California. Mr. Chachas practices in the areas of corporate
and securities transactions. Mr. Chachas received a Bachelor of Arts degree in
1984 from the San Diego State University and his Juris Doctor degree from
California Western School of Law in 1986.
ITEM 11. EXECUTIVE COMPENSATION
Compensation of Officers
With the exception of the shares of Common Stock issued to Mr. Brooksbank,
Mr. Chachas and Mr. Franklin under their respective Consulting Agreements, no
officer of the Registrant received any compensation during the fiscal year ended
December 31, 1996.
Employment Contracts/Stock Incentive Plans
No employment contracts were adopted or granted by the Registrant during
the fiscal year ended December 31, 1996. On October 7, 1996, the Company adopted
the Capital Adevisors Acquisition Corp., 1996-1997 Stock Compensation Plan for
the benefit of its offices, directors, consultants, attorneys and certain
contract service providers. The plan allows for the award of a maximum of
4,000,000 shares of the Common Stock of the Registrant. Said 1996-1997 Stock
Compensation Plan was approved and ratified by the shareholders at its annual
meeting on October 29, 1996. On October 7, 1996, the Registrant entered into
consulting agreements with attorneys, George G. Chachas and Brooksbank &
Associates to provide the necessary legal services and consulting services to
maintain the Registrant in good standing in its securities, corporate and tax
filings. On October 7, 1996, Registrant entered into consulting agreements with
James E. Franklin and Thomas A. Hantges to provide services to the Registrant to
locate and negotiate with a combination partner. On November 6, 1996, the
Registrant filed a Registration Statement on Form S-8 registering 3,500,000
shares of Common Stock to be issued under the 1996-1997 Stock Compensation Plan.
On November 19, 1996, the Board of Directors authorized the issuance of 855,637
shares of Common Stock registered under said Form S-8 to Thomas Brooksbank and
856,637 shares of Common Stock to George G. Chachas for their consulting and
legal services to the Registrant. The Registrant also authorized and issued
855,090 shares of Common Stock to Thomas A. Hantges and 857,636 shares of Common
Stock to James E. Franklin, for the consulting services to the Registrant.
Compensation of Directors
With the exception of the shares of Common Stock issued to Mr. Brooksbank,
Mr. Chachas and Mr. Franklin under their respective consulting agreements, no
director of the Registrant received any compensation during the fiscal year
ended December 31, 1996. During 1996, there were nine meetings of the Board of
Directors or actions taken by the Board of Directors by Unanimous Written
Consent of which all directors were present.
Page 15
<PAGE>
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, 1996, 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.
<TABLE>
<CAPTION>
Title of Amount and Nature of Percent
Class Name and Address Beneficial Ownership of Class
- -------- ------------------------ -------------------- --------
<S> <C> <C> <C>
Common Brooksbank & Associates(1) 858,887 24.40%
201 W. Liberty Street
Suite 1
Reno, Nevada 89505
Common George G. Chachas 858,887 24.40%
4130-75 Porte De Merano
San Diego, CA 92122
Common James E. Franklin 858,886 24.40%
5060 Shoreham Place
Suite 200
San Diego, CA 92122
Common Thomas A. Hantges(2) 858,646 24.39%
4420 Euclid Avenue
Las Vegas, NV 89121
All Directors and 2,601,910 73.92%
Officers as a Group
(Four [4] Persons as
of the date of this Amendment.)
</TABLE>
- --------------
Notes:
1. Thomas R. Brooksbank is the principal and owner of Brooksbank &
Associates, the registered owner of 858,887 shares of the Registrant's common
stock as set forth above.
2. The Hantges Children's Education Trust is the beneficial owner of 129
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 has no direct or indirect control over the trust or the shares
beneficially owned by the Trust.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Purchase of Unregistered Shares of the Company's Common Stock.
In September 1996, Thomas R. Brooksbank, President, Chief Financial Officer
and a Director of the Registrant, George G. Chachas, the Secretary and a
Director of the Registrant, James E. Franklin, the Vice President and a Director
of the Registrant, and Thomas A. Hantges, each purchased 120,000 (pre-reverse
split) shares of unregistered and restricted Common Stock of the Registrant for
$2,500 each. Consulting Agreements with George G. Chachas, Brooksbank &
Associates, James E. Franklin and Thomas R. Hantges and Issuance of Shares
Registered on Form S-8 to Such Consultants.
Page 16
<PAGE>
On October 7, 1996, the Registrant entered into consulting agreements with
attorneys, George G. Chachas and Brooksbank & Associates to provide the
necessary legal services and consulting services to maintain the Registrant in
good standing in its securities, corporate and tax filings. On October 7, 1996,
Registrant entered into consulting agreements with James E. Franklin and Tom
Hantges to provide services to the Registrant to locate and negotiate with a
combination partner. On November 6, 1996, the Registrant filed a Registration
Statement on Form S-8 registering 3,500,000 shares of Common Stock to be issued
under the 1996-1997 Stock Compensation Plan. On November 19, 1996, the Board of
Directors authorized the issuance of 855,637 shares of Common Stock registered
under said Form S-8 to Thomas Brooksbank and 856,637 shares of Common Stock to
George G. Chachas for their consulting and legal services to the Registrant. The
Registrant also authorized and issued 855,090 shares of Common Stock to Thomas
A. Hantges and 857,636 shares of Common Stock to James E. Franklin, for the
consulting services to the Registrant.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents filed as a part of this report:
(1) Financial Statements of Capital Advisors Acquisition Corp. set forth
under Item 8 are filed as part of this report.
(2) The Financial Statement Schedules other than those listed above have
been omitted because they are either not required, not applicable, or the
information is otherwise included.
(b) Information filed as part of this report from Form 8-K:
(1) No reports on Form 8-K were filed during the last quarter of the period
covered by this report.
Page 17
<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.
Capital Advisors Acquisition CORP.
(Registrant)
Date: March 26, 1997 /S/ Thomas R. Brooksbank
-----------------------------
By: Thomas R. Brooksbank
Its: President and
Chief Financial Officer
Date: March 26, 1997 /S/ George G. Chachas
-----------------------------
By: George G. Chachas
Its: Secretary
Page 18
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,858
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,858
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,858
<CURRENT-LIABILITIES> 460
<BONDS> 0
0
0
<COMMON> 500
<OTHER-SE> 898
<TOTAL-LIABILITY-AND-EQUITY> 1,858
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 80,102
<OTHER-EXPENSES> 80,102
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 80,102
<EPS-PRIMARY> (0.13)
<EPS-DILUTED> 0
</TABLE>
