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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1997 Commission File Number 0-27480
LAHAINA ACQUISITIONS, INC.
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(Exact name of registrant as specified in its charter)
Colorado 84-1325695
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(State of Incorporation) (IRS Employer Identification No.)
5459 S. Iris Street, Littleton, Colorado 80123
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(Address of principal executive office) (Zip Code)
Company's telephone number, including area code: (303) 986-6923
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g)
of the Act: Common Stock, No Par Value
Indicate by check mark whether the Company (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, during the preceding 12 months (or for such shorter period
that the Company 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 ss.229.405 of Title 17, Code of Federal Regulations is
not contained herein, and will not be contained, to the best of the Company'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|
The number of shares outstanding of the Company's Common Stock, no par
value per share, as of June 30, 1997 was 996,500.
Documents Incorporated by Reference
1. Form 10 Registration Statement, filed with the Securities and Exchange
Commission on December 29, 1995, which became effective by operation of law
and any amendments thereto.
<PAGE>
2. Form 10-Q for the period ending December 31, 1996 and any amendments
thereto.
3. Form 10-Q for the period ending March 31, 1997 and any amendments thereto.
4. Form 10-Q for the period ending June 30, 1997 and any amendments thereto.
5. Form 8-K on June 2, 1997 and any amendments thereto.
6. Form 8-K on November 7, 1997 and any amendments thereto.
7. Form 8-K on December 15, 1997 and any amendments thereto.
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PART I
Item 1. BUSINESS
History, Organization and Change of Control.
Lahaina Acquisitions, Inc. ("Lahaina" or the "Company") was organized under
the laws of the State of Colorado, on April 5, 1989, to make a distribution of
securities to shareholders of Coyote Acquisitions, Inc. ("Coyote"). Lahaina
filed a Form S-10 registration statement (33-31031-D) with the United States
Securities and Exchange Commission (the "SEC") but subsequently abandoned the
same. Lahaina subsequently decided to make a distribution of securities to the
shareholders of St. Joseph Corp. ("St. Joe"), a shell corporation. In May, 1991,
Lahaina gifted to the shareholders of St. Joe on a pro rata basis, 496,500
"Units" (as described herein). Each Unit consisted of one share of Lahaina
Common Stock ("Common Shares"), two Class A Warrants and two Class B Warrants
(collectively referred to as the "Warrants"). Each Class A Warrant entitles the
holder to purchase one (1) share of Common Stock at a price of $1.00 per share.
Each Class B Warrant entitles the holder to purchase one share of Common Stock
at price of $1.50 per share. Lahaina reserved the right to redeem the Warrants
upon 30 days' written notice at $0.0001 per Warrant. The Warrants were due to
expire in May, 1995; however, the Board of Directors extended the exercise
period until May 15, 1999.
In August 1989, Lahaina issued a total of 1,000,000 shares of Common Stock.
800,000 shares were issued to Gary Agron; 50,000 shares were issued to Barry
Swartz; 50,000 shares were issued to James Eller; and 100,000 shares were issued
to Coyote Acquisitions, Inc. ("Coyote"). The shares issued to Coyote were part
of 100,000 Units issued to coyote, each Unit consisting of one share of Common
Stock; five Class A Warrants, exercisable at $1.00 per share; and five Class B
Warrants, exercisable at $1.50 per share (the "Coyote Unit"). .
On April 24, 1991, Mr. Swartz gratuitously reconveyed his 50,000 shares to
Lahaina; Mr. Eller gratuitously reconveyed his 50,000 shares to Lahaina; and Mr.
Agron gratuitously reconveyed his 400,000 shares to Lahaina. On the same date,
the Units issued to Coyote Acquisitions, Inc. were canceled and 50,000 shares of
Common Shares were issued to Philip Davis, Lahaina's President, and to Janice
Agron, for services rendered.
In May, 1991, Lahaina gifted 496,500 Units (as described herein) to
shareholders of St. Joe (the "St. Joe Units"). The purpose of the distribution
was to cause the shares of Lahaina to be widely held, in anticipation of
creating a public market for the Company's securities. Lahaina has no operating
history nor any revenues or earnings from operations. Lahaina has no significant
assets or financial resources. As such, Lahaina can be defined as a "shell"
company, whose sole purpose at this time is to locate and consummate a merger or
acquisition with a private entity. As a result of the foregoing distribution,
Lahaina currently has 194 shareholders.
<PAGE>
On May 23 1997, Paxford Acquisitions, S.A., a Bahamian corporation (the
"Corporation"), consummated a Stock Purchase Agreement ( the "Agreement") with
Philip J. Davis, John C. Lee and Charles C. Van Gundy (the "Selling
Shareholders") whereby the Corporation purchased Seven Hundred and Fifty
Thousand (750,000) shares of Lahaina Common Stock from Philip J. Davis (selling
366,667 shares), John C. Lee (selling 366,667 shares), and Charles C. Van Gundy
(selling 16,666), representing approximately Seventy Five and 26/100 percent
(75.26%) of the issued and outstanding stock of Lahaina. In consideration for
the shares, the Selling Shareholders received One Hundred and Twenty Five
Thousand and No/100 Dollars ($125,000.) cash. In addition, pursuant to the
Agreement, the Board of Directors of Lahaina, as of May 23, 1997, have accepted
the return of, and canceled, 380,000 Class A Warrants issued to Philip J. Davis,
380,000 Class A Warrants issued to John C. Lee and 40,000 Class A Warrants
issued to Charles C. Van Gundy and accepted the return of, and canceled, 380,000
Class B Warrants issued to Philip J. Davis, 380,000 Class B Warrants issued to
John C. Lee and 40,000 Class B Warrants issued to Charles C. Van Gundy. Pursuant
to the Agreement, the Company has accepted the resignations of the Board of
Directors, as of May 27, 1997, consisting of Philip J. Davis, John C. Lee and
Charles C. Van Gundy and appointed Graham Cooper, Ivy Lynn Cassar and John
Burrow, all of whom are affiliated with Paxford, to serve on the Lahaina's Board
of Directors. On June 2, 1997, the Company filed a Form 8-K reporting the change
of control. Said Form 8-K is incorporated herein by reference. On May 30, 1997,
the Board of Directors authorized the redemption of all outstanding Class A and
Class B Warrants of Lahaina. All outstanding Class A and Class B Warrants have
been redeemed or canceled.
Lahaina believes that there is a demand by non-public corporations for
shell corporations that have a public distribution of securities, such as
itself. Lahaina believes that demand for shells has increased dramatically since
the Commission imposed burdensome requirements upon "blank check" companies
pursuant to Reg. 419 of the Securities Act of 1933, as amended (the "Act").
According to the Commission, Rule 419 was designed to strengthen regulation of
securities offerings by "blank check" companies, which Congress had found to
have been a common vehicle for fraud and manipulation in the penny stock market.
See Securities Act Releases No. 6891 (April 17, 1991), 48 SEC Docket 1131 and
No. 6932 (April 13, 1992) 51 Docket 0382, SEC Docket 0382. The foregoing
regulation has decreased, substantially, the number of "blank check" offerings
filed with the Commission, and as a result has stimulated an increased demand
for shell corporations. While Lahaina has made the foregoing assumption, there
is no assurance that the same is accurate or correct and, accordingly, no
assurance that it will be acquired by or acquire an existing non-public entity.
General
Lahaina proposes to seek, investigate and, if warranted, acquire an
interest in one or more business opportunities ventures. As of the date hereof,
Lahaina has no business opportunities or ventures under contemplation for
acquisition apart from the acquisition contemplated by the Offer but proposes to
investigate potential opportunities in the form of investors or entrepreneurs
with a concept which has not yet been placed in
<PAGE>
operation, or in the form of firms which are developing companies. Lahaina may
seek out established businesses which may be experiencing financial or operation
difficulties and are in need of the limited additional capital it could provide.
Lahaina anticipates that it will seek to merge with or acquire an existing
business if the acquisition contemplated by this Offer is not consummated. After
the merger or acquisition has taken place, the surviving entity will be Lahaina;
however, management from the acquired entity will, in all likelihood, operate
the Company. There is, however, a remote possibility that Lahaina may seek to
acquire and operate an ongoing business, in which case the existing management
might be retained. Due to the absence of capital available for investment by
Lahaina, the types of businesses seeking to be acquired by Lahaina will no doubt
be smaller and higher risk types of businesses. In all likelihood, a business
opportunity will involve the acquisition of or merger with a corporation which
does not need additional cash but which desires to establish a public trading
market for its Common Shares. Accordingly, Lahaina's ability to acquire any
business of substance will be extremely limited.
Lahaina does not propose to restrict its search for investment
opportunities to any particular industry, or geographical location and may,
therefore, engage in essentially any business, anywhere, to the extent of its
limited resources.
It is anticipated that business opportunities will be available to Lahaina
and sought by it from various sources throughout the United States, including
its Officers and Directors, professional advisors such as attorneys and
accountants, securities broker/dealers, venture capitalists, members of the
financial community, other businesses and others who may present solicited and
unsolicited proposals. The reason for this is to attract the most favorable
business opportunities and ventures available. Management believes that business
opportunities and ventures will become available to it, due to a number of
factors, including, among others: (a) management's willingness to enter into
unproven, speculative ventures; (b) management's contacts and acquaintances; and
(c) Lahaina's flexibility with respect to the manner in which it may structure
potential financing and/or acquisitions. However, there is no assurance that
Lahaina will be able to structure or finance and/or acquire any business
opportunity or venture.
Operation of Lahaina
Lahaina intends to search throughout the United States for a
merger/acquisition candidate; however, because of the lack of capital, the
company believes that the merger/acquisition candidate will be conducting
business within a limited geographical area. Lahaina, however, intends to
maintain its corporate headquarters and principal place of business at 5459
South Iris Street, Littleton, Colorado 80123. All corporate records will be
maintained at said office, and it is anticipated that all shareholders' meetings
will take place in Colorado. Upon consummation of the Offer, no assurance can be
given that the corporate records or headquarters will continue to be maintained
at Littleton, Colorado, or that shareholders' meetings will be held in Colorado.
<PAGE>
The Officers and Directors will personally seek acquisition/merger
candidates and/or orally contact individuals or broker/dealers and advise them
of the availability of Lahaina as an acquisition candidate. The Officers and
Directors will review material furnished to them by the proposed
merger/acquisition candidates and decide if a merger/acquisition is in the best
interests of the company and its shareholders.
Lahaina may employ outside consultants; however, until a merger/acquisition
candidate has been targeted by the company, management believes that it is
impossible to consider the criteria that will be used to hire consultants. While
Lahaina may hire independent consultants, it has not considered any criteria
regarding their experience, the services to be provided, or the term of service.
Lahaina has not had any discussions with any consultants and there are no
agreements or understandings with any consultants.
Other than as disclosed herein, there are no other plans for accomplishing
the business purpose of Lahaina.
Selection of Opportunities
The analysis of new business opportunities will be undertaken by or under
the supervision of the Officers and Directors, none of whom is a professional
business analyst or has any previous training or experience in business
analysis. Inasmuch as Lahaina will have no funds available to it in its search
for business opportunities and venture, it will not be able to expend
significant funds on a complete and exhaustive investigation of such business or
opportunity. Lahaina will, however, investigate, to the extent believed
reasonable by its management, such potential business opportunities or ventures.
As part of Lahaina's investigation, officers and directors will meet
personally with management and key personnel of the firm sponsoring the business
opportunity, may visit and inspect plants and facilities, obtain independent
analysis or verification of certain information provided, check references of
management and key personnel, and conduct other reasonable measures, to the
extent of Lahaina's limited financial resources and management and technical
expertise.
Prior to making a decision to recommend to shareholders' participation in a
business opportunity or venture, Lahaina will generally request that it be
provided with written materials regarding the business opportunity containing
such items as a description of products, services and company history;
management resumes; financial information; available projections with related
assumptions upon which they are based; evidence of existing patents, trademarks
or service marks or rights thereto; present and proposed forms of compensation
to management; a description of transactions between the prospective entity and
its affiliates during relevant periods; a description of present and required
facilities; an analysis of risks and competitive conditions; and other
information deemed relevant.
<PAGE>
It is anticipated that the investigation of specific business opportunities
and the negotiation, drafting and execution of relevant agreements, disclosure
documents and other instruments will require substantial management time and
attention and costs for accountants, attorneys and others.
Lahaina will have unrestricted flexibility in seeking, analyzing and
participating in business opportunities. In its efforts, Lahaina will consider
the following kinds of factors:
(a) Potential for growth, indicated by new technology, anticipated market
expansion or new products;
(b) Competitive position as compared to other firms engaged in similar
activities;
(c) Strength of management;
(d) Capital requirements and anticipated availability of required funds
from future operations, through the sale of additional securities, through joint
ventures or similar arrangements or from other sources; and
(e) Other relevant factors.
Potentially available business opportunities may occur in many different
industries and at various stages of development, all of which will make the task
of comparative investigation and analysis of such business opportunities
extremely difficult and complex. Potential investors must recognize that due to
Lahaina's limited capital available for investigation and management's limited
experience in business analysis, Lahaina may not discover or adequately evaluate
adverse facts about the opportunity to be acquired.
Lahaina is unable to predict when it may participate in a business
opportunity. It expects, however, that the analysis of specific proposals and
the selection of a business opportunity may take several months or more. Lahaina
does not plan to raise any capital at the present time, by private placements,
public offerings, pursuant to Regulation S promulgated under the Act, or by any
means whatsoever. Further, there are no plans, proposals, arrangements or
understandings with respect to the sale or issuance of additional securities
prior to the location of an acquisition or merger candidate.
Form of Acquisition
The manner in which Lahaina participates in an opportunity will depend upon
the nature of the opportunity, the respective needs and desires of Lahaina and
the promoters of the opportunity, and the relative negotiating strength of
Lahaina and such promoters. The exact form or structure of Lahaina's
participation in a business opportunity or venture will be dependent upon the
needs of the particular situation. Lahaina's participation may be structured as
an asset purchase agreement, a lease, a license, a joint venture, a partnership,
a merger, or acquisition of securities.
<PAGE>
As set forth above, Lahaina may acquire its participation in a business
opportunity through the issuance of Common Shares or other securities in the
Company. Although the terms of any such transaction cannot be predicted, it
should be noted that in certain circumstances the criteria for determining
whether or not an acquisition is so-called "tax free" reorganization under
Section 368(a)(1) of the Internal Revenue Code of 1954 , as amended, may depend
upon the issuance to the shareholders of the acquired company of at least eighty
percent (80%) of the Common Shares of the combined entities immediately
following the reorganization. If a transaction were structured to take advantage
of these provisions rather than other "tax free" provisions provided under the
Internal Revenue Code all prior shareholders may, in such circumstances, retain
twenty percent (20%) or less of the total issued and outstanding Common Shares.
If such a transaction were available to the Company, it will be necessary to
obtain shareholder approval to effectuate a reverse stock split or to authorize
additional shares of Common Shares prior to completing such acquisition. This
could result in substantial additional dilution to the equity of those who were
shareholders of the Company prior to such reorganization. Further, extreme
caution should be exercised by any investor relying upon any tax benefits in
light of the proposed new tax laws It is possible that no tax benefits will
exist at all. Prospective investors should consult their own legal, financial
and other business advisors.
The present management and the shareholders of Lahaina in all likelihood
will not have control of a majority of the voting shares of the company
following a reorganization transaction. In fact, it is most probable that the
shareholders of the acquired entity will gain control of the company. Further,
management intends to issue additional securities and to make available for
purchase by shareholders of the acquired entity of up to 90% of the shares of
Common Shares. As part of such a transaction, all or a majority of Lahaina's
Directors may resign and new Directors may be appointed without any vote by
shareholders.
Present stockholders have not agreed to vote their respective shares of
Common Shares in accordance with the vote of the majority of all non-affiliated
future stockholders of the Company with respect to any business combination.
Lahaina may not borrow funds and use and funds to make payments to Company
promoters, management or their affiliates or associates.
Lahaina is required by the regulations promulgated under the Securities
Exchange Act of 1934 to obtain and file with the Commission, audited financial
statements of the acquisition candidate not later than sixty days from the date
the Form 8-K is due at the Commission disclosing the acquisition/merger.
Rights of Dissenting Shareholders
Under the Colorado Corporation Code, a business combination typically
requires the approval of two-thirds of the outstanding shares of both
participating companies. The Company's Articles of Incorporation
<PAGE>
reduce the voting requirement to a majority of the Company's outstanding Common
Stock. Shareholders who vote against any business combination in certain
instances may be entitled to dissent and to obtain payment for their shares
pursuant to Sections 7-4-123 and 7-4-124 of the Colorado Corporation Code. The
requirement of approval of the Company's shareholders in any proposed business
combination is limited to those transactions identified as a merger or a
consolidation. A business combination identified as a share exchange does not
require the approval of the Company's shareholders, nor does it entitle
shareholder to dissent and obtain payment for their shares. Accordingly, unless
the acquisition is a statutory merger, requiring shareholder approval, the
Company will not provide shareholders with a disclosure document containing
audited or unaudited financial statements, prior to such acquisition.
Prior to any business combination for which shareholder approval is
required, the Company intends to provide its shareholders complete disclosure
documentation concerning the business opportunity or target company and its
business. Such disclosure will in all likelihood be in the form of a proxy
statement which will be distributed to shareholders at least 20 days prior to
any shareholder's meeting.
Not an "Investment Adviser"
Lahaina is not an "investment adviser" under the Federal Investment
Advisers Act of 1940, which classification would involve a number of negative
considerations. Accordingly, the Company will not furnish or distribute advice,
counsel, publications, writings, analysis or reports to anyone relating to the
purchase or sale of any securities within the language, meaning and intent of
Section 2(a)(11) of the Investment Advisers Act of 1940, 15 U.S.C. 80b2(a)(11).
Not an "Investment Company"
Lahaina may become involved in a business opportunity through purchasing or
exchanging the securities of such business. Lahaina does not intend however, to
engage primarily in such activities and is not registered as an "investment
company" under the Federal Investment Company Act of 1940. The company believes
such registration is not required.
Lahaina must conduct its activities so as to avoid becoming inadvertently
classified as transient "investment company" under the Federal Investment
Company Act of 1940, which classification would affect the company adversely in
a number of respects. Section 3(a) of the Investment Company Act provides the
definition of an "investment company" which excludes an entity which does not
engage primarily in the business of investing, reinvesting or trading in
securities, or which does not engage in the business of investing, owning,
holding or trading "investment securities" (defined as "all securities other
than United States government securities or securities of majority-owned
subsidiaries") the value of which exceeds forty percent (40%) of the value of
its total assets (excluding government securities, cash or cash items). Lahaina
<PAGE>
intends to implement its business plan in a manner which will result in the
availability of this exemption from the definition of "investment company."
Lahaina proposes to engage solely in seeking an interest in one or more business
opportunities or ventures.
Effective January 14, 1981, the Commission adopted Rule 3a-2 which deems
that an issuer is not engaged in the business of investing, reinvesting, owning,
holding or trading in securities for purposes of Section 3(a)(1), cited above,
if, during a period of time not exceeding one year, the issuer has a bona fide
intent to be engaged primarily, or as soon as reasonably possible (in any event
by the termination of a one year period of time), in a business other than that
of investing, reinvesting, owning, holding or trading in securities and such
intent is evidenced by Lahaina's business activities and appropriate resolution
of Lahaina's Board of Directors duly adopted and duly recorded in the minute
book of Lahaina. The Rule 3a-2 "safe harbor" may not be relied on more than a
single time.
Employees
Lahaina is a development stage company and currently has no employees other
than certain of its officers and directors. Management of the company expects to
use consultants, attorneys and accountants as necessary, and does not anticipate
a need to engage any full-time employees so long as it is seeking and evaluating
business opportunities. The need for employees and their availability will be
addressed in connection with the decision whether or not to acquire or
participate in a specific business opportunity.
Item 2. PROPERTIES
Lahaina's offices are located at 5459 South Iris Street, Littleton, Colorado
80123, and the telephone number is (303) 932-9998. Lahaina's office is located
in the home of Philip Davis, the Company's past President. Approximately nine
square feet are allocated to the Company on a rent-free basis. The office will
remain at Mr. Davis's home until an acquisition has been concluded. There are no
written documents memorializing the foregoing.
There are no preliminary agreements or understandings with respect to the
office facility subsequent to the completion of an acquisition. Upon a merger or
acquisition, Lahaina intends to relocate its office to that of the acquisition
candidate.
Item 3. LEGAL PROCEEDINGS
There are no material legal proceedings pending or, to the knowledge of
management, threatened against the Company.
<PAGE>
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to security holders during the fourth quarter of
the fiscal year ended September 30, 1997.
<PAGE>
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
(a) Market Information
The Company's Common Stock has been traded over-the-counter on the bulletin
Board operated by the National Association of Securities Dealers, Inc. under the
symbol "LAHA." The following table sets forth the high and low closing bid of
the Company's Common Stock for each quarter during the past two fiscal years.
The prices reflect inter-dealer quotations without retail mark-ups, mark downs
or commissions, and do not necessarily represent actual transactions. The
Company's securities began trading actively in August 1996. Since the foregoing
date, the high bid has been $0.875 and the low bid has been $0.875.
Period High Low
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Fiscal 1996
First quarter......................................... $0.00 0.00
Second quarter........................................ 0.00 0.00
Third quarter......................................... 0.00 0.00
Fourth quarter........................................ 0.875 0.875
Fiscal 1997
First quarter......................................... 0.875 0.875
Second quarter........................................ 0.875 0.875
Third quarter......................................... 0.875 0.875
Fourth quarter........................................ 0.875 0.875
(b) Holders
As of September 30, 1997, there were approximately 198 holders of the
Company's Common Stock. This number does not include those beneficial owners
whose securities are held in street name.
(c) Dividends
No dividend was paid to stockholders during the fiscal years ended
September 30, 1996 and 1997. The Company intends to continue to retain earnings
for use in the business of the Company and therefore does not anticipate
declaring or paying cash dividends in the immediate future.
(d) Blue Sky Considerations
The laws of some states prohibit the resale of securities issued by "blank
check" or "shell" corporations. The Company may be considered a "blank check" or
"shell" corporation for the purpose of state securities laws. Accordingly, it is
possible that current shareholders may be unable to resell their securities in
other states. The Company is unaware which particular states prohibit such
resales, other than Idaho or Indiana.
<PAGE>
The Commission has suggested that the Company take steps to prohibit
further transfer of the securities distributed to current shareholders, unless
the Company is assured that the further transfer would not violate the
securities laws of the fifty states. The Company believes that the Commission
has no authority to cause the Company to place restrictions on the securities it
previously distributed and which it currently does not own. Such action by the
Company would legally be construed as a unilateral modification of a fully
executed contract and would be considered as a breach thereof. Further, the
Company believes that such action by the Commission would be a usurpation of the
authority granted it by Congress.
Further, because each state has a series of exempt securities transaction
predicated upon the particular facts of each transaction, it is impossible to
determine if a contemplated transaction by an existing shareholder would
possibly violate the securities laws of any particular state.
In the event a current shareholder or broker/dealer resells its securities
in the state where such resale is prohibited, the Company believes that the
seller thereof may be liable criminally or civilly under that particular state's
laws. The Company believes that it will not be liable for such improper
secondary sales.
Existing shareholders should exercise caution in the resale of their shares
of common stock in light of the foregoing.
Item 6. SELECTED FINANCIAL DATA
The selected financial data set forth below for the years ended September
30, 1997, 1997 and 1995 is derived from the Company's audited financial
statements. This information should be read in conjunction with the financial
statements and notes thereto included in Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations and Item 8. Financial
Statements included herein.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULT OF OPERATIONS .
Results of Operations - Inception (April 5, 1989) through June 30, 1997.
The Company is considered to be in the development stage as defined in
Statement of Financial Accounting Standards No. 7 There have been no operations
since incorporation.
There have been no material changes in the Company's results of operations,
since filing its Form 10-K with the Securities and Exchange Commission on
December 27, 1996. Said Form 10-K is incorporated herein by reference.
Liquidity and Capital Resources.
<PAGE>
The Company issued 996,500 shares of its Common Stock to officers,
directors and others. The Company has no operating history and no material
assets. The Company has no cash as of June 30, 1997.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Financial Statements and Supplementary Data begin on the following page.
<PAGE>
LAHAINA ACQUISITIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
For the Year Ended September 30, 1997
<PAGE>
LAHAINA ACQUISITIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
For the Year Ended September 30, 1997
CONTENTS
Page
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Independent Auditors' Report...........................................F-1
Financial Statements:
Balance Sheet.....................................................F-3
Statements of Operations..........................................F-4
Statements of Changes in Stockholders' Equity.....................F-5
Statements of Cash Flows..........................................F-6
Notes to Financial Statements..........................................F-7
<PAGE>
To the Board of Directors
Lahaina Acquisitions, Inc.
(A Development Stage Company)
Littleton, Colorado
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying balance sheet of Lahaina Acquisitions, Inc. (a
Development Stage Company) as of September 30, 1997 and the related statements
of operations, changes in stockholders' equity, and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Lahaina Acquisitions, Inc. as
of September 30, 1997 and the results of its operations and its cash flows for
the year then ended, in conformity with generally accepted accounting
principles.
Millward & Co. CPAs
Fort Lauderdale, Florida
December 22, 1997
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Lahaina Acquisitions, Inc.
(A Development Stage Company)
Littleton, Colorado
We have audited the accompanying statements of operations, changes in
stockholders' equity, and cash flows for the year ended September 30, 1996 and
the statement of operations and cash flows for the period from inception through
September 30, 1996 of Lahaina Acquisitions, Inc. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of Lahaina
Acquisitions, Inc., for the year ended September 30, 1996 and the results of
operations and cash flows from inception through September 30, 1996, in
conformity with generally accepted accounting principles.
Doran Peck, CPA, PC
Denver, Colorado
December 12, 1996
F-2
<PAGE>
LAHAINA ACQUISITIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
September 30, 1997
ASSETS
Acquisition Cost Reimbursement Receivable - Current $ 47,985
Organization Costs - Non-current 600
--------
Total Assets $ 48,585
========
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES
Accounts Payable $ 47,985
Total Liabilities - Current 47,985
--------
STOCKHOLDERS' EQUITY
Common Stock (No Par Value, Authorized 80,000,000
Shares, Issued and Outstanding 996,500 Shares) 7,793
Preferred Stock (No Par Value, Authorized 10,000,000
Shares, None Issued) --
Deficit Accumulated During the Development Stage (7,193)
--------
Total Stockholders' Equity 600
--------
Total Liabilities and Stockholders' Equity $ 48,585
========
The accompanying notes are an integral part of this financial statement.
F-3
<PAGE>
LAHAINA ACQUISITIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
From Inception For the Year Ended
(April 1989) to September 30,
September 30, 1997 1997 1996
------------------ -------------- ---------
(Not Covered by
Accountants Report)
<S> <C> <C> <C>
REVENUE: $ -- $ -- $ --
-------- -------- --------
OPERATING EXPENSE:
Administrative Costs 7,193 4,211 2,982
-------- -------- --------
Total Operating Expenses 7,193 4,211 2,982
-------- -------- --------
Net Loss 7,193 4,211 2,982
======== ======== ========
Net Loss Per Share $ 0 $ 0
======== ========
Weighted Average Shares Outstanding 996,500 996,500
======== ========
</TABLE>
The accompanying notes are an integral part of this financial statement
F-4
<PAGE>
LAHAINA ACQUISITIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
Deficit
Accumulated
During The Total
Common Stock Development Stockholder's
Shares Amount Stage Equity
------- ------- ------- -------
<S> <C> <C> <C> <C>
Balance at September 30, 1995 996,500 $ 600 $ -- $ 600
Net Loss for the Year Ended September 30, 1996 -- -- (2,982) (2,982)
------- ------- ------- -------
Balance at September 30, 1996 996,500 600 (2,982) (2,382)
Capital Contribution -- 7,193 -- 7,193
Net Loss for the Year Ended September 30, 1997 -- -- (4,211) 4,211
------- ------- ------- -------
Balance at September 30, 1997 996,500 $ 7,793 $(7,193) $ 600
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of this financial statement
F-5
<PAGE>
LAHAINA ACQUISITIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
From Inception For the Year Ended
(April 1989) to September 30,
September 30, ---------------------
1997 1997 1996
------------- ------- -------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $(7,193) $(4,211) $(2,982)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Capital contribution of expenses incurred
on behalf of Company by Shareholders $(7,193) $(4,211) $(2,982)
------- ------- -------
Net Cash Used in Operating Activities -- -- --
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
-- -- --
------- ------- -------
Net Cash Provided by Investing Activities -- -- --
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
-- -- --
------- ------- -------
Net Cash Provided by Financing Activities -- -- --
------- ------- -------
Net Increase in Cash -- -- --
Cash at Beginning of Period -- -- --
------- ------- -------
Cash at End of Period $ -- $ -- $ --
======= ======= =======
</TABLE>
Legal costs relating to an aborted acquisition aggregated $73,916 during the
year ended September 30, 1997 (See Note 1)
The accompanying notes are an integral part of this financial statement
F-6
<PAGE>
LAHAINA ACQUISITIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
September 30, 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Activity
Lahaina Acquisitions, Inc. (the "Company"), was incorporated under the laws
of the State of Colorado in April 1989. The Company is in the development stage
and has no operating activity.
The Company intends to actively seek, locate, evaluate, structure and complete
mergers with or acquisitions of private companies, partnerships or sole
proprietorships.
During the year ended September 30, 1997, the Company was negotiating to
acquire Root Industries, Inc. The negotiations were terminated. Through
September 30, 1997, the Company incurred related legal costs of $73,916, of
which $25,931 was reimbursed as agreed by the acquiree prior to September 30,
1997. The balance of $47,985 was reimbursed subsequent to September 30, 1997.
Fiscal Year
The Company's year-end is September 30.
Loss Per Year
The net loss per share was calculated by dividing the net loss by the weighted
average shares outstanding.
NOTE 2 - SHAREHOLDER'S EQUITY
The Company is authorized to issue 800,000,000 shares of common stock having no
per share par value. As of September 30, 1997, the Company has issued 996,500
common shares.
In May 1991, in connection with a private placement, the Company issued 993,000
Class A Warrants and 993,000 Class B Warrants each to purchase one share of
common stock at $1.00 and $1.50, respectively. These Warrants expire May 10,
1999 and may be redeemed by the Company at $.0001 per share upon 30 days written
notice. In July 1997 the Company sent redemption notices to all warrant holders
and accordingly, the warrants expired.
The Company has authorized the issuance of 10,000,000 shares of Preferred Stock
with no per share par value. There has been no issuance of Preferred Stock.
F-7
<PAGE>
NOTE 3 - CAPITAL CONTRIBUTIONS
Certain Officers and Shareholders have paid for expenses on behalf of the
Company. Those amounts have been treated as Capital Contributions and have been
credited to common stock.
F-8
<PAGE>
Item 9. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
On November 3, 1997, the Company engaged KPMG, 130 Dufferin Avenue, Suite
1400, London Ontario, Canada, to act as the Company's independent certified
public accountant. KPMG replaces Doran Peck, C.P.A., P.C. who the Company
terminated its relationship with on October 30, 1997. On November 7, 1997, the
Company filed a Form 8-K reporting a change of accountants. Said Form 8-K is
incorporated herein by reference.
Since the Company appointed Doran Peck, C.P.A., P.C. on or before December
13, 1995, there have been no disagreements with Doran Peck, C.P.A., P.C. on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure or any reportable events. The Auditors Reports on
the financial statements for the Company since December 1996 did not contain any
adverse opinion or a disclaimer of opinion.
The Company, due to its desire to operate on an international basis,
especially in the USA and Canada, has concluded that the company as a whole
would be better served by an accounting firm with international presence and
knowledge of international generally accepted auditing standards GAAP.
Accordingly, at the request of the Board of Directors terminated its
relationship with Doran Peck, C.P.A., P.C. and engaged KPMG.
On December 15, 1997, the Registrant engaged Millward & Co. CPAs, to
act as the registrant's independent certified public accountant. Millward & Co.
CPAs replaces KPMG, 130 Dufferin Avenue, Suite 1400, London Ontario, Canada who
the Registrant terminated its relationship with on December 15, 1997
Since the Registrant appointed KPMG on or before November 3, 1997, there
have been no disagreements with KPMG on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure or any
reportable events. KPMG did not prepare any financial statements for the
Registrant since November 3.
The Registrant, since the appointment of KPMG, has determined that it is in
the best interest of the Registrant to not operate in Canada at this time and
has concluded that the Registrant as a whole would be better served by a
domestic accounting firm with knowledge of generally accepted auditing
standards. Accordingly, at the request of the Board of Directors, the Registrant
has terminated its relationship with KPMG and engaged Millward & Co. CPAs.
<PAGE>
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The following table sets forth the information concerning the directors and
executive officers of the Company and its subsidiaries:
Name Age Position to be Held
- ---- --- -------------------
Graham M. Cooper 65 President, Director
Ivylynn Cassar 32 Secretary and Treasurer
Director
John Burrows 51 Director
Graham M. Cooper became President and Director of the Company following the
consummation of the Agreement. He is also the sole shareholder and a director of
Paxford. Mr. Cooper, a member (Fellow) of the Institute of Chartered Accountants
(England & Wales), has practiced Accountancy in Nassau, Bahamas since 1965.
Ivylynn Cassar became Secretary, Treasurer and a Director of the Company
following the consummation of the Agreement. She is also a director of Paxford.
She is a Certified Public Accountant and is the managing Director of Leopold
Joseph (Bahamas) Limited trust company.
John Burrows became a Director of the Company following the consummation of the
Agreement.
The Directors of the Company are elected to hold office until the next
Annual Meeting of Shareholders and until their respective successors have been
elected and qualified. Officers of the Company are elected by the Board of
Directors and hold office until their successors are duly elected and qualified.
There are no audit, nominating or compensation committees of the Board of
Directors, or committees performing similar functions.
There are no family relations between any director or executive officer and
any other director or executive officer.
<PAGE>
Item 11. EXECUTIVE COMPENSATION
No cash compensation as paid to any officers or directors of the Company.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the information as to beneficial ownership
of shares by (i) each person who has been designated to become a director of the
Company, (ii) each named executive, and (iii) all such persons as of September
30, 1997 based upon shares of Common Stock outstanding on such date plus shares
deemed outstanding pursuant to Securities and Exchange Commission Rule
13d-3(d)(1).
Name and Position Amount & Nature of
of Beneficial Owner Beneficial Ownership Percent of Class
- ------------------- -------------------- ----------------
Graham M. Cooper
President,
Director 750,000 (1) 75.26%
Ivylynn Cassar
Secretary and Treasurer
Director -0- -0-
John Burrows
Director -0- -0-
Directors and Officers as a
group (3 persons) 750,000 75.26%
(1) Graham M. Cooper is the sole shareholder and a director of Paxford.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On May 23 1997, Paxford Acquisitions, S.A., a Bahamian corporation
("Paxford") consummated a Stock Purchase Agreement (the "Agreement') with Philip
J. Davis, John C. Lee and Charles C. Van Gundy, shareholders of the Company
(collectively the "Selling Shareholders") whereby the Paxford purchased Seven
Hundred and Fifty Thousand (750,000) shares of the Company Common Stock from
Philip J. Davis (selling
<PAGE>
366,667 shares), John C. Lee (selling 366,667 shares), and Charles C. Van Gundy
(selling 16,666), representing approximately Seventy Five and Twenty-Six/100
percent (75.26%) of the issued and outstanding stock of Lahaina. In
consideration for the shares, the Selling Stockholders received One Hundred and
Twenty Five Thousand and No/100 Dollars ($125,000.) cash. In addition, pursuant
to the Agreement, the Board of Directors of the Company, as of May 23, 1997,
have accepted the return of, and canceled, 380,000 Class A Warrants issued to
Philip J. Davis, 380,000 Class A Warrants issued to John C. Lee and 40,000 Class
A Warrants issued to Charles C. Van Gundy and accepted the return of, and
canceled, 380,000 Class B Warrants issued to Philip J. Davis, 380,000 Class B
Warrants issued to John C. Lee and 40,000 Class B Warrants issued to Charles C.
Van Gundy. Further, the Board of Directors, as of May 30, 1997, authorized the
redemption of all outstanding Class A and Class B warrants of Lahaina.
Pursuant to the Agreement, the Company has accepted the resignations of the
Board of Directors, as of May 27, 1997, consisting of Philip J. Davis, John C.
Lee and Charles C. Van Gundy and appointed Graham Cooper, the sole shareholder
and a director of Paxford. Ivy Lynn Cassar and John Burrow to serve on the
Lahaina's Board of Directors, effective May 27, 1997.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial Statements are contained in Item 8.
(b) Reports on Form 8-K.
Form 8-K was filed on June 2, 1997 reporting a change of accountants.
Form 8-K was filed on November 7, 1997 reporting a change of accountants.
Form 8-K was filed on December 15, 1997 reporting a change of accountants.
(c) Exhibits.
Exhibit
No. Description
- ------- -----------
3.1 Articles of Incorporation as filed with the Form 10 Registration
Statement on December 29, 1995.
<PAGE>
3.2 Bylaws of the Company as filed with the Form 10 Registration
Statement on December 29, 1995.
4.1 Specimen Stock Certificate as filed with the Form 10 Registration
Statement on December 29, 1995.
4.2 Specimen Class A Warrant Certificate as filed with the Form 10
Registration Statement on December 29, 1995.
4.3 Specimen Class B Warrant Certificate as filed with the Form 10
Registration Statement on December 29, 1995.
27 Financial Data Schedule.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LAHAINA ACQUISITIONS, INC.
(the "Company")
Date: By: s/s Graham Cooper
---------------------- ---------------------------
Graham Cooper, President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
September 30, 1997 Consolidated Financial Statements and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S.
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 47,985
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 600
<DEPRECIATION> 0
<TOTAL-ASSETS> 48,585
<CURRENT-LIABILITIES> 47,985
<BONDS> 0
0
0
<COMMON> 7793
<OTHER-SE> (7193)
<TOTAL-LIABILITY-AND-EQUITY> 48,585
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,211
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4,211)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,211)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,211)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
