<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF EARLIEST EVENT REPORTED: DECEMBER 14, 1998
LAHAINA ACQUISITIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
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<S> <C> <C>
COLORADO 0-27480 84-1325695
(STATE OF OTHER JURISDICTION OF (COMMISSION FILE (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) NO.) IDENTIFICATION NO.)
</TABLE>
(770) 754-6140
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NOT APPLICABLE
(FORMER NAME OF FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
This Current Report on Form 8-K/A is an amendment to the Current Report on
Form 8-K filed by Lahaina Acquisitions, Inc. ("Lahaina" or the "Company")
on December 28, 1998 to provide historical financial statements of Beachside
Commons I, Inc. ("Beachside") and pro forma financial information regarding the
acquisition of Beachside by the Company.
ITEM 1. NOT APPLICABLE
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements
<PAGE> 2
To the Board of Directors
BEACHSIDE COMMONS I, INC.
Alpharetta, GA
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying balance sheet of BEACHSIDE COMMONS I, INC. as
of December 7, 1998, and the related statements of operations, changes in
stockholder's equity, and cash flows for the period from inception, September
25, 1998, to December 7, 1998. 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 BEACHSIDE COMMONS I, INC. as
of December 7, 1998, and the results of its operations and its cash flows for
the year then ended, in conformity with generally accepted accounting
principles.
/s/Kenneth R. Walters, P.A.
- ---------------------------
KENNETH R. WALTERS, P.A.
Fernandina Beach, FL
October 14, 1999
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BEACHSIDE COMMONS I, INC.
BALANCE SHEET
December 7, 1998
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<S> <C>
ASSETS
Current Assets
Cash $ --
Prepaid Expenses 17,281
Escrow Funds 30,000
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Total Current Assets 47,281
Fixed Assets
Land 400,000
Building 2,403,623
Equipment 143,738
Accumulated Depreciation (24,389)
Total Fixed Assets 2,922,972
TOTAL ASSETS $2,970,253
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LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES
Current Liabilities
Accounts Payable 4,250
Security Deposits Payable 9,000
----------
Total Current Liabilities 13,250
Long-term Debt
Notes Payable 1,730,000
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Total Long-term Debt 1,730,000
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TOTAL LIABILITIES 1,743,250
STOCKHOLDER'S EQUITY
Common stock, $1.00 par value, 500 shares
authorized, 500 shares issued and outstanding 500
Additional Pain-In Capital 1,247,069
Retained Deficit (20,566)
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TOTAL STOCKHOLDER'S EQUITY 1,227,003
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $2,970,253
----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
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BEACHSIDE COMMONS I, INC.
STATEMENT OF OPERATIONS
For the Period from September 25, 1998 (Date of Inception)
To December 7, 1998
<TABLE>
<CAPTION>
<S> <C>
Rent Revenue $
Operating Expenses
Depreciation 3,252
Legal Fees 500
Insurance 926
Taxes - Property 600
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Total Operating Expenses 5,278
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Operating Loss (5,278)
Interest Expense (15,288)
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Net Operating Loss $ (20,566)
---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
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BEACHSIDE COMMONS I, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period from September 25, 1998 (Date of Inception)
To December 7, 1998
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<CAPTION>
Common Stock Additional Total
$1.00 Par Value Retained Paid in Stockholders'
------------------------- Earnings Capital Equity
Shares Amount ------------- ------------ ------------
------ ---------
<S> <C> <C> <C> <C> <C>
Balance at September 25, 1998 -- $ -- $ -- $ -- $ --
Issuance of Common Stock 500 500 -- -- 500
Non-Cash Capital Contributed -- -- -- 1,247,069 1,247,069
Net loss -- -- (20,566) -- (20,566)
------ --------- -------- ---------- ----------
Balance at December 7, 1998 500 $ 500 $(20,566) $1,247,069 $1,227,003
====== ========= ======== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 6
BEACHSIDE COMMONS I, INC.
STATEMENT OF CASH FLOWS
From September 25, 1998 (Date of Inception)
To December 7, 1998
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<S> <S>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (20,566)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation 3,252
Expenses paid by stockholder 11,538
Decrease In:
Prepaid expenses 1,526
Increase In:
Accounts payable 4,250
-----------
Net cash provided by operating activities -
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CASH - Beginning of period -
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CASH - End of period -
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NON-CASH INVESTING AND FINANCING ACTIVITIES
Fixed assets acquired through long-term debt,
net of accumulated depreciation at September 25, 1998 $ 2,926,224
Non-cash capital contributions 1,247,569
-----------
$ 4,173,793
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SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for interest $ 15,288
-----------
Cash paid during the period for income taxes $ -
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 7
BEACHSIDE COMMONS I, INC.
NOTES TO FINANCIAL STATEMENTS
December 7, 1998
NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS ACTIVITY
BEACHSIDE COMMONS I, INC. ("the Company"), was incorporated under the laws of
the State of Florida on September 25, 1998. The Company's intent at December 7,
1998 was to operate and further develop a commercial real estate property in
the resort area of Amelia Island, Florida.
The commercial property owned by the Company was purchased and developed by
Mongoose Investments, LLC ("Mongoose") a limited liability company formed under
the laws of the state of Georgia. On September 25, 1998, BEACHSIDE COMMONS I,
INC. was incorporated under the laws of the state of Florida as a wholly-owned
subsidiary of Mongoose. On November 13, 1998, the commercial real estate
property was transferred from Mongoose to the Company. On December 14, 1998,
Lahaina Acquisitions, Inc. (Lahaina) completed the acquisition of all of the
outstanding stock.
CASH EQUIVALENTS
The Company considers all short-term investments purchased with a maturity of
three months or less to be cash equivalents. There were no cash equivalents at
December 7, 1998.
FISCAL YEAR
The Company's original fiscal year-end was December 31. It has adopted
September 30 as the fiscal year-end, which is the fiscal year-end of the
acquirer.
PROPERTY AND EQUIPMENT/DEPRECIATION
The Company depreciates buildings and equipment on the straight-line method
based on their estimated useful lives which range from five to twenty years.
Depreciation expenses for the period was $3,252.
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BEACHSIDE COMMONS I, INC.
NOTES TO FINANCIAL STATEMENTS
December 7, 1998
ACCOUNTS PAYABLE-CASH BOOK BALANCE
As of December 7, 1998, the Company had checks outstanding in excess of book
balances totaling $4,250, which have been classified as accounts payable.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
COMPREHENSIVE INCOME
Statement of Financial Accounting Standards No. 130, Reporting Comprehensive
Income, (SFAS 130), requires that total comprehensive income be reported in the
financial statements. Comprehensive income is equal to the net loss for the
period ended December 7, 1998.
NOTE 2-ESCROW FUNDS
The Company was involved in legal proceedings and $30,000 was being held in
escrow at December 7, 1998. The Company is party from time-to-time in various
legal proceedings. In the opinion of management, there are no matters which
might have a material impact on the Company's financial position or results of
operations.
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BEACHSIDE COMMONS I, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 7, 1998
NOTE 3-LONG-TERM DEBT
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Note payable to Pacific Coast Investment Company
(secured by a first mortgage on the Beachside Commons
property), at an interest rate of 15% payable in monthly
installments of interest only. The entire principal is due
and payable November 11, 2003. $1,550,000
Note payable to GCA Strategic Investment Fund, Ltd. (1),
(secured by a second mortgage on the Beachside Commons
property), at an interest rate of 9%, maturing
January 31, 2001 with interest payable quarterly in arrears
on the last day of March, June, September and December of
each year until the maturity date. 25,000
Notes payable, others, consists of three notes, at an interest
rate of 18% payable on demand, from individuals in the amounts
of $85,000, $50,000, and $20,000. 155,000
---------
$1,730,000
=========
</TABLE>
All long-term debt is reported at fair value. The notes payable on demand
are recorded as long-term debt due to subsequent events.
Maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
Year Ending
December 31 Amount
----------- -----------
<S> <C>
1999 $ -0-
2000 -0-
2001 25,000
2002 -0-
2003 1,550,000
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BEACHSIDE COMMONS I, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 7, 1998
NOTE 4 - STOCKHOLDER'S EQUITY
The Company is authorized to issue 500 shares of common stock with $1.00 per
share par value. As of December 7, 1998, the Company had issued 500 common
shares. At December 7, 1998, all outstanding shares were owned by Lahaina
Acquisitions, Inc., with 86% of Lahaina stock owned by Richard P. Smyth.
NOTE 5 - CAPITAL CONTRIBUTIONS
Some expenses were paid on behalf of the Company by the stockholder. Those
amounts have been recorded as additional paid-in capital.
NOTE 6 - RELATED PARTY TRANSACTIONS
Included in Note 3 - LONG-TERM DEBT are two notes payable to Nancy E. Smyth
totaling $70,000. Mrs. Smyth is married to the majority stockholder of Lahaina.
NOTE 8 - SUBSEQUENT EVENTS
On June 30, 1999, Mongoose agreed to assume three notes payable whose balances
at June 30, 1999, totaled approximately $198,000 and included the notes payable
at December 7, 1998 for $155,000.
On December 14, 1998, the Company was acquired by Lahaina Acquisitions, Inc.
("Lahaina"). Lahaina issued 1,250,000 shares of common stock and 1,910,000
shares of preferred stock and paid $667,500 for the Company. The acquisition
was accounted for as a reverse acquisition. The Company was determined to be
the accounting acquiror for financial statement purposes in accordance with
Staff Accounting Bulletin No. 97. The assets and liabilities of Lahaina were
recorded at its historical cost basis as it was a shell company at December 14,
1998. A related note payable for $750,000 was added to long-term debt on
December 14, 1998. The note payable was convertible into the Company's common
stock.
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b) Pro forma Financial Statements
LAHAINA ACQUISITIONS, INC.
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The following unaudited pro forma condensed combined financial statements give
effect to the acquisition of Beachside Commons I, Inc. ("Beachside") by Lahaina
Acquisitions, Inc. ("Lahaina"). The acquisition of Beachside will be accounted
for using the purchase method of accounting. In accordance with the provisions
of Staff Accounting Bulletin No. 97, Beachside is deemed to be the accounting
acquirer of Lahaina as its stockholders will receive the largest portion of the
voting rights in the combined corporation. The acquired company, Lahaina, will
be recorded at its historical cost basis as it was a shell company prior to the
acquisition of Beachside.
The Unaudited Pro Forma Condensed Balance Sheet gives effect to the acquisition
as if it had occurred on September 30, 1998. The Unaudited Pro Forma Combined
Statements of Operations for the year ended September 30, 1998 gives effect to
these transactions as if they had occurred on October 1, 1997.
The pro forma adjustments are based on estimates, available information and
certain assumptions and may be revised as additional information becomes
available. The pro forma combined financial data does not purport to represent
what Lahaina's financial position or results of operations would actually have
been if such transactions in fact had occurred on those assumed dates and are
not necessarily representative of Lahaina's financial position or results of
operations for any future period. Since Lahaina and Beachside were not under
common control or management, historical combined results may not be comparable
to, or indicative of, future performance. The unaudited pro forma combined
financial statements should be read in conjunction with the other financial
statements and notes thereto included elsewhere in this Form 8-K/A.
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LAHAINA ACQUISITIONS, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
Lahaina Beachside (see note 3) Combined
---------- ---------- ------------ ---------
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash $ 28 $ -- $ 82,500 $ 82,528
Other Current Assets -- 47,281 -- 47,281
-------- ---------- -------- ----------
Total Current Assets 28 47,281 82,500 129,809
Fixed Assets
Land -- 400,000 -- 400,000
Buildings -- 2,403,623 -- 2,403,623
Equipment -- 143,738 -- 143,738
Accumulated Depreciation -- (24,389) -- (24,389)
-------- ---------- -------- ----------
Total Fixed Assets -- 2,922,972 -- 2,922,972
TOTAL ASSETS $ 28 $2,970,253 $ 82,500 $3,052,781
-------- ---------- -------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current Liabilities
Accounts Payable 7,093 4,250 -- 11,343
Security Deposits Payable -- 9,000 -- 9,000
-------- ---------- -------- ----------
Total Current Liabilities 7,093 13,250 -- 20,343
Long-Term Debt
Note Payable - Mortgage -- 1,550,000 -- 1,550,000
Note Payable - Other -- 180,000 -- 180,000
Note Payable - Convertible Debenture -- -- 750,000 750,000
-------- ---------- -------- ----------
Total Long-Term Debt -- 1,730,000 750,000 2,480,000
-------- ---------- -------- ----------
TOTAL LIABILITIES 7,093 1,743,250 750,000 2,500,343
-------- ---------- -------- ----------
SHAREHOLDERS' EQUITY
Common Stock 6,582 500 (7,082) --
Additional Paid-In Capital - Common Stock 52,653 1,247,069 (726,718) 573,004
Contributed Capital -- -- -- --
Retained Deficit (66,300) (20,566) 66,300 (20,566)
-------- ---------- -------- ----------
TOTAL SHAREHOLDERS' EQUITY (7,065) 1,227,003 (667,500) 552,438
-------- ---------- -------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 28 $2,970,253 $ 82,500 $3,052,781
-------- ---------- -------- ----------
</TABLE>
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LAHAINA ACQUISITIONS, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
Lahaina Beachside (see note 4) Combined
---------- --------- ----------- ---------
<S> <C> <C> <C> <C>
REVENUE $ -- $ -- $ -- $ --
EXPENSES:
Administrative Expense 45,479 -- -- 45,479
Operating Expense -- 5,278 -- 5,278
-------- --------- --------- ---------
Total Expenses 45,479 5,278 -- 50,757
LOSS FROM OPERATIONS (45,479) (5,278) -- (50,757)
INTEREST EXPENSE - NET -- (15,288) (67,500) (82,788)
-------- --------- --------- ---------
NET LOSS $(45,479) $ (20,566) $ (67,500) $(133,545)
======== ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 14
LAHAINA ACQUISITIONS, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
NOTE 1 - GENERAL
Lahaina was founded in 1989 to seek, investigate and, if warranted, acquire an
interest in one or more business opportunities or ventures.
The historical financial statements reflect the financial position and results
of operations of Lahaina Acquisitions, Inc. ("Lahaina") and Beachside Commons
I, Inc. ("Beachside"), and were derived from the respective historical
financial statements where indicated. The period included in these financial
statements for Lahaina is as of and for the year ended September 30, 1998. The
period included in these financial statements for Beachside is as of and for
the period from September 25, 1998 (date of inception) to December 7, 1998. The
audited historical financial statements of Beachside included elsewhere herein
have been included in accordance with Securities and Exchange Commission
Regulation S-X Rule 3-05.
NOTE 2 - ACQUISITIONS
The acquisition of Lahaina will be accounted for using the purchase method of
accounting with Beachside being treated as the accounting acquirer of Lahaina
in accordance with Staff Accounting Bulletin No. 97. The acquired company,
Lahaina, will be recorded at its historical cost basis as it was a shell
company prior to the acquisition of Beachside.
NOTE 3 - UNAUDITED PRO FORMA BALANCE SHEET ADJUSTMENTS
The pro forma combined balance sheet adjustments related to the acquisition of
Lahaina by Beachside reflect (i) the issuance of a $750,000 note payable
convertible into Lahaina common stock, (ii) cash paid to the stockholder of
Beachside that, due to the reverse acquisition, will be accounted for as a
distribution in the amount of $667,500, and (iii) the reclassification of
Lahaina's shareholders' equity to Additional Paid in Capital in conjunction
with the merger.
NOTE 4 - UNAUDITED PRO FORMA STATEMENT OF OPERATIONS ADJUSTMENTS
The pro forma combined statement of operations adjustments related to the
acquisition of Lahaina by Beachside reflect additional interest expense
associated with the issuance of a $750,000 convertible note payable. The
proceeds of the note payable were used to fund the cash distribution to the
stockholder of Beachside.
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LAHAINA ACQUISITIONS, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The pro forma adjustments are not adjusted for their income tax effect as none
of the entities had profitable operations during any of the periods.
NOTE 5 - NET LOSS PER SHARE
The pro forma net loss per share for the year ended September 30, 1998 was
$0.06 per share, and the number of shares used in computing both the basic and
diluted net loss totaled 2,246,500 shares. This represents the total number of
shares outstanding immediately prior to the acquisition (996,500) plus the
number of shares issued in connection with the acquisition (1,250,000). The
convertible securities were not included in the computation of loss per share
as they would be anti-dilutive.
<PAGE> 16
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Lahaina Acquisitions, Inc.
(REGISTRANT)
By: /s/ L. Scott Demerau
--------------------------
Name: L. Scott Demerau
October 29, 1999 Title: President
