SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[x] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended March 31, 1998
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]
For the transition period from to
-------------- -----------------
Commission file number 0-24374
LUCAS EDUCATIONAL SYSTEMS, INC.
-------------------------------
(Exact name of small business issuer in its charter)
DELAWARE 62-1690722
-------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
P. O. Box 789
Templeton, California 93465
---------------------------
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (805) 434-3982
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, par
value $.001
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 for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
(1) YES X NO (2) YES X NO
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in part III of this Form 10-K
or any amendment to this Form 10-K. [ ]
State issuer's revenues for its most recent fiscal year: $0.
State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock
was sold, or the average bid and asked prices of such stock, as of a specified
date within the past 60 days.
August 20, 1998 - $13,498,613. There are approximately 2,918,619 shares
of common voting stock of the Registrant held by non-affiliates. During the
past two years, there has been no "established public market" for shares of
common voting stock of the Registrant. This valuation is based upon the
average bid price for shares of common stock of the Registrant on the OTC
Bulletin Board of the NASD on such date.
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS)
N/A
(APPLICABLE ONLY TO CORPORATE ISSUERS)
The number of shares outstanding of the issuer's classes of Common Stock
as of August 20, 1998:
Common Stock, $0.001 Par Value - 11,643,619 shares
DOCUMENTS INCORPORATED BY REFERENCE
A description of "Documents Incorporated by Reference" is contained
in Part III, Item 13 of this report.
Transitional Small Business Issuer Format Yes X No
--- ---
<PAGE>
PART I
Item 1. Description of Business.
------------------------
Business Development.
- ---------------------
Effective November 5, 1997, Mirador Equity Partners, Ltd., a Delaware
corporation (the "Company"), effected a 4.357 for one forward split of its
outstanding voting securities, while retaining the authorized capital and par
value, with appropriate adjustments in the stated capital and capital surplus
accounts of the Company. This forward split was reflected in an amendment to
the Articles of Incorporation of the Company of such date, and in which the
name of the Company was changed from "Mirador Equity Partners, Ltd." to "Lucas
Educational Systems, Inc." A copy of the Articles of Amendment respecting
these changes was attached to the 8-K Current Report of the Company dated
November 11, 1997, which has been previously filed with the Securities and
Exchange Commission (the "Commission") and which is incorporated herein by
reference. See Part III, Item 13, of this Report.
Pursuant to an Agreement and Plan of Reorganization dated
November 7, 1997 (the "Plan"), between the Company; Lucas Educational
Systems, Inc., a Nevada corporation ("Lucas Nevada"); and Jerry R. Lucas,
Cheryl W. Lucas and William R. Murray, the stockholders of Lucas Nevada
(sometimes collectively called the "Lucas Nevada Stockholders"), the Lucas
Nevada Stockholders became the controlling stockholders of the Company in a
transaction viewed as a reverse acquisition, and Lucas Nevada became a
wholly-owned subsidiary of the Company. The Plan was treated as a
recapitalization of Lucas Nevada for accounting purposes, and the effective
date of the Plan was November 11, 1997. For further information, see the 8-K
Current Report of the Company dated November 11, 1997. See Part III, Item 13,
of this Report.
Business.
- ---------
The Company, through its wholly-owned Nevada subsidiary, Lucas Nevada,
was formed to develop, produce and market the extraordinary learning and
memory techniques and related products that have been developed by Mr. Lucas
over the past 30 years. These techniques enable anyone to learn, memorize and
retain any subject matter more thoroughly and effectively than using
traditional repetition-based methods of learning and memorization. The Lucas
Learning System makes learning fun again. It is based on visual-reinforced
association, which is how children learn before they are able to read.
Because of its extraordinary effectiveness in creating an ability to retain
information, Mr. Lucas has trademarked the following phrase to describe his
system: "Learning that lasts".
Mr. Lucas' vision for the Company is to change the way people learn
"Making a difference in people's lives." The premise of The Lucas Learning
System is that memory requires that something be "registered" in the mind and
that it is much easier for a picture of something tangible to register than an
intangible concept, word or phrase.
The Company's products not only teach an extraordinarily effective way
of learning, but they also apply the technique to specific subject matter,
maximizing the learning process and minimizing the effort required by the user
to acquire knowledge. Numerous religious and educational leaders, as well as
seminar attendees, have endorsed the Company's technique and products.
Mr. Lucas has experience with direct marketing of his products using
television appearances and spot commercials. Direct marketing typically
provides a higher percentage of revenues to the Company. Consequently, based
on the success realized previously by Mr. Lucas and the broad potential appeal
of these products, the Company intends to sell its products, at least
initially, directly to consumers. Methods used to reach consumers will likely
include: QVC shopping network; talk shows; direct mail; internet web sites;
and joint ventures. The Company believes that after consumers realize the
worth of their original purchase, they will order additional non-advertised
products.
The Company proposes to fund the production of the Company's "Bible
Memory" video series and "Ready, Set, Remember" children's products; produce
and pay for television spots in selected markets and enable Mr. Lucas to
obtain guest appearances on talk shows, develop a relationship with QVC and
pursue contacts who have expressed interest in working with Mr. Lucas to
develop the Company. It is anticipated that this activity will create
awareness of and demand for additional products, and warrant marketing through
additional channels, which may require further funding.
The potential markets include: parents who want to make learning easier
and enjoyable for their children; people of all ages who want to memorize
Biblical verses and facts; business people who want to remember names and
faces; students who want to study effectively and retain that knowledge for
college entrance exams; students and others who want to learn and retain
grammar rules; students and others who want to learn foreign languages or
foreign students who want to learn English; and, everyone who wants learning
to be easier and long-lasting.
Principal Products or Services and their Markets.
- -------------------------------------------------
The Company produces, markets and distributes proprietary learning and
memory techniques and related products developed by ex-NBA legend Jerry Lucas,
who currently serves as the President and a director of the Company, and who,
with his wife, Cheryl W. Lucas, are the principal and controlling stock
holders of the Company.
The products have universal appeal for easier learning and lasting
memory. Because of this and the fact that the Company's learning and
memorization techniques can be applied to any field of study, the market for
the Company's products is vast. See the heading "Business," above.
Competition.
- ------------
Although there are various persons and entities engaged in similar
endeavors, management believes there is no direct competition with the Company
due to the unique nature of the proprietary learning and memory techniques and
related products developed by Mr. Lucas.
Sources and Availability of Raw Materials.
- ------------------------------------------
None, not applicable.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or
Labor Contracts.
- ----------------
Mr. Lucas has granted a 99 year license to use the technique for a
variety of products, many complete, but several more in various stages of
design and development. The Company also intends to design and develop
additional products. The Company's current and future products are and will
be protected by copyrights. A copy of this Licensing and Royalty Agreement
was attached to the 8-K Current Report dated November 11, 1997. See Part III,
Item 13, of this Report.
Governmental Approval of Principal Products or Services.
- --------------------------------------------------------
None, not applicable.
Effects of Existing or Probable Governmental Regulations.
- ---------------------------------------------------------
The Company is subject to Regulation 14A of the Commission, which
regulates proxy solicitations. Section 14(a) of the Securities Exchange Act
of 1934, as amended (the "1934 Act"), requires all companies with securities
registered pursuant to Section 12(g) thereof to comply with the rules and
regulations of the Commission regarding proxy solicitations, as outlined in
Regulation 14A. Matters submitted to stockholders of the Company at a special
or annual meeting thereof or pursuant to written consent will require the
Company to provide its stockholders with the information outlined in Schedules
14A or 14C of Regulation 14; preliminary copies of this information must be
submitted to the Commission at least 10 days prior to the date that definitive
copies of this information are forwarded to stockholders.
The Company is also required to file annual reports on Form 10-KSB
and quarterly reports on Form 10-QSB with the Commission on a regular basis,
and will be required to timely disclose certain material events (e.g., changes
in corporate control; acquisitions or dispositions of a significant amount of
assets other than in the ordinary course of business; and bankruptcy) in a
Current Report on Form 8-K.
Management believes that these obligations will increase the Company's
annual legal and accounting costs, but it is expected that assets will be
sufficient to meet these costs; in the event that assets are not sufficient,
it is likely that management will advance funds or that funds will be raised
through the limited offering of the Company's securities to "accredited
investors." See the heading "Plan of Operation" of the caption "Management's
Discussion and Analysis or Plan of Operation," Part I, Item 2 of this Report.
Cost and Effect of Compliance with Environmental Laws.
- ------------------------------------------------------
None; not applicable.
Research and Development Expenses.
- ----------------------------------
None; not applicable.
Number of Employees.
- --------------------
The Company currently has six employees.
Item 2. Description of Property.
------------------------
The Company currently maintains its corporate headquarters in
Templeton, California, in approximately 5,000 square feet of leased office
and warehouse space, at a monthly lease price of $3,000 per month. This
property is leased from Cheryl W. Lucas, the Treasurer and a director of the
Company; however, management believes that the terms of this lease are no less
favorable than could have been obtained from non-affiliated parties. For
additional information respecting this lease, see the Notes of the financial
statements of the Company accompanying this Report. See Item 7 of this Report
for a complete description of the financial statements included herein.
Item 3. Legal Proceedings.
------------------
The Company is not a party to any pending legal proceeding. No
federal, state or local governmental agency is presently contemplating any
proceeding against the Company. No director, executive officer or affiliate
of the Company or owner of record or beneficially of more than five percent of
the Company's common stock is a party adverse to the Company or has a material
interest adverse to the Company in any proceeding.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
No matter was been submitted to a meeting of the stockholders during the
preceding fiscal year.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
---------------------------------------------------------
Market Information
- ------------------
There has only been a "public market" for shares of the Company's
common stock since the first quarter of 1998. On or about February 3, 1998,
the Company obtained a listing on the OTC Bulletin Board of the NASD under the
trading symbol "LEDS." This is not an "established trading market."
The range of high and low bid quotations for the Company's
common stock during the quarters ended March 31 and June 30, 1998, is shown
below. Prices are inter-dealer quotations as reported by the NASD and do not
necessarily reflect transactions, retail markups, mark downs or commissions.
<TABLE>
<CAPTION>
STOCK QUOTATIONS*
BID
Quarter ended: High Low
- -------------- ---- ---
<S> <C> <C>
March 31, 1998 7.125 .375
June 30, 1998 7.3125 5.125
</TABLE>
Holders
- -------
The number of record holders of the Company's common stock as of
August 20, 1998, was approximately 155.
Options and 144 Sales
- ---------------------
The Company does not have any outstanding options or warrants.
Dividends
- ---------
The Company has not declared any cash dividends with respect to its
common stock, and does not intend to declare dividends in the foreseeable
future. The present intention of management is to utilize all available funds
for the development of the Company's current and intended business operations.
There are no material restrictions limiting, or that are likely to limit,
the Company's ability to pay dividends on its common stock.
Recent Sales of Unregistered Securities.
- ----------------------------------------
The following table outlines all sales of "restricted securities" by the
Company during the past three years.
Name Date Number of Shares
Jerry R. & Cheryl W. Lucas 11/5/97 8,500,000(1)
William R. Murray 11/5/97 200,000(1)
David E. Nelson 2/24/98 25,000(2)
Smith Consulting Services, Inc., 2/24/98 400,000(3)
a Utah corporation, ("SCS") 5/15/98 400,000(3)
Kim W. Boyce 2/25/98 100,000(4)
8/4/98 30,000(5)
Cooperative Holding Corp. 8/18/98 5,000(5)
Gale C Leetzow, Trustee, Gale C. 8/17/98 25,000(5)
Leetzow & Associates. Emp. Plan 8/17/98 5,000(5)
and Trust
Michael M. Rammell & Jane Rammell 8/12/98 25,000(5)
Revocable Family Trust
1) These shares were issued under the Plan with Lucas Nevada. See the
heading "Business Development," Part I, Item 1, of this Report.
2) David E. Nelson's shares were issued for services rendered as Chief
Financial Officer.
3) The principal stockholder of SCS is Karl S. Smith, a person who
owns in excess of 5% of the outstanding voting securities of the
Company, taking into account the common stock owned by SCS. These
shares were issued for $380,000 advanced to the Company.
See Part III, Item 11, of this Report.
4) These shares were issued for cash at $2.00 per share.
5) These shares were purchased for cash at $2.00 per share, but, are
unissued as of the date of this Report. Mr. Boyce converted a
convertible note in this amount on this date. These funds were
loaned on June 4, 1998.
Item 6. Management's Discussion and Analysis or Plan of Operation.
----------------------------------------------------------
Plan of Operation.
- ------------------
The Company plans in the next twelve months to gain a contractual
agreement with QVC to market selected products for a specific period of time,
and, to further promote the Company's products through other direct or
indirect marketing channels.
The Company plans to satisfy its cash requirements with certain
contingent contracts mentioned above; if these contracts are not consummated,
the Company will need $500,000 for operations for the next twelve months, and
these funds will need to be raised through debt or equity to finance its
continued operations.
Results of Operations.
- ----------------------
Revenues for the fiscal years ending March 31, 1997 and 1998,
were $0, and $0, respectively.
The Company had a net loss of ($63) from inception through the year ended
March 31, 1997; and a net loss of ($351,181) for the year ended March 31,
1998.
Liquidity.
- ----------
From inception through the year ended March 31, 1997, the Company and had
total expenses of $63, while receiving $0 in revenues; the Company received $0
in revenues, with total expenses of $351,181 during the fiscal year ended
March 31, 1998.
The Company had an increase in expenses during the year ended March 31,
1998, due to the costs associated with the reorganization with Lucas Nevada;
and general and administrative expenses increased as a result of intended
operations.
Item 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Financial Statements for the years ended
March 31, 1997 and 1998
Independent Auditor's Report
Consolidated Balance Sheets - March 31, 1998
Consolidated Statements of Operations from inception
on December 5, 1996 to March 31, 1998
and the Year ended March 31, 1998
Consolidated Statements of Stockholders' Equity (Deficit)
from inception on December 5, 1996 through March 31, 1998
Consolidated Statements of Cash Flows from inception
on December 5, 1996 through March 31, 1998
and the Year ended March 31, 1998
Notes to Consolidated Financial Statements
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
- ---------------------
None; not applicable.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
- --------------------------------------------------
Identification of Directors and Executive Officers
- --------------------------------------------------
The following table sets forth the names of all current directors and
executive officers of the Company. These persons will serve until the next
annual meeting of stockholders or until their successors are elected or
appointed and qualified, or their prior resignations or terminations.
<TABLE>
<CAPTION>
Date of Date of
Positions Election or Termination
Name Held Designation or Resignation
---- ---- ----------- --------------
<S> <C> <C> <C>
Jerry R. Lucas President 11/25/96 *
Director 11/25/96 *
Cheryl W. Lucas Secretary/ 11/25/96 3/5/98
Treasurer 11/25/96 *
Director 11/25/96 *
William R. Murray Vice President 11/25/96 *
David E. Nelson CFO 1/28/98 *
Secretary 3/6/98 *
</TABLE>
* These persons presently serves in the capacities indicated.
Business Experience.
- --------------------
Jerry R. Lucas. President and Director, age 57. Mr. Lucas was Phi
Beta Kappa graduate of Ohio State University; he has written extensively on
learning and memory training. Learning and memory training have been passions
of his since his childhood days. While still in the NBA, Mr. Lucas
co-authored The Memory Book, which was number two on the New York Times' "Best
Seller" list for 50 weeks. The book sold over three million copies. Mr.
Lucas has 30 years' experience in developing, promoting and selling learning
and memory training products. His promotional efforts have been greatly aided
by his expertise in another field-basketball. He was voted one of the top 50
basketball players of all time, having been a three-time college All-American
at Ohio State and a seven-time All-Pro with the New York Knicks. He is one of
only two players to average over 20 points and 20 rebounds per game during an
entire NBA season-a feat he accomplished twice.
William R. Murray. Vice President, age 56. Mr. Murray has over 30
years' experience, including significant management experience relating to
the Company's intended operations. Early in his career, he was responsible
for ordering and stock control for a major grocer. From 1986 to 1989, he was
in charge of product development and inventory/warehouse management for Edwin
Cole Ministries, an operation similar in distribution channels and
merchandising approach to that of the Company. In addition, Mr. Murray has
considerable experience in booking engagements for various individuals and
groups, which will be invaluable in providing Mr. Lucas with opportunities to
appear on talk-shows and the like.
Cheryl W. Lucas. Treasurer and Director, age 43. Ms. Lucas is
President and Director of Second Chance for Love Humane Society, and was Vice
President of Marketing of CCI Communications. She was also Vice President of
the Latin American Division of Parker International. She received a B.A.
Degree in Criminal Justice in 1976 from California State University.
David E. Nelson, CPA, Secretary and Chief Financial Officer. Mr.
Nelson, age 55, received a B.S. degree in accounting from the University of
Utah in 1966. He has over 20 years' experience in operations, finance and
regulatory compliance of stock brokerage firms. He is the past President of
Covey & Company, Inc. Mr. Nelson has been a member of the NASD Board of
Arbitrators, the American Institute of Certified Public Accountants and
the Utah Association of Certified Public Accountants.
Family Relationships
- --------------------
Jerry R. Lucas, the President and a director of the Company, and
Cheryl W. Lucas, the Treasurer and a director, are husband and wife, and
together are the controlling stockholders of the Company.
Involvement in Certain Legal Proceedings
- ----------------------------------------
Except as indicated below and to the knowledge of management, during
the past five years, no present or former director, person nominated to become
a director, executive officer, promoter or control person of the Company:
(1) Was a general partner or executive officer of any business by
or against which any bankruptcy petition was filed, whether at
the time of such filing or two years prior thereto;
(2) Was convicted in a criminal proceeding or named the subject of
a pending criminal proceeding (excluding traffic violations and
other minor offenses);
(3) Was the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining
him from or otherwise limiting his involvement in any type of
business, securities or banking activities:
(4) Was found by a court of competent jurisdiction in a civil
action or by the Commission or the
Commodity Futures Trading Commission to have violated any
federal or state securities or commodities law, and the
judgment has not been reversed, suspended, or
vacated.
Compliance with Section 16(a) of the Exchange Act
- -------------------------------------------------
To the knowledge of management, all reports required to be filed under
Section 16(a) of the Securities and Exchange Act of 1934, as amended, have
been filed by directors, executive officers, promoters and controlling persons
of the Company.
Item 10. Executive Compensation.
-----------------------
Cash Compensation
- -----------------
The following table sets forth the aggregate compensation paid by
the Company for services rendered during the periods indicated:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Secur-
ities All
Name and Year or Other Rest- Under- LTIP Other
Principal Period Salary Bonus Annual rictedlying Pay- Comp-
Position Ended ($) ($) Compen-Stock Optionsouts ensat'n
- -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jerry R.
Lucas, 3/31/96 0 0 0 0 0 0 0
President, 3/31/97 0 0 0 0 0 0 0
Director 3/31/98 8,000 0 0 0 0 0 0
Cheryl W.
Lucas, 3/31/96 0 0 0 0 0 0 0
Tres, 3/31/97 0 0 0 0 0 0 0
Director 3/31/98 0 0 0 0 0 0 0
William R.
Murray, 3/31/96 0 0 0 0 0 0 0
V Pres 3/31/97 0 0 0 0 0 0 0
3/31/98 6,000 0 0 0 0 0 0
David E.
Nelson, 3/31/96 0 0 0 0 0 0 0
Sec & CFO 3/31/97 0 0 0 0 0 0 0
3/31/98 1,000 0 0 0 0 0 0
</TABLE>
Bonuses and Deferred Compensation
- ---------------------------------
None.
Compensation Pursuant to Plans
- ------------------------------
None.
Pension Table
- -------------
None; not applicable.
Other Compensation
- ------------------
None.
Compensation of Directors
- -------------------------
None.
Employment Contracts
- --------------------
The Company has no written employment contracts, but has made the
following arrangements with members of management, to wit: Jerry R. Lucas is
paid a salary of $8,000 per month; William R. Murray is paid a salary of
$6,000 per month; and David E. Nelson is paid $1,000 per month.
Termination of Employment and Change of Control Arrangements
- ------------------------------------------------------------
Except as indicated under the heading "Employment Contracts," of this
Item, above, there are no employment contracts, compensatory plans or
arrangements, including payments to be received from the Company, with respect
to any director or executive officer of the Company which would in any way
result in payments to any such person because of his or her resignation,
retirement or other termination of employment with the Company or its
subsidiaries, any change in control of the Company, or a change in the
person's responsibilities following a change in control of the Company.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
---------------------------------------------------------------
The following table sets forth the shareholdings of those persons
who own more than five percent of the Company's common stock as of the date of
this Report:
Percentage Number
Name and Address of Class of Shares Beneficially Owned
Jerry R. Lucas 73% 8,500,000
Cheryl W. Lucas
P. O. Box 789
Templeton, CA 93465
Smith Consulting Services Inc. 7.3% 852,063
455 East 500 South, Suite #201
Salt Lake City, Utah 84111
80.3% 9,352,063
Each of these individuals or entities has sole investment and
voting power with regard to the securities listed opposite his or its name.
Security Ownership of Management.
---------------------------------
The following table sets forth the shareholdings of the Company's
directors and executive officers as of the date of this Report:
Percentage Number
Name and Address of Class of Shares Beneficially Owned
Jerry R. Lucas 73% 8,500,000
Cheryl W. Lucas
P. O. Box 789
Templeton, CA 93465
William R. Murray 1.7% 200,000
P. O. Box 146
Avilla Beach, CA 93424
David E. Nelson .2% 25,000
68 South Main #600
Salt Lake City, Utah 84101
All directors and executive
officers as a group (4) 74.9% 8,725,000
Each of these individuals has sole investment and voting power
with regard to the securities listed opposite his or her name. See Part III,
Item 9, of this Report, for information concerning the offices or other
capacities in which the foregoing persons serve with the Company.
Changes in Control
- ------------------
See the 8-K Current Report dated November 11, 1997, which is
incorporated herein by reference. See Part III, Item 13, "Exhibits and
Reports on Form 8-K."
Item 12. Certain Relationships and Related Transactions.
-----------------------------------------------
Transactions with Management and Others.
- ----------------------------------------
Except as indicated in the 8-K Current Report dated November 11,
1997, and except for the lease of the principal executive offices and
warehouse described in Item 2 of this Report from Cheryl W. Lucas, there have
been no material transactions, series of similar transactions
or currently proposed transactions, to which the Company or any of its
subsidiaries was or is to be a party, in which the amount involved exceeds
$60,000 and in which any director or executive officer, or any security holder
who is known to the Company to own of record or beneficially more than five
percent of the Company's common stock, or any member of the immediate family
of any of the foregoing persons, had a material interest.
Certain Business Relationships.
- -------------------------------
Except as indicated in the 8-K Current Report dated November 11,
1997, and except for the lease of the principal executive offices and
warehouse described in Item 2 of this Report from Cheryl W. Lucas, there have
been no material transactions, series of similar transactions
or currently proposed transactions, to which the Company or any of its
subsidiaries was or is to be a party, in which the amount involved exceeds
$60,000 and in which any director or executive officer, or any security holder
who is known to the Company to own of record or beneficially more than five
percent of the Company's common stock, or any member of the immediate family
of any of the foregoing persons, had a material interest.
Indebtedness of Management.
- ---------------------------
Except as indicated in the 8-K Current Report dated November 11,
1997, and except for the lease of the principal executive offices and
warehouse described in Item 2 of this Report from Cheryl W. Lucas, there have
been no material transactions, series of similar transactions
or currently proposed transactions, to which the Company or any of its
subsidiaries was or is to be a party, in which the amount involved exceeds
$60,000 and in which any director or executive officer, or any security holder
who is known to the Company to own of record or beneficially more than five
percent of the Company's common stock, or any member of the immediate family
of any of the foregoing persons, had a material interest.
Parents of the Issuer.
- ----------------------
Jerry R. Lucas, the President and a director of the Company and
Cheryl W. Lucas, Treasurer and a director, who are husband and wife,
by virtue of their ownership of in excess of 73% of the outstanding voting
securities of the Company, may be deemed to be parents of the Company.
For information regarding transactions between the Company and Mr. Lucas, see
the other headings of this Item; also see Part III, Item 11, of this Report,
respecting stock ownership.
Transactions with Promoters.
- ----------------------------
Except as indicated in the 8-K Current Report dated November 11,
1997, and except for the lease of the principal executive offices and
warehouse described in Item 2 of this Report from Cheryl W. Lucas, there have
been no material transactions, series of similar transactions, currently
proposed transactions, or series of similar transactions, to which the Company
or any of its subsidiaries was or is to be a party, in which the amount
involved exceeds $60,000 and in which any promoter or founder, or any member
of the immediate family of any of the foregoing persons, had a material
interest.
Item 13. Exhibits and Reports on Form 8-K.*
---------------------------------
Reports on Form 8-K**
8-K Current Report dated November 11, 1997, regarding the Plan with
Lucas Nevada and the following exhibits:
Agreement and Plan of Reorganization
Exhibit A - Lucas Stockholders
Exhibit B - Mirador Equity Partners, Ltd. Financial
Statements for the periods ended
March 31, 1997 and 1996
Exhibit B-1 - Mirador Equity Partners, Ltd. Unaudited
Financial Statements for the
period ended September 30, 1997
Exhibit C - Exceptions to Mirador Equity Partners, Ltd. Financial
Statements
Exhibit D - Lucas Educational Systems, Inc. Financial
Statements for the period from
inception (December 5, 1996) to
June 30, 1997 and three months ended September
30, 1997 (See Item 7 above)
Exhibit E - Exceptions to Lucas Educational Systems Financial
Statements
Exhibit F - Investment Letter
Exhibit G - Compliance Certificate of Mirador Equity Partners, Ltd.
Corporation
Exhibit H - Compliance Certificate of
Lucas Educational Systems, Inc.
Exhibit I - Consultant Shares
Certificate of Amendment to Certificate of
Incorporation reflecting name change to
"Lucas Educational Systems, Inc." and forward
split of shares
Licensing and Royalty Agreement
Exhibits*
(i)
Where Incorporated
in this Report
--------------
8-K Current Report dated Part I, Item 1
November 11, 1998** Part III, Item 11
Part III, Item 12
(ii)
Exhibit
Number Description
- ------ -----------
21 Subsidiaries of the Company
27 Financial Data Schedule
* Summaries of all exhibits contained within this
Report are modified in their entirety by reference
to these Exhibits.
** These documents and related exhibits have been
previously filed with the Securities and Exchange
Commission and are incorporated herein by reference.
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.
LUCAS EDUCATIONAL SYSTEMS, INC.
Dated: 8/25/98 By: /ss/ Jerry R. Lucas
Jerry R. Lucas
President and Director
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities on the dates indicated:
Dated: 8/25/98 By: /ss/ Jerry R. Lucas
Jerry R. Lucas
President and Director
Dated: 8/25/98 By: /ss/ Cheryl W. Lucas
Cheryl W. Lucas
Treasurer and Director
Dated: 8/25/98 By: /ss/ William R. Murray
William R. Murray
Vice President
Dated: 8/24/98 By: /ss/ David E. Nelson
David E. Nelson
Secretary and CFO
<PAGE>
LUCAS EDUCATIONAL SYSTEMS, INC.
(Formerly Mirador Equity Partners, Ltd.)
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1998 and 1997
<PAGE>
INDEPENDENT AUDITORS REPORT
To the Board of Directors
Lucas Educational Systems, Inc.
(Formerly Mirador Equity Partners, Ltd.)
(A Development Stage Company)
Templeton, California
We have audited the accompanying consolidated balance sheet of Lucas
Educational Systems, Inc. (formerly Mirador Equity Partners, Ltd.) (a
development stage company) as of March 31, 1998 and the related consolidated
statements of operations, stockholders equity and cash flows for the year
ended March 31, 1998 and from inception on December 5, 1996 through March 31,
1997 and 1998. These consolidated financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.
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 consolidated financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall consolidated financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Lucas Educational Systems, Inc. (formerly Mirador Equity Partners, Ltd.) (a
development stage company) as of March 31, 1998 and the results of their
operations and their cash flows for the year ended March 31, 1998 and from
inception on December 5, 1996 through March 31, 1997 and 1998 in conformity
with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note 3 to the
consolidated financial statements, the Company is a development stage company
with no significant operating revenues to date which raises substantial doubt
about its ability to continue as a going concern. Management s plans in
regard to these matters are also described in Note 3. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/S/Jones, Jensen & Company
Jones, Jensen & Company
Salt Lake City, Utah
August 4, 1998
<TABLE>
LUCAS EDUCATIONAL SYSTEMS, INC.
(Formerly Mirador Equity Partners, Ltd.)
(A Development Stage Company)
Consolidated Balance Sheet
<CAPTION>
ASSETS
March 31,
1998
<S> <C>
CURRENT ASSETS
Cash $ 37,191
Inventory 5,610
Total Current Assets 42,801
FIXED ASSETS
Leasehold improvements 11,070
Vehicles 37,382
Furniture and fixtures 1,931
Computer equipment 17,009
Master videos 13,577
Accumulated depreciation (5,750)
Total Fixed Assets 75,219
OTHER ASSETS
Deposits 3,000
Total Other Assets 3,000
TOTAL ASSETS $ 121,020
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Accounts payable $ 46,036
Payroll taxes payable 6,460
Payroll payable 3,403
Total Liabilities 55,899
COMMITMENTS AND CONTINGENCIES (Notes 5, 7)
STOCKHOLDERS EQUITY
Common stock authorized 20,000,000
shares at $0.001 par value; 11,243,619 and
8,700,000 shares issued and outstanding, respectively 11,244
Additional paid-in capital (deficit) 405,146
Stock subscription receivable (25)
Deficit accumulated during the development stage (351,244)
Total Stockholders Equity 65,121
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 121,020
</TABLE>
<TABLE>
LUCAS EDUCATIONAL SYSTEMS, INC.
(Formerly Mirador Equity Partners, Ltd.)
(A Development Stage Company)
Consolidated Statements of Operations
<CAPTION>
For the
Year From Inception on
Ended December 5, 1996 Through
March 31, March 31,
1998 1997 1998
<S> <C> <C> <C>
REVENUES $ - $ - $ -
OPERATING EXPENSES
General and administrative 345,431 63 345,494
Amortization and depreciation 5,750 - 5,750
Total Operating Expenses 351,181 63 351,244
NET LOSS $ (351,181) $ (63) $ (351,244)
NET LOSS PER SHARE $ (0.04) $ (0.00)
</TABLE>
<TABLE>
LUCAS EDUCATIONAL SYSTEMS, INC.
(Formerly Mirador Equity Partners, Ltd.)
(A Development Stage Company)
Statements of Stockholders Equity
From Inception on December 5, 1996 through March 31, 1998
<CAPTION>
Deficit
Additional Accumulated
Paid-In Stock During the
Common Capital Subscription Development
Shares Stock (Deficit) Receivable Stage
<S> <C> <C> <C> <C> <C>
Inception at December 5, 1996 - $ - $ - $ - $ -
Issuance of common stock at
$0.00125 per share 8,700,000 8,700 (8,600) - -
Net loss from inception on
December 6, 1996 through
March 31, 1997 - - - - (63)
Balance, March 31, 1997 8,700,000 8,700 (8,600) - (63)
Common stock issued in
recapitalization 1,849,869 1,850 (1,810) - -
Common stock issued for
cash and services of
$0.60 per share 192,000 192 114,808 (25) -
Common stock issued for debt
at $0.60 per share 333,000 333 199,667 - -
Common stock issued for
services at $0.60 per share 168,750 169 101,081 - -
Net loss for the year
ended March 31, 1998 - - - - (351,181)
Balance, March 31, 1998 11,243,619 $11,244$405,146 $(25) $ (351,244)
</TABLE>
<TABLE>
LUCAS EDUCATIONAL SYSTEMS, INC.
(Formerly Mirador Equity Partners, Ltd.)
(A Development Stage Company)
Statements of Cash Flows
<CAPTION>
For the
Year From Inception on
Ended December 5, 1996 Through
March 31, March 31,
1998 1997 1998
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss $ (351,181) $ (63) $ (351,244)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Amortization and depreciation 5,750 - 5,750
Common stock issued for services 116,225 - 116,225
Common stock issued for debt 200,000 - 200,000
Changes in operating assets and
liabilities:
Increase in inventory (5,610) - (5,610)
Increase in accounts payable 46,036 - 46,036
Increase in payroll and taxes
payable 9,863 - 9,863
Net Cash Provided (Used) by
Operating Activities 21,083 (63) 21,020
CASH FLOWS FROM INVESTING
ACTIVITIES:
Increase in deposits (3,000) - (3,000)
Increase in fixed assets (80,969) - (80,969)
Net Cash (Used) by Investing
Activities (83,969) - (83,969)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Sale of common stock 100,040 100 100,140
Net Cash Provided by Financing
Activities $ 100,040 $ 100 $ 100,140
NET INCREASE (DECREASE)
IN CASH $ 37,154 $ 37 $ 37,191
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 37 - -
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 37,191 $ 37 $ 37,191
SUPPLEMENTAL DISCLOSURE
OF CASH FLOW INFORMATION
Interest paid $ - $ - $ -
Income taxes paid $ - $ - $ -
</TABLE>
LUCAS EDUCATIONAL SYSTEMS, INC.
(Formerly Mirador Equity Partners, Ltd.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 1998 and 1997
NOTE 1 - The financial statements presented are those of Lucas Educational
Systems, Inc. (the Company). The Company was incorporated in the State of
Delaware on June 11, 1992 to carry of any lawful activity under the laws of
Delaware. On November 30, 1997, Mirador Equity Partners, Ltd. changed its
name to Lucas Educational Systems, Inc. in conjunction with the merger with
Lucas Educational Systems, Inc. Prior to the acquisition of Lucas Educational
Systems, Inc., the Company had been seeking to merge with an existing,
operating company.
Lucas Educational Systems, Inc. (premerger) (LEDS) was incorporated in the
State of Nevada on December 5, 1996. The Company distributes memory aides for
bible, English grammar and Spanish.
On November 5, 1997, the Company and LEDS completed an Agreement and Plan of
Reorganization whereby the Company issued 8,700,000 shares of its common stock
in exchange for all of the outstanding common stock of LEDS. Immediately
prior to the Agreement and Plan of Reorganization, the Company had 1,849,869
post-split shares of common stock issued and outstanding.
The acquisition was accounted for as a recapitalization of LEDS because the
shareholders of LEDS controlled the Company after the acquisition. Therefore,
LEDS is treated as the acquiring entity. There was no adjustment to the
carrying value of the assets or liabilities of LEDS in the exchange. The
Company is the acquiring entity for legal purposes and LEDS is the surviving
entity for accounting purposes. On November 5, 1997, the shareholders of the
Company authorized a forward stock split of 1-for-4.357 shares of common
stock. All references to shares of common stock have been retroactively
restated to reflect the forward stock split.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected a March 31 year end.
b. Loss Per Share
The computation of loss per share of common stock is based on the weighted
average number of shares outstanding during the period of the financial
statements.
c. Cash Equivalents
The Company considers all highly liquid investments with a maturity of three
months or less to be cash equivalents
d. Inventory
Inventories consist of books held for resale and are stated at a lower of cost
or market. The cost of the inventory includes the purchase price and direct
costs such as freight-in
e. Advertising Expense
The Company expenses advertising costs as incurred.
f. Principles of Consolidation
The consolidated financial statements include those of the Company and LEDS.
All significant intercompany accounts and transactions have been eliminated.
g. Provision for Taxes
At March 31, 1998, the Company has net operating loss carryforwards of
approximately $239,000 that may be offset against future taxable income
through 2013. The tax benefit of the loss carryovers has been offset in full
by a valuation allowance.
h. Use of Estimates
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.
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. The Company has not established revenues sufficient to cover its
operating costs and allow it to continue as a going concern. The Company is
developing a marketing program for its educational products. In the interim,
management has committed to covering all operating and other costs.
NOTE 4 - COMMITMENTS AND CONTINGENCIES
Operating Lease
The Company leases its office and warehouse space. Future minimum lease
payments required under the operating agreement are as follows:
Year Ended Operating
March 31, Lease
1999 $ 36,000
2000 36,000
2001 33,000
Total minimum lease payments $ 105,000
The three year lease agreement is with a Company owned and operated by the
wife of a major stockholder.
NOTE 5 - ACCOUNTS PAYABLE - RELATED PARTY
Accounts payable to a related party, unsecured, bearing no interest, due upon
demand. Balances at March 31, 1998 and 1997 were $1,368 and $-0-,
respectively.
NOTE 6 - LICENSING AND ROYALTY AGREEMENT
On August 13, 1997, the Company entered into an agreement with Jerry and
Cheryl Lucas for rights to use the copyright, trademark, patents and name of
the Company. Revenues produced from these activities will be 8% of the gross
receipts. Jerry and Cheryl Lucas also have rights to purchase inventory of
the Company at cost plus 10%. The term of the Agreement is 100 years.
NOTE 7 - SUBSEQUENT EVENTS
Common Stock Issued
On May 15, 1998, the Company authorized the issuance of 400,000 shares of
common stock to a consultant for relief of debt of approximately $300,000.
Approximately $36,000 was owed to the consultant at March 31, 1998 and the
balance was incurred through May 15, 1998.
EXHIBIT 21
SUBSIDIARIES OF THE COMPANY
Lucas Educational Systems, a Nevada corporation
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 37191
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 5610
<CURRENT-ASSETS> 42801
<PP&E> 80969
<DEPRECIATION> 5750
<TOTAL-ASSETS> 121020
<CURRENT-LIABILITIES> 55899
<BONDS> 0
0
0
<COMMON> 11244
<OTHER-SE> 53877
<TOTAL-LIABILITY-AND-EQUITY> 121020
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<OTHER-EXPENSES> 351181
<LOSS-PROVISION> 0
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<INCOME-PRETAX> (351181)
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<CHANGES> 0
<NET-INCOME> (351181)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
