Item 1. Business
Corporate Background Information
WEBCOR ELECTRONICS, INC. (the"Registrant") was incorporated on December 3, 1971 under the laws of the State of Delaware. The Company's business consisted of manufactuing and selling cordless telephones, telephone accessories, electronic scales and calculators. On April 8, 1982, the Company registered its stock under Section 12(g) of the Securities Exchange Act of 1934 (the "Exchange Act").The Registrant conducted an initial public offering of its Common Stock in May, 1982 pursuant to a Form S-1 registration Statement under the Securities Act of 1933 (the "Securities Act").
After pursuing its business for several years, the Registrant filed a voluntary petition under Chapter 11 of the Bankruptcy Act on February 1, 1989. This proceeding was filed in with the U.S. Bankruptcy Court for the Eastern District of New York (Brooklyn) and designated as Case # 89-10328. On October 16, 1990, the Company's Chapter 11 case was voluntarily converted to a case in Chapter 7 which resulted in the orderly liquidation of all corporate assets and the use of the proceeds to repay the Company's creditors. On November 13, 1996 the Company's case under Chapter 7 was closed by an order of the Court and the trustee was discharged. As a result of the Bankruptcy, the Company has no assets, liabilities, management or ongoing operations and has not engaged in any business activities since February, 1990. The Registrant has been totally inactive since November 13, 1996.
During the pendancy of the Bankruptcy, the management of the Registrant neglected to file franchise tax returns with and pay the required franchise taxes to the State of Delaware. As a result, the Company's corporate charter was revoked by order of the Secretary of State of the State of Delaware on March 1, 1991. Similarly, the management of the Registrant neglected to file with the SEC either (a) the regular reports that are required of all companies that have securities registered under the Exchange Act, or (b) a certification on Form 15 terminating its registration under the Exchange Act. As a result, the Company remained a Registrant under the Exchange Act but was seriously delinquent in its SEC reporting obligations. According to the National Quotation Bureau, the last published quotation for the Company's Common Stock was posted by CARR SECURITIES CORP., one of the Company's market makers, on October 15, 1996. At that time, the published quote was $0.00 bid and $0.10 asked. There have been no published quotations for the Company's Common Stock since October 15, 1996.
Acting in its capacity as a Stockholder of the Company, and without first receiving any consent, approval or authorization of any other Stockholder or former officer or director of the Company, Capston effected a renewal, revival and restoration of the Company's certificate of incorporation pursuant to Section 312 of the General Corporation Law of the State of Delaware. In general, Section 312 provides that any corporation may "procure an extension, restoration, renewal or revival of its certificate of incorporation, together with all the rights, franchises, privileges and immunities and subject to all of its duties, debts and liabilities which had been secured or imposed by its original certificate of incorporation" upon compliance with certain procedural requirements.
After reviewing the applicable files, Capston determined that the only debt of the Company that was "secured or imposed by its original certificate" was the obligation of the Registrant to pay its Delaware taxes. Therefore, Capston paid all past due franchise taxes on behalf of the Company and then filed a Certificate of Renewal, Revival, Extension and Restoration of the Company's Certificate of Incorporation on behalf of the Company under the authority granted by Section 312(h). This Certificate was filed in the office of the Secretary of State of the State of Delaware on December 26, 1996 and at the date of this Proxy Statement the Company is lawfully incorporated, validly existing and in good standing under the laws of the State of Delaware.
Proposed Operations
While the Registrant has no assets, liabilities, management or ongoing operations and has not engaged in any business activities since February 1990, Capston believes that it may be possible to recover some value for the Stockholders through the adoption and implementation of a Plan whereby the Registrant will be restructured as a "clean public shell" for the purpose of effecting a business combination transaction with a suitable privately-held company that has both business history and operating assets.
Capston believes the Registrant will offer owners of a suitable privately-held company the opportunity to acquire a controlling ownership interest in a public company at substantially less cost than would otherwise be required to conduct an initial public offering. Nevertheless, Capston is not aware of any empirical statistical data that would independently confirm or quantify Capston's beliefs concerning the perceived value of a merger or acquisition transaction for the owners of a suitable privately-held company. The owners of any existing business selected for a business combination with the Registrant will incur significant costs and expenses, including the costs of preparing the required business combination agreements and related documents, the costs of preparing a Current Report on Form 8-K describing the business combination transaction and the costs of preparing the documentation associated with any future reporting under the Exchange Act and registrations under the Securities Act.
If the Plan is approved by the Stockholders, the Registrant will be fully reactivated and then used as a corporate vehicle to seek, investigate and, if the results of such investigation warrant, effect a business combination with a suitable privately-held company or other business opportunity presented to it by persons or firms that seek the perceived advantages of a publicly held corporation. The business operations proposed in the Plan are sometimes referred to as a "blind pool" because Stockholders will not ordinarily have an opportunity to analyze the various business opportunities presented to the Registrant, or to approve or disapprove the terms of any business combination transaction that may be negotiated by Capston on behalf of the Registrant. Consequently, the Registrant's potential success will be heavily dependent on the efforts and abilities of Capston and its officers, directors and consultants, who will have virtually unlimited discretion in searching for, negotiating and entering into a business combination transaction. Capston and its officers, directors and consultants have had limited experience in the proposed business of the Registrant. Although Capston believes that the Registrant will be able to enter into a business combination transaction within 12 months after the approval of the Plan by the Stockholders, there can be no assurance as to how much time will elapse before a business combination is effected, if ever. The Registrant will not restrict its search to any specific business, industry or geographical location, and the Registrant may participate in a business venture of virtually any kind or nature.
Capston and its officers, directors and consultants anticipate that the selection of a business opportunity for the Registrant will be complex and extremely risky. Because of general economic conditions, rapid technological advances being made in some industries, and shortages of available capital, Capston believes that there are numerous privately- held companies seeking the perceived benefits of a publicly traded corporation. Such perceived benefits may include facilitating debt financing or improving the terms on which additional equity or may be sought, providing liquidity for the principals of the business, creating a means for providing incentive stock options or similar benefits to key employees, providing liquidity for all stockholders and other factors.
Potential 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. Capston anticipates that the Registrant will be able to participate in only one business venture. This lack of diversification should be considered a substantial risk inherent in the Plan because it will not permit the Registrant to offset potential losses from one venture against gains from another. Moreover, due to the Registrant's lack of any meaningful financial, managerial or other resources, Capston believes the Registrant will not be viewed as a suitable business combination partner for either developing companies or established business that are in need of substantial additional capital.
Acquisition of Opportunities
In implementing a particular business combination transaction, the Registrant may become a party to a merger, consolidation, reorganization, joint venture, franchise or licensing agreement with another corporation or entity. It may also purchase stock or assets of an existing business. After the consummation of a business combination transaction, it is likely that the present Stockholders of the Registrant will only own a small minority interest in the combined companies. In addition, as part of the terms of the acquisition transaction, all of the Registrant's officers and directors will ordinarily resign and be replaced by new officers and directors without a vote of the Stockholders. Capston does not intend to obtain the approval of the Stockholders prior to consummating any acquisition other than a statutory merger that requires a Stockholder vote. Capston and its officers, directors and consultants do not intend to sell any shares held by them in connection with a business acquisition.
It is anticipated that any securities issued in a business combination transaction will be issued in reliance on exemptions from registration under applicable Federal and state securities laws. In some circumstances, however, as a negotiated element of a business combination, the Registrant may agree to register such securities either at the time the transaction is consummated or at some specified time thereafter. The issuance of substantial additional securities and their potential sale into any trading market that may develop may have a depressive effect on such market. While the actual terms of a transaction to which the Registrant may be a party cannot be predicted, it may be expected that the parties to the business transaction will find it desirable to avoid the creation of a taxable event and thereby structure the acquisition in a so called "tax free" reorganization under Sections 368(a)(1) or 351 of the Internal Revenue Code of 1986, as amended (the "Code") In order to obtain tax free treatment under the Code, it may be necessary for the owners of the acquired business to own 80% or more of the voting stock of the surviving entity. In such event, the stockholders of the Registrant would retain less than 20% of the issued and outstanding shares of the combined companies, which could result in significant dilution in the equity of such stockholders. The Registrant intends to structure any business combination in such manner as to minimize Federal and state tax consequences to the Registrant and any target company.
As part of the Registrant's investigation of potential business opportunities, Capston and its officers, directors and consultants will ordinarily meet personally with management and key personnel, may visit and inspect material facilities, obtain independent analysis or verification of certain information provided, check reference of management and key personnel, and take other reasonable investigative measures, to the extent of the Registrant's limited resources and Capston's limited expertise. The manner in which the Registrant participates in an opportunity will depend on the nature of the opportunity, the respective needs and desires of the Registrant and other parties and the relative negotiating strength of the Registrant and such other management.
With respect to any business combination negotiations, Capston will ordinarily focus on the percentage of the Registrant which target company stockholders would acquire in exchange for their ownership interest in the target company. Depending upon, among other things, the target company's assets and liabilities, the Registrant's stockholders will in all likelihood only own a small minority interest in the combined companies upon completion of the business combination transaction. Any business combination effected by the Registrant can be expected to have a significant dilutive effect on the percentage of shares held by the Registrant's current Stockholders.
Upon completion of a business combination transaction, there can be no assurance that the combined companies will have sufficient funds to undertake any significant development, marketing and manufacturing activities. Accordingly, the combined companies may be required to either seek additional debt or equity financing or obtain funding from third parties, in exchange for which the combined companies might be required to issue a substantial equity position. There is no assurance that the combined companies will be able to obtain additional financing on terms acceptable to the combined companies.
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 substantial costs for accountants, attorneys and others. If a decision is made not to participate in a specific business opportunity the costs incurred in the related investigation would not be recoverable. Furthermore, even if an agreement is reached for the participation in a specific business opportunity, the failure to consummate that transaction may result in the loss of the Registrant of the related costs incurred.
Item 2.
Item 2. Properties
None.
Item 3.
Item 3. Legal Proceedings
None.
Item 4.
Item 4. Submission of matters to a vote of Security Holders
In February of 1997, the Registrant sent to its stockholders a Notice of Special Meeting and Proxy Statement which described a number of proposals relating to a plan of reorganization proposed by Capston Network Company (OCapstonO), a stockholder of the Company. Subsequently, on March 10, 1997, a Special meeting of the Stockholders was held and all of the proposals were approved by a majority vote of the Stockholders. The principal proposals approved by the stockholders were:
1. A proposal to ratify the actions of Capston in (i) effecting a renewal, revival and restoration of the Company's Certificate of Incorporation; (ii) adopting amended by-laws to govern the business affairs of the Company, and (iii) filing the reports and other documents necessary to bring the Company current with respect to its reporting obligations under the Securities Exchange Act of 1934;
2. A proposal to elect a person designated by Capston to serve as the sole member of the Board of Directors until the 1998 annual Meeting of Stockholders, or until her successor is elected and qualified;
3. A proposal to consider and vote upon proposed an Amendment to the Company's Certificate of Incorporation that will effect a reverse split of all issued and outstanding shares of Common Stock in the ratio of one (1) share of new Common Stock for each 11.5879 shares presently outstanding so that immediately thereafter the Company will have a total of 300,000 shares issued and outstanding;
4. A proposal to consider and vote upon a proposal to issue 200,000 shares of Common Stock to persons designated by Capston as compensation for services rendered in connection with the implementation of the Plan;
5. A proposal to consider and vote upon a proposal which will give the Board of Directors authority to pay an in- kind Finder's Fee to unrelated third party finders who introduce the Company to a suitable acquisition prospect.
6. Consider and vote upon a proposal that will give the Board of Directors discretionary authority to (i) change the Company's name and (ii) issue up to 4,500,000 shares of Common Stock to unrelated third parties, all without prior stockholder approval, in connection with a business combination transaction of the type contemplated by the Plan; and
7. A proposal to consider and vote upon a proposed Amendment to the Company's Certificate of Incorporation that will increase the authorized capital stock of the Company to 25,000,000 shares of $0.01 par value Common Stock and 5,000,000 shares of $0.01 par value Preferred Stock. Detailed disclosure respecting each of the amendments is set forth in the RegistrantOs Proxy Statement dated January 29, 1997 which is incorporated herein by this reference. PART II
Item 5.
Item 5. Market for Registrant's Common Equity
There has been no consistent active trading in the Registrant's security for over five years. It does not currently have a market maker. It does have a new symbol which is WBET. According to the transfer agent, American Stock Transfer & Trust Company, there are 831 beneficial owners as of January 31, 1997.
Item 6.
Item 6. Selected Financial Data.
Operating Revenues 1993 1994 1995 1996 1997 Income (Loss) from Continuing Operation 0 0 0 0 17,815 Income (Loss) from Continuing Operations Per Share 0 0 0 0 0.004%
Total Assets 0 0 0 0 0 Long Term Obligations 0 0 0 0 0 Cash Dividends Declared 0 0 0 0 0 Per Common Share
Note 1. The Company was completely inactive during the period commencing upon the filing of its petition under the filing of its petition under Ch. 11 of the Bankruptcy Code in 1989 and the restoration of its charter in 1996. Accordingly there were no revenues, expenses, assets, or liabilities during the fiscal years 1989 through 1996. The reported loss from operations in fiscal 1997 resulted solely from expenses incurred by Capston on behalf of the Company in connection with the restoration of the Company's corporate charter and the preparation and filing of certain reports required under the Securities Exchange Act of 1934. The off-setting credit was paid-capital, leaving the liabilities and the assets of the Company at $0 as of March 31, 1997.
Item 7.
Item 7. Management Discussion and Analysis of Financial Condition and Results of Operations.
This 10-K is for the purpose of providing financial information in regard to the years that WEBCOR was in bankruptcy. To that end, the attached financial statements include an audited statement for November 13, 1996 when the Registrant's petition was declared closed and the trustee was discharged.
Management has attempted to reconstruct financial statements for the years in which WEBCOR was in bankruptcy. This was not possible due to the fact as a matter of routine the Trustee abandons all Records of the Debtor's Estate. Therefore, records necessary for reconstructing responsible financial statements for the years in bankruptcy were not available, but an audit as of the close of bankruptcy on 11/13/96 was completed and filed with the commission.
The Company had no operations on which to report during bankruptcy or since that time. It is the intention of the acting management to seek stockholder approval through a future proxy to seek out and acquire a private company which can cause the Company to once again become a viable operating public company.
Item 8.
Item 8. Financial Statements and Supplementary Data.
For the information called for by this Item, see the Financial Statements attached. Webcor Electronics, Inc. will be entering the Small Business Issuer System with its first quarterly filing of its 97-98 fiscal year.
Item 9.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
The Registrant's financial statements for the years ended March 31, 1988 were audited by the firm of Mann Judd Landau, Certified Public Accountants. As a result of the bankruptcy, as discussed elsewhere herein, the Registrant did not prepare audited financial statements from 1989 - 1996. In connection with the revival and restoration of the Company's certificate of incorporation, the firm of Want & Ender, Certified Public Accountants was retained to audit the Registrant's balance sheet for the year ended 1996, and to serve as the Registrant's auditor in the future. During the fiscal years ended 1989, and the subsequent interim period preceding the appointment of Mann Judd Landau, CPA, there were no reportable disagreements between the Registrant and the firm of Mann Judd Landau, Certified Public Accountants, on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. Want & Ender audited the Registrant's financial statements for the year ended March 31, 1997.
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant
Ms. Sally Fonner, age 48, the president and sole stockholder of Capston, has assumed the duties of President, Secretary, Treasurer and Sole Director of the Registrant pending a Special Meeting of the Stockholders that is presently scheduled for January 31, 1997. At that Meeting, Ms. Fonner intends to seek re-election for a term of office that is anticipated be no more than two years or until permanent management can be located, whichever should occur first in time. Ms. Fonner's sole purpose is to seek out qualified new operations and management.
Item 11.
Item 11. Executive Compensation.
No officer or director of the Registrant has received any compensation for services performed during the past three years and no future compensation agreement between Ms. Fonner and the Registrant is contemplated. Notwithstanding the foregoing, the Registrant's proposed Proxy Statement will provide for significant stock compensation to certain individuals selected by Capston.
Item 12.
Item 12. 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:
Title of Class Name / Address Amount of Percent of Beneficial Owner Beneficial Owner
Common Victor Reichenstein 985,507 27.00% 79 Express Street Plainview, NY
Capston Network Company 5,000 0.0014% 1612 N. Osceola Avenue Clearwater, Fl
The above information, with the exception of Capston Network Company, is taken from the last filed 10-Q dated January 31, 1989. The transfer agent nor Capston has no information which would indicate this information is still not the best available. Capston believes that of these individuals has sole investment and voting power with regard to the securities listed opposite his name.
Item 13.
Item 13. Certain Relationships and Related Transactions
No officer, director or family member of an officer or director is indebted to the Registrant.
Item 14.
Item 14. Exhibits, Financial Statement Schedules and Reports.
Financial statements filed with this report:
Independent Auditor's report for financial statements Consolidated Balance Sheet as of March 31, 1997 and Consolidated Statements of Operations for the years ending March 31, 1997, 1996, 1995 Consolidated Statement of Changes in Shareholder's Equity/(Deficit) for the years ending March 31, 1997, 1996, and 1995 Consolidated Statements of Cash Flows for the years ended March 31, 1997, 1996, 1995
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
WEBCOR Date: 6/20/97 By______/S/______________ Sally Fonner, Director President and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934 this report has been signed belowy by the following person on behalf of the Registrant and in the capacities and on the date indicated.
Date : 6/20/97 By___________/S/__________ Sally Fonner, Director President and Chief Financial Officer
WANT & ENDER, CPA, P.C. CERTIFIED PUBLIC ACCOUNTANTS East 28th Street, 6th Floor New York, NY 10016 MARTIN ENDER. CPA Telephone (212)684-2414 STANLEY Z. WANT, CPA, CFP Fax (212) 684-5433
Independent Auditor's Report
To the Shareholders and Board of Directors WEBCOR ELECTRONICS INC.
We have audited the accompanying balance sheet of WEBCOR ELECTRONICS, INC. (A Dormant State Company) at March 31, 1997 and 1996 and the related consolidated statements of operations, changes in shareholders equity/(deficit), and cash flows for each of the three years for the period ended March 31, 1997, 1996, 1995. 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 have conducted our audit in accordance with generally accepted auditing standards. These 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 also 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 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 WEBCOR ELECTRONICS, INC. (A Dormant State Company) at March 31, 1997 and 1996 and the consolidated results of its operations and its cash flows for each of the three years for the period ended March 1997, 1996, 1995 in conformity with generally accepted accounting principles.
Martin Ender Want & Ender CPA, P.C. Certified Public Accountants
New York, NY June 20, 1997
WEBCOR CORPORATION (A Dormant State Company)
Consolidated Balance Sheet March 31, 1997 and 1996
1997 1996 Assets
Organization Cost
Total Assets 0.00 0.00
Liabilities and Shareholder's Equity
Stockholders' Equity
Common Stock par value at $.01 per share; 20,000,000 shares authorized of common stock; 3,476,370.00 shares issued and outstanding 0 0 Additional Paid in Capital 17,815 0 Retained Earnings (Deficit) (17,815) 0 ______ _____
Total Shareholders' Equity 0 0 ______ _____
Total Liabilities and Shareholders Equity $ 0 $ 0 ========= ========
*Close of Chapter 7 was 11/13/96, but the Company had ceased all operations in 1990 with the US Bankruptcy Trustee taking on responsibility for the orderly liquidation of corporate assets and the use of the proceeds to repay the Company's creditors.
See accompanying notes to financial statements
WEBCOR CORPORATION (a Dormant State Company) Consolidated Statements of Operations for the years ending March 31, 1997 , 1996 and 1995
1997 1996 1995* Current year 03-31-9603-31-95 ____________ ________________
Revenues $ 0 $ 0 $ 0
Expenses Administrative Expenses $17,365 $ 0 $ 0 Filing Fees $ 450. 0 $ 0
Net Income/Loss for the year $(17,815) $ 0 $ 0 ========= ======== ======
*Close of Chapter 7 was 11/13/96, but the Company had ceased all operations in 1990 with the US Bankruptcy Trustee taking on responsibility for the orderly liquidation of corporate assets and the use of the proceeds to repay the Company's creditors.
WEBCOR ELECTRONICS, INC. (a Dormant State Company) Consolidated Statement of Changes in Shareholder's Equity/(Deficit) for the years ended March 31, 1995, 1996 and 1997
1997 1996 1995 03-31 03-31 03-31
Common Stock (3,957,384 shares issued & outstanding) $ 0 $ 0 $ 0 Additional Paid in Capital 17,815 0 0
Balance April 1 0 0 0
Net Income/(loss) for the year $ (17,815) 0 0
Balance March 31 $ 0 $ 0 $ 0
*Close of Chapter 7 was 11/13/96, but the Company had ceased all operations in 1990 with the US Bankruptcy Trustee taking on responsibility for the orderly liquidation of corporate assets and the use of the proceeds to repay the Company's creditors.
See accompanying notes to financial statements
WEBCOR ELECTRONICS, INC. (A Dormant State Company)
Consolidated Statements of Cash Flows for the years ending March 31, 1997 , 1996 and 1995
Current Year 1996 1995 03-31-97 03-31-96 03-31-95
Cash Flows from Operating Activities Net Income $ (17,815) $ 0 $ 0
Net Cash Provided (used) / By Operating Activities 0 0 0
Expenses Paid by Capston 17,815 0 0
Net Increase (Decrease) in Cash 0 0 0 Cash at Beginning of Period 0 0 0
Cash at End of Period $ 0 0 0 ======== = =
*Close of Chapter 7 was 11/13/96, but the Company had ceased all operations in 1990 with the US Bankruptcy Trustee taking on responsibility for the orderly liquidation of corporate assets and the use of the proceeds to repay the Company's creditors.
See accompanying notes to financial statements
WEBCOR ELECTRONICS, INC. (A Dormant State Company)
March 31, 1997
Note 1. HISTORY OF THE COMPANY
WEBCOR ELECTRONICS, INC., (A Dormant State Company), was incorporated on December 03, 1971, under the laws of the State of Delaware. The Company conducted an initial public offering of its Common Stock in August 1982 and in connection with an application to list its Common Stock on the AMEX system, the Company also registered its Common Stock pursuant to Section 12(g) of the Securities Exchange Act of 1934. The Company's Common Stock remained listed on the AMEX system until April 09, 1987.
On February 01, 1989, the Company filed a voluntary petition under Chapter 11 of the Bankruptcy ACT (Case No. 89-10328) in the U.S. Bankruptcy Court for the Eastern District of New York on October 1,1990, the Company's case under Chapter 11 was voluntarily converted into a case under Chapter 7 of the Bankruptcy Act. As a result of the voluntary conversion of the Company's bankruptcy case, all assets of the Company were transferred to the Trustee in Bankruptcy on the conversion date and the Company ceased all operations. Subsequently, the Trustee in Bankruptcy effected an orderly liquidation of corporate assets and used the proceeds to repay the Company's creditors. On November 13,1996 the Company's case under Chapter 7 was closed by an order of the Court and the Trustee in Bankruptcy was discharged. As a result of the Bankruptcy, the Company has no assets, liabilities, management or ongoing operations and has not engaged in any business activities since October, 1990.
Note 2. RESTORATION OF CORPORATE STATUS
On December 26, 1996, acting in its capacity as the holder of 5,000 shares (0.0014%) of the Company's common stock, and without first receiving the consent, approval or authorization of any other person associated with the Company, Capston Network Company effected a renewal, revival and restoration of the Company's certificate of incorporation pursurant to Section 312 of the General Corporation Law of Delaware. Thereafter, Capston filed a 10- K for the years ending March 31, 1989-1996, and a Proxy Statement seeking approval and ratification of its actions, along with authorization to seek a suitable business combination transaction. This proxy statement was ultimately distributed to the Company's stockholders and the proposals therein were approved by the holders of a majority of the Company's issued and outstanding shares.
Under the terms of the original Proxy Statement, Capston was authorized to seek a suitable business combination transaction on behalf of the Company and to submit the terms of any proposed business combination transaction to the Company's stockholders for their approval. Capston did not receive and was not entitled to receive any equity interest in the Company as a result of it's actions prior to the date of the Proxy Statement. Moreover, Capston was not entitled to reimbursement for any expenses incurred by it on behalf of the Company except to the extent that the terms of a business combination transaction provided for the reimbursement of such expenses. However, because Sally Fonner is both the President of WEBCOR ELECTRONICS, INC. and Capston, prior Staff Accounting Bulletins required under generally accepted accounting the treatment of debiting the expenses with corresponding credit to paid-in capital. Future expenses of Capston or others will be treated this way. These expenses are actual cash expenditures and do not reflect any costs associated with the operation of Capston nor any personnel time or cost.
Note 3. FUTURE EXPENSES
Capston will continue to extend administrative expenses to keep WEBCOR ELECTRONICS. INC. current with its reporting requirements, keeping the Corporation in good standing, any required proxy solicitation or acquisition efforts. These amounts should not exceed $50,000 in out-of-pockets costs. In addition, if approved, and as a result of a suitable acquisition, additional fees paid for by issuance of equity position would be for: (i) Capston of 200,000 shares, (ii)up to 9,500,000 shares for an acquisition(s) and (iii) up to 5% of the acquisition for a finder's fee .