8-K 1 file001.txt FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 April 30, 2003 -------------- (Date of Report) RAKO CAPITAL CORPORATION ------------------------ (Exact name of registrant as specified in its charter) Nevada 000-24633 91-0853320 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) Two North College Avenue, Fayetteville, Arkansas 72701 ------------------------------------------------------ (Address of principal executive offices) (479) 684-2700 -------------- (Registrant's telephone number, including area code) N/A ------------------------------------------------------------ (Former name or former address, if changed since last report.) ITEM 5. OTHER EVENTS Effective April 28, 2003, Mr. Randall Carney resigned from his position as Chief Financial Officer of the Registrant for personal reasons. Such resignation was not the result of any disagreement between the Registrant and Mr. Carney. Ms. Lisa Trammell, the registrant's Vice President, Chief Operating Officer and Secretary, has assumed Mr. Carney's duties as acting chief financial officer of the Registrant on an interim basis until such time as a replacement is selected. The Company has begun a search for a new chief financial officer. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. DATED: APRIL 30, 2003 RAKO CAPITAL CORPORATION By: /s/ Gary M. Fuchs ---------------------------- Name: Gary M. Fuchs Title: Chief Executive Officer

---------------------------------------------------------------------------------------------------------------------- NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OF COMMON STOCK PERCENTAGE OF CLASS PRO FORMA PERCENTAGE OF BENEFICIALLY OWNED OR BENEFICIALLY OWNED (1) CLASS BENEFICIALLY TO BE OWNED OWNED (2) ---------------------------------------------------------------------------------------------------------------------- Larry C. Garriott (4)(5) 11,946,263 (3) 64.5% 48.5% c/o RAKO Capital Corporation Two North College Avenue Fayetteville, AR 72701 ---------------------------------------------------------------------------------------------------------------------- Bonnie Capwell Brooks 12,276,141 (3) 66.3% 49.9% C/o RAKO Capital Corporation Two North College Avenue Fayetteville, AR 72701 ---------------------------------------------------------------------------------------------------------------------- Gary M. Fuchs (4)(5) 435,762 2.4% 1.8% c/o RAKO Capital Corporation Two North College Avenue Fayetteville, AR 72701 ---------------------------------------------------------------------------------------------------------------------- Lisa A. Trammell (4)(5) 481,728 2.6% 2.0% c/o RAKO Capital Corporation Two North College Avenue Fayetteville, AR 72701 ---------------------------------------------------------------------------------------------------------------------- Randall Carney (4) 0 0% 0% c/o RAKO Capital Corporation Two North College Avenue Fayetteville, AR 72701 ---------------------------------------------------------------------------------------------------------------------- Larry Otterstein (4) 0 0% 0% c/o RAKO Capital Corporation Two North College Avenue Fayetteville, AR 72701 ---------------------------------------------------------------------------------------------------------------------- Osprey Investments II, Inc. 2,000,000 10.8% 8.1% 1050 Riverside Avenue Jacksonville, FL 32204 ---------------------------------------------------------------------------------------------------------------------- LAGO Limited Liability Company 11,946,263 64.5% 48.5% Two North College Avenue Fayetteville, AR 72701 ---------------------------------------------------------------------------------------------------------------------- TWS International, Inc. 4,416,924 (6) N/A 18.0% 6120 Windward Parkway Suite 200 Atlanta, Georgia 30005 ---------------------------------------------------------------------------------------------------------------------- Stanford Venture Capital Holdings 1,682,638 (7) N/A 6.8% 201 Biscayne Boulevard Suite 120 Miami, FL 33131 ---------------------------------------------------------------------------------------------------------------------- All Current Executive Officers and 12,863,753 69.5% 52.3% Directors As a group (5 persons) ----------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------- Description of Security Authorized for Issuance Currently Issued and Outstanding --------------------------------------------------------------------------------------------------------------------------- Common Stock 50,000,000 Shares 18,509,584 Shares --------------------------------------------------------------------------------------------------------------------------- Preferred Stock 20,000,000 Shares 0 Shares ---------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------- Purchase Rights Purchase rights to purchase 0 Purchase Rights (Pursuant to 2002 Employee Stock Purchase Plan) up to 500,000 shares of Common Stock --------------------------------------------------------------------------------------------------------------------------- Stock Options Options to purchase up to 0 Options (Pursuant to 2002 Stock Option Plan) 500,000 Shares of Common Stock ---------------------------------------------------------------------------------------------------------------------------

NAME AGE POSITION ---- ---- ---- Larry C. Garriott 52 Chairman of the Board and Director Gary M. Fuchs 42 Vice Chairman, Chief Executive Officer and Director Lisa A. Trammell 42 Vice President, Chief Operating Officer, Secretary and Director Randall Carney 41 Chief Financial Officer

ANNUAL COMPENSATION ------------------- LONG-TERM COMPENSATION OPTIONS/SARS NAME AND POSITION YEAR SALARY BONUS (#) ALL OTHER COMPENSATION ----------------- ---- ------ ----- --- ---------------------- Larry C. Garriott, 2002 $250,000(1) $227,000 * ** Chairman of the Board 2001 $250,000(1) $5,000 Gary M. Fuchs, 2002 $261,000(2) $50,000 * ** Vice Chairman and Chief 2001 $261,000(2) n/a Executive Officer Lisa A. Trammell, 2002 $150,000(3) $25,000 * ** Vice President, COO and 2001 $150,000(3) $5,000 Secretary Randall Carney 2002 $65,000 $1,500 * ** Chief Financial Officer 2001 n/a n/a Larry Otterstein 2002 $85,000(4) * * ** President, 2001 n/a n/a Centra Wireless Edwin C. Ballou, 2002 $50,480.85(5) -- -- -- Former President, 2001 $200,000(5) -- -- -- Centra Wireless Tom Newsom 2002 $57,116.38(6) -- -- -- Former Chief Financial 2001 $90,000 -- -- -- Officer(2) O. Lee Capwell, 2002 $117,000(7) $7,000 * ** Former Chief Administration 2001 $117,000(7) $5,000 Officer(7)

Nine Months Nine Months Ended 9/30/02 Ended 9/30/01 2001 2000 ------------------------------------------------------------------------------ NET SALES (100%) $14,116,957 $15,992,092 $ 21,194,051 $ 17,582,577 ------------------------------------------------------------------------------------------------------------------------------------ COST OF REVENUE 84.4% 84.8% 78.6% 66.1% GROSS PROFIT 15.6% 15.2% 21.4% 33.9% SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 24.7% 10.8% 18.7% 8.6% INCOME FROM OPERATIONS -11.8% 2.1% 2.7% 25.3% OTHER INCOME (EXPENSE) Interest expense 2.7% 2.3% -2.4% -2.6% Interest and dividend income 0.0% 0.0% 0.1% 0.1% Loss on the sale of property and equipment -0.1% -0.1% -0.9% -1.0% Loss on the sale of investments 0.0% -1.2% -0.9% -0.2% Change in unrealized gain (loss) on investments 0.0% 0.0% 0.7% -1.9% TOTAL OTHER (EXPENSE) -0.1% -1.2% -3.4% -5.7% INCOME BEFORE TAXES -11.9% 0.9% -0.7% 19.6%

INCOME TAXES 1.1% 1.1% 0.3% 6.2% NET INCOME -13.0% -0.2% 1.0% 13.4%

CENTRA RAKO INDUSTRIES, INC CAPITAL AND CONSOLIDATING CORPORATION SUBSIDIARIES ENTRIES CONSOLIDATED ------------ ------------ ------------ ------------ Current assets Cash $ - $ 52,963 $ 52,963 Marketable securities, at fair value - 3,238 3,238 Accounts receivable, less allowance for doubtful accounts of $428,117 at September 30, 2002 1,780,979 1,780,979 Due from shareholders - 128,977 128,977 Due from employees - 20,335 20,335 Advances to sub-contractors - 35,569 35,569 Prepaid expenses - 343,605 343,605 Income taxes receivable - 333,671 333,671 ------------ ------------ ------------ ------------ Total current assets - 2,699,337 - 2,699,337 ------------ ------------ ------------ ------------ FIXED ASSETS, net of accumulated depreciation of $2,473,613 9,336,947 9,336,947 ------------ ------------ ------------ ------------ Total Assets $ - $ 12,036,284 $ - $ 12,036,284 ============ ============ ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Bank overdraft $ - $ 559,307 - $ 559,307 Accounts payable 4,887 3,037,342 (1- 1,334 (1- (6,221) 3,037,342 Officers loans 1,555 - (1- 6,221 (2- (7,776) - Accrued liabilities - 1,486,035 1,486,035 Lines of credit - 759,976 759,976 Current portion of long-term debt - 1,385,352 1,385,352 Current portion of capital lease obligations - 224,760 224,760 Deferred tax liability - 40,702 - 40,702 ------------ ------------ ------------ ------------ Total current liabilities 6,442 7,493,474 (6,442) 7,493,474 ------------ ------------ ------------ ------------ Long-term liabilities Long-term debt, net of current portion - 3,259,938 3,259,938 Capital lease obligations, net of current portion - 125,167 125,167 Deferred tax liability - 939,513 939,513 Commitments and contingencies ------------ ------------ ------------ ------------ Total long-term liabilities - 4,324,618 4,324,618 ------------ ------------ ------------ ------------ Total liabilities 6,442 11,818,092 11,818,092 ------------ ------------ ------------ ------------ Shareholders' equity Preferred stock; 20,000,000 shares authorized; $0.001 par value; no shares issued and outstanding - - - Common stock; 50,000,000 shares authorized; $0.001 par value; 17,299,554 shares issued and outstanding 5,025 (3- (2,619) (4- (2,406) (6- 17,300 17,300 Common stock; $0.00001 par value; 50,000,000 shares authorized; 15,143,716 shares issued and outstanding at September 30, 2002 151 (5- (149) (7- (2) - Additional paid-in capital 100,358 15,325 (3- 2,619 (2- 7,776 (4- 2,406 (4- (113,159) (5- 149 (6- (17,300) (6- 1,826 Retained (deficit) earnings (111,825) 202,716 (1- (1,334) (4- 113,159 (6- (1,826) 200,890 Minority interest (7- 2 2 ------------ ------------ ------------ ------------ Total shareholders' equity (6,442) 218,192 6,442 218,192 ------------ ------------ ------------ ------------ Total Liabilities and Shareholders' Equity $ - $ 12,036,284 $ - $ 12,036,284 ============ ============ ============ ============

RAKO SMITH & CAPITAL COMPANY CORPORATION SURVEYING CONSOLIDATING (a) SERVICES, INC. ENTRIES CONSOLIDATE ----------- ------------- ------------- ------------ Current assets Cash $ 52,963 $ 24,100 $ 77,063 Marketable securities, at fair value 3,238 3,238 Accounts receivable, less allowance for doubtful accounts of $428,117 at September 30, 2002 1,780,979 378,254 2,159,233 Due from shareholders 128,977 128,977 Due from employees 20,335 2,500 22,835 Advances to sub-contractors 35,569 35,569 Prepaid expenses 343,605 343,605 Income taxes receivable 333,671 333,671 ----------- ----------- ----------- ----------- Total current assets 2,699,337 404,854 - 3,104,191 ----------- ----------- ----------- ----------- Fixed Assets, net of accumulated depreciation of $2,473,613 9,336,947 165,286 9,502,233 ----------- ----------- ----------- ----------- Goodwill and other identifiable intangible assets - - (1- 2,652,173 2,652,173 ----------- ----------- ----------- ----------- Total Assets $12,036,284 $ 570,140 $ 2,652,173 $15,258,597 =========== =========== =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Bank overdraft $ 559,307 $ - $ 559,307 Accounts payable 3,037,342 - 3,037,342 401K Contributions Payable 45,832 45,832 Accrued liabilities 1,486,035 1,486,035 Lines of credit 759,976 60,000 819,976 Current portion of long-term debt 1,385,352 34,105 1,419,457 Current portion of capital lease obligations 224,760 224,760 Deferred tax liability 40,702 - 40,702 ----------- ----------- ----------- ----------- Total current liabilities 7,493,474 139,937 - 7,633,411 ----------- ----------- ----------- ----------- Long-term liabilities Long-term debt, net of current portion 3,259,938 82,376 3,342,314 Capital lease obligations, net of current portion 125,167 125,167 Deferred tax liability 939,513 939,513 Commitments and contingencies ----------- ----------- ----------- ----------- Total long-term liabilities 4,324,618 82,376 4,406,994 ----------- ----------- ----------- ----------- Total liabilities 11,818,092 222,313 12,040,405 ----------- ----------- ----------- ----------- Shareholders' equity Preferred stock; 20,000,000 shares authorized; $0.001 par value; no shares issued and outstanding - - - Common stock; 50,000,000 shares authorized; $0.001 par value; 18,499,554 shares issued and outstanding 17,300 (2- 1,200 18,500 Common stock 2,600 (1- (2,600) - Additional paid-in capital - 5,395 (1- (5,395) (1- 2,998,800) 2,998,800 Retained earnings 200,890 339,832 (1- (339,832) 200,890 Minority interest 2 2 ----------- ----------- ----------- ----------- Total shareholders' equity 218,192 347,827 2,652,173 3,218,192 ----------- ----------- ----------- ----------- Total Liabilities and Shareholders' Equity $12,036,284 $ 570,140 $ 2,652,173 $15,258,597 =========== =========== =========== ===========

RAKO SMITH & CAPITAL COMPANY CORPORATION SURVEYING CONSOLIDATING (a) SERVICES, INC. ENTRIES CONSOLIDATED ------------ -------------- ------------ ------------- Revenue $ 14,116,957 $ 884,420 (2- (1,750) $ 14,999,627 ------------ -------------- ------------ ------------- Costs and Expenses: Cost of revenue 11,913,108 447,993 (2- (1,750) 12,359,351 General and administration 3,474,440 396,895 3,871,335 Depreciation 18,750 - 18,750 Interest 381,367 7,449 388,816 ------------ -------------- ------------- Total Costs and Expenses 15,787,665 852,337 16,640,002 ------------ -------------- ------------- Operating Income (1,670,708) 32,083 (1,638,625) ------------ -------------- ------------- Other Income (Expense): Interest and dividends 75 7 82 (Loss) on the sale of property and equipment (9,768) - (9,768) (Loss) on the sale of investments - - - Change in unrealized gain (loss) on investments - - - ------------ -------------- ------------- Total other (expense) (9,693) 7 (9,686) ------------ -------------- ------------- (Loss) Income Before Income Taxes (1,680,401) 32,090 (1,648,311) Provision For Income Taxes 157,200 - 157,200 ------------ -------------- ------------- Net (Loss) Income $ (1,837,601) $ 32,090 $ (1,805,511) ============ ============ ============ Basic (Loss) Per Common Share $ (0.10) ============ Weighted Average Number Of Common Shares Outstanding 18,499,554 ============

RAKO SMITH & CAPITAL COMPANY CORPORATION SURVEYING CONSOLIDATING (a) SERVICES, INC. ENTRIES CONSOLIDATED ------------ -------------- ---------- ------------ Revenue $ 21,194,051 $ 2,370,763 (3- (1,750) $ 23,563,064 ------------ ------------ Costs and Expenses: Cost of revenue 16,666,932 1,234,120 (3- (1,750) 17,899,302 General and administration 3,937,741 862,949 4,800,690 Depreciation 25,015 65,444 90,459 Interest 502,061 9,745 511,806 ------------ ------------ ------------ Total Costs and Expenses 21,131,749 2,172,258 23,304,007 ------------ ------------ ------------ Operating Income 62,302 198,505 260,807 ------------ ------------ ------------ Other Income (Expense): Interest and dividends 10,830 2,193 13,023 (Loss) on the sale of property and equipment (185,021) - (185,021) (Loss) on the sale of investments (194,399) - (194,399) Change in unrealized gain (loss) on investments 148,509 - 148,509 ------------ ------------ ------------ Total other (expense) (220,081) 2,193 (217,888) ------------ ------------ ------------ (Loss) Income Before Income Taxes (157,779) 200,698 42,919 Provision For Income Taxes 60,325 - 60,325 ------------ ------------ ------------ Net (Loss) Income $ (218,104) $ 200,698 $ (17,406) ============ ============ ============ Basic (Loss) Per Common Share $ (0.00) ============ Weighted Average Number Of Common Shares Outstanding 18,499,554 ============

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