-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HF3rj9aXORJdt0j3UjclgWr6MWO1QhZhvnBqEr80Dlx1sLlKXLwhB72T6PRNBjwD LUV87NkG3Ulq+5O+7ugL6g== 0000720671-97-000007.txt : 19970430 0000720671-97-000007.hdr.sgml : 19970430 ACCESSION NUMBER: 0000720671-97-000007 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960401 ITEM INFORMATION: Changes in control of registrant FILED AS OF DATE: 19970429 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: HALIFAX CORP CENTRAL INDEX KEY: 0000720671 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370] IRS NUMBER: 540829246 STATE OF INCORPORATION: VA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-08964 FILM NUMBER: 97590048 BUSINESS ADDRESS: STREET 1: 5250 CHEROKEE AVE CITY: ALEXANDRIA STATE: VA ZIP: 22312 BUSINESS PHONE: 7037502202 MAIL ADDRESS: STREET 1: 5250 CHEROKEE AVENUE CITY: ALEXANDRIA STATE: VA ZIP: 22312 FORMER COMPANY: FORMER CONFORMED NAME: HALIFAX ENGINEERING INC/VA DATE OF NAME CHANGE: 19911204 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K - Amendment 2 CURRENT REPORT Pursuant to Section 13 and 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): April 1, 1996 HALIFAX CORPORATION (Exact name of registrant as specified in charter) Virginia 2-84160-W 54-0829246 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 5250 Cherokee Avenue, Alexandria, Virginia 22312 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (703) 750-2202 Not Applicable (Former name or former address, if changed since last report) ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements of Business Acquired The following Audited Financial Statements of CMS Automation, Inc. (CMSA) are filed to be included as Exhibit 99 (a) of the Current Report on Form 8-K and Amendments thereto in substitution of the Audited Financial Statments previously submitted as Exhibits 99 (a) and (b) in Amendment 1: Audited Financial Statements dated December 31, 1995 including Independent Auditor's Report Balance Sheet Statement of Income Statement of Cash Flows Notes to Financial Statements (b) Pro Forma Financial Information Previously submitted in Form 8-K Amendment 1. CMS AUTOMATION, INC. Financial Statements December 31, 1995 CMS AUTOMATION, INC. Table of Contents Page Independent Auditors' Report 2 Exhibit A Balance Sheet 3-4 B Statement of Income 5 C Statement of Changes in Stockholders' Equity 6 D Statement of Cash Flows 7-8 Notes to Financial Statements 9-14 Independent Auditors' Report on Additional Information 15 Schedule 1 Schedule of Operating Expenses 16 INDEPENDENT AUDITORS' REPORT To the Stockholders CMS Automation, Inc. Richmond, Virginia: We have audited the accompanying balance sheet of CMS Automation, Inc. as of December 31, 1995, and the related statements of income, changes in stockholders' equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. 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 includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of CMS Automation, Inc. as of December 31, 1995, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Keiter, Stephens, Hurst, Gary & Shreaves, P.C. March 23, 1996 Exhibit A CMS AUTOMATION, INC. Balance Sheet December 31, 1995 Assets Current assets: Cash $ 97 954 Accounts receivable, net of allowance for uncollectible accounts of $50,000 3 212 001 Inventory 2 176 089 Loans to employees 16 875 Loans to officers 26 028 Prepaid expenses 13 621 Total current assets 5 542 568 Fixed assets 2 824 461 Less accumulated depreciation 1 411 842 Net fixed assets 1 412 619 Software, net of amortization 61 791 Organization costs, net of amortization 22 080 Franchise fee, net of amortization 3 042 Deposits 23 756 Client lists 49 500 Investment 24 664 Total other assets 184 833 $7 140 020
See accompanying notes to financial statements. 3 Exhibit A CMS AUTOMATION, INC. Balance Sheet December 31, 1995 Liabilities and Stockholders' Equity Current liabilities: Short-term debt$ 4 203 658 Notes payable, current portion 117 743 Capital lease obligation, current portion 4 674 Accounts payable 1 422 351 Unearned revenues 320 183 Accrued expenses 78 161 Customer deposits 3 112 Income taxes payable 1 000 Total current liabilities 6 150 882 Notes payable, less current portion 450 000 Deferred credit 12 618 Total liabilities 6 613 500 Commitments Stockholders' equity: Common stock, $.20 par value; 750,000 shares authorized; 484,226 shares issued and outstanding 96 845 Additional paid-in capital 705 758 Retained earnings (deficit) (276 083) Total stockholders' equity 526 520 $7 140 020
See accompanying notes to financial statements. 4 Exhibit B CMS AUTOMATION, INC. Statement of Income For the Year ended December 31, 1995 Sales $21 248 701 Cost of sales 14 582 334 Gross profit 6 666 367 Operating expenses 6 299 738 Operating income 366 629 Other income (expense): Miscellaneous income 139 333 Interest income 3 872 Interest expense (543 231) Loss from investment ( 29 496) Litigation settlement ( 45 000) Total other expense (474 522) Loss before provision for income tax (107 893) Provision for income taxes 1 000 Net loss $(108 893)
See accompanying notes to financial statements. 5 Exhibit C CMS AUTOMATION, INC. Statement of Changes in Stockholders' Equity For the Year ended December 31, 1995
Additional Retained Total Common Stock Paid-In Earnings Stockholders' Shares Amount Capital (Deficit) Equity Balance, December 31, 1994 467399 $ 93480 $ 658123 $( 167190)$ 584 413 Stock issued 16 827 3 365 47 635 - 51 000 Net loss - - - (108893) (108 893) Balance, December 31, 1995 484 226 $96 845 $705 758 $(276 083)$526 520
See accompanying notes to financial statements. 6 Exhibit D CMS AUTOMATION, INC. Statement of Cash Flows For the Year ended December 31, 1995 Cash flows from operating activities: Net loss $( 108 893) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 432 260 Loss from investment 29 496 (Increase) decrease in: Accounts receivable 370 463 Inventory 132 572 Prepaid expenses ( 7 130) Refundable income taxes 71 255 (Decrease) increase in: Accounts payable (1 815 293) Unearned revenues ( 125 593) Income taxes payable 1 000 Accrued expenses ( 61 439) Customer deposits ( 50 752) Deferred credit ( 328) Net cash used in operating activities (1 132 382) Cash flows from investing activities: Acquisition of fixed assets ( 556 308) Acquisition of intangible assets ( 69 232) Decrease in deposits 5 074 Investment advances ( 54 160) Net cash used in investing activities ( 674 626) Cash flows from financing activities: Proceeds from short-term debt, net of repayments 2 021 685 Repayment of long-term debt ( 169 831) Repayment of capital lease obligations ( 20 365) Proceeds from stock issued 51 000 Net cash provided by financing activities 1 882 489
See accompanying notes to financial statements. 7 Exhibit D CMS AUTOMATION, INC. Statement of Cash Flows, Continued For the Year ended December 31, 1995 Net increase in cash $75 481 Cash at beginning of period 22 473 Cash at end of period $97 954 Supplemental disclosures of cash flow information: Interest $571 154 Income taxes -
See accompanying notes to financial statements. 8 CMS AUTOMATION, INC. Notes to Financial Statements (1) Accounting policies: The accounting and reporting policies of CMS Automation, Inc., conform to generally accepted accounting principles. The following describe the more significant of those policies: (a) Organization: The Company was incorporated in January, 1990, for the primary purpose of sales and service of computer hardware, software and networking. The Company has locations in the Eastern part of the United States. (b) Inventories: Inventories are valued at the lower of cost or market, with cost being determined by the average cost method. (c) Fixed assets: Fixed assets are stated at cost. Depreciation is computed by the use of accelerated and straight-line methods and is based on the estimated useful life of the asset. (d) Other assets: Software and organization costs are being amortized over periods of thirty-six to sixty months. Franchise fees are being amortized over 10 years. (e) Unearned revenues: Unearned revenues result from customer contract prepayments. This results in a large amount of revenue being received prior to its realization. These unearned revenues are shown as current liabilities on the balance sheet and are amortized monthly over the terms of the contracts. 9 CMS AUTOMATION, INC. Notes to Financial Statements, Continued (1) Accounting policies, continued: (f) Credit risk: Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and receivables. The Company maintains its cash balances in several financial institutions. The balances are insured by the Federal Deposit Insurance Corporation up to $100,000 in each institution. The Company has funds in excess of $100,000 in a financial institution. Receivables consist principally of trade accounts receivable resulting from sales to customers primarily in the Eastern part of the United States. Credit is extended to customers after an evaluation for credit worthiness. (g) 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. (2) Loans to Officers: Loans to officers are unsecured advances to the officers of the Corporation. No interest is currently being charged on these advances. (3) Fixed assets: The following comprise the Corporation's fixed assets at December 31, 1995: Support equipment $2 073 115 Furniture and fixtures 616 448 Vehicles 20 396 Leasehold improvements 114 502 $2 824 461
10 CMS AUTOMATION, INC. Notes to Financial Statements, Continued (4) Investment: In 1995, the Company advanced $54,160 to an entity that is expected to be accounted for under the equity investment rules. This entity had a loss in 1995, of which CMS Automation reduced its investment by $29,496, its share of the total loss. (5) Short-term debt: During 1995, the Company entered into an agreement with IBM Credit Corporation for wholesale financing. This agreement allows the Company to borrow funds up to $7,000,000, based upon eligible accounts receivable, and inventory. Interest is charged on the outstanding balance at prime plus 3.25%. This agreement is secured by accounts receivable, inventory, fixed assets and intangibles. It is guaranteed by the shareholders of the Company. (6) Notes payable: The following comprise the Company's notes payable at December 31, 1995: Term note payable to Signet Bank, due in monthly installments of $10,000 plus interest at 9.25%, through May, 1996. Secured by accounts receivable, inventory, equipment, general intangibles and subordination agreement. Guaranteed by stockholders. $ 70 000 Unsecured term note payable to G. Nolde, due in monthly installments of $4,951 including interest at 8%, through October, 1996. 47 743 Unsecured subordinated demand note to G. Nolde with interest at 8%. 285 000 Unsecured subordinated demand note to I. Cox with interest at 8%. 165 000 Total long-term debt 567 743 Less current maturities 117 743 $ 450 000 11 CMS AUTOMATION, INC. Notes to Financial Statements, Continued (6) Notes payable, continued: The future maturities of long-term debt at December 31, 1995 are as follows: Thereafter $450 000 $450 000 (7) Capital leases: The Corporation has acquired equipment under the provisions of long-term leases. For financial reporting purposes, minimum lease rentals relating to these leases have been capitalized. Equipment costs $ 57 752 Less accumulated depreciation 26 224 $ 31 528 The following is a schedule by years of future minimum lease payments under capital leases together with the present value of the net minimum lease payments as of December 31, 1995: Year ended December 31: 1996 $4 736 Total minimum lease payments 4 736 Less amount representing interest 62 Present value of net minimum lease payments $4 674 Current portion $4 674 12 CMS AUTOMATION, INC. Notes to Financial Statements, Continued (8) Income taxes: The provision (benefit) for income taxes consists of the following: Current $3 300 Deferred (2 300) Total $ 1 000 Deferred income taxes are provided for differences in timing, in reporting income for financial statement and tax purposes, arising from differences in the methods of accounting for bad debts, inventory, and litigation settlements. For tax purposes, bad debts are expensed as incurred, while the allowance method is used for financial purposes. Inventory for income tax purposes includes Section 263A costs which are not included for financial statement purposes. For financial statement purposes litigation settlements are expensed as incurred, while for tax purposes they are deductible when paid. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. Net deferred tax assets are composed of the following: Deferred tax assets arising from: Temporary differences $24 565 AMT credits 15 101 Valuation allowance (39 666) Net deferred tax asset $- The Company has alternative minimum tax credit carryforwards of approximately $15,000 which are available to offset future federal income tax liability. The Company also has contribution carryforwards of approximately $8,000 which expire in 1999. 13 CMS AUTOMATION, INC. Notes to Financial Statements, Continued (9) Commitments: The Corporation leases its facilities in Virginia, Georgia and South Carolina. Total net rent expense under facility leases for 1995 was $293,624. The Corporation was also obligated under a lease for an automobile. Lease expense under this agreement was $4,193 for 1995. Future obligations under these leases as of December 31, 1995 are as follows: Minimum Minimum Rental Sublease Payments Receipts 1996 $257 755 $21 467 1997 240 520 - 1998 207 589 - 1999 35 552 - (10) Profit sharing plan: The Corporation has a qualified contributory profit-sharing plan covering substantially all of its employees. Annual contributions are at the discretion of the Board of Directors but may not exceed the maximum amount allowable under applicable provisions of the Internal Revenue Code. No contribution was made for 1995. (11) Subsequent event: Effective April 1, 1996, CMS Automation, Inc. merged into CMSA Acquisition Corporation, a wholly-owned subsidiary of Halifax Corporation. 14 INDEPENDENT AUDITORS' REPORT ON ADDITIONAL INFORMATION To the Stockholders CMS Automation, Inc. Richmond, Virginia: Our report on our audit of the basic financial statements of CMS Automation, Inc., for the year ended December 31, 1995 appears on page 2. That audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedules of operating expenses are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has not been subjected to the auditing procedures applied in the audit to the basic financial statements, and accordingly, we express no opinion on it. Keiter, Stephens, Hurst, Gary & Shreaves, P.C. March 23, 1996 Schedule 1 CMS AUTOMATION, INC. Schedule of Operating Expenses For the Year ended December 31, 1995 Operating expenses: Advertising $ 43 330 Amortization 44 464 Auto expenses 109 643 Bad debts 58 763 Commissions 378 218 Contributions 1 150 Depreciation 387 795 Dues and subscriptions 17 473 Employee benefit programs 190 246 Freight 150 435 Insurance 45 807 Miscellaneous 18 339 Office expense 64 193 Outside services 71 506 Payroll taxes 296 952 Penalties 36 430 Printing services 18 513 Professional fees 63 431 Recruitment 24 632 Rent 333 103 Repairs and maintenance 20 639 Salaries 3 353 877 Small equipment and tools 5 189 Supplies 34 172 Taxes and licenses 48 249 Telephone 217 793 Training 48 756 Travel and entertainment 152 147 Utilities 64 493 Total operating expenses $6 299 738 See independent auditors' report on additional information. 16 SIGNATURES 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 thereunto duly authorized. HALIFAX CORPORATION (Registrant) Date: April 29, 1997 By: s/ Howard C. Mills Howard C. Mills, President & Chief Executive Officer Date: April 29, 1997 By: s/ John D. D'Amore John D. D'Amore Vice President Finance & Accounting
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