-----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, OoPYWqcyd1Rq7DKyjG3P9ByeJHeY+eTR+3qcof4VvRhl/LWfNcRtcCUd3jrbL4zN 77IULT2MoU5i5xQkoWDo7Q== 0000950150-96-000931.txt : 19960830 0000950150-96-000931.hdr.sgml : 19960830 ACCESSION NUMBER: 0000950150-96-000931 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960619 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960829 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: POLLUTION RESEARCH & CONTROL CORP /CA/ CENTRAL INDEX KEY: 0000763950 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823] IRS NUMBER: 952746949 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-14266 FILM NUMBER: 96623107 BUSINESS ADDRESS: STREET 1: 506 PAULA AVENUE CITY: GLENDALE STATE: CA ZIP: 91201 BUSINESS PHONE: 8182477601 MAIL ADDRESS: STREET 1: 506 PAULA AVE CITY: GLENDALE STATE: CA ZIP: 91201 FORMER COMPANY: FORMER CONFORMED NAME: DASIBI ENVIRONMENTAL CORP DATE OF NAME CHANGE: 19900529 8-K 1 FORM 8-K - DATE OF REPORT JUNE 19, 1996 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 AMENDMENT NO. 1 TO FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported) June 19, 1996 POLLUTION RESEARCH AND CONTROL CORP. (Exact Name of Registrant as Specified in Its Charter) CALIFORNIA (State or Other Jurisdiction of Incorporation) 0-14266 95-2746949 (Commission File Number) (I.R.S. Employer Identification No.) 506 Paula Avenue, Glendale, California 91201 (Address of Principal Executive Offices) (Zip Code) 818-247-7601 (Registrant's Telephone Number, Including Area Code) Not Applicable (Former Name or Former Address, if Changed Since Last Report) 2 POLLUTION RESEARCH AND CONTROL CORP. AMENDMENT NO. 1 TO FORM 8-K June 19, 1996 TABLE OF CONTENTS
Page ---- Item 2. Acquisition or Disposition of Assets. 3 Item 7. Financial Statements and Exhibits. 4
2 3 Item 2. Acquisition or Disposition of Assets. On July 3, 1996, the Company filed a Current Report on Form 8-K describing its acquisition of Nutek, Inc. effective June 19, 1996. This Amendment No. 1 to that Form 8-K is filed for the purpose of furnishing the financial information required by Rule 310(c) and (d) of Regulation S-B. 3 4 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial statements of businesses acquired: The financial statements of Nutek, Inc. and Notes to Financial Statements, together with the Independent Auditor's report of Patton Thornton & Co. required by this Item 7(a) are attached on pages F-1 through F-15 hereof and are incorporated herein by this reference. The Pro-forma financial information required by this Item 7(a) is attached on pages F-16 through F-18 hereof and is incorporated herein by this reference. The financial statements and information filed as part of this current report on Form 8-K are listed in the index to financial statements below:
Page ---- 1) Independent Auditor's report F-1 2) Balance Sheets of Nutek, Inc. as of September 29, 1995 and September 30, 1994 F-2 3) Statements of Income of Nutek, Inc. for the Years Ended September 29, 1995 and September 30, 1994 F-4 4) Statements of Changes in Stockholders' Equity of Nutek, Inc. for the Years Ended September 29, 1995 and September 30, 1994 F-5 5) Statements of Cash Flows of Nutek, Inc. for the Years Ended September 29, 1995 and September 30, 1994 F-6 6) Notes to Financial Statements of Nutek, Inc. F-7 7) Unaudited Balance Sheet of Nutek, Inc. as of May 31, 1996 F-12 8) Unaudited Statements of Income of Nutek Inc. for the Eight Months Ended May 31, 1996 and 1995 F-14 9) Unaudited Statements of Cash Flows of Nutek Inc. for the Eight Months Ended May 31, 1996 and 1995 F-15 (b) Pro-forma financial information:: 1) Pro-forma Condensed Consolidated Statement of Operations of Pollution Research and Control Corp. and Subsidiaries for the Year Ended December 31, 1995 F-16 2) Pro-forma Condensed Consolidated Statement of Operations of Pollution Research and Control Corp. and Subsidiaries for the Five Months Ended May 31, 1996 F-17 3) Notes to Pro-Forma Condensed Consolidated Statements of Operations F-18
4 5 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 hereunto duly authorized. Pollution Research and Control Corp. ------------------------------------ (Registrant) Date: August 29, 1996 By: /s/ Albert E. Gosselin, Jr . ------------------ ----------------------------------- Albert E. Gosselin, Jr., President 5 6 Patton Thornton & Co. Certified Public Accountants 2nd Floor Harbourview Bldg. 25 West Cedar Street Pensacola, FL 32573 Tel: (904) 434-3146 Fax: (904) 438-2160 INDEPENDENT AUDITOR'S REPORT We have audited the accompanying balance sheets of Nutek, Inc. as of September 29, 1995 and September 30, 1994, and the related statements of income, changes in stockholders' equity, and cash flows for the years 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Nutek, Inc., as of September 29, 1995 and September 30, 1994, and the results of its operations, and its cash flows for the years then ended, in conformity with generally accepted accounting principles /S/ Patton, Thornton & Co.. December 4, 1995 F-1 7 BALANCE SHEET NUTEK, INC. - PENSACOLA, FLORIDA SEPTEMBER 29, 1995 AND SEPTEMBER 30, 1994 ASSETS
CURRENT ASSETS: 1995 1994 ---------- ---------- Cash $ 498 $ -0- Contracts receivable (note B) 277,928 680,655 Costs and estimated earnings in excess of billings (notes A1 & C) 276,834 459,399 Inventory (notes A2 & L) 402,969 648,179 Income taxes receivable 9,920 -0- Other receivables 45,853 36,759 Employee advances 3,424 514 Prepaid expenses 11,097 5,890 Deferred tax asset (note E) 17,000 15,000 ---------- ---------- $1,045,523 $1,846,396 PROPERTY & EQUIPMENT: Office furniture and equipment $ 52,141 $ 58,905 Buildings & Leasehold improvements 289,544 285,032 Transportation equipment 88,529 83,569 Machinery and equipment 609,587 673,542 Computer and software 154,845 93,558 Equipment under capital leases 108,608 173,119 ---------- ---------- $1,303,254 $1,367,725 Less accumulated depreciation (note A3) 997,094 1,061,664 ---------- ---------- $ 306,160 $ 306,061 OTHER ASSETS: Patents, less accumulated amortization of $49,746 in 1994 (note F) $ -0- $ 39,315 Deposits 424 424 ---------- ---------- $ 424 $ 39,739 ---------- ---------- $1,352,107 $2,192,196 ========== ==========
The accompanying notes are an integral part of these statements. F-2 8 LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES: 1995 1994 ---------- ---------- Accounts payable $ 162,410 $ 498,301 Accrued and other payables 21,358 35,623 Income taxes payable 2,212 Accrued salaries and bonuses 10,263 24,261 Billings in excess of costs and estimated earnings (notes A1 & C) 17,086 16,850 Current portion of long-term debt (note M) 179,627 517,666 ---------- ---------- $ 390,744 $1,094,913 LONG-TERM DEBT: Notes payable (note M) $ 254,099 $ 555,558 Note payable to stockholder (note G) 466,862 548,308 Obligations under capital leases (note H) 16,209 ---------- ---------- $ 720,961 $1,120,075 Less amounts due within one year (note M) (179,627) (517,666) ---------- ---------- $ 541,334 $ 602,409 COMMITMENTS AND CONTINGENCIES (note H) - - DEFERRED INCOME TAXES - LONG TERM (note E) $ 27,000 $ 33,000 STOCKHOLDERS' EQUITY: Common stock: $1 par value; 20,000 shares authorized, 2,548.19 shares issued and 1,800 outstanding in 1994 and 1995 $ 1,913 $ 1,913 Additional paid-in capital 81,361 81,361 Retained earnings 369,231 438,076 Treasury stock (Common stock 748.19 shares in 1994 and 1995) at cost. (59,476) (59,476) ---------- ---------- $ 393,029 $ 461,874 ---------- ---------- $1,352,107 $2,192,196 ========== ==========
F-3 9 STATEMENTS OF INCOME NUTEK, INC. - PENSACOLA, FLORIDA YEARS ENDED SEPTEMBER 29, 1995 AND SEPTEMBER 30, 1994
1995 1994 ----- ---- % of % of Amount Revenues Amount Revenues ----------- -------- ---------- -------- Contract revenues earned $2,480,299 100.0% $3,743,467 100.0% Cost of revenues earned 2,073,692 83.6 2,967,104 79.3 ---------- ----- ---------- ------ Gross profit $ 406,607 16.4 $ 776,363 20.7 Discounts earned and miscellaneous income 4,651 .2 5,747 .2 ---------- ----- ---------- ------ $ 411,258 16.6 $ 782,110 20.9 General and administrative expenses 692,612 27.9 644,567 17.2 ---------- ----- ---------- ------ Income (loss) from operations $ (281,354) (11.3) $ 137,543 3.7 Other income (expenses): Sale of assets $ 7,596 .3 $ 5,500 .1 Sale of scrap 5,027 .2 4,525 .1 Interest income 2,415 .1 6 - Interest expense (108,169) (4.4) (99,340) (2.6) Gain on FirePower Sale 287,291 11.6 -0- - ---------- ----- ---------- ------ $ 194,160 7.8 $ (89,309) (2.4) ---------- ----- ---------- ------ Net income (loss) before taxes $ (87,194) (3.5) $ 48,234 1.3 Provision (benefit) for income taxes (note D) (18,349) (.7) 11,000 .3 ----------- ----- ---------- ------ Net income (loss) $ (68,845) (2.8)% $ 37,234 1.0% ========== ===== ========== ======
The accompanying notes are an integral part of these statements. F-4 10 STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY NUTEK, INC. - PENSACOLA, FLORIDA YEARS ENDED SEPTEMBER 29, 1995 AND SEPTEMBER 30, 1994
Additional Capital Paid-In Treasury Retained Stock Capital Stock Earnings Total ----- ------- ----- -------- ----- Balances at October 1, 1993 $1,913 $ 81,361 $(27,524) $400,842 $456,592 Net income 37,234 37,234 Treasury stock reacquired from ESOP (31,952) (31,952) ------ -------- -------- -------- -------- Balances at September 30, 1994 $1,913 $ 81,361 $(59,476) $438,076 $461,874 Net (loss) (68,845) (68,845) ------ -------- -------- -------- -------- Balance at September 29, 1995 $1,913 $ 81,361 $(59,476) $369,231 $393,029 ====== ======== ======== ======== ========
The accompanying notes are an integral part of these statements. F-5 11 STATEMENTS OF CASH FLOWS NUTEK, INC. - PENSACOLA, FLORIDA YEARS ENDED SEPTEMBER 29, 1995 AND SEPTEMBER 30, 1994
CASH FLOWS FROM OPERATING ACTIVITIES: 1995 1994 ---------- ---------- Net income (loss) $ (68,845) $ 37,234 Adjustments to reconcile net income to net cash: (Gain) Loss on disposal of asset (294,887) (5,500) Depreciation and amortization 72,253 63,967 Provision for deferred taxes (8,000) 11,000 (Increase) decrease in current assets: Contracts receivable 402,727 (244,260) Costs and estimated earnings in excess of billings 182,565 (35,909) Inventory 245,210 49,521 Income taxes receivable (9,920) -0- Employee advances (2,910) (371) Prepaid expenses (5,207) 1,000 Other receivables (9,094) (1,639) Refundable income taxes -0- -0- Other assets -0- 21,569 Increase (decrease) in current liabilities: Accounts payable (335,890) 131,941 Accrued and other payables (14,265) 23,167 Income taxes payable (2,212) (8,892) Accrued salaries and bonuses (13,996) 15,587 Billings in excess of costs and estimated earnings 236 12,412 --------- --------- $ 137,765 $ 70,827 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property and equipment $ (88,731) $ (78,490) Proceeds from disposal of property and equipment and patents 350,580 5,500 --------- --------- $ 261,849 $ (72,990) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from long-term debt $ 75,567 $ 75,811 Borrowings from stockholders 46,669 59,687 Repayments to stockholders (128,115) (80,728) Repayments of long-term debt (393,237) (28,506) Stock reacquired from ESOP plan and trust -0- (31,952) --------- -------- $(399,116) $ (5,688) --------- -------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ 498 $ (7,851) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR -0- 7,851 --------- -------- CASH AND CASH EQUIVALENTS AT END OF YEAR $ 498 $ -0- ========= ========
The accompanying notes are an integral part of these statements. F-6 12 NOTES TO FINANCIAL STATEMENTS NUTEK, INC. - PENSACOLA, FLORIDA NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1. The Company uses the accrual method of accounting in maintaining its books and preparing its financial statements. Profits on long-term contracts are recorded on the basis of the Company's estimates of the percentage of completion of individual contracts, commencing when progress reaches a point where experience is sufficient to estimate final results with reasonable accuracy. That portion of the contract price is accrued which is allocable, on the basis of the estimates of percentage of completion, to contract expenditures incurred and work performed. At the time a loss on a contract becomes known, the entire amount of the estimated ultimate loss is accrued. General and administrative expenses are charged as incurred to periodic income and are not allocated to contract costs. Costs and earnings in excess of amounts billed are classified as current assets under "costs and estimated earnings in excess of billings on uncompleted contracts." Billings in excess of costs are classified under "current liabilities as billings in excess of costs and estimated earnings on uncompleted contracts." 2. Inventory is stated at the lower of cost or market, with cost being determined by the first-in, first-out method of inventory valuation. 3. Depreciation is provided by using accelerated and straight-line methods over the estimated useful lives of the related assets. 4. Investment and other business tax credits are recognized as reductions of income tax expense in the period in which the credits may be utilized. 5. In 1987, the Company changed from a fiscal year ending on September 30th to one ending on the Friday closest to September 30th. The last days of fiscal 1995 and 1994 were September 29th and September 30th, respectively. 6. For the purposes of the statement of cash flows, the Company considers all highly liquid debt instruments with an original maturity when purchased of three months or less to be cash equivalents. 7. The Company's sole manufacturing facility is located in Pensacola, Florida. The Company's primary activities include: production of control panels, PC boards, and electronic ignition systems. Although the Company only has one manufacturing facility, it sells and ships its products nationwide. F-7 13 NOTES TO FINANCIAL STATEMENTS - (CONTINUED) NUTEK, INC. - PENSACOLA, FLORIDA NOTE B - CONTRACTS RECEIVABLE Contracts receivable as of September 29, 1995 and September 30, 1994, were as follows:
1995 1994 ---- ---- Contracts receivable $292,928 $ 690,655 Allowance for doubtful accounts (15,000) (10,000) -------- --------- $277,928 $ 680,655 ======== =========
NOTE C - CONTRACTS IN PROGRESS Information with respect to contracts in progress at September 29, 1995 and September 30, 1994, was as follows:
1995 1994 -------- -------- Cost incurred on uncompleted contracts $428,534 $819,164 Estimated earnings 96,749 166,609 -------- -------- $525,283 $985,773 Less: Billings to date 265,535 543,224 -------- -------- $259,748 $442,549 ======== ========
These amounts are included in the accompanying balance sheet under the following captions:
1995 1994 -------- --------- Costs and estimated earnings in excess of billings on uncompleted contracts $276,834 $ 459,399 Billings in excess of costs and estimated earnings on uncompleted contracts (17,086) (16,850) -------- --------- $259,748 $ 442,549 ======== =========
NOTE D - INCOME TAXES The Company has approximately $41,000 of job credits and research credits expiring in the years 1998 through 2001. The major differences between the current year statutory tax rates and the actual income tax provision in these financial statements are the use of general business tax credits to reduce taxes. F-8 14 NOTES TO FINANCIAL STATEMENTS - (CONTINUED) NUTEK, INC. - PENSACOLA, FLORIDA NOTE E - DEFERRED INCOME TAXES The deferred tax asset results primarily from book and tax differences in inventory due to Internal Revenue Code Section 263A (uniform capitalization) and allowance for doubtful accounts. The deferred tax liability results from differences in accumulated depreciation for book and tax purposes. NOTE F - PATENTS Patents are stated at cost less accumulated amortization. Amortization is provided by using the straight-line method over the estimated useful life of 17 years. NOTE G - NOTE PAYABLE TO STOCKHOLDER The note from the stockholder is a demand note with interest accruing monthly at 10.0% per annum. The note is due on October 1, 1997. This note is subordinated to the other liabilities of Nutek, Inc. Total interest expense paid to the shareholder in fiscal year 1995 was $56,186 and $53,346, respectively. NOTE H - COMMITMENTS AND CONTINGENCIES The Company leases various equipment and office space under operating leases expiring at various dates through July 1998. As of September 29, 1995, future minimum lease payments under the non-cancelable leases were: 1996 $13,680 1997 13,680 1998 11,400 ------- Total $38,760 =======
NOTE I - RELATED PARTY TRANSACTIONS Rental expense for all operating leases for the years ending September 29, 1995 and September 30, 1994, was $30,180 and $32,240, respectively. These amounts include leases from stockholders for several assets. The total lease payments to stockholders for the years ending September 29, 1995 and September 30, 1994, were approximately $30,180 and $29,040, respectively. F-9 15 NOTES TO FINANCIAL STATEMENTS - (CONTINUED) NUTEK, INC. - PENSACOLA, FLORIDA NOTE J - EMPLOYEE STOCK OWNERSHIP PLAN During fiscal year 1994, the Company terminated its employee stock ownership plan, and reacquired all of the outstanding stock under that plan. NOTE K - NON-CASH INVESTING AND OTHER CASH FLOW INFORMATION Cash was paid during the year for interest and income taxes as follows:
1995 1994 ---- ---- Interest $105,664 $ 90,173 Income taxes (see note D) $ -0- 9,920 NOTE L - INVENTORIES 1995 1994 ---- ---- Raw materials $388,554 $461,542 Manufactured parts 16,725 139,750 Shop supplies 72,690 80,268 Finished goods -0- 21,447 Inventory out for testing -0- 25,172 Less: Reserve for inventory loss (75,000) (80,000 -------- -------- $402,969 $648,179 ======== ========
NOTE M - NOTES PAYABLE
Payee Security Rate Terms Current Long-Term Total - ----- -------- ---- ----- ------- --------- ----- Barnett Bank Inventory and accounts receivable Prime +.75 Variable $149,500 $ -0- $149,500 Barnett Bank Computer Prime +.75 Variable 11,124 39,808 50,932 Barnett Bank Computer 8.75% $490./mo 1,423 -0- 1,423 Barnett Bank Iron Worker 7.50% $372./mo 4,161 1,514 5,675 Barnett Bank Auto 6.50% $502./mo 5,250 9,014 14,264 Barnett Bank Truck 8.05% $815./mo 7,561 23,365 30,926 Xerox Corp. Fax Machine 15.50% $ 65./mo 608 771 1,379 ------- ------- -------- $179,627 $74,472 $254,099 ======== ======= ========
F-10 16 NOTES TO FINANCIAL STATEMENTS - (CONTINUED) NUTEK, INC. - PENSACOLA, FLORIDA NOTE M - NOTES PAYABLE (continued) Maturities in each of the next five years are as follows:
September 30, Amount ------------- ------ 1996 $179,627 1997 27,206 1998 23,414 1999 17,416 2000 6,436 -------- $254,099 ========
NOTE N During fiscal year 1995, the Company sold its Firepower Product line. As a result, Nutek realized $287,291 in gain on the sale of related patents, fixed assets, inventory, and work-in-process. F-11 17 BALANCE SHEET NUTEK, INC. - PENSACOLA, FLORIDA MAY 31, 1996 (UNAUDITED) ASSETS
1996 ---- CURRENT ASSETS: Cash $ 300 Accounts receivable 508,608 Inventory 1,025,062 Other receivables 9,787 Prepaid expenses 11,098 Deferred tax asset 17,000 ---------- $1,571,855 PROPERTY AND EQUIPMENT: Office furniture and equipment $ 53,827 Buildings & leasehold improvements 296,594 Transportation equipment 88,529 Machinery and equipment 611,413 Computer and software 161,781 Equipment under capital leases 107,708 ---------- $1,319,852 Less accumulated depreciation (1,034,194) ---------- $ 285,658 OTHER ASSETS: Patents $ -0- Deposits $ 424 ---------- $ 424 ---------- $1,857,937 ==========
F-12 18 BALANCE SHEET NUTEK, INC. - PENSACOLA, FLORIDA MAY 31, 1996 (UNAUDITED) LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 626,627 Accrued and other payables 14,999 Income taxes payable -0- Accrued salaries and bonuses 10,260 Deferred tax liability 22,000 Current portion of long-term debt 196,749 ---------- $ 870,635 LONG-TERM DEBT: Notes payable $ 333,518 Note payable to stockholder 498,956 ---------- $ 832,474 Less amounts due within one year (196,749) ---------- $ 635,725 COMMITMENTS AND CONTINGENCIES - DEFERRED INCOME TAX - LONG-TERM $ 5,000 STOCKHOLDERS' EQUITY: Common stock; $1 par value; 20,000 shares authorized, 2,548 shares issued and 1,800 outstanding in 1996 $ 1,913 Additional paid-in capital 81,361 Retained earnings 322,779 Treasury stock (Common stock 748.19 shares in 1996) at cost (59,476) ---------- $ 346,577 ---------- $1,857,937 ==========
F-13 19 STATEMENTS OF INCOME NUTEK, INC. - PENSACOLA, FLORIDA FOR THE EIGHT MONTHS ENDED MAY 31, 1996 AND MAY 31, 1995 (UNAUDITED)
1996 1995 ---- ---- Sales $ 1,875,907 $ 1,887,633 Cost of Sales 1,529,934 1,563,111 ----------- ----------- Gross profit $ 345,973 $ 324,522 Discounts earned and miscellaneous income 127 860 ----------- ----------- $ 346,100 $ 325,382 General and administrative expenses 346,267 490,473 ----------- ------------ Income/loss from operations $ (167) $ (165,091) Other income (expenses): Sale of scrap $ 2,598 $ 3,143 Interest income 6,571 2,216 Interest expense (55,454) (70,548) ----------- ----------- $ (46,285) $ (65,189) ----------- ----------- Net income (loss) $ (46,452) $ (230,280) Retained earnings, beginning of period $ 369,231 $ 438,076 ----------- ----------- Retained earnings, end of period $ 322,779 $ 207,796 =========== ===========
F-14 20 STATEMENTS OF CASH FLOWS NUTEK, INC. - PENSACOLA, FLORIDA FOR THE EIGHT MONTHS ENDED MAY 31, 1996 AND MAY 31, 1995 (UNAUDITED)
1996 1995 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ (46,452) $(230,280) Adjustments to reconcile net income to net cash: Depreciation and amortization 37,100 40,200 Provision for deferred taxes - 15,000 (Increase) decrease in current assets: Contracts receivable (230,680) 429,404 Costs and estimated earnings in excess of billings 276,834 459,399 Inventory (622,094) (303,880) Income taxes receivable 9,920 Employee advances 3,424 514 Prepaid expenses -0- (2) Other receivables 36,067 (19,341) Other assets -0- (723) Increase (decrease) in current liabilities: Accounts payable 463,617 (267,125) Accrued and other payables (6,359) (23,949) Income taxes payable -0- (1,783) Accrued salaries and bonuses (3) (14,127) Billings in excess of costs and estimated earnings (17,086) (16,850) -------- --------- $(95,712) $ 66,457 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property and equipment $(16,598) $ (67,636) Obligations under capital lease -0- (16,209) -------- --------- $(16,598) $ (83,845) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from long-term debt $100,500 $ 55,567 Borrowings from stockholders 50,000 -0- Repayments to stockholders (17,907) (30,000) Repayments of long-term debt (21,081) (7,879) -------- --------- $111,512 $ 17,688 -------- --------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ (798) $ 300 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,098 -0- -------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 300 $ 300 ======== =========
F-15 21 Pollution Research and Control Corp. and Subsidiaries Pro-Forma Condensed Consolidated Statement of Operations For the Year Ended December 31, 1995
PRCC & Subsidiaries Nutek, Inc. Year Ended Year Ended Pro-forma Pro-forma 12-31-95 9-29-95 Adjustments (Unaudited) ---------- --------- ------------ --------- Net Revenues $5,515,505 $2,484,950 $(187,189)(1) $7,813,266 Cost of Goods Sold 3,664,504 2,073,692 (113,026)(2) 5,625,170 ---------- ---------- ---------- Gross Profit 1,851,001 411,258 2,188,096 Operating Expenses 2,446,691 692,612 109,167(3) 3,248,470 ---------- ---------- ---------- Loss From Operations (595,690) (281,354) (1,060,374) Interest & Other Income 3,961 302,329 306,290 Interest Expense (5,589) (108,169) (70,000)(4) (183,758) ---------- ---------- ---------- Loss Before Income Taxes (597,318) (87,194) (937,842) Provision (Benefit) for Income Taxes - (18,349) (49,651)(5) (68,000) ---------- ---------- --------- Net Loss $(597,318) $ (68,845) $(869,842) ========= ========== ========= Loss Per Share: Net Loss $ (.09) $ (.13) ========= ========= Weighted average common and common equivalent shares outstanding 6,932,662 6,932,662 ========= =========
See accompanying notes. F-16 22 Pollution Research and Control Corp. and Subsidiaries Pro-Forma Condensed Consolidated Statement of Operations For the Five Months Ended May 31, 1996
PRCC & Subdidiaries Nutek, Inc. Pro-forma Pro-forma (Unaudited) (Unaudited) Adjustments (Unaudited) ------------ ----------- ------------ ----------- Net Revenues $2,331,275 $1,335,013 $( 83,051)(1) $3,583,237 Cost of Goods Sold 1,398,690 1,055,872 47,000 (2) 2,501,562 ---------- ---------- ---------- Gross Profit 932,585 279,141 1,081,675 Operating Expenses 746,992 174,879 45,069(3) 966,940 ---------- ---------- ---------- Income From Operations 185,593 104,262 114,735 Interest & Other Income 5,035 4,264 9,299 Interest Expense (7,091) (34,666) (36,000)(4) (77,757) ---------- ---------- ---------- Income Before Income Taxes 183,537 73,860 46,277 Provision (Benefit) for - - (24,000)(5) (24,000) ---------- ---------- ---------- Income Taxes Net Income $ 183,537 $ 73,860 $ 70,277 ========== ========== ========== Earnings Per Share: Net Income $ .03 $ .01 ========== ========== Weighted average common and common equivalent shares outstanding 7,045,041 7,045,041 ========= =========
See accompanying notes. F-17 23 Pollution Research and Control Corp. and Subsidiaries Notes to Pro-Forma Condensed Consolidated Statements of Operations 1. Introduction Effective June 19, 1996 the Company acquired 100% of the outstanding stock of Nutek, Inc., a Florida company primarily engaged in the manufacture of electrical control panels for process control applications in the utility, pulp and paper, and other industries. The Company paid $315,184 inclusive of acquisition costs, and financed the balance of the total purchase price of $1,929,669 (including the incurrence and assumption of debt) with $1,285,069 in asset-based loans based on Nutek's assets, $150,000 in seller financing, with miscellaneous debt accounting for the remainder. The transaction was accounted for as a purchase. Current assets and liabilities were recorded at their fair values, with the remainder of $1,496,308 assigned to property and equipment. The details of the assignment of the purchase price are presented in the summary balance sheet of Nutek as of the acquisition date given below: Certificate of deposit $ 21,750 Accounts receivable 525,811 Inventories 1,105,918 Deferred tax asset - current 38,000 Other current assets 21,470 Property and equipment 1,496,308 Loan costs 90,500 Deferred tax asset - long term 67,000 Other assets 424 Accounts payable (656,864) Other current liabilities (328,648) Deferred tax liability (452,000) Asset-based loans (1,285,069) Seller financing (150,000) Other debt (179,416) ----------- Cash paid (Stockholder's equity) $ 315,184 ===========
Reference is made to the Company's Form 10-Q for the period ended June 30, 1996, particularly the Consolidated Balance Sheet as of June 30, 1996 (which reflects the acquisition) and the notes to the Consolidated Financial Statements contained therein for additional information. F-18 24 Pro-forma statements of operations are presented for the year ended December 31, 1995 (using Nutek's annual results from its fiscal year ended September 29, 1995), and for the five months ended May 31, 1996. Pro-forma financial information is intended to provide investors with information about the continuing impact of a particular transaction by showing how it might have affected historical financial statements if the transaction had been consummated at an earlier time. Such statements can possibly assist investors in analyzing future prospects of the Company because they illustrate the possible scope of the change in the Company's historical financial position and results of operations caused by the transaction, but are not necessarily indicative of future results. 2. Pro-forma adjustments: The pro-forma adjustments listed below were made assuming the transaction had been consummated at the beginning of the fiscal year and the interim period, respectively, and consist of those adjustments management believes were necessary to give effect to events that were directly attributable to the transaction, expected to have a continuing impact, and are factually supportable. The parenthetical item numbers cross-reference to those shown on the face of the respective pro-forma statement of operations.
Year Five Months Ended Ended 12/31/95 5/31/96 --------- -------- (1) Revenue To convert Nutek's revenues from percentage of completion method to recognize revenue when the goods are shipped, to be consistent with the Company's accounting method $(187,189) $(83,051) ========= ======== (2) Cost of Goods Sold To convert Nutek's cost of goods sold from percentage-of-completion method to recognize costs when the goods are shipped, to be consistent with the Company's accounting method $(225,026) $ - To reflect additional depreciation on the amount of the purchase price assigned to fixed assets in excess of previous book value 112,000 47,000 --------- -------- $(113,026) $ 47,000 ========= ======== (3) Selling, General and Administrative To reflect additional depreciation on the amount of the purchase price assigned to fixed assets in excess of previous book value $ 61,000 $ 25,000 To reflect amortization of loan costs 30,167 12,569 To reflect miscellaneous fees relating to asset based financing 18,000 7,500 --------- -------- $ 109,167 $ 45,069 ========= ========
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Year Ended Five Months Ended Ended 12/31/95 5/31/96 --------- ------- (4) Interest Expense To reflect additional interest expense on the increase in debt $(70,000) $(36,000) ======== ======== (5) Income taxes To eliminate the current income tax benefit of Nutek which would not have existed $ 10,349 $ - To reflect the reduction of the deferred tax liability relating to the additional excess of book over tax depreciation (60,000) (24,000) -------- -------- $(49,651) $(24,000) ======== ========
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