-----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, H3LL86oLOWBiEGipftjdslMPeLb0FwZLeN5ZN+vyH6SqJnWKrrbWEfiMm5Pj0GLq SjJE9/I7jSN3RQFYnuHxXw== 0000950123-01-000440.txt : 20010123 0000950123-01-000440.hdr.sgml : 20010123 ACCESSION NUMBER: 0000950123-01-000440 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20001110 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010119 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NETWORK SYSTEMS INTERNATIONAL INC CENTRAL INDEX KEY: 0000842722 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 870460247 STATE OF INCORPORATION: NV FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-22991 FILM NUMBER: 1511978 BUSINESS ADDRESS: STREET 1: 200 NORTH ELM STREET CITY: GREENSBORO STATE: NC ZIP: 27401 BUSINESS PHONE: 6024648900 MAIL ADDRESS: STREET 1: 200 N ELM ST CITY: GREENSBORO STATE: NC ZIP: 27401 FORMER COMPANY: FORMER CONFORMED NAME: AQUA AUSTRALIS INC DATE OF NAME CHANGE: 19940322 8-K/A 1 y44575be8-ka.txt AMENDMENT #1 TO 11/10/00 8-K: NETWORK SYSTEMS 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 NOVEMBER 10, 2000 Date of Report (Date of earliest event reported) NETWORK SYSTEMS INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) NEVADA 0-22991 87-0460247 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 6413 CONGRESS AVENUE, SUITE 230, BOCA RATON, FL 33487 (Address of principal executive offices) (561) 988-2334 Registrant's telephone number 2 ITEM 1. CHANGES IN CONTROL OF REGISTRANT. Not Applicable. ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS On November 10, 2000, Network Systems International, Inc. ("NESI") completed acquisition of 100% of the issued and outstanding common stock of InterLAN Communications, Inc. ("InterLAN")(http://www.interlancom.com), a Virginia corporation, in exchange for $150,000 in cash, 250,000 shares of the common stock of NESI and promissory notes in the amount of $150,000. InterLAN is a provider of data communications and networking infrastructure solutions and consulting for business, government and education. InterLAN specializes in Remote Access including VPN (Virtual Private Networking), Wide Area and Local Area technologies to include Fiber Optic and Gigabit. The product line includes High Speed Switches, Routers, VPN Gateways, Servers and Workstations. InterLAN offers products from ADC, Adtran, APC, Lucent, AVAYA, Cisco Systems, Compaq, D-Link, RSA, Nortel Networks and Intel. InterLAN has provided design, consulting, product and maintenance services to national and international companies and organizations such as Sprint, Global One, The United States Securities and Exchange Commission, CLC - Computer Learning Center, The United States Department of Labor, The United States Army, GTE, Software AG and the Federal Aviation Administration. ITEM 3. BANKRUPTCY OR RECEIVERSHIP Not Applicable. ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT Not Applicable. ITEM 5. OTHER EVENTS Not Applicable. ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS Not Applicable. 2 3 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements of Business Acquired The audited financial statements of the acquired business, interLAN Communications, Inc., as of December 31, 1999 and for the year then ended, together with the audit report of Crooks & Seth, P.C. dated January 31, 2000 is attached hereto as Exhibit 99.1. (b) Pro forma financial information On November 10, 2000, Network Systems International, Inc. ("NESI") completed acquisition of 100% of the issued and outstanding common stock of InterLAN Communications, Inc. ("InterLAN")(http://www.interlancom.com), a Virginia corporation, in exchange for $150,000 in cash, 250,000 shares of the common stock of NESI and promissory notes in the amount of $150,000. The pro forma exhibits include a pro forma combining balance sheet as of September 30, 2000 that reflects the effects of the acquisition, as if it had occurred on that date. In addition, a combining pro forma statement of operations for the year ended September 30, 2000 reflects the acquisition on a pro forma basis, as if the transaction had occurred at the beginning of the year. (c) Exhibits 23.1 Consent of Crooks & Seth, P.C. 99.1 Audited financial statement of interLAN Communications, Inc. as of December 31, 1999 and for the year then ended, together with the audit report of Crooks & Seth, P.C., dated January 31, 2000. 99.2 Pro forma combined balance sheet as of September 30, 2000. 99.3 Pro forma combined statement of operations for the year ended September 30, 2000. ITEM 8. CHANGE IN FISCAL YEAR Not Applicable. ITEM 9. SALE OF EQUITY SECURITIES PURSUANT TO REGULATION S Not Applicable. 3 4 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. NETWORK SYSTEMS INTERNATIONAL, INC. BY /s/ HERBERT TABIN, PRESIDENT DATE: JANUARY 19, 2001 4 5 EXHIBITS
Exhibit Page Number Description Number 23.1 Consent of Crooks & Seth, P.C. 6 99.1 Audited financial statement of interLAN Communications 7 as of December 31, 1999 and for the year then ended, together with the audit report of Crooks & Seth, P.C., dated January 31, 2000. 99.2 Pro forma combined balance sheet as of September 30, 2000. 15 99.3 Pro forma combined statement of operations for the year ended 17 September 30, 2000.
5 EX-23.1 2 y44575bex23-1.txt CONSENT OF CROOKS & SETH, P.C. 1 EXHIBIT 23.1 CONSENT OF CROOKS & SETH, P.C. INDEPENDENT AUDITOR'S CONSENT We consent to the use in this Form 8-K of Network Systems International, Inc. of the Financial Statements and Independent Auditor's Report for fiscal year ending December 31, 1999 of InterLAN Communications, Inc. CROOKS & SETH, P.C. By: Brian Crooks Title: Partner Date: January 18, 2001 6 EX-99.1 3 y44575bex99-1.txt AUDITED FINANCIAL STATEMENT OF INTERLAN 1 Exhibit 99.1 interLAN COMMUNICATIONS, INC. FINANCIAL REPORT DECEMBER 31, 1999 7 2 CONTENTS
Page INDEPENDENT AUDITOR'S REPORT 1 FINANCIAL STATEMENTS: Balance Sheet 2 Income Statement 3 Statement of Cash Flow 4 Notes to financial statements 5-6
8 3 INDEPENDENT AUDITORS REPORT To the Board of Directors InterLAN Communications, Inc. 131 Elden Street Herndon, Virginia We have audited the accompanying balance sheet, statement of operations and statement of cash flow of interLAN Communications, Inc. as of December 31 , 1999. This financial statement is the responsibility of the 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 the 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 balance sheet, statement of operations and statement of cash flows referred to above, presents fairly, in all material respects, the financial position of interLAN Communications, Inc. as of December 31, 1999, in conformity with generally accepted accounting principles. CROOKS & SETH PC Herndon, Va. January 31, 2000 9 4 interLAN COMMUNICATION, INC. Balance Sheet as of DECEMBER 31, 1999
ASSETS CURRENT ASSETS Cash in Banks $111,471 Accounts Receivable 270,898 TOTAL CURRENT ASSETS 382,369 PROPERTY AND EQUIPMENT Furniture & Fixtures 13,516 Computers & Equipment 12,377 Accum. Depreciation (20,138) -------- TOTAL PROPERTY & EQUIPMENT 5,755 OTHER ASSETS Other Noncurrent Assets 1,211 Accum. Amortization (1,043) -------- TOTAL OTHER ASSETS 168 -------- TOTAL ASSETS $388,292 ======== LIABILITIES & EQUITY CURRENT LIABILITIES Accounts payable $233,339 Taxes payable 8,419 Loan -Payable -Other 28,575 -------- 270,333 LONG-TERM LIABILITIES Long-term Note Payable 32,061 -------- 32,061 -------- TOTAL LIABILITIES 302,394 EQUITY Common Stock 13,500 Paid in Capital 78,515 Retained Earnings (19,571) Current Period Income 13,454 ------- TOTAL EQUITY 85,898 -------- TOTAL LIABILITIES & EQUITY $388,292 ========
Read Accountant's Audit report Page 2 10 5 interLAN COMMUNICATION, INC. Income Statement For the Twelve Months Ending December 31, 1999 REVENUES Computer Sales & Rentals $2,662,838 Freight Income 11,871 Other income and Reimbursements 6,728 ---------- TOTAL REVENUES $2,681,437 DIRECT COSTS OF REVENUE Costs of Goods $2,123,510 Wages & Benefits 443,584 TOTAL DIRECT COSTS $2,567,094 ---------- GROSS PROFIT 114,343 OPERATING EXPENSES: Selling and Marketing expenses $ 19,442 General & Administrative expenses 78,063 ---------- TOTAL OPERATING EXPENSES $ 97,505 ---------- INCOME BEFORE TAXES $ 16,838 ---------- Corporate Income Tax 3,384 NET INCOME AFTER TAXES $ 13,454 ==========
Read Accountant's Audit report Page 3 11 6 interLAN COMMUNICATION, INC. STATEMENT OF CASH FLOW FOR THE THREE MONTHS ENDING DECEMBER 31, 1999 CASH FLOWS FROM OPERATIONS: Net Income (Loss) $ 13,454 Adjustments to reconcile Net Income Depreciation 3,100 Decrease (Increase) in: Accounts Receivable- Net (75,613) Prepaid Expenses 40,000 Increase (Decrease) in: Accounts Payable 8,570 Deferred Income (11,726) Loans 58,451 Paid in Capital 0 Net Cash Flows from Operations $ 36,236 --------- Cash Flows from Investing Activities Purchases of Fixed Assets (3,500) Net Cash Flows from Investing Activities $ (3,500) --------- Net Increase (Decrease) in Cash $ 32,736 Cash at Beginning of Year $ 78,735 --------- Cash at End of the Period $ 111,471 =========
Read Accountant's Audit Report Page 4 12 7 interLAN COMMUNICATIONS, INC. Notes to Financial Statements December 31, 1999 (1) ORGANIZATION The interLAN Communications, Inc. (Company) is a for profit organization providing computers, software and support services to the Federal Government and commercial organizations. The Company was incorporated in the state of Virginia in 1995. (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REVENUE RECOGNITION Revenue is recorded on the accrual basis and billed to the customer when shipped. The Company has not experienced any significant uncollectibles, therefore no provision has been made for bad debt. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ from those estimates. PROPERTY, PLANT AND EQUIPMENT Furniture and equipment are recorded at cost. Depreciation is calculated using the 150% Declining Balance method over the useful life permitted by IRS. The company maintains offices at 131 Elden Street, Herndon, Va. The company has two equipment leases with monthly payments totaling $347, which will expire by February 2002 INCOME TAXES The Company has elected to report Income Tax Returns on the accrual basis as a C Corporation. The Tax Receivable has been accrued for the estimated payments and the loss carryback. Historically, there are no significant differences between the Tax returns and the Financial Statements. NOTE PAYABLE The Company has borrowed funds from United Bank on January 5, 1999 in the amount of $80,000. The repayment terms are 36 monthly payments of $2,557.97 at 9.25% interest. The note has an outstanding balance as of December 31, 1999 of $58,450. 13 8 (3) CONTINGENCIES The Company is a computer and software sales firm, which provides systems to primarily business customers. The liability for warranty is passed through to the manufactures. However, the Company does have direct responsibility for labor costs for the repair or replacement of various components. The estimated accrual for these costs as of December 31, 1999 is based on a percentage of sales over a period of time. (4) CONCENTRATIONS OF CREDIT AND MAJOR CUSTOMERS The Company performs periodic credit evaluations of the financial condition of its customers and does not require collateral from its customers. Concentrations of credit risk with respect to accounts receivable are limited due to the large number of customers in the Company's customer base. (5) RELATED PARTY TRANSACTIONS Bonuses in addition to wages were paid to employee/stockholders in the amount of $90,000 in 1999. 14 EX-99.2 4 y44575bex99-2.txt PRO FORMA COMBINED BALANCE SHEET AS OF 9/30/00 1 NETWORK SYSTEMS INTERNATIONAL, INC. PRO FORMA COMBINING BALANCE SHEET AS OF SEPTEMBER 30, 2000 EXHIBIT 99.2
Historical interLAN Adjust Eliminate Pro forma ASSETS Current assets: Cash and cash equivalents $ 750,000 $ 337,235 A (150,000) $ 937,235 Accounts receivable, net -- 608,365 608,365 Notes receivable 1,500,000 -- 1,500,000 Income taxes receivable 106,417 -- 106,417 Other -- 1,160 1,160 ----------- --------- ----------- Total current assets 2,356,417 946,760 3,153,177 Property and equipment, net -- 8,219 8,219 Investment in interLAN A 637,500 (637,500) -- -- Goodwill, net -- -- B 394,248 354,823 C (39,425) ----------- --------- ----------- $ 2,356,417 $ 954,979 $ 3,516,219 =========== ========= =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable $ 750,000 $ 30,107 A 150,000 $ 930,107 Accounts payable 81,000 554,609 635,609 Accrued income taxes payable -- 83,000 83,000 Accrued expenses and other -- 33,400 33,400 Amounts due to purchaser of discontinued operations 106,417 -- 106,417 ----------- --------- ----------- 937,417 701,116 1,788,533 Long-term debt, less current -- 10,611 10,611 Stockholders' equity: Preferred stock 3 -- 3 Common stock 9,989 14,000 A 250 (14,000) 10,239 Additional paid-in capital 6,410,620 86,244 A 337,250 (480,492) 6,747,870 B 394,248 Retained deficit (5,001,612) 143,008 C (39,425) (143,008) (5,041,037) ----------- --------- ----------- 1,419,000 243,252 1,717,075 ----------- --------- ----------- $ 2,356,417 $ 954,979 $ 3,516,219 =========== ========= ===========
15 2 NETWORK SYSTEMS INTERNATIONAL, INC. PRO FORMA COMBINING BALANCE SHEET AS OF SEPTEMBER 30, 2000 EXHIBIT 99.2 (Continued)
DEBIT CREDIT [A] Cash 150,000 Notes payable 150,000 Common stock 250 Additional paid in capital 337,250 Investment in interLAN 637,500 To record acquisition of interLAN [B] Goodwill 394,248 Additional paid in capital 394,248 To record goodwill on subsidiary's books [C] Amortization expense 39,425 Accumulated amortization, goodwill 39,425
To record amortization of goodwill for one year 16 EX-99.3 5 y44575bex99-3.txt PRO FORMA COMIBINED STATEMENT OF OPERATIONS 1 NETWORK SYSTEMS INTERNATIONAL, INC. PRO FORMA COMBINING STATEMENT OF OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 2000 EXHIBIT 99.3
Historical interLAN Adjust Pro forma Revenues $ -- $4,484,031 $ 4,484,031 Costs and expenses: Cost of goods sold -- 3,662,009 3,662,009 Selling, general and administrative expense 81,000 606,581 A 39,425 727,006 Interest expense -- 3,695 3,695 ------------ ---------- --------- ------------ 81,000 4,272,285 39,425 4,392,710 ------------ ---------- --------- ------------ Earnings (loss) from continuing operations before taxes (81,000) 211,746 (39,425) 91,321 Income tax expense (benefit) (27,540) 78,688 B (14,982) 36,166 ------------ ---------- --------- ------------ Earnings (loss) from continuing operations (53,460) 133,058 (24,443) 55,155 Discontinued operations: Loss from operations of discontinued operations, less applicable income tax benefit of $1,762,184 (8,495,293) -- (8,495,293) Gain on disposal of discontinued operations, less applicable income taxes of $1,242,342 1,751,891 -- 1,751,891 ------------ ---------- --------- ------------ Net loss from discontinued operations (6,743,402) -- -- (6,743,402) ------------ ---------- --------- ------------ Net earnings (loss) (6,796,862) 133,058 (24,443) (6,688,247) Dividends on preferred shares 32,721 32,721 ------------ ---------- --------- ------------ Net loss applicable to common shares $ (6,829,583) $ 133,058 $ (24,443) $ (6,720,968) ============ ========== ========= ============ Earnings (loss) per common share, basic and diluted: Net earnings (loss) from continuing operations $ (0.01) $ 0.00 Net loss from discontinued operations (0.83) (0.80) ------------ ------------ $ (0.84) $ (0.80) ============ ============
17 2 NETWORK SYSTEMS INTERNATIONAL, INC. PRO FORMA COMBINING STATEMENT OF OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 2000 EXHIBIT 99.3 (Continued)
DEBIT CREDIT [A] Amortization expense 39,425 Accumulated amortization, goodwill 39,425 To record amortization of goodwill for one year [B] Accrued income taxes payable 14,982 Income tax expense 14,982
To record the income tax impact of the additional amortization expense 18 -----END PRIVACY-ENHANCED MESSAGE-----