-----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, Jf71cwLeGjhkWOoggah+PEJn+Ro/49dwChBquIuRh4yz+Q5wMcA/S42FufzXnkHN oP0YbIHf7BTxyhR1LKk4Rg== 0000891618-98-003555.txt : 19980803 0000891618-98-003555.hdr.sgml : 19980803 ACCESSION NUMBER: 0000891618-98-003555 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980522 ITEM INFORMATION: FILED AS OF DATE: 19980731 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BUSINESS RESOURCE GROUP CENTRAL INDEX KEY: 0000945028 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-FURNITURE & HOME FURNISHINGS [5020] IRS NUMBER: 770150337 STATE OF INCORPORATION: CA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-26208 FILM NUMBER: 98675184 BUSINESS ADDRESS: STREET 1: 2150 N FIRST ST STREET 2: STE 101 CITY: SAN JOSE STATE: CA ZIP: 95131 BUSINESS PHONE: 4084413700 MAIL ADDRESS: STREET 1: 2150 NORTH FIRST STREET SUITE 101 CITY: SAN JOSE STATE: CA ZIP: 95131 8-K/A 1 FORM 8-K/A DATED MAY 22, 1998 1 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 Date of Report (Date of earliest event reported): May 22, 1998 BUSINESS RESOURCE GROUP (Exact name of Registrant as specified in its charter) 0-26208 (Commission File Number) CALIFORNIA 77-0150337 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation) 2150 North First Street, Suite 101 San Jose, CA 95131 (Address of principal executive offices, with zip code) 408-325-3200 (Registrant's telephone number, including area code) N/A (Former name or former address, if changed since last report) 2 The Registrant hereby amends the following item of its Report on Form 8-K filed with the Securities and Exchange Commission on June 8, 1998. The Registrant is amending Item 7 to include certain required financial statements and pro forma financial statements and exhibits associated therewith. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) Financial Statements of Business Acquired. Exhibit 99.1 hereto contains the audited balance sheets for OFN, INC. as of March 31, 1998, unaudited income statements for the 12-months ended December 31, 1997 and the six months ended June 30, 1998, an unaudited balance sheet as of April 30, 1998 and the related statements of operations, shareholder's equity, and cash flows for the period ended March 31, 1998. (b) Pro Forma Financial Information. Exhibit 99.1 hereto contains the unaudited pro forma combined condensed balance sheet as of April 30, 1998, the unaudited pro forma combined condensed statements of operations for the year ended October 31, 1997 and the six months ended April 30, 1998 and the notes thereto. (c) Exhibits. 2.1* Asset Purchase Agreement dated May 22, 1998 , among the Company, OFN, INC., BRG Acquisition Corp. and David & Rebecca Nagorski, Husband and Wife as Joint Tenants. 23.1 Independent Auditor's Consent 99.1 OFN, INC. Financial Statements with Report of Deloitte & Touche LLP. * Filed with the Commission on June 8, 1998 and incorporated as an exhibit hereto pursuant to Rule 12b-32 promulgated under the Securities Exchange Act of 1934, as amended. -2- 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. BUSINESS RESOURCE GROUP Date: July 31, 1998 By: /s/ John Palmer ------------------------------------- John Palmer, Chief Financial Officer -3- 4 INDEX TO EXHIBITS
Exhibit No. Exhibit ------- ------- 2.1* Asset Purchase Agreement dated May 22, 1998, among the Company, OFN, INC., BRG Acquisition Corp. and David & Rebecca Nagorski, Husband and Wife as Joint Tenants. 23.1 Independent Auditor's Consent 99.1 OFN, INC. Financial Statements with Report of Deloitte & Touche LLP.
* Filed with the Commission on June 8, 1998 and incorporated as an exhibit hereto pursuant to Rule 12b-32 promulgated under the Securities Exchange Act of 1934, as amended. EX-23.1 2 INDEPENDENT AUDITOR'S CONSENT 1 EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT We hereby consent to the incorporation by reference in Business Resource Group's Registration Statements Nos. 33-95144, 333-02388, 333-23495, 333-49849 on Forms S-8 our report, dated May 7, 1998, relating to the financial statements of OFN, Inc., which appears in this Current Report on Form 8-K/A of Business Resource Group. /s/ Deloitte & Touche LLP San Jose, California July 30, 1998 EX-99.1 3 OFN, INC. FINANCIAL STATEMENTS 1 BUSINESS RESOURCE GROUP PRO FORMA CONDENSED COMBINED BALANCE SHEET (UNAUDITED)
Pro forma Combined BRG OFN Combined Pro forma Balance Sheet 4/30/98 4/30/98 4/30/98 Adjustments 4/30/98 ----------------------------------------------------------------------- ASSETS Current assets: Cash and equivalents 636 233 869 - 869 Accounts receivable, net 14,866 453 15,319 - 15,319 Inventory 8,211 490 8,701 - 8,701 Prepaids and other current assets 2,110 27 2,137 - 2,137 ----------------------------------------------------------------------- Total current assets 25,823 1,203 27,026 - 27,026 Property and equipment, net 2,344 45 2,389 - 2,389 Goodwill - - - 2,341 (1) 2,341 Other assets 819 15 834 - 834 ----------------------------------------------------------------------- 28,986 1,263 30,249 2,341 32,590 ======================================================================= LIABILITIES AND SHAREHOLDERS EQUITY Current liabilities: Line of credit 4,990 - 4,990 2,093 (1) 7,083 Accounts payable 6,678 78 6,756 - 6,756 Accrued liabilities 3,906 114 4,020 - 4,020 Current portion, notes payable - - - 356 (1) 356 Income taxes payable 316 - 316 - 316 ----------------------------------------------------------------------- Total current liabilities 15,890 192 16,082 2,449 18,531 Deferred income tax liability 75 - 75 - 75 Notes payable - - - 713 (1) 713 Shareholder's equity: Common stock 49 5 54 (5) (2) 49 Additional paid-in capital 11,016 - 11,016 250 (1) 11,266 Retained earnings 1,956 1,066 3,022 (1,066) (2) 1,956 ----------------------------------------------------------------------- Total shareholder's equity 13,021 1,071 14,092 (821) 13,271 ----------------------------------------------------------------------- 28,986 1,263 30,249 2,341 32,590 =======================================================================
Footnotes: (1) To record the acquisition of OFN, Inc. including recording goodwill ($2.3 million), borrowing from line of credit ($2.1 million), issuance of note ($1.1 million) and issuance of 100,000 Business Resource Group common stock ($250,000). (2) To eliminate the shareholders equity of OFN, Inc. 2 BUSINESS RESOURCE GROUP PRO FORMA CONDENSED COMBINED INCOME STATEMENT (UNAUDITED)
BRG OFN, Inc. Pro forma 12 months 12 months Combined ended ended Pro forma Income 10/31/97 12/31/97 Combined Adjustments Statement -------------------------------------------------------------------- Net Revenues $ 72,701 $ 3,373 $ 76,074 $ - $ 76,074 Cost of Net Revenues 57,430 1,644 59,074 - 59,074 -------------------------------------------------------------------- Gross Profit 15,271 1,729 17,000 - 17,000 Selling, General and Administrative expenses 16,622 987 17,609 117 (1) 17,726 -------------------------------------------------------------------- Income (loss) from operations (1,351) 742 (609) (117) (726) Net interest income / (expenses) 66 - 66 (232) (2) (166) -------------------------------------------------------------------- Income (loss) before income taxes (1,285) 742 (543) (349) (892) Income taxes (523) - (523) 160 (3) (363) -------------------------------------------------------------------- Net Income/(loss) $ (762) $ 742 $ (20) $ (509) $ (529) ==================================================================== Net Income/(loss) per common and common equivalent share, basic and diluted $ (0.16) $ (0.11) ============= ============= Shares used on computation 4,902 100 (4) 5,002 ============= ============= =============
Footnotes: (1) To record amortization ($117,000) of goodwill. Goodwill amortization period is 20 years. (2) To record estimated interest ($167,000) on line of credit borrowings for acquisition under assumption line of credit is outstanding for full year and to record interest ($64,000) on note payable issued to seller. (3) To record income tax expense for OFN, Inc. net of the tax benefit of pro forma adjustments. (4) To reflect shares issued in connection with OFN, Inc. acquisition. 3 BUSINESS RESOURCE GROUP PRO FORMA CONDENSED COMBINED INCOME STATEMENT (UNAUDITED)
BRG OFN, Inc. Pro forma 6 months 6 months Combined ended ended Pro forma Income 04/30/98 06/30/98 Combined Adjustments Statement --------------------------------------------------------------------- Net Revenues $ 40,093 $ 1,853 $ 41,946 $ - $ 41,946 Cost of Net Revenues 31,565 920 32,485 - 32,485 --------------------------------------------------------------------- Gross Profit 8,528 933 9,461 - 9,461 Selling, General and Administrative expenses 7,761 587 8,348 59 (1) 8,407 --------------------------------------------------------------------- Income from operations 767 346 1,113 (59) 1,054 Other income / (expense): Net Interest Income / (expense) (51) - (51) (116) (2) (167) Gain on Sale of Assets 50 - 50 - 50 --------------------------------------------------------------------- Total other income / (expense) (1) - (1) (116) (117) --------------------------------------------------------------------- Income before income taxes 766 346 1,112 (175) 937 Income taxes 316 - 316 71 (3) 387 --------------------------------------------------------------------- Net Income $ 450 $ 346 $ 796 $ (246) $ 550 ===================================================================== Basic net earnings per share: $ 0.09 $ 0.11 ============= ============= Weighted average common shares outstanding 4,913 100 (4) 5,013 ============= ============= ============= Diluted net earnings per share: $ 0.09 $ 0.11 ============= ============= Total common stock and common stock equivalents 4,951 100 (4) 5,051 ============= ============= =============
Footnotes: (1) To record amortization ($59,000) of goodwill for six month period. Goodwill amortization period is 20 years. (2) To record estimated interest ($84,000) on line of credit borrowings for acquisition under assumption line of credit is outstanding for full six months and to record six months interest ($32,000) on note payable issued to seller. (3) To record income tax expense for OFN, Inc. net of the tax benefit of pro forma adjustments. (4) To reflect shares issued in connection with OFN, Inc. acquisition. 4 [DELOITTE & TOUCHE LLP LOGO] OFN, INC. Financial Statements as of March 31, 1998 and Independent Auditors' Report - --------------- Deloitte Touche Tohmatsu International - --------------- 5 [DELOITTE & TOUCHE LLP LETTERHEAD] INDEPENDENT AUDITORS' REPORT To the Shareholders of OFN, Inc.: We have audited the accompanying balance sheet of OFN, Inc. (the Company) as of March 31, 1998, and the related statements of income, shareholders' 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. 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, such financial statements present fairly, in all material respects, the financial position of the Company at March 31, 1998, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. /s/ DELOITTE & TOUCHE LLP May 7, 1998 6 OFN, INC. BALANCE SHEET MARCH 31, 1998 ASSETS Current assets: Cash.......................................................... $ 421,000 Accounts receivable........................................... 266,000 Inventory..................................................... 469,000 Prepaids and other current assets............................. 18,000 ---------- Total current assets...................................... 1,174,000 Property and equipment - net.................................... 45,000 Deposits........................................................ 15,000 ---------- Total........................................................... $1,234,000 ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable.............................................. $ 22,000 Accrued liabilities........................................... 147,000 ---------- Total current liabilities................................. 169,000 Shareholders' equity: Common stock, no par value; 1,000,000 shares authorized; 5,000 shares issued and outstanding......................... 5,000 Retained earnings............................................. 1,060,000 ---------- Total shareholders' equity................................ 1,065,000 ---------- Total........................................................... $1,234,000 ==========
See notes to financial statements. -2- 7 OFN, INC. STATEMENT OF INCOME YEAR ENDED MARCH 31, 1998 Net revenues....................................................$ 3,431,000 Cost of net revenues............................................ (1,684,000) ----------- Gross profit.................................................... 1,747,000 Selling, general and administrative expenses.................... 1,340,000 ----------- Net income......................................................$ 407,000 ===========
See notes to financial statements. -3- 8 OFN, INC. STATEMENT OF SHAREHOLDERS' EQUITY YEAR ENDED MARCH 31, 1998
Common Stock ----------------------- Retained Shares Amount Earnings Total Balances, April 1, 1997.................... 5,000 $5,000 $ 653,000 $ 658,000 Net income................................. 407,000 407,000 ------ ------ ---------- ---------- Balances, March 31, 1998................... 5,000 $5,000 $1,060,000 $1,065,000 ====== ====== ========== ==========
See notes to financial statements. -4- 9 OFN, INC. STATEMENT OF CASH FLOWS YEAR ENDED MARCH 31, 1998 Cash flows from operating activities: Net income........................................................................... $407,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization....................................................... 20,000 Changes in operating assets and liabilities: Inventory.......................................................................... (125,000) Prepaids and other current assets.................................................. (18,000) Accounts payable................................................................... (112,000) Accrued liabilities................................................................ 2,000 -------- Net cash provided by operating activities........................................ 174,000 Cash flows from investing activities: Purchase of property and equipment................................................... (27,000) ------- Increase in cash...................................................................... 147,000 Cash: Beginning of period.................................................................. 274,000 ------- End of period........................................................................ $421,000 ========
See notes to financial statements. -5- 10 OFN, INC. NOTES TO FINANCIAL STATEMENTS YEAR ENDED MARCH 31, 1998 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION - OFN, Inc., a California corporation (the Company), sells refurbished workspace products and services. 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 reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include the allowance for doubtful accounts receivable, inventory reserves, estimated useful lives of fixed assets and certain accrued liabilities. Actual results could differ from those estimates. CONCENTRATION OF CREDIT RISK - Financial instruments that potentially subject the Company to concentration of credit risk consist of cash and accounts receivable. Management believes the credit risk associated with cash is minimal. Substantially all of the Company's business activities are located in Southern California. The Company believes that its credit evaluation, approval and monitoring processes substantially mitigate potential credit risks. Collateral generally is not required. CASH - Cash consists of demand deposits in a single bank. INVENTORY is stated at the lower of cost (determined on a standard cost basis) or market value. PROPERTY AND EQUIPMENT are stated at cost and are depreciated using the straight-line method over useful lives of five years. REVENUE RECOGNITION - Revenues from product sales are recognized upon shipment or installation of products. 2. INCOME TAXES The Company is not subject to federal income taxes since it elected to be taxed as an S corporation pursuant to the Internal Revenue code. In lieu of corporate income taxes, the shareholders of an S corporation are taxed on their proportionate share of the Company's taxable income. Therefore, no provision for federal income taxes has been included in these financial statements. As an S corporation California requires the Company to pay tax at 1.5% of taxable income, which is included in selling, general and administrative expenses. -6- 11
3. PROPERTY AND EQUIPMENT Property and equipment at March 31, 1998 consist of the following: Office furniture and equipment ............................. $ 63,000 Vehicles ................................................... 37,000 Warehouse equipment ........................................ 29,000 -------- 129,000 Accumulated depreciation ................................... (84,000) -------- Total property and equipment -- net ........................ $ 45,000 ======== 4. ACCRUED LIABILITIES Accrued liabilities at March 31, 1998 consist of the following: Bonuses .................................................... $ 86,000 Sales taxes ................................................ 29,000 Vacation ................................................... 20,000 Payroll taxes .............................................. 12,000 -------- Total accrued liabilities .................................. $147,000 ========
5. LEASE OBLIGATIONS The Company leases operating facilities under operating leases which expire in fiscal year 2000 and may be canceled with sixty days notice after September 1998. Future scheduled lease payments under these operating leases are as follows:
YEARS ENDING MARCH 31, 1999 ......................................................... $192,000 2000 ......................................................... 95,000 -------- Total future payments .......................................... $287,000 ========
Rent expense for the year ended March 31, 1998 was approximately $190,000. 6. MAJOR CUSTOMERS AND VENDORS Three customers represented 28%, 16% and 13% of accounts receivable as of March 31, 1998, respectively. Two vendors accounted for 24% and 21% of the purchases for the year ended March 31, 1998, respectively. 7. SUBSEQUENT EVENT (UNAUDITED) In 1998, the Company entered into negotiations with Business Resource Group, Inc. (BRG), whereby BRG may purchase certain assets and assume certain liabilities of the Company. * * * * * -7- -----END PRIVACY-ENHANCED MESSAGE-----