SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K/A
(AMENDMENT NO.1)
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): August 1, 1997
THERMACELL TECHNOLOGIES, INC
(Exact Name of Registrant as Specified in its Charter)
Commission File Number 0-21279
FLORIDA 59-3223708
- ------------------------------- -------------------
(State of Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
5419 Provost Dr., Holiday, FL 34690
(Address of Principal Executive Offices)
(813) 938-3269
(Issuer's Telephone Number)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such a
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
The number of shares outstanding of the Issuer's Common Stock,
$.0001 par Value, as of August 31, 1997 was 2,859,551
Transitional Small Business Disclosure Format:
Yes No X
--- ---
<PAGE>
Item 7 Financial Statements and Exhibits
(a) Financial Statement of Business Acquired.
The audited financial statements for Atlas Chemical Company for each
of the two years in the period ending June 30, 1997..Pages F-1 - F-12
(b) Pro-forma financial information.
The following unaudited pro forma condensed consolidated financial statements
are filed with this report:
Pro Forma Condensed Balance Sheet at May 31, 1997............Page G-1
Pro Forma Condensed Consolidated Income Statement for Six
Months Ended May 31, 1997..................................Page G-2
Notes to Pro Forma Income Statement and Balance Sheet Data...Page G-3
Pursuant to a Stock Purchase Agreement dated July 29, 1997 (the Agreement), the
Registrant acquired a paint manufacturing business in Miami, Florida, Atlas
Chemical Company, a Florida corporation (ATLAS), for approximately $1,067,000
in cash. The acquired business was merged into a separate surviving subsidiary
of the Registrant. The Registrant intends to continue the acquired operations
through its subsidiary.
A Form 8-K dated August 1, 1997 has previously been filed related to this
acquisition.
The unaudited pro forma financial statements as of and for the six months ended
May 31, 1997 have been prepared based on historical data of the Registrant, as
adjusted to reflect the acquisition of ATLAS as if each such agreement and
merger had been effective December 1, 1996. The pro forma income statement data
may not be indicative of the future results of operations or what the actual
results of operations would have been had the acquisition described above been
effective earlier.
2
<PAGE>
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.
THERMACELL TECHNOLOGIES, INC.
/s/ Gerald Couture
-------------------------------
Vice-President, Finance and
Chief Financial Officer
Dated: October 14, 1997
3
<PAGE>
ATLAS CHEMICAL CO.
Contents
Page
----
Report of Independent Certified Public Accountants F-2
Balance Sheet F-3 - F-4
Statements of Operations F-5
Statements of Changes in Accumulated Deficit F-6
Statements of Cash Flows F-7
Notes to Financial Statements F-8 - F-12
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Atlas Chemical Co.
Miami, Florida
We have audited the accompanying balance sheet of Atlas Chemical Co. as of June
30, 1997 and the related statements of operations, changes in accumulated
deficit, and cash flows for each of the two years in the period ended June 30,
1997. 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 audits.
We conducted our audits 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 audits provide 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 Atlas Chemical Co. as of June
30, 1997, and the results of its operations and its cash flows for each of the
two years in the period ended June 30, 1997 in conformity with generally
accepted accounting principles.
CHERRY, BEKAERT & HOLLAND, L.L.P.
Clearwater, Florida
September 25, 1997
F-2
<PAGE>
Atlas Chemical Co.
Balance Sheet
June 30, 1997
Assets
<TABLE>
<S> <C>
Current assets
Accounts receivable, net of allowance for
doubtful accounts of $7,711 $ 302,060
Inventories 212,112
Prepaid expenses 7,403
Cash value of officers' life insurance 20,645
----------------
Total current assets 542,220
----------------
Property and equipment
Equipment 72,157
Furniture and fixtures 39,552
Vehicles 105,599
Leasehold improvements 121,802
----------------
339,110
Less accumulated depreciation 258,130
----------------
80,980
----------------
Other assets
Deposits 547
Deferred income tax benefit, net 35,249
----------------
35,796
----------------
$ 658,996
================
</TABLE>
See notes to financial statements.
F-3
<PAGE>
Atlas Chemical Co.
Balance Sheet - continued
June 30, 1997
Liabilities and Stockholders' Equity
<TABLE>
<S> <C>
Current liabilities
Overdraft $ 1,435
Note payable - life insurance 11,357
Current maturities of long term debt
Notes payable 10,357
Capital lease 7,498
Accounts payable 233,805
Accrued payroll and payroll taxes 6,823
Other accrued expenses 55,870
-----------------
Total current liabilities 327,145
-----------------
Long term debt, net of current maturites
Notes payable 5,393
Capital lease obligation 9,701
-----------------
15,094
Stockholders' equity
Common stock, no par value 5,000 shares
authorized, 4,121 shares issued, and outstanding 452,471
Accumulated deficit (135,714)
-----------------
Total stockholders' equity 316,757
-----------------
$ 658,996
=================
</TABLE>
See notes to financial statements.
F-4
<PAGE>
Atlas Chemical Co.
Statements of Operations
Years ended June 30,
<TABLE>
<S> <C> <C>
1997 1996
-------------- ----------------
Revenue
Sales $ 2,399,103 $ 2,699,375
Less cost of goods sold 1,727,994 1,936,444
-------------- ----------------
Gross profit 671,109 762,931
Operating expenses
Selling expenses 296,929 320,553
Laboratory expenses 21,253 21,604
Warehouse expenses 208,316 216,685
General and administrative expenses 250,611 232,145
-------------- ----------------
Total operating expenses 777,109 790,987
-------------- ----------------
Loss from operations (106,000) (28,056)
Other income (expense)
Other income 19,056 1,266
Interest expense (4,031) (8,281)
Other expenses (4,602) (5,397)
-------------- ----------------
Total other income (expense) 10,423 (12,412)
-------------- ----------------
Loss before income tax benefit (95,577) (40,468)
Income tax benefit 27,570 7,679
-------------- ----------------
Net loss $ (68,007) $ (32,789)
============== ================
</TABLE>
See notes to financial statements.
F-5
<PAGE>
Atlas Chemical Co.
Statements of Changes in Accumulated Deficit
Years ended June 30,
<TABLE>
<S> <C> <C>
1997 1996
--------------- ---------------
Accumulated deficit - beginning of year $ (67,707) $ (34,918)
Net loss (68,007) (32,789)
--------------- ---------------
Accumulated deficit - end of year $ (135,714) $ (67,707)
=============== ===============
</TABLE>
See notes to financial statements
F-6
<PAGE>
Atlas Chemical Co.
Statements of Cash Flows
Years ended June 30,
<TABLE>
<S> <C> <C>
1997 1996
--------------- ---------------
Cash flows from operating activities
Reconciliation of net loss to net cash
used in operating activities
Net loss $ (68,007) $ (32,789)
Adjustments to reconcile net loss to net to
cash used in operating activities:
Depreciation 34,045 32,524
Deferred income tax benefit (30,916) (7,679)
Loss on sale of assets - 525
(Increase) decrease in accounts receivable 51,442 (46,581)
(Increase) decrease in inventory 66,649 (41,597)
Decrease in prepaid expenses 4,768 8,005
(Increase) decrease in other assets (3,087) 2,732
Increase in overdraft 1,435 -
Increase (decrease) in accounts payable (51,983) 70,502
Increase (decrease) in accrued expenses (4,975) 3,426
--------------- ---------------
Net cash used in operating activities (629) (10,932)
--------------- ---------------
Cash flows from investing activities
Proceeds from sale of assets - 1,701
Capital expenditures (5,767) (27,449)
--------------- ---------------
Net cash used in investing activities (5,767) (25,748)
--------------- ---------------
Cash flows from financing activities
Proceeds from sale of stock - 100,000
Proceeds from borrowings - 18,194
Principal payments on notes payable (13,760) (52,491)
Principal payments on capital lease obligation (6,815) (5,204)
--------------- ---------------
Net cash provided by (used in) financing activities (20,575) 60,499
--------------- ---------------
Net increase (decrease) in cash (26,971) 23,819
Cash beginning of year 26,971 3,152
--------------- ---------------
Cash end of year $ - $ 26,971
=============== ===============
</TABLE>
See notes to financial statements.
F-7
<PAGE>
Atlas Chemical Co.
Notes to Financial Statements
June 30, 1997
Note 1 - Summary of significant accounting policies
Business activity
Atlas Chemical Co. (the Company) was incorporated in 1959 to manufacture and
market paints and coatings. A summary of the significant accounting policies
applied in the preparation of the accompanying financial statements follows.
Inventories
Inventories are stated at the lower of cost or market on an average cost basis.
Property and equipment
Property and equipment are recorded at cost. Depreciation of property and
equipment is provided using straight-line and accelerated methods over the
estimated useful lives of the assets. Expenditures for maintenance and repairs
are charged to expense as incurred.
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 at the date of the
financial statements. Actual results could differ from those estimates.
Income taxes
Income taxes are accounted for according to Statement of Financial Accounting
Standards No. 109, (SFAS 109). The statement requires the use of an asset and
liability approach for the recognition of income taxes. Deferred tax assets and
liabilities are recorded for the expected future tax consequences of events that
have been recognized in the Company's financial statements or tax returns. In
estimating future tax consequences, SFAS 109 generally considers all expected
future events.
F-8
<PAGE>
Atlas Chemical Co.
Notes to Financial Statements - continued
June 30, 1997
Note 1 - Summary of significant accounting policies - continued
Cash and cash equivalents
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
Note 2 - Inventory
Inventories consist of the following at June 30, 1997:
Raw materials $ 117,583
Finished goods 94,529
---------
$212,112
=========
Note 3 - Income tax matters
The net deferred income tax asset consists of the following components as of
June 30, 1997:
Net operating loss $ 51,249
Valuation adjustment (16,000)
---------
$ 35,249
=========
The component giving rise to the net deferred income tax asset described above
has been included in the accompanying balance sheet as of June 30, 1997 as
follows:
Current asset $ -
Noncurrent asset 35,249
---------
Deferred income tax benefit, net $ 35,249
=========
F-9
<PAGE>
Atlas Chemical Co.
Notes to Financial Statements - continued
June 30, 1997
Note 3 - Income tax matters - continued
The net operating loss generated through year end June 30, 1997 is $177,824. The
carryback of three years has previously been used to offset federal and state
taxable income for those years. The carryforward is available for a period of 15
years. Realization of the noncurrent deferred tax asset is dependent upon
sufficient future taxable income during the period that carryforwards are
expected to be available to reduce taxable income.
There was no provision for income tax (reduction) for the NOL's generated in
1995 and 1994 and carried forward to June 30, 1996. This amounted to $77,868 and
was reduced by a valuation amount equal to the NOL. This valuation was recorded
because the Company has no assurance that the NOL will be used to reduce income
in future years.
Note 4 - Note Payable
Note payable consisted of borrowings against the cash surrender value of
officers life insurance. Due to the sale of the company, this policy was
cancelled in July, and the proceeds were used to repay the note.
Note 5 - Long term debt
Long term debt consists of the following:
Note due in 60 monthly installments of $300,
plus interest at 9.5%, beginning September 1994,
collateralized by a vehicle $ 8,400
Note due in 36 monthly installments of $597,
including interest at 9.5%, beginning July 1995,
collateralized by a vehicle 7,350
--------
15,750
Less current maturities 10,357
--------
$ 5,393
========
F-10
<PAGE>
Atlas Chemical Co.
Notes to Financial Statements - continued
June 30, 1997
Note 5 - Long term debt - continued
Maturities of long-term debt are as follows:
1998 $ 10,357
1999 4,193
2000 1,200
--------
$15,750
========
Note 6 - Capital lease obligation
The Company acquired a truck under the provisions of a long-term lease. For
financial reporting purposes, minimum lease payments relating to the truck have
been capitalized. The lease expires in August 1999. The leased property under
capital lease as of June 30, 1997, has a cost of $29,219, accumulated
amortization of $15,194 and a net book value of $14,025. Amortization of the
leased property is included in depreciation expense.
The future minimum lease payments under the capital lease and the net present
value of the future minimum lease payments at June 30, 1997 are as follows:
Total minimum lease payments $19,112
Less amount representing interest 1,913
-------
Present value of net minimum lease payments 17,199
Less current maturities 7,498
-------
$ 9,701
=======
Note 7 - Related party transactions
The Company leases its premises from a trust consisting of stockholders of the
company. There is no formal written lease. Annual rental expense for each of the
years ending June 30, 1997 and 1996 was $ 42,684.
F-11
<PAGE>
Atlas Chemical Co.
Notes to Financial Statements - continued
June 30, 1997
Note 8 - Concentration of credit risk
The Company operates from one location in Southern Florida and manufactures and
sells paint and related products. The Company extends credit to its customers
substantially without collateral. The business operations are influenced by the
general economic conditions of the surrounding area.
Note 9 - Subsequent events
On July 29, 1997 all the outstanding shares of the Company were sold to Atlas
Acquisition Corporation, a wholly owned subsidiary of Thermacell Technologies,
Inc. Subsequent to the sale, it was anticipated the fiscal year end of the
company would be changed to September 30, 1997.
F-12
<PAGE>
THERMACELL TECHNOLOGIES, INC.
PRO FORMA INCOME STATEMENT DATA
FOR THE SIX MONTHS ENDED MAY 31, 1997
(in thousands)
<TABLE>
<CAPTION>
- --------------------------------------- ----------------------- ---------------------- --------------------- -------------------
ThermaCell Atlas Chemical for
Technologies per 10Q six months ending Proforma Adjustments
of 5/31/97(a) 5/31/97 Proforma
- --------------------------------------- ----------------------- ---------------------- --------------------- -------------------
<S> <C> <C> <C> <C>
Net Sales $ 415 $ 1,158 $ 1,573
Cost of Sales 210 811 1,021
- --------------------------------------- ----------------------- ---------------------- --------------------- -------------------
Gross Profit 205 347 552
- --------------------------------------- ----------------------- ---------------------- --------------------- -------------------
Operating Expenses:
Selling and Administrative Expenses 617 405 1,022
- --------------------------------------- ----------------------- ---------------------- --------------------- -------------------
(Loss) Income from Operations (412) (58) (470)
- --------------------------------------- ----------------------- ---------------------- --------------------- -------------------
Interest Expense, net (Loss) (139) (139)
Other (Loss) (35) (35)
- --------------------------------------- ----------------------- ---------------------- --------------------- -------------------
Provision (Benefit) for Income Taxes 110 110
- --------------------------------------- ----------------------- ---------------------- --------------------- -------------------
(Loss) Income (476) (58) (534)
- --------------------------------------- ----------------------- ---------------------- --------------------- -------------------
</TABLE>
G-1
<PAGE>
THERMACELL TECHNOLOGIES, INC.
PRO FORMA BALANCE SHEET DATA
AS OF MAY 31, 1997
(in thousands)
<TABLE>
<CAPTION>
ThermaCell Technologies Atlas Chemical
Six Months Ending 5/31/97 Six Months ending
5/31/97 Adjustments Proforma
- --------------------------------- -------------------------- ------------------------ ---------------- ---- ----------------------
<S> <C> <C> <C> <C> <C>
Current Assets:
Cash $ 2,256 $ 4 $ (1,067) b $ 1,193
Accounts Receivable, net of
allowance for doubtful accounts 137 297 434
Inventories 129 227 356
Other current assets 785 19 804
-------------------------- ------------------------ ---------------- ---- ----------------------
Total current assets 3,307 547 (1,067) 2,787
Property, equipment and other
assets 271 69 340
Goodwill and other assets 608 17 720 c 1,345
-------------------------- ------------------------ ---------------- ---- ----------------------
Total Assets 4,186 633 (347) 4,472
========================== ======================== ================ ==== ======================
Current Liabilities:
Accounts Payable 57 259 316
Other current liabilities 540 70 610
-------------------------- ------------------------ ---------------- ---- ----------------------
Total current liabilities 597 329 926
Long-term debt,
(net of current portion) 15 15
Stockholders'
equity: 5,613 378 378 5,613
Capital
Retained earnings (2,024) (88) (30) d (2,082)
-------------------------- ------------------------ ---------------- ---- ----------------------
Total liabilities and $ 4,186 $ 633 347 $ 4,472
stockholders' equity
========================== ======================== ================ ==== ======================
</TABLE>
G-2
<PAGE>
THERMACELL TECHNOLOGIES, INC.
NOTES TO PRO FORMA INCOME STATEMENT AND BALANCE SHEET DATA
FOR THE SIX MONTHS ENDED AND AS OF MAY 31, 1997
(Unaudited)
(a) The historical financial statements of ThermaCell Technologies for the six
months ended May 31, 1997. The Atlas Chemical column reflects the
operations of Atlas for the six months ended May 31, 1997 which is the time
prior to their acquisition by ThermaCell.
(b) Reflect the acquisition for cash in the amount of $1,067,000.
(c) Reflects the goodwill recorded for the Atlas acquisition.
(d) Reflects the elimination of loss on Atlas' books at time of closing of the
transaction which occurred after the May 31, 1997 pro forma statement date.
G-3
