SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
F O R M 8-K/A
Amendment No. 2
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) September 22, 1997
TRANSITION ANALYSIS COMPONENT TECHNOLOGY, INC.
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(Exact name of registrant as specified in charter)
Delaware 333-20709 13-3391820
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(State or Other Jurisdiction (Commission) (IRS Employer
of Incorporation) File Number) Identification No.)
22700 Savi Ranch Parkway, Yorba Linda, California 92657
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (714) 974-7676
N/A
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(Former name or former address, if changed since last report)
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of business acquired.
See Financial Statements of Research Analysis Corporation
for the year ended August 31, 1997 commencing on page 3 of
this Report.
(b) Pro Forma Financial Information.
See Financial Statements and Pro Forma Financial Information
of the Registrant commencing on page 12 of this Report.
(c) Exhibits
See Exhibit Index.
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Item 7.(a) Financial Statements of business acquired.
RESEARCH ANALYSIS CORPORATION
Financial Statement
For the Year Ended August 31, 1997
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[Stephen Wojdowski Letterhead]
To the Board of Directors and Stockholders of
Research Analysis Corporation
We have audited the accompanying balance sheet of Research Analysis Corporation
as of August 31, 1997 and the related statements of operations, 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.
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 Research Analysis Corporation
as of August 31, 1997, and the results of its operations and cash flow for the
year then ended, in conformity with generally accepted accounting principles.
/s/ Stephen Wojdowski
---------------------
November 18, 1997
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RESEARCH ANALYSIS CORPORATION
Balance Sheet
August 31, 1997
ASSETS
Current Assets
Cash in bank $ 45,409
Accounts receivable - trade 88,400 $ 133,809
---------
Property and Equipment
Office equipment and computers 49,793
Less: accumulated depreciation (23,792) 26,001
---------
Other Assets
Capitalized software development costs 59,920
Deposits 1,336 61,256
--------- ---------
Total Assets $ 221,096
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accrued payroll and employee benefits $ 84,102
Stockholders' Equity (per accompanying statement)
Common stock, authorized 10,000,000 shares $ 23,124
Additional paid-in capital 28,317
Retained earnings 85,553 136,994
--------- ---------
Total Liabilities and Stockholders' Equity $ 221,096
=========
See accompanying notes to financial statements.
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RESEARCH ANALYSIS CORPORATION
Income Statement
Year Ended August 31, 1997
Revenue $784,624
Contract Costs
Direct labor $ 335,402
Subcontracts 71,194
Travel 37,542
Other direct costs 2,467 446,605
--------- ---------
Gross Profit 338,019
Operating Expenses
Fringe benefits 273,238
Overhead 61,475
General and administrative 34,628 369,341
--------- ---------
Loss from Operations (31,322)
Other Income and Expenses
Interest income 838
--------
Loss before Taxes (30,484)
Tax Benefit 6,480
--------
Net Loss $(24,004)
========
See accompanying notes to financial statements.
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RESEARCH ANALYSIS CORPORATION
Statement of Stockholders' Equity
Common Stock
(Par Value $0.10) Additional
------------------- Paid-in Retained
Shares Value Capital Earnings
------- ------- --------- ---------
Balance at August 31, 1996 280,082 $20,868 $ 18,573 $ 109,557
Purchase of common stock 25,557 2,256 9,744
Shares surrendered (93,955)
Net Loss (24,004)
------- ------- --------- ---------
211,684 $23,124 $ 28,317 $ 85,553
======= ======= ========= =========
See accompanying notes to financial statements.
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RESEARCH ANALYSIS CORPORATION
Statement of Cash Flows
Year Ended August 31, 1997
Cash Flow from Operating Activities:
Net Loss $ (24,004)
Adjustments to reconcile net income to net
cash flow from operating activities:
Depreciation and amortization 13,358
Accounts receivable 28,374
Accounts payable and accrued expenses (1,355)
Prepaid taxes 500
Deferred taxes (6,480)
---------
Net Cash Flow from Operating Activities 10,393
---------
Cash Flow from Investing Activities
Purchase of computers and office equipment (31,408)
Software development (59,920)
---------
Net Cash Flow from Investing Activities (91,328)
---------
Cash Flow from Financing Activities
Purchases of common stock 12,000
---------
Net Cash Flow from Financing Activities 12,000
---------
Net Increase/(Decrease) in Cash (68,935)
Cash, beginning 114,344
---------
Cash, ending $ 45,409
=========
Supplemental disclosures of cash flow information
Cash paid during the year for:
Interest (net of amount capitalized) -0-
Income taxes -0-
See accompanying notes to financial statements.
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RESEARCH ANALYSIS CORPORATION
Notes to Financial Statement
Note A - Summary of Significant Accounting Policies
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RECOGNITION OF REVENUE
The major portion of revenues result from contract services performed for the
United States Government and its prime contractors under cost reimbursement and
fixed-price contracts and subcontracts. Contract revenues are accounted for
under the percentage of completion method wherein sales and estimated earnings
are recognized when work is performed.
INVENTORIES
No inventories are maintained. All cost is charged to operations in the period
in which it is incurred.
PROPERTY AND EQUIPMENT
Depreciation is provided over the estimated useful lives of assets using the
straight-line method. Estimated useful life is five years for furniture and
equipment.
CAPITALIZED SOFTWARE DEVELOPMENT COSTS
In accordance with the Statement of Financial Accounting Standard No. 86, the
Company has capitalized certain costs related to the development of software
products. Capitalized costs are amortized using the straight-line method over
five years. During the fiscal year, the Company incurred $59,920 in software
development costs which were capitalized; however, there was no amortization for
the year ended August 31, 1997.
INCOME TAXES
Taxes are provided at the appropriate rates for all taxable items included in
income regardless of the period in which such items are reported for tax
purposes. The principal difference arises from the use of a "Cash Basis" for tax
purposes and an "Accrual Basis" for financial statement purposes.
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RESEARCH ANALYSIS CORPORATION
Notes to Financial Statement
(continued)
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 and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
LINE OF BUSINESS
The Company was incorporated in the State of California on September 13, 1983
and is engaged primarily in engineering consulting for reliability,
maintainability and logistics in military hardware.
Note B - Accounts Receivable
- ----------------------------
Accounts receivable are primarily billed to the U.S. Government or subcontracts
under U.S. Government prime contracts. All receivables are considered
collectible.
Note C - Accrued Payroll and Employee Benefits
- ----------------------------------------------
Accrued salaries $ 17,361
Accrued vacation 6,741
Accrued retirement plan 60,000
--------
$ 84,102
========
Note D - Income Taxes
The provision for federal income taxes includes the following:
Payable currently $ --
Deferred tax benefit 6,480
--------
$ 6,480
========
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RESEARCH ANALYSIS CORPORATION
Notes to Financial Statement
(continued)
Note F - Commitments
- --------------------
Facilities are leased under operating leases. Rent expense was $17,982 for
fiscal year 1997.
As of August 31, 1997, future minimum annual lease payments are as follows:
Year Ended August 31
--------------------
1998 $ 16,392
1999 13,660
--------
$ 30,052
========
Note G - Retirement Plans
- -------------------------
The Company has both a profit sharing and money purchase retirement plan that
covers all eligible employees. Annual contributions to the profit sharing plan
are made at the discretion of the board of directors. The money purchase plan is
based on a fixed percentage of eligible compensation. Retirement plan expense
was $60,000 for fiscal year 1997.
Note H - Common Stock
- ---------------------
During the fiscal year, the majority stockholder surrendered 93,955 shares of
his stock as an equalizing transaction for no consideration. The two
stockholders of the Company now each own 50%.
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Item 7.(b) Pro Forma Financial Information.
TRANSITION ANALYSIS COMPONENT TECHNOLOGY, INC.
Pro Forma Condensed Combined Statement of Income
For the Three Months Ended September 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
TACTECH RAC Adjustments Consolidated
-------- --- ----------- ------------
<S> <C> <C> <C> <C>
Revenues $607,751 $148,325 ($15,223) $740,853
Selling, general and administrative
expenses 539,506 197,408 ( 15,223) 721,691
Amortization of software
development costs -- 1,070 -- 1,070
Interest expense 2,864 -- -- 2,649
Income before income taxes 55,358 (52,709) -- 2,649
Provision for income taxes 18,800 (17,900) -- 900
Net income $ 36,558 $ 34,809 -- $ 1,749
Net income per common share (--)
Shares used in computation 598,734
</TABLE>
See accompanying notes.
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TRANSITION ANALYSIS COMPONENT TECHNOLOGY, INC.
Pro Forma Condensed Combined Statement of Income
For the Year Ended June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
TACTECH RAC Adjustments Consolidated
-------- --- ----------- ------------
<S> <C> <C> <C> <C>
Revenues $2,205,679 $843,180 ($24,000) $3,024,859
Selling, general and administrative
expenses 1,863,247 792,831 (24,000) 2,632,078
Depreciation of equipment 39,562 10,214 -- 49,776
Income before income taxes 302,870 40,135 -- 343,005
Provision for income taxes 103,400 13,600 -- 117,000
Net income $ 199,470 $ 26,535 -- $ 226,005
Net income per common share $0.37
Shares used in computation 598,734
</TABLE>
See accompanying notes.
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TRANSITION ANALYSIS COMPONENT TECHNOLOGY, INC.
Notes to Unaudited Pro Forma Condensed Combined Financial Statements
(a) The pro forma financial statements for the year ended June 30, 1997 and for
the three month period ended September 30, 1997 were taken from the books
and records of TACTech and RAC. The TACTech financial information
for the year ended June 30, 1997 was previously filed on Form 10-KSB.
(b) Intercompany sales and purchases have been eliminated in the consolidated
number, and income taxes have been provided assuming the acquisition had
taken place at the beginning of the respective year and quarter.
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TRANSITION ANALYSIS COMPONENT TECHNOLOGY, INC.
Pro Forma Balance Sheet Information
-----------------------------------
The pro forma balance sheet data for TACTech after giving effect to the RAC
acquisition was previously reported in the footnotes to the financial statements
in the Form 10-KSB of TACTech for the year ended June 30, 1997; and such balance
sheet data is hereby incorporated by reference. The RAC balance sheet as of
September 30, 1997 has been included in the consolidated balance sheet of
TACTech in TACTech's Form 10-QSB for the quarter ended September 30, 1997; and
such balance sheet data is hereby incorporated by reference.
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SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrants have duly caused this report to be signed on their
respective behalf by the undersigned, thereunto duly authorized.
Date: January 22, 1998
TRANSITION ANALYSIS COMPONENT
TECHNOLOGY, INC.
By: /s/ Martin S. Fawer
-------------------
Chief Financial Officer and
Vice President
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EXHIBIT INDEX
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Exhibit Description
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2 Merger Agreement and Plan of Reorganization, dated as of September 1,
1997 by and among Transition Analysis Component Technology, Inc. (the
"Registrant"), Research Technology Analysis Corp., Research Analysis
Corporation, Jeff Hanser and Bruce L. Blackford.*
10.1 Option Agreement dated September 22, 1997, granting 22,452 options to
Bruce L. Blackford.*
10.2 Option Agreement, dated September 22, 1997, granting 22,452 options to
Jeff Hanser.*
10.3 Employment Agreement, dated September 22, 1997, between the Registrant
and Bruce L. Blackford.*
10.4 Employment Agreement, dated September 22, 1997, between the Registrant
and Jeff Hanser.*
99. Press release dated September 22, 1997.*
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* Previously filed.
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