<PAGE>
UNITED STATES
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 Exchange Act of 1934
Date of Report (Date of earliest event reported): May 22, 1998
------------
00-23711
----------------------------
COMMISSION FILE NO.
ACSYS, Inc.
-----------
(Exact name of registrant as specified in its Charter)
Georgia 58-2299173
- - ------- ----------
(State or other jurisdiction (IRS Employer
incorporation or organization) Identification Number)
75 Fourteenth Street, Suite 2200
Atlanta, GA 30309 30309
- - ---------------------------------------- -----
(Address of principal executive offices) (ZIP CODE)
(404) 817-9440
--------------
(Registrant's telephone number, including area code)
2000 Pennsylvania Avenue
Suite 7650
Washington, DC 20006
----------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 22, 1998, Acsys, Inc. (the "Company") acquired all of the interest in
ICON Search and Consulting, Inc. ("ICON") in a stock-for-stock merger
transaction which qualified as a "pooling of interests" for accounting purposes
and as a tax-free reorganization. Under the terms of the Agreement and Plan of
Merger by and among the Company, ICON, ICON Merger Subsidiary, Inc. and the
Shareholders of ICON, dated March 31, 1998 (the "Merger Agreement"), ICON
shareholders received 2,820,360 shares of the Common stock of the Company in
exchange for all of the equity interest in ICON. The number of shares of the
Company's stock issued to each ICON shareholder was based upon an exchange ratio
included in the Merger Agreement and upon the average closing price of the
Company's stock during a 15-trading-day measuring period ending before the
closing.
A copy of the Merger Agreement was provided as Exhibit 2.6 to the Company's
quarterly report on form 10-Q filed on May 15, 1998 and is incorporated herein
by reference.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
-----------------------------------------
Report of Independent Public Accountants..................... F-1
Balance Sheets............................................... F-2
Statements of Operations..................................... F-3
Statements of Shareholder's Equity........................... F-4
Statement of Cash Flows...................................... F-5
Notes to Financial Statements................................ F-6
(B) PRO FORMA COMBINED FINANCIAL INFORMATION (UNAUDITED)
----------------------------------------------------
Basis of Presentation........................................ F-11
Pro Forma Combined Balance Sheet............................. F-12
Pro Forma Combined Statements of Operations.................. F-13
Notes to Pro Forma Combined Financial Statements............. F-18
(C) EXHIBITS
--------
Not applicable
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To ICON Search and Consulting, Inc.:
We have audited the accompanying balance sheet of ICON Search and Consulting,
Inc. (a Georgia corporation) as of December 31, 1997, and the related statements
of operations, 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, the financial statements referred to above present fairly, in
all material respects, the financial position of ICON Search and Consulting,
Inc. as of December 31, 1997, and the results of its operations and its cash
flows for the year then ended, in conformity with generally accepted accounting
principles.
Atlanta, Ga.,
April 15, 1998 (except with respect
to the matter discussed in Note 8,
as to which the date is May 22, 1998.)
F-1
<PAGE>
ICON SEARCH AND CONSULTING, INC.
--------------------------------
BALANCE SHEETS
--------------
<TABLE>
<CAPTION>
December 31 March 31
1997 1998
------------------ -------------------
<S> <C> <C>
(unaudited)
ASSETS
- - ------
CURRENT ASSETS:
Accounts receivables, net of allowances
of $75,000 and $125,000 $3,138,722 $4,388,099
Prepaid expenses and other 679,599 301,840
---------- ----------
Total current assets 3,818,321 4,689,939
PROPERTY AND EQUIPMENT, net 119,169 161,679
DEFERRED INCOME TAXES 102,971 --
OTHER ASSETS 36,086 36,086
---------- ----------
$4,076,547 $4,887,704
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
- - ------------------------------------
CURRENT LIABILITIES:
BANK OVERDRAFT $ 487,232 $ 180,431
Line of credit -- 122,845
Accounts payable 16,965 18,258
Accrued payroll and contractor costs 803,142 2,173,959
Other current liabilities 4,671 302,473
Deferred income taxes 1,092,595 589,700
Deferred revenues 174,316 209,316
---------- ----------
Total current liabilities 2,578,921 3,596,982
---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 4)
SHAREHOLDERS' EQUITY:
Class A Common stock, $.01 par value, 40,000,000 shares authorized,
2,000,000 shares issued and outstanding 20,000 20,000
Class B Common stock, $.01 par value, 4,000,000 shares authorized, no
shares issued or outstanding -- --
Retained earnings 1,477,626 1,270,722
---------- ----------
Total shareholders' equity 1,497,626 1,290,722
---------- ----------
$4,076,547 $4,887,704
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
F-2
<PAGE>
ICON SEARCH AND CONSULTING, INC.
--------------------------------
STATEMENTS OF OPERATIONS
------------------------
<TABLE>
<CAPTION>
For the Year Ended For the Three Months
December 31 Ended March 31
----------------------------------------
1997 1997 1998
------------------- -------------------- -------------------
<S> <C> <C> <C>
(unaudited)
SERVICE REVENUES:
Temporary staffing $18,276,449 3,499,248 $6,798,119
Permanent placement 1,676,713 589,614 254,238
----------- ---------- ----------
Total service revenues 19,953,162 4,088,862 7,052,357
DIRECT COST OF SERVICES, consisting of payroll, payroll
taxes and benefit costs for temporary employees and cost
of contract personnel 14,670,587 2,833,561 5,373,667
----------- ---------- ----------
Gross profit 5,282,575 1,255,301 1,678,690
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 4,166,807 865,672 1,970,965
AMORTIZATION AND DEPRECIATION 52,173 13,043 15,416
----------- ---------- ----------
Operating income (loss) 1,063,595 376,586 (307,691)
OTHER INCOME (EXPENSE):
Interest income 10,818 327 798
Interest expense (2,361) (345) (2,133)
Other 1,374 -- --
----------- ---------- ----------
Income before income taxes 1,073,426 376,568 (309,026)
INCOME TAXES 437,529 153,489 (102,122)
----------- ---------- ----------
NET INCOME (LOSS) $ 635,897 $ 223,079 $ (206,904)
=========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE>
ICON SEARCH AND CONSULTING, INC.
--------------------------------
STATEMENTS OF SHAREHOLDERS' EQUITY
----------------------------------
<TABLE>
<CAPTION>
Common Stock
----------------------------------
Class A Class B
------------------- --------------
Retained
Shares Amount Shares Amount Earnings Total
--------- -------- ------ ------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1996 2,000,000 20,000 -- -- 841,729 861,729
Net income -- -- -- -- 635,897 635,897
--------- ------- ------ ------ ---------- ----------
BALANCE, DECEMBER 31, 1997 2,000,000 20,000 -- -- 1,477,626 1,497,626
Net loss (Unaudited) -- -- -- -- (206,904) (206,904)
--------- ------- ------ ------ ---------- ----------
BALANCE, MARCH 31, 1998 2,000,000 $20,000 -- $ -- $1,270,722 $1,290,722
========= ======= ====== ====== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
ICON SEARCH AND CONSULTING, INC.
--------------------------------
STATEMENTS OF CASH FLOWS
------------------------
<TABLE>
<CAPTION>
For the Year For the Three Months
Ended Ended March 31
December 31 -----------------------------------------
1997 1997 1998
------------------- ------------------- --------------------
<S> <C> <C> <C>
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 635,897 $ 223,079 $ (206,904)
Adjustments to reconcile net income to net cash used in
operating activities-
Amortization and depreciation 52,173 13,043 15,416
Deferred tax expense 437,529 109,382 (399,924)
Changes in operating assets and liabilities-
Accounts receivable, net (998,731) (359,804) (1,249,377)
Prepaid expenses and other (671,709) (60,217) 377,759
Accounts payable (98,280) (97,164) 1,293
Accrued liabilities and other 208,044 182,941 1,668,619
Deferred revenues 174,316 -- 35,000
--------- --------- -----------
Net cash provided by (used in) operating
activities (260,761) 11,260 241,882
--------- --------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (83,658) (25,877) (57,926)
--------- --------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in bank overdrafts 487,232 157,430 (306,801)
Net borrowings (repayments) on line of credit (183,263) (183,263) 122,845
--------- --------- -----------
Net cash provided by (used in) financing
activities 303,969 (25,833) (183,956)
--------- --------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (40,450) (40,450) --
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 40,450 40,450 --
--------- --------- -----------
CASH AND CASH EQUIVALENTS, END OF YEAR $ -- $ -- $ --
========= ========= ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE>
ICON SEARCH AND CONSULTING, INC.
--------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(Information as of March 31, 1998 and
-------------------------------------
for the three months ended March 31, 1997 and 1998 is unaudited)
----------------------------------------------------------------
1. DESCRIPTION OF BUSINESS:
------------------------
ICON Search and Consulting, Inc. (the "Company") was incorporated in Atlanta,
Georgia in September 1994. The Company is an information technology staffing
firm.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
-------------------------------------------
Risks and Uncertainties
- - -----------------------
The Company's future results of operations involve a number of risks and
uncertainties. Factors that could affect the Company's future operating results
and cause actual results to vary materially from expectations include, but are
not limited to, the Company's brief operating history, the competitive market
for information technology staffing services, dependence on availability of
qualified personnel, and dependence on key management personnel.
Cash and Cash Equivalents
- - -------------------------
The Company considers cash on deposit with financial institutions and all highly
liquid investments purchased with an original maturity of three months or less
to be cash equivalents.
Property and Equipment
- - ----------------------
Property and equipment are stated at cost. Depreciation is provided on a
straight-line basis over the useful lives of the assets. Leasehold improvements
are depreciated over the shorter of the estimated useful life of the asset or
the remaining term of the lease.
<TABLE>
<CAPTION>
December 31 March 31
Useful Lives 1997 1998
---------------- ----------------- -----------------
<S> <C> <C> <C>
Office equipment 3 years $184,356 $ 224,383
Office furniture and fixtures 7 years 19,378 37,277
Leasehold improvements 7 years 6,753 6,753
-------- ---------
210,487 268,413
Less- Accumulated depreciation (91,318) (106,734)
-------- ---------
$119,169 $ 161,679
======== =========
</TABLE>
Depreciation was $52,173, $13,043 and $15,416 for the years ended December 31,
1997, and the three months ended March 31, 1997 and 1998, respectively.
F-6
<PAGE>
ICON SEARCH AND CONSULTING, INC.
--------------------------------
NOTES TO FINANCIAL STATEMENTS-(Continued)
-----------------------------------------
Revenue Recognition
- - -------------------
The Company recognizes temporary staffing revenues when the services are
performed. The Company recognizes permanent placement revenues when the
employment offer and acceptance has occurred and the candidate's employment
start date has been established. Revenues from permanent placements are
reported in the statements of operations net of estimated adjustments due to
placed candidates that terminate employment within the Company's guarantee
period (generally 90 days). The net adjustment in each of the periods presented
is immaterial.
Gross Profit
- - ------------
Gross profit is determined by deducting the direct cost of services for
temporary staffing revenues, temporary payroll, payroll taxes and benefit costs
and cost of contract personnel. The primary costs associated with permanent
placement revenues are sales commissions, which increase in proportion with
service revenue from permanent placements. Consistent with industry practice,
these costs are included in selling, general, and administrative expenses.
Supplemental Cash Flow Information
- - ----------------------------------
The Company paid interest of $2,361, $345 and $2,133 for the years ended
December 31, 1997 and the three months ended March 31, 1997 and 1998,
respectively.
Income Taxes
- - ------------
The Company follows SFAS No. 109, "Accounting for Income Taxes." Under SFAS No.
109, the liability method is used in accounting for income taxes. Under this
method, deferred tax assets and liabilities are determined based on differences
between the financial reporting and tax bases of assets and liabilities and are
measured using enacted tax rates that are expected to be in effect when the
differences reverse.
Pervasiveness 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 and disclosure of
contingent 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.
F-7
<PAGE>
ICON SEARCH AND CONSULTING, INC.
--------------------------------
NOTES TO FINANCIAL STATEMENTS-(Continued)
-----------------------------------------
Fair Value of Financial Instruments
- - -----------------------------------
Management believes that the carrying amounts of certain financial instruments,
including cash and cash equivalents, accounts receivables, accounts payables and
accrued expenses, approximate their fair values as of each balance sheet date,
given the relatively short maturity of these instruments.
Litigation
- - ----------
The Company is involved in litigation in the ordinary course of business
which is not, in the opinion of management, expected to have a material effect
on the results of operations or financial condition of the Company.
3. LINE OF CREDIT:
---------------
In October 1996, the Company entered into a line of credit agreement with a
bank. The line provides for maximum borrowings of $750,000 at prime plus 1% and
expires in May 1998, subject to renewal. The line is secured by substantially
all of the assets of the Company and is personally guaranteed by the
shareholders. During 1997, the maximum borrowing on the line was $268,441. For
the year ended December 31, 1997, interest expense on the line was $2,361, at a
weighted average interest rate of 9.5%. No amounts under the line were
outstanding at December 31, 1997.
4. COMMITMENTS AND CONTINGENCIES:
------------------------------
The Company leases office space under a noncancelable operating lease. Future
minimum payments required under operating leases that have an initial or
remaining noncancelable lease term in excess of one year at December 31, 1997
are as follows:
<TABLE>
<S> <C>
1998 $ 77,965
1999 78,259
2000 65,805
2001 49,248
--------
$271,277
========
</TABLE>
Rent expense was $49,339, $82,894, $14,392 and $13,617 for the years ended
December 31, 1996 and 1997 and the three months ended March 31, 1997 and 1998,
respectively.
5. RETIREMENT SAVINGS PLAN:
------------------------
The Company has a defined contribution retirement plan for the benefit of all
eligible employees. The plan qualifies under Section 401(k) of the Internal
Revenue Code and allows for eligible employees to contribute to the plan up to
10% of their compensation, subject to the
F-8
<PAGE>
ICON SEARCH AND CONSULTING, INC.
--------------------------------
NOTES TO FINANCIAL STATEMENTS-(Continued)
-----------------------------------------
maximum contributions allowed by the Internal Revenue Code. The plan also
provides for discretionary profit sharing contributions by the Company. The
Company did not make contributions to the plan during the year ended December
31, 1997 and the three months ended March 31, 1997 and 1998.
6. INCOME TAXES:
------------
The components of income tax expense (benefit) are as follows:
<TABLE>
<CAPTION>
For the Year For the Three
Ended Months Ended
December 31 March 31
1997 1998
----------------- -----------------
<S> <C> <C>
Federal:
Current $(95,773) $ 337,427
Deferred 464,146 (423,408)
-------- ---------
368,373 (85,981)
-------- ---------
State:
Current (17,980) 63,347
Deferred 87,136 (79,489)
-------- ---------
69,156 (16,142)
-------- ---------
$437,529 $(102,122)
======== =========
</TABLE>
The tax effect of significant temporary differences is as follows:
<TABLE>
<CAPTION>
December 31 March 31
1997 1998
----------------- -----------------
<S> <C> <C>
Gross deferred tax assets:
Reserves not currently deductible for tax $ 72,251 $ 205,110
Operating loss carryforwards 102,971 --
----------- ---------
175,222 205,110
Gross deferred tax liability:
Difference between cash basis of accounting (tax) and
accrual basis of accounting (book) ---------------- ----------------
(1,164,846) (794,810)
----------- ---------
Net deferred income tax liability $ (989,624) $ 589,700
=========== =========
</TABLE>
F-9
<PAGE>
ICON SEARCH AND CONSULTING, INC.
--------------------------------
NOTES TO FINANCIAL STATEMENTS-(Continued)
-----------------------------------------
The federal statutory income tax rate is reconciled to the effective tax rate as
follows:
<TABLE>
<CAPTION>
For the
Three Months
For the Year Ended
Ended December 31 March 31
1997 1998
----------------- -----------------
<S> <C> <C>
Federal statutory rate 34.0% (34.0)%
State income taxes, net of federal benefit 4.0 (4.0)
Expenses not deductible for tax purposes 2.7 5.0
---- ------
40.7% (33.0)%
==== ======
</TABLE>
7. STOCK OPTION PLAN:
-----------------
In May 1997, the Company granted options to certain employees to purchase
280,000 shares of Class B common stock at $1.00 per share. Each share of Class
B common stock has an ownership interest equal to 10% of a Class A common share
and is restricted to its sale or transfer, as defined. The options can be
exercised upon the earlier of 20 years or a public offering in excess of
$300,000 of the Company's Class A common stock. As of December 31, 1997, no
options have been exercised.
The Company accounts for its options under APB Opinion No. 25, "Accounting for
Stock Issued to Employees." In 1995, the Financial Accounting Standards Board
issued SFAS No. 123, "Accounting for Stock-Based Compensation." SFAS No. 123
established a fair value based method of accounting for stock-based compensation
plans. SFAS No. 123 requires that an employer's financial statements include
certain disclosures about stock-based employee compensation arrangements
regardless of the method used to account for the plan. Had the Company
recognized compensation cost for its stock option plans consistent with the
provisions of SFAS No. 123, pro forma net income would have been $589,282 for
the year ended December 31, 1997. The fair value of the option grants was
established on the grant date using the Black-Scholes option pricing model, with
a risk free interest rate of 6.50%, no expected dividend yield and an expected
life of five years.
8. SALE OF BUSINESS:
-----------------
On May 22, 1998, the stockholders of the Company exchanged all of their
outstanding shares of common stock for common stock of ACSYS, Inc., in a merger
transaction to be accounted for as a pooling-of-interests.
F-10
<PAGE>
ACSYS, INC.
-----------
PRO FORMA COMBINED FINANCIAL STATEMENTS
---------------------------------------
BASIS OF PRESENTATION
---------------------
(Unaudited)
ACSYS, Inc. ("ACSYS" or the ''Company'') was formed on March 10, 1997. On May
16, 1997, the Company acquired all of the issued and outstanding common stock of
Infinity Enterprises, Inc.; David C. Cooper & Associates, Inc.; DCCA
Professional Temporaries, Inc.; and EKT, Inc. in exchange for shares of the
Company's Common Stock. The Company also acquired all of the issued and
outstanding common stock of Cama of Tampa, Inc., Rylan Forbes Consulting Group,
Inc. (''Rylan Forbes'') and AcSys Resources, Inc. (''AcSys Resources''), on May
19, 1997, July 25, 1997 and September 3, 1997, respectively, in the same manner.
These acquisitions have been accounted for under the pooling-of-interests method
of accounting. The historical financial statements of the Company have been
restated to include the accounts and operating results of the acquired companies
for all dates and periods prior to the combinations, except for Infinity
Enterprises, Inc. and Cama of Tampa, Inc., which are reflected only from their
respective dates of formation of March 1, 1994 and January 1, 1996,
respectively.
In February 1998, the Company sold 2,842,500 shares of Common Stock in an
initial public offering, resulting in net proceeds of approximately $20.1
million (the "Offering").
Prior to the acquisition of AcSys Resources by the Company, AcSys Resources
acquired C.P.A. Staffing, Inc., C.P.A. Search, Inc. and Career Placement
Associates, Inc. (together, ''C.P.A. Staffing'') on August 12, 1997. The
acquisition was accounted for under the purchase method of accounting and is
reflected in the financial statements of the Company from the date of
acquisition.
On May 22, 1998, the Company acquired ICON Search & Consulting, Inc. ("ICON"),
whereby the Company exchanged 2,820,360 shares of its Common Stock for all of
the issued and outstanding shares of common stock of ICON, in a transaction
accounted for as a pooling-of-interests (the "ICON Merger"). Merger costs were
$1,730,000.
The pro forma combined balance sheet gives effect to the ICON Merger as if it
had occurred on March 31, 1998. The pro forma combined statements of operations
for the years ended December 31, 1995 and 1996 represent the combined historical
operating results of the Company and ICON. The pro forma combined statements of
operations for the year ended December 31, 1997 and the three months ended March
31, 1997 and 1998 represent the combined operating results of the Company and
ICON and give effect to (i) the acquisition of C.P.A. Staffing and the Offering
as if they had occurred on January 1, 1997 and (ii) certain other pro forma
adjustments. See Notes to Pro Forma Consolidated Financial Statements
The pro forma adjustments are based on estimates, available information and
certain assumptions that management deems appropriate. The pro forma financial
data do not purport to represent what the Company's financial position or
results of operations would actually have been if such transactions had occurred
on those dates and are not necessarily representative of the Company's financial
position or results of operations for any future period. The pro forma
consolidated financial statements should be read in conjunction with the other
financial statements and notes thereto included elsewhere in this form 8-K/A.
F-11
<PAGE>
ACSYS, INC.
-----------
PRO FORMA COMBINED BALANCE SHEET
--------------------------------
MARCH 31, 1998
--------------
(Unaudited)
<TABLE>
<CAPTION>
Historical
------------------------------ Pro Forma
ACSYS ICON Combined
------------- --------------- ------------
ASSETS (Note 1) (Notes 1 and 3)
------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents............................................... $ 7,059,888 $ -- $ 7,059,888
Accounts receivable, net................................................ 10,213,354 4,388,099 14,601,453
Prepaid expenses and other.............................................. 1,096,664 301,840 1,398,504
----------- ---------- -----------
Total current assets........................................... 18,369,906 4,689,939 23,059,845
PROPERTY AND EQUIPMENT, net.............................................. 2,488,811 161,679 2,650,490
GOODWILL AND OTHER INTANGIBLE
ASSETS, net.............................................................. 17,633,134 -- 17,633,134
OTHER ASSETS............................................................. 112,817 36,086 148,903
----------- ---------- -----------
$38,604,668 $4,887,704 $43,492,372
=========== ========== ===========
LIABILITIES AND
---------------
SHAREHOLDERS' EQUITY
--------------------
CURRENT LIABILITIES:
Bank overdrafts......................................................... $ -- $ 180,431 $ 180,431
Line of credit.......................................................... -- 122,845 122,845
Current portion of long-term debt....................................... 42,962 -- 42,962
Accounts payable........................................................ 664,532 18,258 682,790
Accrued liabilities and other........................................... 4,146,615 2,476,432 6,623,047
Deferred income taxes................................................... 906,784 589,700 1,496,484
Deferred revenues....................................................... -- 209,316 209,316
----------- ---------- -----------
Total current liabilities 5,760,893 3,596,982 9,357,875
----------- ---------- -----------
LONG-TERM DEBT........................................................... 648,374 -- 648,374
----------- ---------- -----------
DEFERRED INCOME TAXES.................................................... 2,272,216 -- 2,272,216
----------- ---------- -----------
OTHER LONG-TERM LIABILITIES.............................................. 337,134 -- 337,134
----------- ---------- -----------
SHAREHOLDERS' EQUITY:
Preferred stock, no par value, 5,000,000 shares
authorized, no shares issued or outstanding............................. -- -- --
Common stock, no par value, 45,000,000 shares authorized, 11,426,737
shares issued and outstanding (ACSYS historical), 14,247,093 (pro
forma combined)........................................................ 29,115,356 20,000 29,135,356
Retained earnings....................................................... 470,695 1,270,722 1,741,417
----------- ---------- -----------
Total shareholders' equity 29,586,051 1,290,722 30,876,773
----------- ---------- -----------
$38,604,668 $4,887,704 $43,492,372
=========== ========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
F-12
<PAGE>
ACSYS, INC.
-----------
PRO FORMA COMBINED STATEMENT OF OPERATIONS
------------------------------------------
YEAR ENDED DECEMBER 31, 1995
----------------------------
(Unaudited)
<TABLE>
<CAPTION>
Historical
--------------------------- Pro Forma
ACSYS ICON Combined
------------- ------------ -------------
(Note 1) (Note 1)
<S> <C> <C> <C>
SERVICE REVENUES:
Temporary staffing.................................................... $26,565,734 $1,648,966 $28,214,700
Permanent placement................................................... 7,919,043 350,310 8,269,353
----------- ---------- -----------
Total service revenues............................................ 34,484,777 1,999,276 36,484,053
DIRECT COST OF SERVICES, consisting of payroll,
payroll taxes and benefit costs for temporary
employees and cost of contract personnel............................... 17,731,610 552,461 18,284,071
----------- ---------- -----------
Gross profit...................................................... 16,753,167 1,446,815 18,199,982
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES........................... 12,795,347 1,097,647 13,892,994
AMORTIZATION AND DEPRECIATION.......................................... 674,312 7,097 681,409
SEVERANCE AND FRANCHISE TERMINATION COSTS.............................. 166,394 -- 166,394
----------- ---------- -----------
Operating income.................................................. 3,117,114 342,071 3,459,185
OTHER INCOME (EXPENSE):
Interest income....................................................... 64,039 199 64,238
Interest expense...................................................... (890,133) -- (890,133)
Other................................................................. (39,132) -- (39,132)
----------- ---------- -----------
Income before income taxes........................................ 2,251,888 342,270 2,594,158
INCOME TAXES........................................................... -- 133,133 133,133
----------- ---------- -----------
NET INCOME............................................................. $ 2,251,888 $ 209,137 $ 2,461,025
=========== ========== ===========
NET INCOME PER SHARE (Note 5):
Basic and diluted net income per share................................ $0.24
===========
Shares used in computing basic and diluted net income
============
per share............................................................. 10,094,306
===========
PRO FORMA DATA:
Income before income taxes, as reported............................... $ 2,594,158
Pro forma income taxes................................................ 1,123,964
-----------
Pro forma net income.................................................. $ 1,470,194
===========
Pro forma basic and diluted net income per share...................... $0.15
===========
Shares used in computing pro forma basic and diluted
net income per share................................................. 10,094,306
===========
</TABLE>
The accompanying notes are an integral part of this statement
F-13
<PAGE>
ACSYS, INC.
-----------
PRO FORMA COMBINED STATEMENT OF OPERATIONS
------------------------------------------
YEAR ENDED DECEMBER 31, 1996
----------------------------
(Unaudited)
<TABLE>
<CAPTION>
Historical
--------------------------- Pro Forma
ACSYS ICON Combined
------------- ------------ -------------
(Note 1) (Note 1)
<S> <C> <C> <C>
SERVICE REVENUES:
Temporary staffing.................................................... $34,756,945 $ 9,799,537 $44,556,482
Permanent placement................................................... 11,151,319 1,034,190 12,185,509
----------- ----------- -----------
Total service revenues............................................ 45,908,264 10,833,727 56,741,991
DIRECT COST OF SERVICES, consisting of payroll,
payroll taxes and benefit costs for temporary
employees and cost of contract personnel............................... 22,873,091 7,743,335 30,616,426
----------- ----------- -----------
Gross profit...................................................... 23,035,173 3,090,392 26,125,565
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES........................... 18,776,444 1,992,698 20,769,142
AMORTIZATION AND DEPRECIATION.......................................... 661,377 31,670 693,047
SEVERANCE AND FRANCHISE TERMINATION COSTS.............................. 566,512 -- 566,512
----------- ----------- -----------
Operating income.................................................. 3,030,840 1,066,024 4,096,864
OTHER INCOME (EXPENSE):
Interest income....................................................... 73,729 69 73,798
Interest expense...................................................... (872,958) (7,947) (880,905)
Other................................................................. (4,099) 734 (3,365)
----------- ----------- -----------
Income before income taxes........................................ 2,227,512 1,058,880 3,286,392
INCOME TAXES........................................................... -- 418,962 418,962
----------- ----------- -----------
NET INCOME............................................................. $ 2,227,512 $ 639,918 $ 2,867,430
=========== =========== ===========
NET INCOME PER SHARE (Note 5):
Basic and diluted net income per share................................ $0.27
===========
Shares used in computing basic and diluted net income
per share............................................................ 9,972,294
===========
PRO FORMA DATA:
Income before income taxes, as reported............................... $ 3,286,392
Pro forma income taxes................................................ 1,399,067
-----------
Pro forma net income.................................................. $ 1,887,325
===========
Pro forma basic and diluted net income per share...................... $0.17
===========
Shares used in computing pro forma basic and diluted
net income per share................................................. 9,972,294
===========
</TABLE>
The accompanying notes are an integral part of this statement.
F-14
<PAGE>
ACSYS, INC.
-----------
PRO FORMA COMBINED STATEMENT OF OPERATIONS
------------------------------------------
YEAR ENDED DECEMBER 31, 1997
----------------------------
(Unaudited)
<TABLE>
<CAPTION>
Historical Pro Forma Adjustments
------------------------------------- ------------------------------------------------ Pro Forma
ACSYS ICON Combined C.P.A. Staffing Offering Other Combined
------------- ---------------------- ------------- ---------------- ------------ ----------------- ----------
(Note 1) (Notes 1 and 3) (Notes 1 and 2) (Note 4) (Note 4)
<S> <C> <C> <C> <C> <C> <C> <C>
SERVICE REVENUES:
Temporary
staffing...... $41,781,038 $18,276,449 $60,057,487 $4,015,890 $ -- $ -- $64,073,377
Permanent
placement..... 16,394,016 1,676,713 18,070,729 540,620 -- -- 18,611,349
----------- ----------- ----------- ---------- ------ ------ -----------
Total service
revenues.. 58,175,054 19,953,162 78,128,216 4,556,510 -- -- 82,684,726
DIRECT COST OF
SERVICES, consisting
of payroll, payroll
taxes and benefit
costs for temporary
employees and cost of
contract personnel. 27,912,116 14,670,587 42,582,703 2,832,357 -- -- 45,415,060
----------- ----------- ----------- ---------- ------ ------ -----------
Gross profit... 30,262,938 5,282,575 35,545,513 1,724,153 -- -- 37,269,666
SELLING, GENERAL AND
ADMINISTRATIVE
EXPENSES........... 25,812,475 4,166,807 29,979,282 1,679,590 -- (2,939,267)(a)(e) 28,719,605
COMBINATION EXPENSES 1,797,334 -- 1,797,334 -- -- (1,797,334)(b) --
AMORTIZATION AND
DEPRECIATION....... 663,088 52,173 715,261 20,995 -- 131,612(d) 867,868
SEVERANCE AND FRANCHISE
TERMINATION COSTS.. 682,000 -- 682,000 -- -- -- 682,000
----------- ----------- ----------- ---------- ------ ------ -----------
Operating
income........ 1,308,041 1,063,595 2,371,636 23,568 -- 4,604,989 7,000,193
OTHER INCOME (EXPENSE):
Interest income.... 33,111 10,818 43,929 -- -- -- 43,929
Interest expense... (864,096) (2,361) (866,457) -- 896,369(g) (105,273)(f) (75,361)
Other.............. 33,335 1,374 34,709 -- -- -- 34,709
----------- ----------- ----------- ---------- -------- ------ -----------
Income before
income taxes....... 510,391 1,073,426 1,583,817 23,568 896,369 4,499,716 7,003,470
INCOME
TAXES.... -- 437,529 437,529 -- 358,548(c) 2,215,416(c) 3,011,493
----------- ----------- ----------- ---------- -------- --------- -----------
NET INCOME.......... $ 510,391 $ 635,897 $ 1,146,288 $ 23,568 $537,821 $2,284,300 $ 3,991,977
=========== =========== =========== ========== ======== ========== ===========
NET INCOME (LOSS) PER SHARE (Note 5):
Basic and diluted
net income
per share......... $0.02
===========
Shares used in
computing basic
net income
per share......... 10,439,961
===========
Shares used in
computing diluted
net income
per share......... 10,543,807
===========
PRO FORMA DATA:
Income before
income taxes,
as reported....... $ 1,583,817
Pro forma
income taxes...... 1,455,692
-----------
Pro forma
net income........ $ 128,125
===========
Pro forma
basic net
income (loss)
per share......... $(0.08) $0.31
=========== ===========
Pro forma
diluted net
income (loss)
per share......... $(0.08) $0.30
=========== ===========
Shares used in
computing pro forma
basic net income
(loss) per share.. 10,439,961 13,044,757
=========== ===========
Shares used in
computing pro forma
diluted net income
(loss) per share.. 10,439,961 13,148,603
=========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
F-15
<PAGE>
ACSYS, INC.
-----------
PRO FORMA COMBINED STATEMENT OF OPERATIONS
------------------------------------------
THREE MONTHS ENDED MARCH 31, 1997
---------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Historical Pro Forma Adjustments
------------------------------------- ------------------------------------------------ Pro Forma
ACSYS ICON Combined C.P.A. Staffing Offering Other Combined
------------- ---------------------- ------------- ---------------- ------------ ----------------- ----------
(Note 1) (Notes 1 and 3) (Notes 1 and 2) (Note 4) (Note 4)
<S> <C> <C> <C> <C> <C> <C> <C>
SERVICE REVENUES:
Temporary
staffing...... $ 9,354,530 $ 3,499,248 $12,853,778 $1,454,470 $ -- $ -- $14,308,248
Permanent
placement..... 3,530,762 589,614 4,120,376 221,238 -- -- 4,341,614
----------- ----------- ----------- ---------- ------ ------ -----------
Total service
revenues.. 12,885,292 4,088,862 16,974,154 1,675,708 -- -- 18,649,862
DIRECT COST OF
SERVICES, consisting
of payroll, payroll
taxes and benefit
costs for temporary
employees and cost of
contract personnel. 6,255,571 2,833,561 9,089,132 1,103,429 -- -- 10,192,561
----------- ----------- ----------- ---------- ------ ------ -----------
Gross profit... 6,629,721 1,255,301 7,885,022 572,279 -- -- 8,457,301
SELLING, GENERAL AND
ADMINISTRATIVE
EXPENSES........... 5,373,414 865,672 6,239,086 401,383 -- (208,000)(a) 6,432,469
COMBINATION EXPENSES -- -- -- -- -- -- --
AMORTIZATION AND
DEPRECIATION....... 90,288 13,043 103,331 5,000 -- 53,949(d) 162,280
SEVERANCE AND FRANCHISE
TERMINATION COSTS.. -- -- -- -- -- -- --
----------- ----------- ----------- ---------- ------ ------ -----------
Operating
income........ 1,166,019 376,586 1,542,605 165,896 -- 154,051 1,862,522
OTHER INCOME (EXPENSE):
Interest income.... 14,641 327 14,968 -- -- -- 14,968
Interest expense... (223,246) (345) (223,591) -- 224,092(g) (26,318)(f) (25,817)
Other.............. (8,000) -- (8,000) -- -- -- (8,000)
----------- ----------- ----------- ---------- -------- ------ -----------
Income before
income taxes....... 949,414 376,568 1,325,982 165,896 224,092 127,733 1,843,703
INCOME
TAXES.... -- 153,489 153,489 -- 89,637(c) 549,666(c) 792,792
----------- ----------- ----------- ---------- -------- --------- -----------
NET INCOME.......... $ 949,414 $ 223,079 $ 1,172,493 $ 165,896 $134,455 $ (421,933) $ 1,050,911
=========== =========== =========== ========== ======== ========== ===========
NET INCOME PER SHARE (Note 5):
Basic and diluted
net income
per share......... $0.10
===========
Shares used in
computing basic
net income
per share......... 9,972,294
===========
Shares used in
computing diluted
net income
per share......... 10,047,611
===========
PRO FORMA DATA:
Income before
income taxes,
as reported....... $ 1,325,982
Pro forma
income taxes...... (570,172)
-----------
Pro forma
net income........ $ 755,810
===========
Pro forma
basic and
diluted net income
per share......... $ 0.06 $0.08
=========== ===========
Shares used in
computing pro forma
basic net income
per share......... 9,972,294 13,044,757
=========== ===========
Shares used in
computing pro forma
diluted net income
per share......... 10,047,611 13,120,074
=========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
F-16
<PAGE>
ACSYS, INC.
-----------
PRO FORMA COMBINED STATEMENT OF OPERATIONS
------------------------------------------
THREE MONTHS ENDED MARCH 31, 1998
---------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Historical Pro Forma Adjustments
------------------------------------- ------------------------------- Pro Forma
ACSYS ICON Combined Offering Other Combined
------------- ---------------------- ------------- ---------------- ------------ ----------
(Note 1) (Notes 1 and 3) (Note 4) (Note 4)
<S> <C> <C> <C> <C> <C> <C>
SERVICE REVENUES:
Temporary staffing.............$12,406,240 $ 6,798,119 $19,204,359 $ -- $ -- $19,204,359
Permanent placement............ 4,956,708 254,238 5,120,946 -- -- 5,210,946
----------- ----------- ----------- ------ ------ -----------
Total service revenues..... 17,362,948 7,052,357 24,415,305 -- -- 24,415,305
DIRECT COST OF SERVICES,
consisting of payroll,
payroll taxes and benefit
costs for temporary
employees and cost of
contract personnel............. 8,209,850 5,373,667 13,583,517 -- -- 13,583,517
----------- ----------- ----------- ------ ------ -----------
Gross profit............... 9,153,098 1,678,690 10,831,788 -- -- 10,831,788
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES........ 7,833,585 1,970,965 9,804,550 -- (729,099)(a) 9,075,451
COMBINATION EXPENSES............ -- -- -- -- -- --
AMORTIZATION AND DEPRECIATION... 238,645 15,416 254,061 -- -- 254,061
----------- ----------- ----------- ------ ------ -----------
Operating income........... 1,080,868 (307,691) 773,177 -- 729,099 1,502,276
OTHER INCOME (EXPENSE):
Interest income................ 55,487 798 56,285 -- -- 56,285
Interest expense............... (127,300) (2,133) (129,433) 95,231(g) -- (34,202)
----------- ----------- ----------- ------ ------ -----------
Income before income taxes...... 1,009,055 (309,026) 700,029 95,231(c) 729,099 1,524,359
INCOME TAXES.................... 3,276,000 (102,122) 3,173,878 40,949 (2,589,840)(c) 624,987
----------- ----------- ----------- ------ ------ -----------
NET (LOSS) INCOME...............$(2,266,945) $ (206,904) $(2,473,849) $54,282 $3,318,939 $ 899,372
=========== =========== =========== ====== ====== ===========
NET LOSS PER SHARE (Note 5):
Basic and diluted net loss
per share..................... $(0.19)
===========
Shares used in computing basic
and diluted net income
per share..................... 12,763,609
===========
PRO FORMA DATA:
Income before income taxes,
as reported................... $ 700,029
Pro forma income taxes......... (287,012)
-----------
Pro forma net income........... $ 413,017
===========
Pro forma basic net
income per share.............. $ 0.03 $0.07
=========== ===========
Pro forma diluted net
income per share.............. $ 0.03 $0.06
=========== ===========
Shares used in computing pro forma
basic net income per share.... 12,763,609 13,535,111
=========== ===========
Shares used in computing pro forma
diluted net income per share.. 13,138,511 13,910,013
=========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
F-17
<PAGE>
ACSYS, INC.
-----------
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
------------------------------------------------
(Unaudited)
1. GENERAL:
--------
The historical financial statements of the Company and ICON were derived from
their historical statements of operations for the years ended December 31, 1995,
1996 and 1997 and the three months ended March 31, 1997 and 1998 and their
historical balance sheets as of March 31, 1998. See the financial statements
and notes thereto for the Company and ICON included elsewhere in this 8K/A. The
historical statement of operations of C.P.A. Staffing was derived from the
historical statement of operations for the period from January 1, 1997 through
the date of its acquisition on August 12, 1997 and the three months ended March
31, 1997. See the financial statements and notes thereto for C.P.A. Staffing
included in the Company's Form S-1 Registration Statement dated February 5,
1998.
2. ACQUISITION OF C.P.A. STAFFING:
-------------------------------
Prior to the acquisition of AcSys Resources by the Company, AcSys Resources
acquired C.P.A. Staffing on August 12, 1997. The acquisition was accounted for
under the purchase method of accounting. The total purchase price was
approximately $9,700,000 and consisted of cash of $1,900,000, 1,219,274 shares
of Common Stock with an estimated fair market value of $7,700,000 and
transaction costs of $144,000. The purchase price was allocated to the assets
acquired and liabilities assumed. The approximately $8,750,000 excess of the
purchase price over estimated fair value of the net assets acquired was recorded
as goodwill.
3. MERGER WITH ICON:
-----------------
On May 22, 1998, the Company acquired ICON, whereby the Company exchanged
2,820,360 shares of its Common Stock for all of the issued and outstanding
shares of common stock of ICON, in a transaction accounted for as a pooling-of-
interests. Merger costs were at $1,730,000.
F-18
<PAGE>
ACSYS, INC.
------------
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS--(Continued)
-------------------------------------------------------------
(Unaudited)
4. ADJUSTMENTS TO THE PRO FORMA COMBINED STATEMENTS OF OPERATIONS FOR THE YEAR
---------------------------------------------------------------------------
ENDED DECEMBER 31, 1997 AND THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998:
---------------------------------------------------------------------------
(a) Reflects an adjustment of $2,236,802, $208,000 and $729,099 for the year
ended December 31, 1997 and the three months ended March 31, 1997 and 1998
to officer and employee compensation based on employment agreements entered
into upon the closing of the Company's 1997 acquisitions and the ICON
Merger. This adjustment does not reflect discretionary bonuses which may be
paid to these individuals.
(b) Reflects the elimination of the combination expenses.
(c) Reflects the provision for income taxes as if the Company was a C
corporation during 1997.
(d) Reflects the amortization expense for the goodwill recorded in connection
with the acquisition of C.P.A. Staffing. The goodwill is being amortized on
a straight-line basis over an estimated life of 40 years.
(e) Reflects the elimination of the non-recurring, non-cash charge of $702,465
relating to the acquisition of C.P.A. Staffing.
(f) Reflects additional interest expense on the borrowings incurred to finance
the cash portion of the C.P.A. Staffing purchase price.
(g) Reflects the elimination of interest expense resulting from the reduction of
debt utilizing a portion of the net proceeds of the Offering.
5. PRO FORMA NET INCOME (LOSS) PER SHARE:
--------------------------------------
The shares used in computing historical combined and pro forma combined net
income per share are as follows:
<TABLE>
<CAPTION>
Year Ended December 31 Three Months Ended March 31
-------------------------------------------- ---------------------------------------------
Pro Forma Pro Forma
Combined Combined Combined Combined
--------------------------------- ---------- ---------------------- ----------------------
1995 1996 1997 1997 1997 1998 1997 1998
---------- --------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Average outstanding shares of
Common Stock of the Company 7,273,946 7,151,934 7,619,601 8,493,220 7,151,934 9,943,249 8,493,220 9,943,249
Shares issued in the ICON
Merger 2,820,360 2,820,360 2,820,360 2,820,360 2,820,360 2,820,360 2,820,360 2,820,360
Shares issued in the Offering
necessary to pay expenses of
the Offering, repay
indebtedness, and pay
distributions to certain
shareholders for income
taxes on S corporation
earnings -- -- -- 1,731,177 -- -- 1,731,177 771,502
---------- --------- ---------- ---------- ---------- ---------- ---------- ----------
Shares used in computing
basic net income (loss) per
share 10,094,306 9,972,294 10,439,961 13,044,757 9,972,294 12,763,609 13,044,757 13,535,111
Common Stock equivalents for
stock options granted -- -- 103,846 103,846 75,317 374,902 75,317 374,902
---------- --------- ---------- ---------- ---------- ---------- ---------- ----------
Shares used in computing
diluted net income (loss)
per share 10,094,306 9,972,294 10,543,807 13,148,603 10,047,611 13,138,511 13,120,074 13,910,013
========== ========= ========== ========== ========== ========== ========== ==========
</TABLE>
F-19
<PAGE>
ACSYS, INC.
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS--(Continued)
-------------------------------------------------------------
(Unaudited)
Basic net income (loss) per share is computed by dividing the net income (loss)
for each year by the weighted average number of common shares outstanding for
each year. Diluted net income (loss) per share is computed by dividing net
income (loss) for each year by the weighted average number of common shares and
Common Stock equivalents outstanding during each year. The average number of
common shares outstanding excludes the redeemable common shares for the years
ended December 31, 1996 and 1997 and the three months ended March 31, 1997, as
the accretion on the redeemable Common Stock of $223,780, $932,174 and $134,000,
respectively, is deducted in arriving at the net income (loss) available to
Common shareholders.
F-20
<PAGE>
ACSYS, Inc.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ACSYS, Inc
----------
(registrant)
Date: August 5, 1998 /s/ Lester E. Gallagher, III
-------------- ----------------------------
Lester E. Gallagher, III
Chief Financial Officer
(the registrant's principal financial and
chief accounting officer, who is duly
authorized to sign this report)
