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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
AMENDMENT NO. 2
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):
APRIL 27, 1999
SUNDERLAND CORPORATION
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
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(STATE OR OTHER JURISDICTION OF INCORPORATION)
000-24803 52-2102142
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(COMMISSION FILE NUMBER) (IRS EMPLOYER IDENTIFICATION NO.)
2901 EL CAMINO AVENUE, LAS VEGAS, NEVADA 89102
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE
(702) 227-0965
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THE UNDERSIGNED HEREBY AMENDS THE FOLLOWING ITEMS, FINANCIAL STATEMENTS AND
EXHIBITS ON FORM 8-K DATED MAY 5, 1999 AS SET FORTH IN THE PAGES ATTACHED
HERETO.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(B) PRO FORMA FINANCIAL INFORMATION
Effective April 27, 1999, Sunderland Corporation ("Sunderland")
consummated an asset purchase agreement with Del Mar Mortgage, Inc. and Del Mar
Holdings, Inc. (collectively referred to as "Del Mar Entities") whereby
Sunderland acquired certain assets and assumed certain liabilities of the Del
Mar Entities in exchange for 2,934,762 share of common stock of Sunderland.
Sunderland concurrently consummated a reorganization agreement with Capsource,
Inc. ("Capsource") whereby Sunderland acquired all the outstanding capital stock
of Capsource in exchange for 12,000 shares of common stock of Sunderland
(referred to as the "Transactions").
The Del Mar Entities are related entities under common management and
controlling ownership. Accordingly, the business combination between the Del Mar
Entities has been accounted for as a reorganization of entities under common
control. The reorganization reflects the combined financial statements of the
Del Mar Entities and the restatement of their stockholders' equity for the
shares issued by Sunderland in a manner similar to a stock split. Only certain
assets of the Del Mar Entities were acquired by Sunderland; however; since the
Del Mar Entities are considered the accounting acquirer in the business
combinations with Sunderland and Capsource, the assets not acquired, net of the
liabilities not assumed, have been accounted for as distributions to the Del Mar
Entities' shareholders. The transaction between the Del Mar Entities and
Sunderland has been accounted for as a reverse acquisition of Sunderland by the
Del Mar Entities and the assets of Sunderland have been recorded at historical
cost since Sunderland was a shell corporation with no operations and only
nominal assets prior to the transaction. The financial statements reflect the
issuance of 750,000 shares of common stock for the net assets of Sunderland.
The business combination with Capsource has been accounted for using the
purchase method of accounting. The cost of Capsource is based upon the fair
value of the 12,000 common shares issued in the transaction, which was $12,360
or $1.03 per share. The acquisition resulted in the recognition of $1,390 of
goodwill. Goodwill will be amortized over a period of 5 years using the
straight-line method.
Following the Transactions, the shareholders approved a 5-for-3 stock split of
Sunderland's common stock, resulting in 6,161,270 common shares outstanding
after the stock split.
The following statements set forth certain selected financial information
for Sunderland, Capsource, Del Mar Mortgage, and Del Mar Holdings, on an
unaudited pro forma consolidated basis giving effect to the Transactions as if
the Transactions had become effective on December 31, 1998, in the case of the
balance sheet information presented, and as if the Transactions had become
effective at the beginning of the periods indicated, in the case of operations
information presented.
The unaudited pro forma condensed consolidated financial information set
forth in the following tables is based on historical financial statements of
Sunderland, Del Mar Mortgage, Del Mar Holdings, and Capsource and the
assumptions and adjustments described in the notes accompanying the same, is
presented for information purposes only, and is not necessarily indicative of
the consolidated financial position or results of operations that would have
occurred had the transactions been consummated on December 31, 1998, or at the
beginning of the periods indicated, or which may occur in the future.
The unaudited pro forma consolidated financial data are based upon
assumptions that Sunderland Corporation believes are reasonable and should be
read in conjunction with the financial statements of Del Mar Mortgage, Del Mar
Holdings, and Capsource and the accompanying notes thereto, included elsewhere
in this Form 8-KA.
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SUNDERLAND CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Historical
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Acquired Assets/Business Pro Forma
------------------------------- Pro Forma
Sunderland Del Mar Del Mar Pro Forma Consolidated
Corporation Mortgage Capsource Holdings Total Adjustments Balance
----------- ---------- --------- ---------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Current assets
Cash $ 416 $ 524,438 $ 9,747 $ 355,115 $ 889,716 $ (879,553) a $ 10,163
Accounts receivable - 401,526 - - 401,526 (401,526) a -
Shareholder receivable - - - 547,355 547,355 (11,709) a 535,646
Trust deed investments - 1,009,410 - 2,460,724 3,470,134 (1,009,410) a 2,460,724
Deposits - - - 3,038 3,038 3,038
Dues from related party - - - - - -
----------- ---------- --------- ---------- ---------- -----------
Total current assets 416 1,935,374 9,747 3,368,232 5,311,769 3,009,571
Property and equipment
Furniture and equipment - 58,119 3,757 18,067 79,942 (35,888) a 44,054
Leasehold improvements - 1,754 - - 1,754 1,754
----------- ---------- --------- ---------- ---------- -----------
- 59,672 3,757 18,067 81,696 45,808
Less accumulated depreciation - 22,319 829 1,687 24,835 (1,687) a 23,148
----------- ---------- --------- ---------- ---------- -----------
Net property and equipment - 37,553 2,926 16,380 56,661 22,660
Cost of mortgage license, net
of amortization - - 1,075 - 1,075 1,390 b 2,465
----------- ---------- --------- ---------- ---------- -----------
Total assets $ 416 $1,972,927 $13,750 $3,382,612 $5,369,705 $ 3,034,696
----------- ---------- --------- ---------- ---------- -----------
----------- ---------- --------- ---------- ---------- -----------
Current liabilities
Accounts payable and
accrued expenses $ - $ 34,701 $ - $ 218,380 $ 253,081 $ (253,081) a $ -
Notes payable - - - 450,000 450,000 (100,000) a 350,000
Trust liabilities - 1,431,032 - - 1,431,032 (1,431,032) a -
Current portion of capital
lease obligations - 4,103 - - 4,103 (4,103) a -
---------- ---------- --------- ---------- ---------- -----------
Total current liabilities - 1,469,836 - 668,380 2,138,216 350,000
Long-term portion capital
lease obligations - 13,718 - - 13,718 (13,718) a -
---------- ---------- --------- ---------- ---------- -----------
Total liabilities - 1,483,554 - 668,380 2,151,934 350,000
Shareholders' equity
Common stock 500 2,500 5,022 287 6,309 (7,693) a 616
Additional paid-in capital 75 - - 2,574,472 2,574,547 99,415 a 2,675,352
1,390 b
Retained earnings (159) 466,873 8,728 139,473 634,915 (626,187) a 8,728
---------- ---------- --------- ---------- ---------- -----------
Total stockholders' equity 416 489,373 13,750 2,714,232 3,217,771 2,684,696
---------- ---------- --------- ---------- ---------- -----------
Total liabilities and
stockholders' equity $ 416 $1,972,927 $13,750 $3,382,612 $5,369,705 $ 3,034,696
---------- ---------- --------- ---------- ---------- -----------
---------- ---------- --------- ---------- ---------- -----------
</TABLE>
a Assets and liabilities not included in the asset purchase agreements with Del
Mar Mortgage, Inc., and Del Mar Holdings, Inc. distributed to their
shareholders.
b Capitalization of goodwill related to the acquisition of Capsource, Inc.
Note: The pro forma consolidated balance sheet reflects the issuance of 12,000
shares to purchase 100 shares of the outstanding common stock of Capsource, and
issuance of a total of 2,946,762 shares to purchase certain assets from Del Mar
Mortgage and Del Mar Holdings with a combined historical net book value totaling
$3,019,140.
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SUNDERLAND CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Historical
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Acquired Assets/Business
--------------------------------
Sunderland Del Mar Del Mar
Corporation Mortgage Capsource Holdings Total Adjustments Pro Forma
<S> <C> <C> <C> <C> <C> <C> <C>
----------- ---------- ---------- ---------- ---------- ------------ ----------
Revenues $ - $6,526,256 $ 218,670 $ 316,353 $7,061,279 - $7,061,279
Cost of revenues - 335,679 - - 335,679 - 335,679
----------- ---------- ---------- ---------- ---------- ------------ ----------
Gross profit - 6,190,577 218,670 316,353 6,725,600 - 6,725,600
Advertising, general and
administrative expenses
Advertising - 536,077 - - 536,077 - 536,077
General and
administrative expenses 159 3,421,660 213,751 480,243 4,115,813 278 b 4,116,091
----------- ---------- ---------- ---------- ---------- ------------ ----------
Total advertising, general and
Administrative expenses 159 3,957,737 213,751 480,243 4,651,890 - 4,652,168
----------- ---------- ---------- ---------- ---------- ------------ ----------
Income from operations (159) 2,073,710 4,919 (163,890) 2,073,710 - 2,073,432
Other income
Interest income - 339,273 - 307,425 646,698 - 646,698
----------- ---------- ---------- ---------- ---------- ------------ ----------
Total other income - 339,273 - 307,425 646,698 - 646,698
----------- ---------- ---------- ---------- ---------- ------------ ----------
Income before provision for
income taxes (159) 2,572,113 4,919 - 2,720,408 - 2,720,130
Provision for income taxes - - - - 24,939 a 924,939
----------- ---------- ---------- ---------- ---------- ------------ ----------
Net income (loss) $ (159)$2,572,113 $ 4,919 $ 143,535 $2,720,408 $ 924,939 $1,795,191
----------- ---------- ---------- ---------- ---------- ------------ ----------
----------- ---------- ---------- ---------- ---------- ------------ ----------
</TABLE>
a Provision for income taxes using a federal tax rate of 34%.
b Amortization of goodwill related to acquired businesses calculated over a
sixty month period.
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SIGNATURES:
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Sunderland Corporation
By: /s/ Stephen J. Byrne
(Print name and title of signing officer)
Stephen J. Byrne, President
Dated: August 13, 1999
