<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
----------
JANUARY 18, 2000
(Date of earliest event reported)
MICRO-ASI, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
TEXAS 000-27027 75-2586030
(State or other jurisdiction of (Commission file number) (I.R.S. employer identification no.)
incorporation or organization)
</TABLE>
12655 NORTH CENTRAL EXPRESSWAY, SUITE 1000
DALLAS, TEXAS 75243
(Address of principal executive offices)
972-392-9636
(Registrant's telephone number,
including area code)
================================================================================
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Effective January 18, 2000, Micro-ASI, Inc. completed the acquisition of the
outstanding common stock (BTI common stock) of Best Technologies, Inc., a Texas
corporations (BTI), from the sole shareholder of BTI (Seller), pursuant to a
stock purchase agreement (Agreement). BTI is an electronics contract
manufacturer headquartered in Wylie, Texas. In connection with the Agreement,
one share of Preferred Stock of BTI was created and issued to the Seller. The
Company, as a holder of the BTI Common Stock has the right to appoint one
director to the three member Board of Directors of BTI. The Seller, as holder of
the BTI Preferred Stock has the right to appoint two directors to the
three-member Board of Directors of BTI and certain other voting rights. Pursuant
to the Agreement, the Company will receive the outstanding BTI Preferred Stock
upon the satisfaction of certain obligations, including, but not limited to, the
completion of an initial public offering of the Company's Common Stock.
In connection with the acquisition, (i) a promissory note from the Company to
the Seller in the amount of $2,500,000, due the earlier of (a) December 31, 2001
or (b) ten days after the completion of an initial public offering by the
Company (Purchase Note); (ii) a convertible note from the Company to the Seller
in the amount of $1,416,667 due December 31, 2001, which is immediately
convertible into $1,416,667 shares of Common Stock of the Company (Convertible
Note). Additionally, the Company has committed to purchase $750,000 of capital
expenditures to by used BTI's flip-chip assembly due ninety days after the
completion of one or more private placements having an aggregate gross offering
amount in excess of $6,000,000 (Capital Contribution). The purchase price is not
subject to any post closing adjustments. The acquisition of BTI provides the
Company with manufacturing capabilities to produce the redesigned products and
offer turnkey solutions to its customers. Because the Seller of BTI still
retains voting control, the Company will not consolidate the operations of BTI
until the obligations noted above are satisfied.
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
The appropriate financial information relating to the
acquisition reported on January 27, 2000, is filed herewith.
(b) Pro Forma Financial Information.
The appropriate financial information relating to the
acquisition reported on January 27, 2000, is filed herewith.
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 hereunto duly authorized.
MICRO-ASI, INC.
Dated: April 3, 2000 By: /s/ JOEL E. CLAYBROOK
-----------------------------
Joel E. Claybrook, President
<PAGE> 4
Financial Statement Index
<TABLE>
<CAPTION>
<S> <C>
Report of Independent Auditors.......................................................... F-1
Audited Financial Statements
Balance Sheet........................................................................... F-2
Statements of Operations................................................................ F-3
Statements of Shareholder's Equity...................................................... F-4
Statements of Cash Flows................................................................ F-5
Notes to Financial Statements........................................................... F-6
(b) Pro Forma Financial Information
Pro forma financial information relating to the acquisition of
Best Technologies, Inc. required by item 7 (b) of Form 8-KSB is
filed herewith.
Pro Forma Financial Statement Index
Unaudited Pro Forma Combined Financial Information...................................... F-11
Unaudited Pro Forma Combined Balance Sheet at December 31, 1999......................... F-12
Unaudited Pro Forma Combined Statement of Operations for the Year
December 31, 1999....................................................................... F-13
Notes to Unaudited Pro Forma Financial Information...................................... F-14
</TABLE>
<PAGE> 5
Report of Independent Auditors
Board of Directors
Best Technologies, Inc.
We have audited the balance sheet of Best Technologies, Inc. (the Company), as
of December 31, 1999, and the related statements of operations, shareholder's
equity (deficit), and cash flows for each of the two years in the period 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 audits.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. 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 Best Technologies, Inc., at
December 31, 1999, and the results of its operations and its cash flows for each
of the two years in the period then ended in conformity with accounting
principles generally accepted in the United States.
/s/ Ernst & Young LLP
March 30, 2000
Dallas, Texas
F-1
<PAGE> 6
Best Technologies, Inc.
Balance Sheet
<TABLE>
<CAPTION>
DECEMBER 31,
1999
------------
<S> <C>
ASSETS
Current assets:
Cash $ 32,702
Accounts receivable 358,117
Inventories 210,164
-----------
Total current assets 600,983
Property and equipment, net of accumulated
depreciation and amortization 330,659
-----------
Total assets $ 931,642
===========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 323,632
Current maturities of long-term debt and capital lease
obligations 965,599
-----------
Total current liabilities 1,289,231
Long-term debt and capital lease obligations 155,752
Commitments and contingencies
Shareholder's equity (deficit):
Common stock, no par value:
Authorized shares - 100,000
Issued and outstanding shares - 1,000 1,000
Additional paid in capital 65,765
Accumulated deficit (580,106)
-----------
Total shareholder's equity (deficit) (513,341)
-----------
Total liabilities and shareholder's equity (deficit) $ 931,642
===========
</TABLE>
See accompanying notes
F-2
<PAGE> 7
Best Technologies, Inc.
Statements of Operations
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1999 1998
---------- -----------
<S> <C> <C>
Net sales $2,779,949 $ 2,393,009
Cost of goods sold 1,763,540 1,592,180
---------- -----------
Gross profit 1,016,409 800,829
Selling, general and administrative expenses 902,201 777,851
---------- -----------
Income from operations 114,208 22,978
Interest expense 86,605 102,577
---------- -----------
Net income (loss) $ 27,603 $ (79,599)
========== ===========
</TABLE>
See accompanying notes.
F-3
<PAGE> 8
Best Technologies, Inc.
Statements of Shareholder's Equity (Deficit)
Years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
-------------- PAID IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
------ ------ ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1997 1,000 $1,000 $ 44,970 $(520,110) $(482,140)
Fair value of imputed interest
expense on loan from shareholder -- -- 13,134 -- 13,134
Net loss -- -- (79,599) (79,599)
----- ------ -------- --------- ---------
Balance at December 31, 1998 1,000 1,000 58,104 (607,709) (548,605)
Fair value of imputed interest
expense on loan from shareholder -- -- 7,661 -- 7,661
Net income -- -- -- 27,603 27,603
----- ------ -------- --------- ---------
Balance at December 31, 1999 1,000 $1,000 $ 65,765 $(580,106) $(513,341)
===== ====== ======== ========= =========
</TABLE>
See accompanying notes.
F-4
<PAGE> 9
Best Technologies, Inc.
Statements of Cash Flows
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1999 1998
--------- ----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 27,603 $ (79,599)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 73,685 50,423
Imputed interest expense on loan from shareholders 7,661 13,134
Loss on sale of equipment -- (13,164)
Changes in operating assets and liabilities:
Accounts receivable (33,472) 33,421
Inventories 24,667 213,931
Accounts payable and accrued expenses 66,542 (175,137)
--------- ---------
Net cash used in operating activities 166,686 43,009
INVESTING ACTIVITIES
Capital expenditures (85,662) (8,660)
Proceeds from sale of equipment -- 40,000
--------- ---------
Net cash (used in) provided by investing activities (85,662) 31,340
FINANCING ACTIVITIES
Net proceeds (payments) from revolving line of credit 20,767 (109,288)
Principal payments on long-term debt (98,153) (86,803)
--------- ---------
Net cash used in financing activities (77,386) (196,091)
Net increase (decrease) in cash 3,638 (121,742)
Cash at beginning of year 29,064 150,806
--------- ---------
Cash at end of year $ 32,702 $ 29,064
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest $ 86,605 $ 102,577
========= =========
</TABLE>
See accompanying notes.
F-5
<PAGE> 10
Best Technologies, Inc.
Notes to Financial Statements (continued)
December 31, 1999
1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
BUSINESS
Best Technologies, Inc., (the Company) is an "S" Corporation organized under the
laws of the state of Texas in 1993. The Company is a subcontract manufacturer of
printed circuit boards with its principle customers located in the United
States. The Company's operations are based in Dallas, Texas. As more fully
discussed in Note 6, all of the Company's common stock was acquired by
Micro-ASI, Inc. on January 18, 2000.
INVENTORIES
Inventories are valued at the lower of cost, using the FIFO (first-in, first-out
method) or market.
PROPERTY AND EQUIPMENT
Property and equipment are stated on the basis of historical cost. Depreciation
is computed using the straight-line method over their estimated useful lives.
Estimated useful lives range from three to ten years. Amortization of assets
under capital leases is included in depreciation and amortization expense.
REVENUE RECOGNITION
Revenue is recognized when goods are shipped.
INCOME TAXES
The Company has elected to be treated as an S Corporation under the Internal
Revenue Code. As an S Corporation, the income of the Company is taxable to the
sole shareholder and, accordingly, these combined financial statements do not
include a provision for corporate income taxes.
F-6
<PAGE> 11
Best Technologies, Inc.
Notes to Financial Statements (continued)
1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to concentration of
credit risk are trade accounts receivable. The Company performs credit
evaluations of its customers and generally does not require collateral.
SIGNIFICANT CUSTOMERS
Sales of $1,898,270 and $1,403,416 were made to three customers in 1999 and
1998, respectively. The loss of any one of these customers could have a material
adverse impact on the Company's financial position and results of operations. In
addition, receivables from the three customers totaled $196,131 at December 31,
1999.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments consist primarily of cash equivalents,
accounts receivable, accounts payable and debt instruments. The carrying amount
of financial instruments other than the debt instruments are representative of
their fair values due to their short maturities. The Company's revolving line of
credit bears interest at market rates and accordingly management believes the
carrying amount approximates fair value. The Company's notes payable bear a
fixed rate of interest currently below market rates. However, management does
believe the current market value is significantly different than its carrying
values.
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 amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
F-7
<PAGE> 12
Best Technologies, Inc.
Notes to Financial Statements (continued)
2. INVENTORIES
Inventories consist of the following at December 31, 1999:
<TABLE>
<S> <C>
Raw materials and component parts $ 89,025
Work in process 121,139
--------
$210,164
========
</TABLE>
3. PROPERTY AND EQUIPMENT
Property and equipment consists of the following at December 31, 1999:
<TABLE>
<S> <C>
Machinery and equipment $ 541,790
Furniture and fixtures 38,430
Automobiles 10,840
---------
591,060
Less accumulated depreciation and amortization (260,401)
---------
$ 330,659
=========
</TABLE>
Property and equipment includes machinery and equipment under capital leases
with a book value of $170,053 net of accumulated amortization of $15,004.
4. DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
1999
----------
<S> <C>
$500,000 revolving line of credit $ 251,202
Notes payable to bank due April 14, 2001, and
bearing interest at 8.75% with principal payments
of $8,196 plus interest, payable monthly 135,011
Note payable to shareholder due March 31, 2000,
bearing interest, payable monthly, at 6% 563,274
Obligations under capital lease (Note 5) 171,864
----------
1,121,351
Less current maturities
965,599
----------
$ 155,752
==========
</TABLE>
F-8
<PAGE> 13
Best Technologies, Inc.
Notes to Financial Statements (continued)
4. LONG-TERM DEBT (CONTINUED)
The Company's revolving line of credit arrangement is collateralized by the
Company's accounts receivable and inventory. Payments on accounts receivables
are remitted by customers to a lockbox controlled by the lending institution.
The arrangement bears interest at prime plus 4% (12.5% as of December 31, 1999).
The revolving line of credit is automatically renewed in April of each year
unless terminated in advance. The Company has notified the lending institution
of its intention to terminate this arrangement during 2000.
The Company's notes payable to bank are collateralized by the Company's
equipment, inventory and accounts receivable.
As more fully discussed in Note 6, the note payable to shareholder was paid on
March 31, 2000.
5. COMMITMENTS AND CONTINGENCIES
The Company has capital leases for machinery and equipment and operating leases
consisting primarily of real estate rentals payable to the principal
shareholder. Rental expense for the years ended December 31, 1999 and 1998, was
$93,588 and $83,185, respectively. As of December 31, 1999, future minimum
rental payments required under capital and operating leases that had initial or
remaining noncancelable lease terms in excess of one year are as follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
-------- ---------
<S> <C> <C>
2000 $ 52,771 $ 93,588
2001 52,771 92,691
2002 52,771 90,000
2003 37,559 90,000
2004 -- 90,000
Thereafter -- 300,000
-------- --------
Total minimum lease payments 195,872 $756,279
========
Less amount representing interest 24,008
--------
Present value of minimum lease payments 171,864
Less current portion 52,771
--------
Long-term portion $119,093
========
</TABLE>
F-9
<PAGE> 14
Best Technologies, Inc.
Notes to Financial Statements (continued)
6. ACQUISITION BY MICRO-ASI, INC.
Effective January 18, 2000, the Company sold all of its common stock to
Micro-ASI, Inc. for a total purchase price of $3.9 million. The purchase price
consisted of: a $2.5 million promissory note due the earlier of December 31,
2001 or ten days after the completion of an initial public offering by
Micro-ASI, Inc., and a $1.4 million note convertible into 1.4 million shares of
Micro-ASI, Inc. common stock. As part of the purchase agreement, Micro-ASI
agreed to pay the Company's note payable to shareholder by March 31, 2000. This
note payable was fully paid on March 31, 2000. (See Note 4) Additionally, the
selling shareholder received one share of preferred stock in the newly formed
subsidiary of Micro-ASI, Inc. which holds the common stock of the Company. The
share of preferred stock entitles the holder to appoint two directors to the
three member Board of Directors of the newly formed subsidiary.
7. YEAR 2000 (UNAUDITED)
All of the Company's internal systems and software, including virtually all
software and services provided by third-parties, appropriately handled the Year
2000 date changeover and the Company's operations were not impacted. While the
Company has experienced no Year 2000 related disruptions to date, there are
remaining risks associated with the Year 2000 issue and the Company will
continue to monitor possible future implications of Year 2000 issues. Based on
currently available information and assessments, the Company's management
believes that Year 2000 related disruptions, if any, will not have a material
adverse effect on the Company's financial position or results of operations.
F-10
<PAGE> 15
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following sets forth the Company's Unaudited Pro Forma Combined Financial
Information for 1999, giving effect to the Company's January 18, 2000,
acquisition of Best Technologies, Inc. (Acquisition). The Company's Unaudited
Pro Forma Combined Statement of Operations Information gives effect to the
Acquisition as if it had been consummated at the beginning of 1999. The
Company's Unaudited Pro Forma Combined Balance Sheet Information gives effect to
the Acquisition as if it had been consummated on December 31, 1999.
The Unaudited Pro Forma Combined Financial Information of the Company is
presented for illustrative purposes only and does not purport to present the
financial position or results of operations of the Company had the Acquisition
occurred on the dates indicated, nor is it necessarily indicative of the results
of operations which may be expected to occur in the future. Under the terms of
the Acquisition, the Seller of Best Technologies, Inc., shall retain voting
control. Therefore, the Company will not consolidate the operations of Best
Technologies, Inc. until the obligations, as defined in the Purchase Agreement,
are satisfied and the Company obtains voting control. The Unaudited Pro Forma
Combined Financial Information should be read in conjunction with the separate
historical financial statements of Micro-ASI, Inc. appearing in its Annual
Report on Form 10-KSB for the year ended December 31, 1999 and of Best
Technologies, Inc. appearing elsewhere in this Form 8-KSB.
The accompanying Unaudited Pro Forma Combined Financial Information has been
prepared under guidelines established by Article 11 of Regulation S-X under the
Securities Act. Under those guidelines, there are limitations on the adjustments
that can be made in the presentation of pro forma financial information.
The historical financial information for Micro-ASI, Inc. and Best Technologies,
Inc. has been derived from the audited financial statements of Micro-ASI, Inc.
appearing in its Annual Report on Form 10-KSB for the year ended December 31,
1999 and of Best Technologies, Inc. included elsewhere in this Form 8-KSB.
The pro forma adjustments relating to the purchase of Best Technologies, Inc.
represent the Company's preliminary determinations of these adjustments and are
based upon available information and certain assumptions the Company considers
reasonable under the circumstances. Final amounts could differ from those set
forth therein and those differences could be material. The Company will finalize
its purchase price allocation subsequent to the date hereof.
F-11
<PAGE> 16
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
BALANCE SHEET
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Historical Pro Forma
---------- -----------------------
Micro-ASI,
Inc. Adjustments Combined
---------- ----------- ----------
<S> <C> <C> <C>
Current assets
Cash $551,292 $ -- $ 551,292
Accounts receivable -- -- --
Inventory -- -- --
-------- ---------- ----------
Total current assets 551,292 -- 551,292
Property and equipment, net 89,635 -- 89,635
Other assets 27,121 27,121
Investment in Best Technologies -- 3,916,667 3,916,667
-------- ---------- ----------
Total assets $668,048 $3,916,667 $4,584,715
======== ========== ==========
Current liabilities
Accounts payable and accrued
expenses $583,493 $ -- $ 583,493
Current maturities of long-term
debt and capital lease
obligations -- -- --
-------- ---------- ----------
Total current liabilities 583,493 -- 583,493
Long-term debt and capital lease
obligations, less current portion -- 3,916,667 3,916,667
Stockholders' equity (deficit), net 84,555 84,555
-------- ---------- ----------
Total liabilities and stockholders'
equity (deficit) $668,048 $3,916,667 $4,584,715
======== ========== ==========
</TABLE>
F-12
<PAGE> 17
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
BALANCE SHEET
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Historical Pro Forma
------------ ----------------------------
Micro-ASI,
Inc. Adjustments Combined
------------ ------------ ------------
<S> <C> <C> <C>
Revenues $ -- $ -- $ --
Research and development 808,396 -- 808,396
Selling, general and administrative 2,922,080 886,002 3,808,082
Equity in income (loss) of
Best Technologies, Inc. -- (27,603) (27,603)
------------ ------------ ------------
Operating income (loss) (3,730,476) (858,399) (4,588,875)
Interest income 27,451 -- 27,451
Interest expense (2,674) (195,833) (198,507)
------------ ------------ ------------
Net income (loss) $ (3,705,699) $ (1,054,232) $ (4,729,931)
============ ============ ============
Basic and diluted net loss per share $ (0.21) $ (0.26)
============ ============
Weighted average shares
outstanding 17,989,506 17,989,506
============ ============
</TABLE>
F-13
<PAGE> 18
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
BALANCE SHEET
DECEMBER 31, 1999
1. The purchase price consisted of the following:
<TABLE>
<S> <C>
Promissory note due the earlier of December 31, 2001 or ten days after the
completion of an initial public offering by Micro-ASI, Inc. $ 2,500,000
Promissory note convertible into 1,400,000 shares of Micro-ASI, Inc.
stock 1,416,667
-----------
$ 3,916,667
===========
</TABLE>
2. Pro Forma Balance Sheet - For purposes of preparing the Unaudited Pro Forma
Combined Balance Sheet. The proforma adjustments represents the Company's
investment in Best Technologies, Inc. The Company does not have voting
control of Best Technologies, Inc., therefore it must account for its
investment in Best Technologies, Inc, until such time as the Company voting
control.
3. Pro Forma Combined Statement of Operations - The Company's Pro Forma
Combined Statement of Operations data for the year ended December 31, 1999
includes the following adjustments:
F-14
<PAGE> 19
<TABLE>
<S> <C>
Selling, general and administrative expense:
Recording of one year of amortization of excess of carrying value of
equity investments over the book value of underlying assets
(amortized over five years) $886,002
Equity in (income) loss of Best Technologies, Inc.:
Recording the Co. shares of Best Technologies, Inc. 1999 net income. $(27,603)
Interest expense:
Recording of interest expense for $3,900,000 of promissory notes at
5% interest for one year $195,833
</TABLE>
The tax effect of the remaining net operating loss carryforward at December 31,
1999 has not been reflected as an income tax benefit in the pro forma statements
of operations due to the uncertainty of future realization.
Interest expense on the Promissory Note due the earlier of December 31, 2001 or
ten days after the completion of an initial public offering by Micro-ASI, Inc.
was based upon an interest rate of 5%. Interest expense on the Promissory note
convertible into 1,416,667 shares of Micro-ASI, Inc. stock was based upon an
interest rate of 5%.
F-15
