SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 19, 1997
AVIATION GROUP, INC.
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(Exact name of registrant as specified in its charter)
TEXAS 0-10124 75-2631373
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(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation or organization) Identification No.)
700 N. Pearl Street, Suite 2170
Dallas, Texas 75201
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (214) 922-8100.
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
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On August 19, 1997, Aviation Group, Inc., a Texas corporation ("the
Company"), acquired all of the outstanding stock of Casper Air Service, a
Wyoming corporation ("CAS"). In connection with the acquisition, the Company
paid $1,167,000 and issued a total of 153,565 shares of Common Stock to the
selling CAS shareholders. The number of shares issued by the Company was based
on the Company's initial public offering price for its Common Stock of $5.75 per
share and a total value of approximately $883,000 in stock delivered to CAS
shareholders. The Company obtained the funds used in this acquisition from the
net proceeds from the Company's initial public offering, which was also
consummated on August 19, 1997.
CAS is a full-service, fixed-base operation located at Natrona County
International Airport in Casper, Wyoming and has been in business continuously
since 1946. CAS offers aircraft line services, aircraft repair and maintenance,
aircraft parts distribution, aircraft charter flights and aircraft sales.
The aircraft line services offered by CAS include aircraft refueling,
de-icing, cleaning and heating, and weather information, refreshments, lounge
areas and ground transportation for pilots and passengers. The FAA certified
service department of CAS provides maintenance and overhaul services for piston
and turbo-charged aircraft engines, propellers, accessories and avionics
systems. The parts department of CAS sells to customers located outside the
United States and outside the Rocky Mountain region as well as in connection
with its service operations. CAS is the fourth largest wholesaler of Cessna
parts in the United States. CAS has offered charter flights since its inception
in 1946. The Company has determined to discontinue the charter operations of CAS
in the near future.
At and for the fiscal year ended April 30, 1997, CAS had total assets of
$3,625,000, total liabilities of $2,793,000, net sales of $8,573,000 and net
income of $272,000.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
---------------------------------------------
(a) Previous independent accountants
The Company's principal independent accountant, Arsement, Redd & Morella,
LLC, resigned effective September 3, 1997. The audit report of Arsement, Redd &
Morella, LLC for the Company's financial statements for the period ended June
30, 1996 did not contain an adverse opinion or a disclaimer of opinion and was
not modified as to uncertainty, audit scope or accounting principles. In
connection with its audit for the period ended June 30, 1996 and through
September 3, 1997, there have been no disagreements with Arsement, Redd &
Morella, LLC on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which, if not resolved to
the satisfaction of Arsement, Redd & Morella, LLC, would have caused them to
make reference thereto in their report on the financial statements for such
period.
The decision to change accountants was approved by the Company's Board of
Directors.
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(b) New independent accountants
The Company has engaged Price Waterhouse, LLP as its new independent
accountant as of September 3, 1997.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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(a) Financial Statements of the Businesses Acquired. The audited financial
statements of CAS for the two fiscal years ended April 30, 1996 and the
unaudited interim financial statements of CAS for the nine-month period ended
January 31, 1997 are incorporated by reference herein from the Form SB-2
Registration Statement of the Company (File No. 333-22727). The audited
financial statements of CAS for the fiscal year ended April 30, 1997 have not
been completed and are not included in this Form 8-K Current Report. The Company
expects that the audited financial statements of CAS for the fiscal year ended
April 30, 1997 will be completed and filed by amendment to this Form 8-K Current
Report within 75 days after the date of this Form 8-K Current Report.
(b) Proforma Financial Information. The Company's proforma consolidated
statements of operation for the fiscal year ended June 30, 1996 and for the nine
months ended March 31, 1997 and the Company's proforma consolidated balance
sheet as of March 31, 1997 are incorporated by reference herein from the Form
SB-2 Registration Statement of the Company (File No. 333-22727). The proforma
financial statements of the Company will be updated by amendment to this Form
8-K not later than 75 days after the date of this Form 8-K Current Report.
(c) Exhibits.
Exhibit No. Description
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2.1 Stock Purchase Agreement dated as of April 18, 1997 among
Aviation Group, Inc., Casper Air Service, and the shareholders
of Casper Air Service (incorporated herein by reference to
Exhibit 10.19 of Registrant's Form SB-2 Registration Statement
(File No. 333-22727))
2.2 First Amendment to Stock Purchase Agreement dated June 16,
1997 among Aviation Group, Inc., Casper Air Service, and the
shareholders of Casper Air Service
2.3 Second Amendment to Stock Purchase Agreement dated July 31,
1997 among Aviation Group, Inc., Casper Air Service, and the
shareholders of Casper Air Service
2.4 Third Amendment to Stock Purchase Agreement dated August 11,
1997 among Aviation Group, Inc., Casper Air Service, and the
shareholders of Casper Air Service
16.1 Letter from Arsement, Redd & Morella, LLC
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: September 3, 1997.
AVIATION GROUP, INC.
By: /s/ Lee Sanders
------------------------------
Lee Sanders, President
CORPDAL:81907.1 99999-1
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FIRST AMENDMENT TO
STOCK PURCHASE AGREEMENT
------------------------
This First Amendment to Stock Purchase Agreement is entered into this 16th
day of June, 1997 by and among Aviation Group, Inc., a Texas corporation
("Group"), Casper Air Service, a Wyoming corporation ("Casper"), and the
shareholders of Casper (each a "Casper Shareholder" and collectively the "Casper
Shareholders").
R E C I T A L S:
----------------
WHEREAS, the parties have entered into a Stock Purchase Agreement dated as
of April 18, 1997 (the "Agreement") pursuant to which Group has agreed to
purchase, and the Casper Shareholders have agreed to sell, all of the
outstanding shares of capital stock of Casper;
WHEREAS, on June 1, 1997, one of the charter airplane of Casper crashed
injuring its pilot and severely damaging the plane (the "Crash");
WHEREAS, Group has concerns regarding potential liabilities and other
ramifications arising from the Crash, and Casper and the Casper Shareholders
desire to provide assurances to Group with respect to such matters in order to
induce Group to consummate the transaction contemplated by the Agreement;
WHEREAS, the parties desire to amend the Agreement to address the Crash as
provided herein.
NOW, THEREFORE, for and in consideration of the premises and other valuable
consideration, the parties do hereby amend the Agreement as follows:
1. A new Section 4.31 shall be added to the Agreement and shall read in its
entirety as follows:
4.31 Recent Crash of Airplane. Casper and each of the Casper
Shareholders (other than Jeff Bishop and Quentin Dawson) hereby represent
and warrant, jointly and severally, to Group as follows:
4.31.1 Casper's airplane no. N1233P crashed at approximately
10:30 p.m. on takeoff from the airport located in Rawlins, Wyoming.
The pilot, Gregory Pire, suffered injuries and was hospitalized. There
were no passengers on the plane. The propellers of the airplane were
bent forward indicating that the plane had full power on takeoff.
Casper has no knowledge of any defect in the plane or negligence of
Casper.
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4.31.2 Casper has effective workers' compensation insurance that
covers the pilot for hospitalization and other health expenses and
prevents by operation of Colorado law any claims or causes of action
against Casper by the pilot or his family or relatives, in these
circumstances. The Crash occurred during the course of the pilot's
employment with Casper.
4.31.3 Casper also has effective aircraft hull insurance that
insures Casper against the loss of the plane to the extent of
$325,000, less a $1,000 deductible. With respect to the Crash, Casper
also has effective cargo legal liability insurance of $200,000 each
occurrence and aircraft liability insurance of $10,000,000 each
occurrence.
4.31.4 There is no reasonable basis for (i) a fine or other
penalty to be imposed upon Casper or its management by any regulatory
agency as a result of the Crash or (ii) for revocation, or other
regulatory action with respect to, any license or permit necessary for
its existing operations as a result of the Crash.
4.31.4 Casper has no knowledge of any pending or threatened claim
or demand arising from the Crash or any liability, contingent or
otherwise, that is not fully covered by adequate and effective
insurance protecting Casper from any loss (other than the insurance
deductible) arising therefrom.
2. A new Section 8.10 shall be added to the Agreement and shall read in its
entirety as follows:
8.10 Recent Crash of Airplane. Group shall have satisfied itself that
Casper has no material contingent or actual liability arising from the
Crash and no significant risk of a substantial penalty or of loss of a
necessary license or permit as a result of the Crash.
3. Subsection 12.1.2 shall be amended to read in its entirety as follows:
12.1.2 unilaterally by Group, on one hand, or by Casper, on the other
hand, in writing, without liability on the part of the terminating party on
account of such termination (provided the terminating party is not
otherwise in material default or breach of this Agreement, or has failed or
refused to close without justification hereunder), if the Closing Date
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shall not have occurred on or before 5:00 p.m. Central Standard Time on
July 15, 1997 ("Final Termination Date"); provided, however, that Group may
extend the Final Termination Date by 30 days upon the payment to Casper of
an additional fee of $25,000. Group has previously paid $25,000 for
extension of the Final Termination Date from June 15 to July 15, 1997, and
said $25,000 payment and any subsequent $25,000 payment by Group to Casper
to extend the Final Termination Date beyond July 15, 1997 shall be referred
to collectively as the "Extension Fee";
4. The Agreement as amended hereby shall continue in full force and effect.
EXECUTED as of the date first above written.
CASPER AIR SERVICE
By: /s/ Fred Werner
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Name: Fred Werner
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Title:President
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AVIATION GROUP, INC.
By: /s/ Lee Sanders
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Lee Sanders, President
/s/ Fred Werner
-----------------------------------
Fred Werner, Individually
/s/ Jeff L. Bishop
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Jeff L. Bishop, Individually
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/s/ Quentin Dawson
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Quentin Dawson, Individually
CASPER AIR SERVICE EMPLOYEE STOCK
OWNERSHIP PLAN AND TRUST
By: /s/ Fred Werner
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Fred Werner, Sole Trustee
ROBEDB/01652.007003
DALLAS/70017.03
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SECOND AMENDMENT TO
STOCK PURCHASE AGREEMENT
------------------------
This Second Amendment to Stock Purchase Agreement is entered into this 31st
day of July, 1997 by and among Aviation Group, Inc., a Texas corporation
("Group"), Casper Air Service, a Wyoming corporation ("Casper"), and the
shareholders of Casper (each a "Casper Shareholder" and collectively the "Casper
Shareholders").
R E C I T A L S:
----------------
WHEREAS, the parties have entered into a Stock Purchase Agreement dated as
of April 18, 1997, as amended by the First Amendment to Stock Purchase Agreement
dated June 16, 1997 (collectively, the "Agreement"), pursuant to which Group has
agreed to purchase, and the Casper Shareholders have agreed to sell, all of the
outstanding shares of capital stock of Casper;
WHEREAS, the parties desire to amend the Agreement to extend the
"Determination Date" provided for in Subsection 10.5(b).
NOW, THEREFORE, for and in consideration of the premises and other valuable
consideration, the parties do hereby amend the Agreement as follows:
1. Subsection 10.5(b)shall be amended to read in its entirety as follows:
(b) Until the Group Stock of Werner or the ESOP is properly registered
for resale under the Securities Act and free of any restrictions on
transfer, Werner or the ESOP, as the case may be, shall be protected from
any decreases in fair market value of the Group Stock held by such party.
So long as and conditioned upon Werner or the ESOP continuing to hold the
Group Stock issued to them at the Closing, Group agrees to pay Werner or
the ESOP, as the case may be, such additional cash consideration (the
"Additional Consideration") as equals any excess of the total dollar amount
of Group Stock issued to Werner or the ESOP, as the case may be, at the
Closing, as calculated under Section 3.1, over the fair market value of
such Group Stock on the date that is the later to occur (the "Determination
Date") of (i) the effectiveness of the registration for resale of the Group
Stock under the Securities Act, (ii) the elimination of any transfer
restrictions on the Group Stock, (iii) with respect to the ESOP only, the
receipt of the IRS Qualification Letter, or (iv) the first anniversary of
the effective date of the registration statement for the IPO. The fair
market value will equal the average of the average high asked and low bid
prices for the five trading days preceding the Determination Date on which
the determination of fair market value is made. In no event shall the
Determination Date be later than the second anniversary of the Closing, at
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which time the Group Stock issued to Werner and the ESOP should be freely
tradable under Rule 144 promulgated under the Securities Act.
2. The Agreement as amended hereby shall continue in full force and effect.
EXECUTED as of the date first above written.
CASPER AIR SERVICE
By: /s/ Fred Werner
-----------------------------------
Name: Fred Werner
-----------------------------------
Title:President
-----------------------------------
AVIATION GROUP, INC.
By: /s/ Lee Sanders
-----------------------------------
Lee Sanders, President
/s/ Fred Werner
-----------------------------------
Fred Werner, Individually
/s/ Jeff L. Bishop
-----------------------------------
Jeff L. Bishop, Individually
/s/ Quentin Dawson
-----------------------------------
Quentin Dawson, Individually
CASPER AIR SERVICE EMPLOYEE STOCK
OWNERSHIP PLAN AND TRUST
By: /s/ Fred Werner
------------------------------
Fred Werner, Sole Trustee
ROBEDB\01652\007003
DALLAS\71684.1
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THIRD AMENDMENT TO
STOCK PURCHASE AGREEMENT
------------------------
This Third Amendment to Stock Purchase Agreement is entered into as of this
11th day of August, 1997 by and among Aviation Group, Inc., a Texas corporation
("Group"), Casper Air Service, a Wyoming corporation ("Casper"), and the
shareholders of Casper (each a "Casper Shareholder" and collectively the "Casper
Shareholders").
R E C I T A L S:
----------------
WHEREAS, the parties have entered into a Stock Purchase Agreement dated as
of April 18, 1997, as amended by First Amendment to Stock Purchase Agreement
dated June 16, 1997 and Second Amendment to Stock Purchase Agreement dated as of
July 31, 1997 (collectively, as amended, referred to as the "Agreement")
pursuant to which Group has agreed to purchase, and the Casper Shareholders have
agreed to sell, all of the outstanding shares of capital stock of Casper;
WHEREAS, the parties desire to amend the Agreement to extend the outside
date for the Closing as provided herein.
NOW, THEREFORE, for and in consideration of the premises and other valuable
consideration, the parties do hereby amend the Agreement as follows:
1. Subsection 12.1.2 shall be amended to read in its entirety as follows:
12.1.2 unilaterally by Group, on one hand, or by Casper, on the other
hand, in writing, without liability on the part of the terminating party on
account of such termination (provided the terminating party is not
otherwise in material default or breach of this Agreement, or has failed or
refused to close without justification hereunder), if the Closing Date
shall not have occurred on or before 5:00 p.m. Central Standard Time on
August 20, 1997 ("Final Termination Date"). Group has previously paid
$25,000 for extension of the Final Termination Date from June 15 to July
15, 1997, and $25,000 for extension of the Final Termination Date from July
15 to August 15, 1997, and said payments of $50,000 total to extend the
Final Termination Date shall be referred to collectively as the "Extension
Fee";
2. The Agreement as amended hereby shall continue in full force and effect.
<PAGE>
EXECUTED as of the date first above written.
CASPER AIR SERVICE
By: /s/ Fred Werner
-----------------------------------
Name: Fred Werner
-----------------------------------
Title:President
-----------------------------------
AVIATION GROUP, INC.
By: /s/ Lee Sanders
-----------------------------------
Lee Sanders, President
/s/ Fred Werner
-----------------------------------
Fred Werner, Individually
/s/ Jeff L. Bishop
-----------------------------------
Jeff L. Bishop, Individually
/s/ Quentin Dawson
-----------------------------------
Quentin Dawson, Individually
CASPER AIR SERVICE EMPLOYEE STOCK
OWNERSHIP PLAN AND TRUST
By: /s/ Fred Werner
------------------------------
Fred Werner, Sole Trustee
ROBEDB/01652.007003
DALLAS/73077.01
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(LETTERHEAD OF ARSEMENT, REDD & MORELLA, L.L.C.
CERTIFIED PUBLIC ACCOUNTANTS)
September 3, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
Aviation Group, Inc.
We have read Item 4 of Aviation Group, Inc.'s Form 8-K first dated August 19,
1997 and are in agreement with the statements contained therein insofar as they
pertain to our Firm.
Very truly yours,
/s/Arsement, Redd & Morella, L.L.C.
Arsement, Redd & Morella, L.L.C.
Terrace Centre
701 Robley Dr., Suite 200, Lafayette, LA 70503
P.O. Box 31976, Lafayette, LA 70593-1976
(318) 984-7010 or Fax (318) 981-6001
