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
JULY 13, 1999
Date of report (Date of earliest event reported)
NUCLEUS, INC.
(Exact Name of Registrant as Specified in its Charter)
0-14039 11-2714721
(Commission File Number) (I.R.S. Employer Identification No.)
150 NORTH MICHIGAN AVENUE 60601
CHICAGO, ILLINOIS (Zip Code)
(Address of Principal Executive Offices)
312/683-9000
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
As previously reported on Form 8-K dated July 13, 1999 and filed with the
Securities and Exchange Commission (the "Commission") on July 28, 1999, Nucleus,
Inc. ("Nucleus" or the "Company") acquired Innovative Technology Solutions, Inc.
("ITS") pursuant to an Agreement and Plan of Merger dated as of June 30, 1999
(the "Agreement"). This Form 8-K/A is being filed in accordance with the
Commission's rules to include the required historical and pro forma financial
information relating to the transaction which was not available at the time of
the initial filing on Form 8-K.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
Nucleus files herewith the following financial statements of ITS:
Report of Independent Auditor
Balance Sheets as of December 31, 1997, 1998 and June 30, 1999
(unaudited)
Statements of Income for the years ended December 31, 1997 and
1998 and the six-month periods ending June 30, 1998
(unaudited) and 1999 (unaudited)
Statements of Shareholders' Equity for the years ended December
31, 1997 and 1998 and the six-month period ending June 30,
1999 (unaudited)
Statements of Cash Flows for the years ended December 31, 1997
and 1998 and the six-month periods ending June 30, 1998
(unaudited) and 1999 (unaudited)
Notes to Financial Statements
2
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders
Innovative Technology Solutions, Inc.
Seattle, Washington
We have audited the accompanying balance sheets of Innovative Technology
Solutions, Inc., a Washington corporation, as of December 31, 1997 and 1998, and
the related statements of income, shareholders' equity and cash flows for the
years 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 audits 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 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 Innovative Technology
Solutions, Inc. as of December 31, 1997 and 1998 and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
Watson & Associates, P.S.
August 11, 1999
3
<PAGE>
INNOVATIVE TECHNOLOGY SOLUTIONS, INC.
BALANCE SHEETS
<TABLE>
DECEMBER 31, JUNE 30,
--------------------------
1997 1998 1999
------------ ------------ -----------
<S> <C> <C> <C>
ASSETS (UNAUDITED)
Current assets:
Cash and cash equivalents.................. $ 17,384 $ 36,915 $ 241,792
Accounts receivable........................ 78,220 123,928 3,165,486
Inventory.................................. -- 40,731 --
Loan receivable............................ -- 10,000 --
-------- -------- ----------
Total current assets.................... 95,604 211,574 3,407,278
Property and equipment, net of accumulated
depreciation............................... 16,886 21,684 11,030
Other assets................................ -- -- 216
-------- -------- ----------
$112,490 $233,258 $3,418,524
======== ======== ==========
LIABILITIES AND NET ASSETS
Current liabilities:
Line of credit - bank...................... $ 44,729 $ 90,303 $ --
Accounts payable........................... 26,765 83,102 3,329,057
Accrued expenses........................... -- 381 622
Shareholder loan........................... 10,000 -- --
-------- -------- ----------
Total current liabilities............... 81,494 173,786 3,329,679
-------- -------- ----------
Shareholders' equity:
Capital stock.............................. 50,500 50,500 50,500
Retained (deficit) earnings................ (19,504) 8,972 38,345
-------- -------- ----------
30,996 59,472 88,845
-------- -------- ----------
$112,490 $233,258 $3,418,524
======== ======== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
INNOVATIVE TECHNOLOGY SOLUTIONS, INC.
STATEMENTS OF INCOME
<TABLE>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
------------------------------ -----------------------------
1997 1998 1998 1999
-------------- --------------- -------------- --------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues......................................... $528,619 $2,356,533 $1,042,629 $10,228,800
Cost of revenues................................. 34,694 1,489,269 634,620 9,418,656
Selling, general & administration expenses....... 405,781 827,837 347,850 763,141
-------- ---------- ---------- -----------
Income from operations.......................... 88,144 39,427 60,159 47,003
Other expense.................................... (3,567) (8,301) (3,963) (9,540)
-------- ---------- ---------- -----------
Net income....................................... $ 84,577 $ 31,126 $ 56,196 $ 37,463
========= ========== ========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
INNOVATIVE TECHNOLOGY SOLUTIONS, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
CAPITAL STOCK
(50,000 SHARES AUTHORIZED,
NO PAR VALUE)
--------------------------
SHARES RETAINED
ISSUED AND EARNINGS/
OUTSTANDING AMOUNT (DEFICIT) TOTAL
------------ ---------- ----------- ---------
<S> <C> <C> <C> <C>
Balance at December 31, 1996............. 500 $ 500 $(104,081) $(103,581)
Issuance of stock....................... 125 50,000 -- 50,000
Net income.............................. -- -- 84,577 84,577
--- ------- --------- ---------
Balance at December 31, 1997............. 625 50,500 (19,504) 30,996
Distributions to shareholders........... -- -- (2,650) (2,650)
Net income.............................. -- -- 31,126 31,126
--- ------- --------- ---------
Balance at December 31, 1998............. 625 50,500 8,972 59,472
Distributions to shareholders
(unaudited).......................... -- -- (8,090) (8,090)
Net income (unaudited).................. -- -- 37,463 37,463
--- ------- --------- ---------
Balance at June 30, 1999 (unaudited)..... 625 $50,500 $ 38,345 $ 88,845
=== ======= ========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
INNOVATIVE TECHNOLOGY SOLUTIONS, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
------------------------------ -----------------------------
1997 1998 1998 1999
-------------- --------------- -------------- --------------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income........................................... $ 84,577 $ 31,126 $ 56,196 $ 37,463
Adjustment to reconcile net income to net cash
provided by operating activities:
Depreciation...................................... 6,057 14,531 7,266 21,021
Change in assets and liabilities:
Accounts receivable............................... (78,220) (45,708) (419,174) (3,041,558)
Inventory......................................... -- (40,731) -- --
Loans receivable.................................. -- (10,000) -- 10,000
Other assets...................................... -- -- -- (216)
Accounts payable.................................. 26,766 56,337 269,097 3,286,686
Accrued expenses.................................. -- 381 713 241
-------- -------- -------- -----------
Net cash provided by operating activities...... 39,180 5,936 (85,902) 313,637
-------- -------- -------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to fixed assets............................ (8,750) (19,329) (9,877) (10,367)
-------- -------- -------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowing (repayment) of shareholder loan............ (7,896) (10,000) 40,000 --
Shares of stock issued............................... 50,000 -- -- --
Distribution to shareholders......................... -- (2,650) (2,650) (8,090)
Increase (decrease) in bank line of credit........... (55,421) 45,574 100,574 (90,303)
-------- -------- -------- -----------
(13,317) 32,924 137,924 (98,393)
-------- -------- -------- -----------
Net increase (decrease) in cash...................... 17,113 19,531 42,145 204,877
Cash, beginning of year.............................. 271 17,384 17,384 36,915
-------- -------- -------- -----------
Cash, end of year.................................... $ 17,384 $ 36,915 $ 59,529 $ 241,792
======== ======== ======== ===========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest............................... $ 3,567 $ 9,234 $ 4,549 $ 7,533
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
INNOVATIVE TECHNOLOGY SOLUTIONS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
NOTE 1 -- NATURE OF THE BUSINESS
- --------------------------------
Innovative Technology Solutions, Inc. (the "Company") sells microcomputer
products and services to medium to large businesses throughout Washington,
Oregon and Idaho. The Company was incorporated in 1995 and is located in
Seattle, Washington.
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ----------------------------------------------------
Cash and cash equivalents
-------------------------
The Company considers all highly liquid investments with a maturity of
three months or less at date of acquisition to be cash equivalents.
Accounts receivable
-------------------
Losses on uncollectible accounts receivable are recognized when such
losses become known or indicated. No allowance was considered necessary at
December 31, 1998 or 1997. Credit risk is represented by the unsecured
receivables stated on the balance sheet.
Inventory
---------
Inventory is stated at cost on the first-in, first-out basis, and consists
of goods in transit from supplier to customer.
Equipment and depreciation
--------------------------
Equipment, which consists primarily of computer equipment and
peripherals, is recorded at cost. Depreciation is provided using the
straight-line method over useful lives of three to five years.
Revenue recognition and concentrations
--------------------------------------
Revenue is recognized at the time product is delivered or the service
is performed. Provision for sales returns are estimated based on the Company's
historical return experience.
Prior to April, 1999 the Company operated under a program with one of
its suppliers, whereby the Company acted as a sales agent. Under this program,
the Company generated sales of $11,206,000 and $6,450,000 for the supplier and
received referral fees (which are included in revenue on the statement of
income) of $2,237,000 and $508,700 in 1998 and 1997, respectively. During April,
1999, the Company terminated the program and purchased inventory directly from
its supplier for reselling.
One customer accounted for approximately 24% and 34% of total sales in 1998
and 1997, respectively. Referral fees accounted for approximately 58% and 89% of
accounts receivable outstanding at December 31, 1998 and 1997, respectively.
Income tax
----------
The Company, with the consent of its shareholders, elected under the
Internal Revenue Code to be taxed as an S corporation, effective July 21, 1995.
As a result of the Company's tax status change, its income and expenses are
included with that of the shareholders for federal income tax purposes for
periods beginning
8
<PAGE>
after July 21, 1995. Therefore no provision or liability for federal income
taxes has been included in these financial statements. State and local business
excise taxes are included in operating expenses.
Dividends
---------
The Board of Directors has agreed to declare a dividend at the end of
each year sufficient to assist stockholders with payment of tax on corporate
taxable income. The Company declared and paid a dividend of $2,650 in 1998 and
$8,095 in March 1999.
Advertising
-----------
The Company expenses advertising costs as incurred.
Use of estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
NOTE 3 -- LINE OF CREDIT
- ------------------------
The Company has a line of credit with a bank for $125,000, guaranteed
by a shareholder and secured by deeds of trust on the personal residences of the
principal shareholders. Borrowings on the line totaled $90,303 and $44,729 at
December 31, 1998 and 1997, respectively. Interest is charged at the bank's base
rate plus two percent, which was 10.0% and 11.5% at December 31, 1998 and
1997, respectively.
NOTE 4 -- RELATED PARTY TRANSACTIONS
- ------------------------------------
A corporation partially owned by shareholders of the Company was
advanced funds totaling $10,000 as of December 31, 1998. The advance is
non-interest-bearing and is unsecured.
In 1997, a shareholder advanced $10,000 to the Company. The loan, which
was unsecured and non-interest bearing, was repaid in 1998.
NOTE 5 -- DEFINED CONTRIBUTION PLAN
- -----------------------------------
In 1998, the Company established a defined contribution plan, qualified
under IRC section 401(k), open to participation by all full-time employees over
the age of 21, after one year of employment. Under the plan, the Company may
make contributions on a discretionary basis. No contribution was made to the
plan by the Company in 1998.
NOTE 6 -- CONTINGENCIES (unaudited)
- -----------------------------------
A risk exists that Innovative Technology Solutions, Inc. and its operations
could be adversely affected if the computer systems it uses and those used by
significant third parties (e.g., vendors, customers, third party administrators,
etc.) do not properly process and calculate date-related information and data
due to "Y2K" issues. Management is assessing its computer systems and business
processes and has initiated actions to address the Y2K needs of the Company as
they are identified. Management is also assessing the actions being taken by
third parties that are significant to its business. At this time, management has
not determined the impact on the Company, including the costs of remediation of
the Y2K issue. Management intends to fund the costs of needed Y2K efforts, if
any, from cash flows from operations; these costs will be expensed as incurred.
9
<PAGE>
NOTE 7 -- SUBSEQUENT EVENT
- --------------------------
In June, 1999, the Company entered into a purchase agreement with
Nucleus, Inc. (Nucleus) whereby all of the outstanding shares of the Company's
common stock would be acquired by Nucleus for $1,000,000 plus 1,000,000 shares
of Nucleus common stock.
10
<PAGE>
(b) PRO FORMA FINANCIAL INFORMATION.
The following unaudited pro forma combined financial statements of Nucleus
give effect to the acquisition of Comp-Pro Computers, Inc. ("Comp-Pro"), Telos
Distributing, Inc. ("Telos"), Young Data Systems, Inc. ("YDS") and ITS.
The unaudited pro forma condensed combined balance sheet as of June 30,
1999 and the pro forma condensed combined statements of operations for the year
ended December 31, 1998 and the six months ended June 30, 1999 have been
prepared to illustrate the effect of the acquisitions described above. The
acquisitions (accounted for as purchases) are treated as if they had occurred on
June 30, 1999, in the pro forma balance sheet and as of January 1, 1998, for the
pro forma statement of operations for the year ended December 31, 1998 and
January 1, 1999 for the six months ended June 30, 1999. The unaudited pro forma
condensed combined statement of operations for the year ended December 31, 1998
was prepared from the historical statements of operations of Nucleus, Comp-Pro,
Telos, YDS and ITS for the year then ended. The unaudited pro forma condensed
combined balance sheet as of June 30, 1999 and the statement of operations for
the six months ended June 30, 1999, were prepared from the unaudited historical
balance sheets and statements of operations of Nucleus, Comp-Pro, Telos, YDS and
ITS, respectively.
The pro forma condensed combined financial statements are presented for
illustrative purposes only and are not necessarily indicative of the combined
financial positions or combined results of operations of Nucleus that would have
been reported had the acquisitions described above occurred on the dates
indicated, nor do they represent a forecast of the combined financial position
of Nucleus at any future date or the combined results of operations of Nucleus
for any future period. Furthermore, no effect has been given in the pro forma
combined statements of operations for synergies or cost savings, if any, that
may be realized. The unaudited pro forma condensed combined financial statements
reflect the acquisitions, using the purchase method of accounting.
The following unaudited pro forma condensed combined financial statements
and accompanying notes are qualified in their entirety by reference to, and
should be read in conjunction with Nucleus' Management's Discussion and Analysis
of Financial Condition and Results of Operations included in its Annual Report
on Form 10-KSB for the year ended December 31, 1998, as amended, and its
Quarterly Report on Form 10-Q for the period ended June 30, 1999, and the
audited financial statements of ITS, which are also included within this Form
8-K/A.
11
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 1999
<TABLE>
HISTORICAL PRO FORMA
-----------------------------
ASSETS NUCLEUS(1) ITS ADJUSTMENTS(3) PRO FORMA
-------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Current assets:
Cash.................................... $ -- $ 241,792 $ -- $ 241,792
Accounts receivable..................... 225,415 3,165,486 -- 3,909,901
Subscription receivable................. 200,000 -- -- 200,000
Unbilled revenue........................ 139,721 -- -- 139,721
Inventory............................... 131,234 -- -- 131,234
Other current assets.................... 106,014 -- -- 106,014
------------ ------------- ------------ ------------
Total current assets................. 802,384 3,407,278 -- 4,209,662
Property, plant and equipment, net......... 76,133 11,030 -- 87,163
Other assets............................... 500,000 216 -- 500,216
Intangibles, net........................... 2,037,337 -- 4,818,155(3) 6,855,492
------------ ------------- ------------ ------------
Total assets......................... $ 3,415,854 $ 3,418,524 $ 4,818,155 $ 11,652,533
============ ============= ============ ============
Current liabilities:
Bank overdraft.......................... $ 9,957 $ -- $ -- $ 9,957
Accounts payable........................ 1,005,782 3,329,057 -- 4,334,839
Accrued expenses........................ 289,258 622 32,000(3) 321,880
Due to former owners.................... 60,000 -- -- 60,000
Note payable to former owners........... -- -- 1,000,000(3) 1,000,000
Due to related parties.................. 241,258 -- -- 241,258
------------ ------------- ------------ ------------
Total current liabilities............ 1,606,255 3,329,679 1,032,000 5,967,934
------------ ------------- ------------ ------------
Stockholders' equity:
Common stock and paid in
capital.............................. 6,123,782 50,500 3,824,500(3) 9,998,782
Preferred stock......................... -- -- -- --
Retained (deficit) earnings............. (4,314,183) 38,345 (38,345)(3) (4,314,183)
------------ ------------- ------------ ------------
Total stockholders' equity........... 1,809,599 88,845 3,786,155 5,684,599
------------ ------------- ------------ ------------
Total liabilities and $ 3,415,854 $ 3,418,524 $ 4,818,155 $ 11,652,533
stockholders' equity............... ============ ============= ============ ============
</TABLE>
12
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
HISTORICAL
--------------------------------------------------------------- PRO FORMA
NUCLEUS(1) COMP-PRO(2) TELOS(2) YDS(2) ITS ADJUSTMENTS PRO-FORMA
----------- ----------- ---------- ---------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue, net................... $ 1,297,628 $ 185,684 $ 253,288 $ 258,585 $10,228,800 $ -- $ 12,223,985
Cost of revenues............... 987,467 158,931 162,912 200,878 9,418,656 -- 10,928,844
Selling, general, & administrative
expenses.................... 1,220,905 31,495 100,735 65,335 763,141 -- 2,181,611
Amortization expense........... 13,503 -- -- -- -- 214,839(4) 228,342
----------- ---------- ---------- ---------- ----------- ------------ -------------
Income (loss) from operations.. (924,247) (4,742) (10,359) (7,628) 47,003 (214,839) (1,114,812)
Other income (expense)......... 8,680 13 (5,710) (2,434) (9,540) (38,750)(5) (47,741)
----------- ---------- ---------- ---------- ------------ ------------ -------------
Income (loss) before taxes..... (915,567) (4,729) (16,069) (10,062) 37,463 (253,589) (1,162,553)
Income tax expense (benefit)... -- -- -- -- -- -- --
----------- ---------- ---------- ---------- ----------- ------------ -------------
Net income (loss).............. $ (915,567) $ (4,729) $ (16,069) $ (10,062) $ 37,463 $ (253,589) $ (1,162,553)
=========== ========== ========== ========= =========== ============ =============
Diluted loss per share..... $ (0.14) $ (0.15)
=========== =============
Diluted weighted average 6,560,380 1,386,164(6) 7,946,544
shares outstanding....... =========== ============ =============
</TABLE>
13
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
HISTORICAL
------------------------------------------------------------- PRO FORMA
NUCLEUS(1) COMP-PRO(2) TELOS(2) YDS(2) ITS ADJUSTMENTS PRO-FORMA
----------- ----------- ----------- ---------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues, net.................. $ 3,574,572 $ 481,176 $ 1,300,648 $ 522,725 $ 2,356,533 $ -- $ 8,235,654
Cost of revenue................ 2,517,157 423,252 952,288 439,479 1,489,269 -- 5,821,445
Selling, general, & administrative
expenses.................... 1,602,992 81,188 287,742 132,545 827,837 -- 2,932,704
Amortization expense........... -- -- -- -- -- 456,684(4) 456,684
----------- ----------- ----------- ---------- ----------- ------------ ----------
Income (loss) from operations.. (545,577) (23,264) 60,618 (49,299) 39,427 (456,684) (975,179)
Other income (expense)......... 21,106 -- (203) 381 (8,301) (85,000)(5) (72,017)
----------- ----------- ----------- ---------- ----------- ------------ ----------
Income (loss) before taxes..... (524,471) (23,264) 60,415 (48,918) 31,126 (541,684) (1,047,196)
Income tax expense (benefit)... (25,820) -- 12,761 -- -- -- (13,059)
----------- ----------- ----------- ---------- ----------- ------------ ----------
Income (loss) before
extraordinary Item.......... $ (498,651) $ (23,264) $ 47,654 $ (48,918) $ 31,126 $ (541,684) $ (1,034,137)
=========== =========== =========== ========== =========== ============ =============
Diluted income (loss) per
share.................... $ (0.08) $ (0.13)
=========== -------------
Diluted weighted average 6,413,165 1,425,000(6) 7,838,165
shares outstanding....... =========== ============ =============
</TABLE>
14
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL DATA
1. On April 15, 1999, Nucleus Holdings Corporation was merged with and
into Nucleus, with Nucleus the surviving corporation. The merger was
approved by the board of directors of both Nucleus Holdings and
Nucleus, and required the holder of Nucleus Holdings common stock to
receive 5,307.109 shares of Nucleus common stock for each of its 1,000
outstanding shares.
2. The historical results of operations of Comp Pro for the six months
ended June 30, 1999, reflect the operations of Comp Pro from January 1,
1999 to April 30, 1999 (date of acquisition). The historical results of
operations of Telos for the six months ended June 30, 1999, reflect the
operations of Telos from January 1, 1999 to May 20, 1999 (date of
acquisition). The historical results of operations of YDS for the six
months ended June 30, 1999, reflect the operations of YDS from January
1, 1999 to June 15, 1999 (date of acquisition).
3. Nucleus has accounted for the ITS acquisition as a purchase. The
purchase price has been allocated to the acquired assets and assumed
liabilities based upon their estimated relative fair values, based upon
preliminary determinations, as follows:
<TABLE>
<S> <C>
Total purchase price, including expenses.................... $4,907,000
Current assets.............................................. 3,407,278
Other assets................................................ 11,246
Liabilities assumed......................................... 3,329,679
----------
Excess purchase price over net assets acquired.............. $4,818,155
==========
</TABLE>
Pro forma adjustments have been recorded to reflect the purchase price
as described above.
4. Represents amortization expense associated with goodwill totaling $6.9
million recorded in connection with the acquisitions amortized over 15
years and the Comp Pro covenants not-to-compete of $25,000 amortized
over three years.
5. Represents interest expense on the $1,000,000 ITS note which bears
interest at prime plus 1% recorded in connection with the acquisitions.
6. Represents the issuance of 1,425,000 shares to consummate the
acquisitions of Telos, YDS and ITS. For diluted income (loss) per share
purposes, these shares have been weighted for the period such shares
were actually outstanding.
(c) EXHIBITS.
None.
15
<PAGE>
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.
NUCLEUS, INC.
(Registrant)
Date: September 10, 1999 By:/s/ J. Theodore Hartley
------------------------------------
J. Theodore Hartley,
Executive Vice President and
Chief Financial Officer
16
