SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 3
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 30, 1995
PCT HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Nevada 0-26088 87-0431483
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation or
organization)
434 Olds Station Road, Wenatchee, WA 98801
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number,
including area code: (509) 664-8000
None
(Former name or former address, if changed since last report)
<PAGE>2
Item 7. Financial Statements and Exhibits
- -----------------------------------------
A. Financial Statements
--------------------
Presented on the following pages 3 through 21 are (i) a Table of
Contents for the supplementary financial information presented
herein; (ii) management's introduction and notes to the
supplementary financial information; (iii) the Report of
Independent Certified Public Accountants and the accompanying
audited financial statements of Morel Industries, Inc., at and for
the years ended June 30, 1995 and 1994; and (iv) pro forma
supplementary financial statements combining the Company's historical
financial statements with those of the acquired entity.
<PAGE>3
PCT HOLDINGS, INC.
TABLE OF CONTENTS FOR SUPPLEMENTARY FINANCIAL INFORMATION
FORM 8-K FINANCIAL DISCLOSURE
TRANSACTION WITH MOREL INDUSTRIES, INC.
SUPPLEMENTARY FINANCIAL INFORMATION
- -----------------------------------
Page
----
1. Management's introduction and notes to the supplemental
financial information, including incorporation by reference
of the audited financial statements of the Company at and
for the annual periods ended May 31, 1995 and 1994
previously filed with the Commission in conjunction with the
Company's annual report on Form 10-KSB; and the unaudited
quarterly financial statements at and for the quarterly
periods ended August 31, 1995 and 1994 previously filed with
the Commission in conjunction with the Company's quarterly
report on Form 10-QSB. 4
2. Audited Financial Statements of Morel Industries, Inc., the
acquired entity, at and for the annual periods ended
June 30, 1995 and 1994. 5
3. Pro forma supplementary financial statements combining the
Company's historical financial statements with those of the
acquired entity, Morel Industries, Inc., including the
balance sheets and income statements, as follows:
a. At and for the quarterly periods ended August 31 and
September 30, 1995, for the registrant and the acquired
entity, respectively; 18-19
b. At and for the annual periods ended May 31 and June 30,
1995, for the registrant and the acquired entity,
respectively. 20-21
<PAGE>4
PCT HOLDINGS, INC.
SUPPLEMENTARY FINANCIAL INFORMATION FOR FORM 8-K
MANAGEMENT'S INTRODUCTION AND NOTES THERETO
As previously reported on current reports on Form 8-K and 8-K/A dated
November 30, 1995, the Company entered into an Agreement and Plan of Merger
with Morel Industries, Inc., a Washington corporation ("Morel"), pursuant
to which Morel Acquisition Corporation, a Washington corporation and
subsidiary of the Company formed for the purpose of effecting the
acquisition of Morel, was merged into Morel effective, for accounting
purposes, as of November 30, 1995 (the "Merger"). Although the Merger was
initially reported and accounted for as a pooling of interests, the Company
recently has concluded, in consultation with its accounting advisors, that
the transaction does not meet all of the conditions necessary to be
accounted for as a pooling of interests. As a result, the Company has
revised its financial statements to reflect the change from pooling of
interests to purchase accounting and to report its financial condition and
results of operations accordingly.
The financial statements included and incorporated herein include the
financial statements of the registrant, PCT Holdings, Inc., and the
financial statements of Morel Industries, Inc., the acquired entity. Pro
forma supplementary financial information combining the two entities has
been prepared in form and content in reference to these financial
statements and the associated notes. Management has not chosen to eliminate
or adjust the historical financial information since it considers that any
material changes to the operations of the two entities will or may not
occur until a time significantly after the business combination, and are
therefore not estimable at this time. Captions have been modified slightly
to allow consistency in reporting the pro forma combined results of the two
entities accounted for as a purchase. Earnings per share on the related
income statements reflects the shares issued by the registrant in the
business combination as if issued at the beginning of the periods.
Pro forma adjustments to the supplementary financial statements:
The pro forma adjustments column of the following balance sheets and income
statements reflects the following:
1) Elimination of the equity section of the acquired company and
reflection of the stock issued for the purchase;
2) Recording of the note payable liability to the shareholder holding the
nonvoting common stock;
3) Recording of a net reduction in the fixed assets of $83,770 to record
them at estimated fair market value;
4) Recording of the excess of cost over net book value of assets acquired
in the transaction; and
5) The associated amortization of the excess for the period.
<PAGE>5
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Morel Industries, Inc.
Entiat, Washington
We have audited the accompanying balance sheets of Morel Industries,
Inc. as of June 30, 1995 and 1994, and the related statements of income,
stockholders' 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 audits to
obtain reasonable assurance about whether the financial statements are free
from 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 Morel
Industries, Inc. at June 30, 1995 and 1994, and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.
/s/ BDO SEIDMAN, LLP
November 8, 1995, except as to
Notes 4 and 9 which date is December 1, 1995
Seattle, Washington
<PAGE>6
MOREL INDUSTRIES, INC.
BALANCE SHEETS
June 30, 1995 1994
- ---------------------------------------------------------------------
ASSETS (Note 4)
CURRENT ASSETS
Cash $ 151,825 $ 636,114
Accounts receivable (Note 3) 1,395,527 1,415,762
Project receivable (Note 8) 126,000 897,656
Inventories (Notes 1 and 3) 936,311 821,021
Prepaid expenses and other 112,728 28,970
- ---------------------------------------------------------------------
Total Current Assets 2,722,391 3,799,523
PROPERTY AND EQUIPMENT, less accumulated
depreciation (Notes 2 and 3) 6,667,079 2,625,767
RECEIVABLE FROM STOCKHOLDERS -- 111,403
DEFERRED BOND COSTS 24,745 --
- ---------------------------------------------------------------------
$9,414,215 $6,536,693
<PAGE>7
MOREL INDUSTRIES, INC.
BALANCE SHEETS
June 30, 1995 1994
- --------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Line-of-credit (Note 3) $ 968,539 $ 889,554
Accounts payable 1,106,331 937,286
Accrued expenses 540,622 454,141
Current maturities of long-term debt
(Note 4) 1,001,781 103,149
Pre-billed moving expenditures (Note 8) -- 768,500
---------- ----------
Total Current Liabilities 3,617,273 3,152,630
---------- ----------
DEFERRED SALES TAX 144,891 --
LONG-TERM DEBT, net of current maturities
(Note 4) 2,147,672 --
DEFERRED INCOME TAXES (Note 6) 727,848 681,645
---------- ----------
Total Liabilities 6,637,684 3,834,275
---------- ----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (Note 9)
Common stock, $100 par value; 2,500 shares
authorized; 416 shares issued and
outstanding 41,600 41,600
Common stock, non-voting, $2,000 par value;
2,500 shares authorized; 87.5 shares
issued and outstanding 175,000 175,000
Additional paid-in capital 825,938 825,938
Retained earnings 1,733,993 1,659,880
---------- ----------
Total Stockholders' Equity 2,776,531 2,702,418
$9,414,215 $6,536,693
========== ==========
See accompanying summary of accounting policies and notes to financial
statements.
<PAGE>8
MOREL INDUSTRIES, INC.
STATEMENTS OF INCOME
Years Ended June 30, 1995 1994
- -------------------------------------------------------------------------------
SALES $ 10,707,838 $ 9,895,578
COST OF SALES 9,622,768 8,327,254
------------ ------------
Gross Profit 1,085,070 1,568,324
OPERATING EXPENSES 1,189,553 1,240,742
------------ ------------
Income (Loss) from Operations (104,483) 327,582
------------ ------------
OTHER INCOME (EXPENSE)
Interest income 30,844 18,326
Interest expense (267,477) (130,500)
Realized recovery (loss) on investment 28,881 (77,471)
Other expense (13,886) (40,235)
------------ ------------
Total Other Income (Expense) (221,638) (229,880)
------------ ------------
Income (Loss) Before Extraordinary Item (326,121) 97,702
EXTRAORDINARY ITEM, gain on sale of foundry
less applicable income taxes of $151,789 and
$988,134 (Note 8) 294,648 1,918,142
------------ ------------
Income (Loss) Before Income Taxes (31,473) 2,015,844
Deferred Income Tax (Provision) Benefit
(Note 6) 105,586 (38,708)
------------ ------------
Net Income $ 74,113 $ 1,977,136
============ ============
See accompanying summary of accounting policies and notes to financial
statements.
<PAGE>9
MOREL INDUSTRIES, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Non-voting Additional Retained
Common Common Paid-in Earnings
Stock Stock Capital (Deficit) Total
<S> <C> <C> <C> <C> <C>
BALANCE, July 1, 1993 $ 41,600 $ 175,000 $ 825,938 $ (317,256) $ 725,282
Net income -- -- -- 1,977,136 1,977,136
----------- ----------- ----------- ----------- -----------
BALANCE, June 30, 1994 41,600 175,000 825,938 1,659,880 2,702,418
Net income -- -- -- 74,113 74,113
----------- ----------- ----------- ----------- -----------
BALANCE, June 30, 1995 $ 41,600 $ 175,000 $ 825,938 $ 1,733,993 $ 2,776,531
=========== =========== =========== =========== ===========
</TABLE>
See accompanying summary of accounting policies and notes to financial
statements.
<PAGE>10
MOREL INDUSTRIES, INC.
STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
Years Ended June 30 1995 1994
- -------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income $ 74,113 $ 1,977,136
----------- -----------
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Gain on sale of foundry (294,648) (1,918,142)
Depreciation and amortization 356,600 112,241
Deferred income taxes (105,586) 38,708
Settlement of stockholder receivable as a bonus 111,403 --
Changes in operating assets and liabilities:
Decrease (increase) in assets:
Accounts receivable 20,235 (194,725)
Inventories (115,290) (118,583)
Prepaid expenses and other (83,758) (17,096)
Increase (decrease) in liabilities
Accounts payable 169,045 (262,525)
Accrued expenses 86,481 247,960
----------- -----------
Net Cash Provided by (Used in) Operating Activities 218,595 (135,026)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale and relocation of foundry 2,508,860 3,336,528
Acquisition of property and equipment (4,492,197) (1,937,427)
Payment of relocation costs (1,963,807) (512,761)
Increase in deferred sales tax 144,891 --
Increase in receivable from stockholder -- (111,403)
----------- -----------
Net Cash Provided by (Used in) Investing Activities (3,802,253) 774,937
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in line-of-credit 78,985 89,555
Proceeds from long-term borrowings 3,438,868 --
Principal payments on long-term debt (392,564) (435,660)
Increase in deferred bond costs (25,920) --
----------- -----------
Net Cash Provided by (Used in) Financing Activities 3,099,369 (346,105)
----------- -----------
Net Increase (Decrease) in Cash (484,289) 293,806
CASH, beginning of period $ 636,114 $ 342,308
CASH, end of period $ 151,825 $ 636,114
=========== ===========
SUPPLEMENTAL CASH FLOWS DISCLOSURE:
Cash paid for interest $ 260,733 $ 130,500
=========== ===========
</TABLE>
See accompanying summary of accounting policies and notes to financial
statements.
<PAGE>11
MOREL INDUSTRIES, INC.
SUMMARY OF ACCOUNTING POLICIES
NATURE OF BUSINESS AND Morel Industries, Inc. ("Morel") is a manufacturer
SIGNIFICANT of aluminum castings located in Entiat, Washington.
CUSTOMER During 1994, Morel changed its name from Morel
Foundry Corporation to emphasize Morel's expanding
capabilities in machining and powder coat
painting. In 1995 and 1994 sales to a major
customer in the Class 8 truck industry were 75%
and 78% of total sales.
INVENTORIES Inventories are valued at the lower of cost (first-
in, first-out) or market. Work-in-process is valued
at the lower of estimated cost or market.
Estimated cost is derived through an analysis
of historical gross profit margins.
PROPERTY AND EQUIPMENT Property and equipment is recorded at cost and
is depreciated using the straight-line method over
estimated useful lives as follows:
Years
---------------------------------------------------
Office equipment 3-7
Foundry equipment 7-10
Building 15-40
---------------------------------------------------
Expenditures for repairs and maintenance which do
not extend the useful life of the related asset are
expensed as incurred.
INCOME TAXES Deferred taxes are provided for temporary
differences in the basis of assets and liabilities
for book and income tax reporting purposes. If it
is more likely than not that some portion of a
deferred tax asset will not be realized, a
valuation allowance is recognized.
<PAGE>12
MOREL INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1: Inventories consisted of the following:
Inventories
June 30, 1995 1994
---------------------------------------------------
Work-in-process $695,411 $593,064
Raw materials 112,538 100,812
Foundry supplies 128,362 127,145
---------------------------------------------------
Total inventories $936,311 $821,021
===================================================
NOTE 2: Property and equipment consisted of the following:
Property and Equipment
June 30, 1995 1994
---------------------------------------------------
Machinery, equipment and
furniture $3,768,755 $2,874,282
Land and building 3,684,314 823,844
Accumulated depreciation (785,990) (1,072,359)
---------------------------------------------------
Net property and equipment $6,667,079 $2,625,767
===================================================
NOTE 3: Morel has a line-of-credit with a bank with
Line-of-Credit interest at the bank's prime rate (9% at June 30,
1995) plus 2%. The agreement allows Morel to
borrow up to the lesser of $1,000,000 or 80% of
eligible accounts receivable as defined by the
bank. At June 30, 1995, $968,539 was outstanding
and $31,461 was available for borrowing. The
line-of-credit is secured by accounts receivable,
inventories and equipment and is personally
guaranteed by the stockholders, see Notes 4 and 9.
<PAGE>13
NOTE 4:
Long-Term Debt June 30, 1995 1994
---------------------------------------------------
Industrial revenue bond
payable to a bank with
monthly payments of
$19,252, including
interest at 8.12% through
November 2009, secured by
land, building and
equipment, and personally
guaranteed by the
stockholders. $1,953,154 --
Note payable to a supplier
with quarterly interest
payments of 12% on the
outstanding balance;
principal due February
1996 and 1997, secured by
property and equipment. 277,291 --
Note payable to an
organization with monthly
payments of $1,718,
including interest at
10.5% through September
2000, secured by personal
residences and guarantee
of the stockholders. 100,000 --
Note payable to an
individual, interest only
at 14% through
September 30, 1995, when
interest increases to 15%.
Due in full in March 1996.
Secured by substantially
all assets of Morel and
subordinated to the
industrial revenue bond. 500,000 --
Notes payable to suppliers
with monthly payments of
$757 to $44,543 including
interest at 10%.
Unsecured with maturities
through February 1996 318,320 --
Note payable to a supplier
in quarterly installments
of $25,000, plus interest
at 12% through May 1995,
unsecured. -- 100,000
Other 688 3,149
---------------------------------------------------
$3,149,453 $103,149
Less current maturities 1,001,781 103,149
---------------------------------------------------
Total Long-Term Debt $2,147,672 --
===================================================
<PAGE>14
Scheduled maturities of long-term debt as of
June 30, 1995, are as follows:
---------------------------------------------------
1996 $1,001,781
1997 270,316
1998 100,415
1999 109,207
2000 118,774
Thereafter 1,548,960
---------------------------------------------------
Total $3,149,453
===================================================
Morel's line-of-credit and industrial revenue bond
agreements require, among other matters, that
Morel maintain minimum working capital,
tangible net worth and debt to tangible net
worth ratios. Morel was not in compliance with
the covenants at June 30, 1995. In conjunction
with the merger of Morel on December 1, 1995,
the bank provided a waiver of the covenants
through November 30, 1995, and restructured the
covenants through the expiration of the
agreements, see Note 9. Management believes
Morel will be in compliance with the covenants
through June 30, 1996.
<PAGE>15
NOTE 5: Morel leases equipment and vehicles under
Commitments and noncancelable operating leases. Future minimum
Contingencies lease payments are as follows:
---------------------------------------------------
1996 $32,336
1997 22,142
1998 5,092
1999 1,796
2000 974
---------------------------------------------------
$62,340
===================================================
Rent expense for the years ended June 30, 1995 and
1994, was $57,386 and $66,669.
During the normal course of business, matters arise
which may ultimately subject Morel to claims and
litigation. Management believes that the
resolution of these matters will not have a
material adverse effect on Morel's financial
condition.
NOTE 6: Deferred tax liabilities are comprised of the
Income Taxes following:
---------------------------------------------------
June 30, 1995 1994
---------------------------------------------------
Property and equipment $(1,227,233) $(1,065,361)
Officers' bonus 93,424 47,964
Other 58,502 39,782
Net operating loss
carryforward 347,459 295,970
---------------------------------------------------
$(727,848) $(681,645)
===================================================
Morel has net operating loss carryforwards of
approximately $1,022,000 with expiration dates
through fiscal year 2010.
The difference between Morel's effective income tax
rate and the statutory rate of 34% consists of the
following:
June 30, 1995 1994
---------------------------------------------------
Income tax (provision)
benefit at the
statutory rate $110,881 $(33,219)
Amortization of goodwill -- (2,487)
Meals and entertainment (3,426) (1,388)
Officer's life insurance (1,869) (1,614)
---------------------------------------------------
$105,586 $(38,708)
===================================================
<PAGE>16
NOTE 7: Morel participates in a multi-employer pension plan
Employee Benefit Plans pursuant to an agreement between Morel and its
employee bargaining unit. Although the plan is a
defined benefit plan, the specific benefit levels
are not negotiated with or known by Morel.
Contributions expense related to the plan was
$36,014 and $29,411 for the years ended June 30,
1995 and 1994. Subsequent to year end, Morel's
collective bargaining agreement expired and was
not renewed. Accordingly, Morel no longer
participates in the multi-employer plan.
Morel has a 401(k) employee benefit plan for those
employees who meet the eligibility requirements set
forth in the plan. Eligible employees may
contribute up to 15% of their compensation. Morel's
annual contribution to the plan is determined by
the board of directors. Morel made no
contributions during the years ended June 30,
1995 and 1994.
NOTE 8: In 1994, Morel was required to sell its facility in
Sale of Foundry Seattle, Washington, to the Port of Seattle (the
Property Port). Under terms of the sale Morel received
$2,533,000 for the facility and $3,626,000 for
relocation costs. In March 1994, Morel purchased a
facility in Entiat, Washington, and began
operations in Entiat during August 1994.
For financial statement purposes, Morel recognized
an extraordinary gain of $294,648 and $1,918,142
for the years ended June 30, 1995 and 1994. For
tax reporting purposes, Morel retained its original
basis in the assets sold and, accordingly, did not
recognize a taxable gain.
At June 30, 1995 and 1994, Morel was due $126,000
and $897,656 from the Port for relocation costs.
During the year ended June 30, 1994, Morel billed
the Port $768,500 for relocation costs which had
not yet been incurred, and which are recorded in
the accompanying balance sheet as a liability.
NOTE 9: On December 1, 1995, Morel entered into an
Subsequent Events agreement to merge with PCT Holdings, Inc. (PCTH),
in a transaction expected to be accounted for as a
pooling of interests. PCTH serves as a holding
company for subsidiaries providing sealed connectors
and components, ceramic capacitors and filters and
machined aluminum parts for the medical, energy,
aerospace, communications and electronics
industries.
Morel has reported a loss before extraordinary item
of $362,121 in 1995 and as of June 30, 1995, has a
working capital deficit of $894,822. Additionally,
at June 30, 1995, Morel was in violation of certain
debt covenants on the line-of-credit and industrial
revenue bond agreements. Subsequent to the merger,
PCTH provided Morel with $1 million of working
capital. The proceeds of the loan were used
primarily to repay $500,000 of the industrial
revenue bond. The balance was used to fund $260,000
of accounts payable, prepayment penalties of
$140,000 and provide working capital for Morel.
<PAGE>17
In conjunction with the repayment of the industrial
revenue bond, the bank provided Morel with a waiver
of its debt covenants through November 30, 1995, and
restructured the covenants through the expiration of
the agreements.
Morel's 1996 operating plan has been developed to
improve operating efficiency and continue to broaden
Morel's revenue base. Additionally, PCTH has
committed to provide Morel with sufficient working
capital until profitable operations are restored.
Although Morel believes that its operating plan and
working capital available from PCTH will be adequate
to meet its 1996 working capital needs and maintain
compliance with the restructured debt covenants,
there can be no assurance that Morel may not
experience liquidity problems because of adverse
market conditions or other unfavorable events.
<PAGE>18
PCT HOLDINGS, INC. AND SUBSIDIARIES
PRO FORMA COMBINED BALANCE SHEET
AUGUST 31, 1995, and SEPTEMBER 30, 1995, RESPECTIVELY
SUPPLEMENTARY FINANCIAL INFORMATION FOR FORM 8-K
<TABLE>
<CAPTION>
PCT HOLDINGS, INC. MOREL IND., INC.
Unaudited Unaudited Pro Forma
August 31, 1995 September 30, 1995 Adjustments COMBINED
------------------ ------------------ ----------- --------
Assets:
<S> <C> <C> <C>
Current Assets
Cash $ 476,051 $ 89,513 $ 565,564
Receivables 1,621,033 1,555,739 3,176,772
Inventory 4,942,063 839,068 5,781,131
Prepaid Expense 68,936 45,972 114,908
Other 281,181 0 281,181
----------- ----------- -----------
Total Current Assets $ 7,389,264 $ 2,530,292 $ 9,919,556
Net Property, Plant & Equipment 3,209,609 6,593,842 (83,770) 9,719,681
Real Estate Held for Resale 676,253 0 676,253
Cost in Excess of NBV 462,687 0 284,524 742,469
(4,742)
Patents, net 454,635 0 454,635
Non-compete Agreement 100,000 0 100,000
Other 115,908 24,241 140,149
----------- ---------- -----------
Total Assets $12,408,356 $9,148,375 $21,752,743
=========== ========== ===========
Liabilities and Shareholders' Equity
Current Liabilities
Bank Line of Credit 0 $ 964,140 $ 964,140
Accounts Payable $ 2,122,108 1,373,033 3,495,141
Accrued Liabilities 366,622 501,448 868,070
Current Portion - LTD 2,677,401 799,071 3,476,472
Current Portion - C/L 48,585 0 48,585
Current Portion - N/P 600,000 0 200,000 800,000
Current Portion - Non-Compete 35,000 0 35,000
----------- ---------- -----------
Total Current Liabilities 5,849,716 3,637,692 9,687,408
----------- ---------- -----------
Long Term Debt, net 540,739 2,128,992 2,669,731
Capital Leases, net 51,063 0 51,063
Deferred Sales Tax 0 144,891 144,891
Non-compete Agreement, net 65,000 0 65,000
Deferred Rent/Taxes 146,710 637,554 784,264
----------- ---------- -----------
Total Liabilities 6,653,228 6,549,129 13,402,357
----------- ---------- -----------
Shareholders' Equity 2,600,000
Common Stock 11,511,777 41,600 (41,600) 14,111,777
Common Stock, Non-Voting 0 175,000 (175,000)
Additional Paid in Capital 0 825,938 (825,938)
Accumulated Deficit (5,756,649) 1,556,708 (1,556,708) (5,761,391)
----------- ---------- -----------
(4,742)
Total Shareholders' Equity 5,755,128 2,599,246 8,350,386
----------- ---------- -----------
Total Liabilities & Equity $12,408,356 $9,148,375 $21,752,743
=========== ========== ===========
</TABLE>
The accompanying notes are an integral part of the pro forma combined financial
statements.
<PAGE>19
PCT HOLDINGS, INC. AND SUBSIDIARIES
PRO FORMA COMBINED STATEMENTS OF INCOME
QUARTER ENDED AUGUST 31, 1995, AND SEPTEMBER 30, 1995, RESPECTIVELY
PCT HOLDINGS, INC., AND MOREL INDUSTRIES, INC.
SUPPLEMENTARY FINANCIAL INFORMATION FOR FORM 8-K
<TABLE>
<CAPTION>
PCT MOREL
HOLDINGS, INC. IND., INC.
Quarters Ending
--------------------------------
August 31, September 30,
1995 1995 Pro Forma
Unaudited Unaudited Adjustments COMBINED
------------ ------------- ----------- --------
<S> <C> <C> <C>
NET SALES $3,456,473 $2,785,422 $6,241,895
COST OF SALES 2,795,475 2,669,528 5,465,003
---------- ---------- ----------
GROSS PROFIT 660,998 115,894 776,892
OPERATING EXPENSES 808,687 245,554 4,742 1,059,893
---------- ---------- ----------
INCOME (LOSS) FROM OPERATIONS (147,689) (129,660) (282,091)
---------- ---------- ----------
OTHER INCOME AND EXPENSE
Interest Income 0 1,075 1,075
Interest Expense (44,776) (103,461) (148,237)
Other 52 (35,533) (35,481)
---------- ---------- ----------
(44,724) (137,919) (182,643)
---------- ---------- ----------
NET INCOME (LOSS) BEFORE FEDERAL
INCOME TAX (192,413) (267,579) (464,734)
FEDERAL INCOME TAX - deferred 0 90,294 90,294
---------- ---------- ----------
NET INCOME (LOSS) FOR THE YEAR ($192,413) ($177,285) ($374,440)
========== ========== ==========
NET INCOME (LOSS) PER SHARE ($0.02) ($0.27) ($0.06)
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the pro forma combined financial
statements.
<PAGE>20
PCT HOLDINGS, INC. AND SUBSIDIARIES
PRO FORMA COMBINED BALANCE SHEET
MAY 31, 1995, and JUNE 30, 1995, RESPECTIVELY
SUPPLEMENTARY FINANCIAL INFORMATION FOR FORM 8-K
<TABLE>
<CAPTION>
PCT MOREL
HOLDINGS, INC. IND., INC.
Audited Audited Pro Forma
May 31, 1995 June 30, 1995 Adjustments COMBINED
------------- ------------- ----------- --------
<S> <C> <C> <C> <C>
Assets:
Current Assets
Cash $ 1,078,637 $ 151,825 $ 1,230,462
Receivables 1,075,999 1,521,527 2,597,526
Inventory 4,375,162 936,311 5,311,473
Prepaid Expense 39,721 112,728 152,449
Other 278,795 473,045 751,840
------------ ------------ ------------
Total Current Assets $ 6,848,314 $ 3,195,436 $ 10,043,750
Net Property, Plant & Equipment 3,008,122 6,667,079 (83,770) 9,591,431
Real Estate Held for Resale 676,253 0 676,253
Patents, net 478,092 0 478,092
Costs in Excess of NBV 462,687 0 107,239 562,777
Non-compete Agreement 100,000 0 (7,149) 100,000
Other 56,444 24,745 81,189
------------ ------------ ------------
Total Assets $ 11,629,912 $ 9,887,260 $ 21,533,492
============ ============ ============
Liabilities and Shareholders' Equity
Current Liabilities
Bank Line of Credit 0 $ 968,539 $ 968,539
Accounts Payable $ 1,527,467 1,106,331 2,633,798
Accrued Liabilities 518,065 540,622 1,058,687
Current Portion - LTD 2,448,000 1,001,781 3,449,781
Current Portion - C/L 51,000 0 51,000
Current Portion - N/P 510,000 0 200,000 710,000
Current Portion - Non-Compete 35,000 0 35,000
------------ ------------ ------------
Total Current Liabilities 5,089,532 3,617,273 8,906,805
Long Term Debt, net 319,574 2,147,672 2,467,246
Capital Leases, net 115,281 0 115,281
Notes Payable, net 457,644 0 457,644
Non-compete Agreement, net 65,000 0 65,000
Deferred Rent/Taxes 128,711 1,345,784 1,474,495
------------ ------------ ------------
Total Liabilities 6,175,742 7,110,729 13,486,471
------------ ------------ ------------
Shareholders' Equity 2,600,000
Common Stock 11,018,406 41,600 (41,600) 13,618,406
Common Stock, Non-Voting 0 175,000 (175,000) 0
Additional Paid in Capital 0 825,938 (825,938) 0
Accumulated Deficit (5,564,236) 1,733,993 (1,733,993) (5,571,385)
------------ ------------ ------------
(7,149)
Total Shareholders' Equity 5,454,170 2,776,531 8,047,021
------------ ------------ ------------
Total Liabilities & Equity $ 11,629,912 $ 9,887,260 $ 21,533,492
============ ============ ============
</TABLE>
The accompanying notes are an integral part of the pro forma combined financial
statements.
<PAGE>21
PCT HOLDINGS, INC AND SUBSIDIARIES
PRO FORMA COMBINED STATEMENTS OF INCOME
FISCAL YEAR ENDED MAY 31, 1995, AND JUNE 30, 1995, RESPECTIVELY
PCT HOLDINGS, INC., AND MOREL INDUSTRIES, INC.
SUPPLEMENTARY FINANCIAL INFORMATION FOR FORM 8-K
<TABLE>
<CAPTION>
PCT MOREL
HOLDINGS, INC. IND., INC.
YEARS ENDED
May 31, 1995 June 30, 1995 Pro Forma
Audited Audited Adjustments COMBINED
--------------- ------------- ----------- --------
<S> <C> <C> <C> <C>
NET SALES $ 11,035,595 $ 10,707,838 $ 21,743,433
COST OF SALES 9,092,157 9,622,768 18,714,925
------------ ------------ ------------
GROSS PROFIT 1,943,438 1,085,070 3,028,508
OPERATING EXPENSES 2,788,940 1,189,553 7,149 3,985,642
------------ ------------ ------------
INCOME (LOSS) FROM OPERATIONS (845,502) (104,483) (957,134)
------------ ------------ ------------
OTHER INCOME AND EXPENSE
Interest Income 74,352 30,844 105,196
Interest Expense (356,360) (267,477) (623,837)
Gain on sale of foundry, net
of income taxes of $151,789 0 323,529 323,529
Merger and Equity Capital Costs (538,040) 0 (538,040)
Other 13,835 (13,886) (51)
------------ ------------ ------------
(806,213) 73,010 (733,203)
INCOME (LOSS) BEFORE FEDERAL TAX (1,651,715) (31,473) (1,690,337)
FEDERAL INCOME TAX (DEFERRED) 241,000 105,586 346,586
------------ ------------ ------------
NET INCOME (LOSS) FOR THE YEAR ($ 1,410,715) $ 74,113 ($ 1,343,751)
============ ============ ============
INCOME (LOSS) PER SHARE OF COMMON STOCK ($0.41) $0.12 ($0.33)
</TABLE>
The accompanying notes are an integral part of the pro forma combined financial
statements.
<PAGE>22
B. Exhibits
--------
The following are filed as exhibits to this Amendment No. 3:
23.1 Consent of Moss Adams LLP.
<PAGE>23
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 hereunto duly authorized.
PCT HOLDINGS, INC.
By: /s/ DONALD A. WRIGHT
----------------------------------------
Donald A. Wright
President and Chief Executive Officer
Dated: May 6, 1996
<PAGE>24
EXHIBIT INDEX
Exhibit Sequential
Number Description Page
23.1 Consent of Moss Adams LLP. 25
Exhibit 23.1
Moss Adams LLP
Certified Public Accountants
INDEPENDENT AUDITOR'S CONSENT
We consent to the use in this Current Report of PCT Holdings, Inc., on Form
8-K/A of our report dated July 14, 1995, incorporated by reference and
included as part of this Current Report.
/s/ Moss Adams LLP
Everett, Washington
May 6, 1996
