SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities and Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) : November 19, 1999
SETO HOLDINGS, INC.
(Exact name of registrant as specified by its charter)
Nevada 33-5820-LA 77-00882545
(State or other jurisdic- (Commission File Number) (IRS Employer
tion of incorporation) Identification
Number)
554 North State Road
Briarcliff Manor, New York 10510
(Address of principal executive offices)
Registrant's Telephone Number: (914) 923-5000
Former Name or Former Address if Changed Since Last Report: N/A
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS:
The Company's October 31, 1999 unaudited pro forma combined financial
statements give effect to the acquisition of two foreign subsidiary companies as
set forth in Note 1 to these financial statements as if such transaction had
occurred, for balance sheet purposes, on October 31, 1999 and for statement of
operating purposes on February 1, 1999. These unaudited pro forma combined
financial statements should be read in conjunction with the Company's
consolidated financial statements and notes thereto appearing in the Form 8-K,
Form 10QSB and Form 10KSB. The pro forma information is not necessarily
indicative of the results that would have been reported has such events actually
occurred on the dates specified, nor is it indicative of the Company's future
results.
A preliminary allocation of the purchase price has been made to major
categories of assets and liabilities in the accompanying pro forma combined
financial statements based on available information. The actual allocation of
purchase price and the resulting effect on income form operations may differ
significantly from the proforma amounts included herein. These pro forma
adjustments represent the Company's preliminary determination of purchase
accounting adjustments and are based upon available information and certain
assumptions that the Company believes to be reasonable. Consequently, the
amounts reflected in the pro forma combined financial statements are subject to
change, and the final amounts may differ substantially.
1
<PAGE>
SETO HOLDINGS, INC.
PRO FORMA COMBINED BALANCE SHEET
OCTOBER 31, 1999
(Unaudited)
ASSETS
Historical
Acquisitions
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Seto Batteries
Holdings, Fimas Industries, Pro forma
Inc. Sdn. Bhd. Ltd. Adjustments Combined
Cash $ 53,404 $ 110,000 $305,603 $ 469,007
Accounts receivable 506,447 2,510,000 124,321 3,140,768
Inventory 877,785 1,869,000 64,322 2,811,107
Prepaid expenses 180,488 180,488
Deferred taxes 110,592 110,592
---------- ---------- -------- -----------
Total current assets 1,728,716 4,489,000 494,246 6,711,962
---------- ---------- -------- -----------
Investments in subsidiaries (3) ($ 20,360)
(2) 4,027,000
(5) ( 4,006,640)
Property, plant and equipment 618,605 4,196,000 226,689 (4) ( 43,888) 6,167,766
---------- ---------- -------- -----------
(2) 423,000
(3) 747,360
Others assets 348,876 300,000 648,876
---------- ---------- -------- -----------
Total assets $2,696,197 $8,985,000 $720,935 $13,528,604
========== ========== ======== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities $ 947,699 $4,205,000 $741,295 $ 5,893,994
Long-term debt 311,596 753,000 1,064,596
Deferred lease liability 9,000 9,000
Stockholders' equity 1,427,902 4,027,000 ( 20,360) (4) ( 43,888) 6,561,014
---------- ---------- -------- -----------
(5) ( 4,006,640)
(2) 4,450,000
(3) 727,000
Total liabilities and
stockholders' equity $2,696,197 $8,985,000 $720,935 $13,528,604
========== ========== ======== ===========
</TABLE>
See notes to pro forma combined financial statements. 2
<PAGE>
SETO HOLDINGS, INC.
PRO FORMA COMBINED STATEMENT OF INCOME
NINE MONTHS ENDED OCTOBER 31, 1999
(Unaudited)
Historical
Acquisitions
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Hong Kong
Seto Batteries
Holdings, Fimas Industries, Pro forma
Inc. Sdn. Bhd. Ltd. Adjustments Combined
Net sales $2,482,794 $14,483,000 $538,668 $17,504,462
Cost of sales 1,268,536 13,499,000 367,707 (4) $43,888 15,179,131
---------- ----------- -------- ------- -----------
Gross profit 1,214,258 984,000 170,961 ( 43,888) 2,325,331
Selling, general and
administrative expenses 1,166,926 332,000 60,075 1,559,001
----------- ---------- -------- ------- -----------
Income from operations 47,332 652,000 110,886 ( 43,888) 766,330
Other income (expenses) ( 79,799) ( 176,000) 1,015 ( 254,784)
----------- ----------- -------- ------- -----------
Income (loss) before
income tax ( 32,467) 476,000 111,901 ( 43,888) 511,546
Income taxes (benefit) ( 6,553) 74,000 67,447
----------- ----------- -------- ------- -----------
Net income (loss) ($ 25,914) $ 402,000 $111,901 ($43,888) $ 444,099
=========== =========== ======== ======= ===========
Per share information:
Basic:
Earnings per share $ .03
Weighted average shares outstanding $17,415,565
Diluted:
Earnings per share $ .02
Weighted average shares outstanding $23,653,590
</TABLE>
See notes to pro forma combined financial statements. 3
<PAGE>
SETO HOLDINGS, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
NINE MONTHS ENDED OCTOBER 31, 1999
1. The unaudited pro forma combined balance sheet as of October 31, 1999
gives effect to the Company's acquisition of Fimas Sdn. Bhd. and Hong Kong
Batteries Industries, Ltd. in November 1999. The transactions are described in
the following paragraphs:
On November 27, 1999, the Company acquired all of the issued and
outstanding capital stock of Fimas, Sdn. Bhd. ("Fimas") in exchange for
5,000,000 shares of the Company's common stock. In the event that the Company
makes available to Fimas an aggregate of $1,500,000 for additional working
capital and Fimas' operations for the fiscal year ending March 31, 2001 generate
net income of at least $1,000,000, then the Company will issue to the former
stockholders of Fimas an additional 1,000,000 shares of the Company's common
stock.
On November 19, 1999, the Company acquired all of the issued and
outstanding capital stock of Hong Kong Batteries Industries, Ltd. ("HKBI") in
exchange for 1,500,000 shares of the Company's common stock. In the event that
the Company makes available to HKBI an aggregate of $700,000 and HKBI's
operations for the fiscal year ending January 31, 2001 generate net income of at
least $300,000, then the Company shall issue the former stockholders of HKBI an
additional 500,000 shares of the Company's common stock.
2. The acquisition of Fimas was accounted for by the purchase method of
accounting. Under purchase accounting, the total purchase price is allocated to
the tangible and intangible assets and liabilities of Fimas based on their
estimated fair values as of the closing date. The purchase was recorded as
follows:
5,000,000 shares @ $.89/sh $4,450,000
Shareholders' equity at closing date 4,027,000
---------
Excess of cost over book value $ 423,000
==========
The excess of cost over book value was allocated entirely to property,
plant and equipment.
4
<PAGE>
SETO HOLDINGS, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
NINE MONTHS ENDED OCTOBER 31, 1999
3. The acquisition of HKBI was accounted for by the purchase method of
accounting. Under purchase accounting, the total purchase price is allocated to
the tangible and intangible assets and liabilities of HKBI. Based on their
estimated fair values as of the closing date, the purchase was recorded as
follows:
1,500,000 shares @ $.484 $727,000
Shareholders' deficiency at closing date ( 20,360)
--------
Excess of cost over book value $747,360
========
The excess of cost over book value was allocated entirely to property,
plant and equipment.
4. The adjustment for estimated pro forma depreciation was calculated
based on an average useful life of 20 years for each company:
Fimas $15,862
HKBI 28,026
------
$43,888
=======
5. The adjustment to shareholders' equity as a result of the acquisitions
is summarized as follows:
Elimination of Fimas shareholders' equity $4,027,000
Elimination of HKBI shareholders' deficiency ( 20,360)
----------
$4,006,640
==========
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