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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
January 21, 2000
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Date of Report (date of earliest event reported)
SAN HOLDINGS, INC.
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Exact Name of Registrant as Specified in its Charter
Colorado 0-16423 84-0907969
- --------------------------- --------------- ----------------------
State or Other Jurisdiction Commission File IRS Employer Identifi-
of Incorporation Number cation Number
900 West Castleton Road, Suite 100, Castle Rock, Colorado 80104
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Address of Principal Executive Office, Including Zip Code
(303) 297-9656
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Registrant's Telephone Number, Including Area Code
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED. The financial
statements for CoComp, Inc. for the years ended December 31, 1999 and 1998 are
filed herewith:
INDEX
Page
1) AUDITED FINANCIAL STATEMENTS OF COCOMP, INC.
Independent Auditor's Repoprt ................................ 3
Financial Statements:
Balance Sheets .............................................. 4
Statements of Income ........................................ 5
Statements of Retained Earnings.............................. 6
Statements of Cash Flows .................................... 7
Notes to Financial Statements ............................... 8
(b) PRO FORMA FINANCIAL INFORMAITON. Unaudited Pro Forma Financial
Statements for SAN Holdings, Inc. and CoComp, Inc. as of December 31, 1999,
and for the year ended December 31, 1999, are filed herewith on pages 10-13.
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.
SAN HOLDINGS, INC.
Dated: April 20, 2000 By:/s/ L.W. Buxton
L. W. Buxton, President
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LARRY O'DONNELL, CPA, P.C.
Telephone (303) 745-4545 2280 South Xanadu Way
Suite 370
Aurora, Colorado 80014
Board of Directors
CoComp, Inc.
Fort Collins, Colorado
Independent Auditor's Report
I have audited the accompanying balance sheet of CoComp, Inc. as of December
31, 1999 and 1998 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. My responsibility is to express
an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I 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. I believe that my audit provides a reasonable basis
for my opinion.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CoComp, Inc. as of December
31, 1999 and 1998, and the results of its operations and its cash flows for
the years then in conformity with generally accepted accounting principles.
Larry O'Donnell, CPA, P.C.
March 16, 2000
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CoComp, Inc.
Balance Sheets
December 31, 1999 and 1998
Assets
1999 1998
---------- ----------
Current assets
Cash $ 173,556 $ 408,974
Accounts receivable 1,656,423 1,439,939
Inventory 154,982 55,349
Prepaid expenses 32,958 39,175
Deposit 9,082 14,767
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Total current assets 2,027,001 1,958,204
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Property and equipment
Computer equipment 160,765 139,690
Office equipment 20,165 17,976
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180,930 157,666
Less accumulated depreciation 75,572 67,981
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105,358 89,685
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$2,132,359 $2,047,889
========== ==========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 974,546 $ 852,512
Notes payable-related parties - 77,841
Accrued expenses 146,500 76,222
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Total current liabilities 1,131,046 1,006,575
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Stockholders' equity
Common stock 525,000 525,000
Retained earnings 476,313 516,314
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1,001,313 1,041,314
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$2,132,359 $2,047,889
========== ==========
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CoComp, Inc.
Statements of Income
Year Ended December 31, 1999 and 1998
1999 1998
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Revenues $9,258,809 $10,071,929
Cost of revenues 6,978,968 7,385,912
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Gross profit 2,279,841 2,686,017
General & administrative expenses 1,882,495 2,227,030
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Income from operations 397,346 458,987
Interest income 21,073 7,568
Interest expense (15,106) (10,241)
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Net income $ 403,313 $ 456,314
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CoComp, Inc.
Statements of Retained Earnings
Years Ended December 31, 1999 and 1998
1999 1998
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Beginning, balance $ 516,314 $ 337,022
Plus net income 403,313 456,315
Less dividends (443,314) (277,023)
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Balance, ending $ 496,313 $ 516,314
========= =========
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CoComp, Inc.
Statements of Cash Flows
Years Ended December 31, 1999 and 1998
1999 1998
--------- ---------
Cash flows from operating activities:
Net income $ 403,313 $ 459,315
Adjustments to reconcile net income
to net cash
Provided by operations:
Depreciation 7,591 10,603
(Increase) decrease in:
Accounts receivable (216,484) (202,936)
Inventory (99,633) 125,730
Prepaid expenses 6,217 (26,262)
Deposits 5,685 (8,075)
Increase (decrease) in: (net of
acquisition)
Accounts payable 132,034 (20,781)
Accrued expenses 70,278 27,888
Net cash provided by operating activities 309,001 365,482
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Cash flows from investing activities:
Purchase of property and equipment (23,264) (13,417)
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Net cash used in investing activities (23,264) (13,417)
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Cash flows from financing activities:
Dividends (443,314) (277,023)
Proceeds of loans payable - 77,841
Repayment of loans payable (77,841) -
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Net cash flow provided by financing
activities (521,155) (199,182)
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Net increase (decrease) in cash equivalents (235,418) 152,883
Cash at beginning of year 408,974 256,091
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Cash at end of year $ 173,556 $ 408,974
========= =========
Supplemental disclosures of cash flow
information
Cash paid during the year for
Interest $ 15,107 $ 10,241
Income taxes - -
See Notes to Financial Statements.
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CoComp, Inc.
Notes to Financial Statements
1. Organization and Summary of Significant Accounting Policies:
Organization - The company was organized under the laws of the state of
Colorado on August 1, 1987. The Company designs and implements data storage
solutions primarily for commercial customers. The Company operates in the
United States.
Property and equipment - Property and equipment are stated at cost, net of
accumulated depreciation. Depreciation is provided using the straight-line
method.
Cash Equivalents - For the purposes of reporting cash flow, the Company
considers cash and savings deposits to be cash equivalents.
Inventories - Inventories consist of components and materials and are stated
at the lower of cost or market using the first-in, first-out method.
Advertising - The Company expenses advertising costs when they are incurred.
Income taxes - S corporation status - The Company, with the consent of its
shareholders, has elected under the Internal Revenue Code to be an S
corporation. In lieu of corporation income taxes, the shareholders of an
S corporation are taxed on their proportionate share of the Company's taxable
income. Therefore, no provision or liability for federal income taxes has
been included in the financial statements.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results may differ from those
estimates.
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CoComp, Inc.
Notes to Financial Statements (continued)
2. Lease commitment
The Company is obligated under lease agreements for the rental of its
facilities through July, 2002. Minimum lease payments for the years ending
December 31 are as follows: 2000 $42,000; 2001 $37,000; 2002 $16,000.
Total rent expense for the years ended December 31, 1999 and 1998 was $117,000
and $129,000, respectively.
3. Advertising
The Company expensed advertising costs of $16,978 and $30,861 for the years
ended December 31, 1999 and 1998, respectively.
4. Concentrations
Credit risk - The Company performs ongoing credit evaluations of its
customers' financial condition and, generally, requires no collateral from its
customers.
Cash balances - The Company maintains its cash balances in a brokerage
account. The balances are not insured. At December 31, 1999, the Company's
uninsured cash balances total approximately $177,000.
5. Subsequent Event - Acquisition by Citadel Environmental Group, Inc.
and Storage Area Networks
On January 21, 2000, the stockholders of the Company sold all of the
outstanding stock of the Company to a public company, SAN Holdings, Inc.
(formerly "Citadel Environmental Group, Inc.") and its affiliate, Storage Area
Networks. The Company will be consolidated with SAN Holdings, Inc. and Storage
Area Networks from the date of the sale.
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(b) Proforma Financial Information
The following unaudited proforma combined financial statements are
derived from the historical financial statements of SAN Holdings, Inc.
(formerly Citadel Environmental Group, Inc.), Storage Area Networks and
CoComp, Inc., and give effect to the acquisition of Storage Area Networks by
the Registrant on January 7, 2000, and the acquisition of CoComp, Inc. on
January 21, 2000. The unaudited proforma combined balance sheet as of
December 31, 1999, and the unaudited proforma combined statements of
operations for the year ended December 31, 1999, reflect the two acquisitions
as if they had occurred on December 31, 1999, for the unaudited proforma
consolidated balance sheet and at January 1, 1999, for the unaudited proforma
combined statements of operations. Storage Area Networks' year-end was
November 30, 1999, and the financial information of Storage Area Networks
reflects amounts at November 30, 1999, and for the year then ended.
The proformas also reflect the issuance by the Registrant of a total of
3,182,659 shares of Series AA and Series AAA Convertible Preferred Stock for a
total of approximately $5,035,000. These sales were made during January and
February 2000.
The unaudited proforma combined financial statements do not purport to be
indicative of the results that would actually have been obtained if the
combinations had been in effect on the dates indicated, or that may be
obtained in the future. The unaudited proforma combined financial statements
should be read in conjunction with the historical consolidated financial
statements of SAN Holdings, Inc., Storage Area Networks, and CoComp, Inc.,
together with the related notes thereto.
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SAN Holdings, Inc.
Unaudited Proforma Combined Balance Sheet
December 31, 1999
(In Thousands)
<TABLE>
<CAPTION>
ASSETS
Storage
Area SAN Elimina- Consoli-
Networks CoComp Holdings Other tions dated
-------- ------ -------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Current Assets $1,982 $2,027 $ 3 $ 5,035 (2) $ 0 $ 7,968
Current Assets (1,079) (4)
Property and Equip.,
Net 22 105 27 154
Goodwill, Net 1,079 (4) (983) (6) 2,047
Goodwill, Net 951 (3)
Goodwill, Net 1,000 (1)
Other Assets 2,326 2,326
------ ------ ------- ------- -------- --------
Total Assets $4,330 $2,132 $ 30 $ 6,986 $ (983) $ 12,495
====== ====== ======= ======= ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities $4,199 $1,131 $ 34 $ 0 $ 0 $ 5,364
Long Term Liabilities 6 14 951 (3) 971
------ ------ ------- ------- -------- --------
4,205 1,131 48 951 0 6,335
Common Stock 12 525 5,801 873 (5) (7,199) (6) 6,047
Common Stock 5,035 (7)
Common Stock 1,000 (7)
Paid in Capital 53 53
Preferred Stock 873 5,035 (2) 0
Preferred Stock (5,035) (7)
Preferred Stock (873) (5)
Retained Earnings
(Accum. Deficit) 60 476 (6,692) 6,216 (6) 60
------ ------ ------- ------- -------- --------
125 1,001 (18) 6,035 (983) 6,160
------ ------ ------- ------- -------- --------
Total Liabilities
and Shareholders'
Equity $4,330 $2,132 $ 30 $ 6,986 $ (983) $ 12,495
====== ====== ======= ======= ======== ========
</FN>
</TABLE>
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SAN Holdings, Inc.
Unaudited Proforma Combined Income Statement
For the Year Ended December 31, 1999
In Thousands
<TABLE>
<CAPTION>
Storage
Area SAN Elimina- Consoli-
Networks CoComp Holdings Other tions dated
-------- ------ -------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues $12,308 $9,259 $ 60 $ 0 $ 0 $ 21,627
Operating Expenses 12,303 8,861 391 21,555
------- ------ ------- ------- -------- --------
Income (Loss) from
Operations 5 398 (331) 72
Other Income (Expense) 81 6 (1) (136) (9) (16)
Other Income (Expense) 148 (10)
Other Income (Expense) (114) (11)
------- ------ ------- ------- -------- --------
Income/(Loss) Before Tax 86 404 (332) (102) (9) 56
(10)(11)
Provision for Tax 25 (12) (12) 13
------- ------ ------- ------- -------- --------
Income Before Extra-
ordinary Item 61 404 (332) (90) 43
Extraordinary
Item, Net of Tax 544 544
------- ------ ------- ------- -------- --------
Net Income $ 61 $ 404 $ 212 $ (90) $ 0 $ 587
------- ------ ------- ------- -------- --------
Earnings Per Share:(13)
Income/(Loss) From
Operations Before
Extraordinary Item $ 0.06
Extraordinary Item 0.68
--------
Net Income $ 0.74
--------
</TABLE>
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SAN Holdings, Inc.
Notes to the Unaudited Proforma Combined Financial Statements
Notes to Unaudited Proforma Combined Balance Sheet for the Year Ended December
31, 1999
NOTE 1 - Issuance of 89,000 shares of stock for purchase of CoComp,
valued at $1,000,000.
NOTE 2 - Issuance of 3,182,659 shares of Series AA and Series AAA
preferred stock for cash.
NOTE 3 - Assumption of $951,000 in acquisition debt of CoComp.
NOTE 4 - Payment of $1,079,000 in cash for CoComp.
NOTE 5 - Conversion of SAN Holdings preferred stock to pre-acquisition
common stock.
NOTE 6 - To eliminate SAN Holdings preferred and CoComp acquisition
equity.
NOTE 7 - To record conversion of Series AA and AAA preferred stock to
common.
NOTE 8 - Other assets comprised of:
Accounts Receivable, Long-Term, Net $1,934,000
Cost of Purchased Contracts, Net 390,000
Deposits 2,000
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Total $2,326,000
==========
Notes to Unaudited Proforma Combined Income Statement for the Year Dnded
December 31, 1999
NOTE 9 - Amortization of goodwill due to acquisition, amortized over
15 years.
NOTE 10 - Earnings of 5% on net funds received from preferred private
placement.
NOTE 11 - Interest expense on acquisition debt of CoComp at 12% per
annum.
NOTE 12 - Provision for taxes based on CoComp conversion from
S-corporation status to C-Corporation due to acquisition,
the effect of items (1) and (2) above, and based on
consolidated earnings.
NOTE 13 - Earnings per Share is calculated based on conversions of
preferred stock, series BB, AA, and AAA and taking into
consideration the reverse stock split. Weighted average
number of common shares used in EPS calculation totaled
7,959,000.
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