<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20509
FORM 8-K-A2
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
December 23, 1998
Date of Report
(Date of Earliest Event Reported)
COLE COMPUTER CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Nevada 0-23819 76-0547762
(State or other juris- (Commission File No.) (IRS Employer
diction of incorporation) I.D. No.)
11711 South Portland
Oklahoma City, Oklahoma 73170
(Address of Principal Executive Offices)
(405) 692-5351
Registrant's Telephone Number
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Audited financial statements of the Company and subsidiaries as
of December 31, 1998 and 1997 are attached hereto and incorporated herein by
reference.
Independent Auditor's Report
Balance Sheet as of December 31, 1998
Statements of Income for the Years ended
December 31, 1998 and 1997
Statements of Stockholders' Equity for the years
ended December 31, 1998 and 1997
Statements of Cash Flows for the years ended
December 31, 1998 and 1997
Notes to Financial Statements
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of
Cole Computer Corporation
(formerly Pandora's Golden Box)
Oklahoma City, Oklahoma
We have audited the accompanying balance sheet of Cole Computer Corporation
and subsidiary as of December 31, 1998 and the related statements of income,
stockholders' equity and cash flows for each of the two 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 audit.
We conducted our audit 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 audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to in the first paragraph
present fairly, in all material respects, the financial position of Cole
Computer Corporation and subsidiary as of December 31, 1998, and the
results of its operations and its cash flows for each of the two years then
ended in conformity with generally accepted accounting principles.
March 15, 1999
Malone & Bailey, PLLC
Houston, Texas
<TABLE>
COLE COMPUTER CORPORATION
(formerly Pandora's Golden Box)
BALANCE SHEET
As of December 31, 1998
<CAPTION>
<S> <C>
CURRENT ASSETS
Cash $ 226,418
Accounts receivable 86,058
Inventory 651,596
other current assets 12,131
Total Current Assets 975,703
EQUIPMENT, less accumulated depreciation of $33,704 69,335
TOTAL ASSETS $ 1,045,538
CURRENT LIABILITIES
Current portion of installment
notes payable $ 9,272
Demand note payable to stockholder 50,607
Accounts payable 554,447
Accrued expenses 155,583
Total Current Liabilities 769,909
LONG-TERM DEBT, net of current portion 24,356
Total Liabilities 794,265
STOCKHOLDERS' EQUITY
Common stock, $.001 par value, 25,000,000
shares authorized, 9,940,900 shares
issued and outstanding 9,941
Paid in capital 445,753
Retained earnings (Deficit) (204,421)
Total Stockholders, Equity (Deficit) 251,273
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 1,045,538
</TABLE>
see accompanying summary of accounting policies and notes to financial
statements.
<TABLE>
COLE COMPUTER CORPORATION
(formerly Pandora's Golden Box)
STATEMENTS OF INCOME
For the Years Ended December 31, 1998 and 1997
<CAPTION>
1998 1997
<S> <C> <C>
REVENUES $8,305,479 $4,459,475
COST OF SALES
Materials 7,147,868 3,887,875
Labor 225,797 107,734
Other 41,732 22,650
Total Cost of Sales 7,415,397 4,018,259
GROSS MARGIN 890,082 441,216
Selling expenses 629,897 221,771
General and administrative 433,538 172,390
NET INCOME (LOSS) FROM OPERATIONS ( 173,353) 47,055
Interest (income) ( 651) ( 1,122)
Interest expense 26,245 23,079
NET INCOME (LOSS) BEFORE TAXES ( 198,947) 23,079
INCOME TAX (Benefit) ( 7,588) 3,608
NET INCOME (LOSS) ( 191,359) $ 19,471
Income (loss) per common share $(.025) $.003
Weighted average shares outstanding 7,520,077 7,300,002
</TABLE>
See accompanying summary of accounting policies and notes to financial
statements.
<TABLE>
COLE COMPUTER CORPORATI0N
(formerly Pandora's Golden Box)
STATEMENTS OF STOCKHOLDERS' EQUITY
For the Years Ended December 31, 1998 and 1997
<CAPTION>
- common stock - Paid in Retained
Shares $ Capital (Deficit) Totals
<S> <C> <C> <C> <C> <C>
Balances
December 31, 1996 7,300,002 $ 7,300 ($ 223) $( 32,533) $( 25,456)
Net income - 1997 19,471 19,471
Balances -
December 31, 1997 7,300,002 7,300 ( 222) $( 13,062) ( 5,985)
Shares Contributed
by founding
shareholders (955,725) (956) 956
shares issued for
services performed
early to mid-1998 955,725 956 285,761 286,717
Shares issued in
connection with
reorganization
December 1998 2,248,000 2,248 1,604,727 1,606,975
Costs of fundraising
shares issued (1,816,975) (1,816,975)
cash paid ( 21,000) ( 21,000)
Shares sold for cash
December 1998 392,898 393 392,507 392,900
Net income - 1998 (191,359) (191,359)
Balances-
December 31, 1998 9,940,900 $ 9,941 $ 445,753 $(204,421) $ 251,273
</TABLE>
See accompanying summary of accounting policies and notes to financial
statements.
<TABLE>
COLE COMPUTER CORPORATION
(formerly Pandora's Golden Box)
STATEMENTS OF CASH FLOW
For the Years Ended December 31, 1998 and 1997
<CAPTION>
1998 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(191,359) $ 19,471
Adjustments to reconcile net income to net
cash provided by operating activities:
Stock issued for services 76,718
Depreciation 17,597 10,096
Deferred income taxes ( 2,793) 2,793
Change in cash from:
Accounts receivable (25,887) ( 57,807)
Inventory (520,051) ( 96,999)
Other current assets ( 7,953) ( 4,179)
Accounts payable 486,170 15,671
Accrued expenses 102,187 53,396
NET CASH OPERATING ACTIVITIES ( 65,371) ( 57,558)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment ( 30,111) ( 43,306)
CASH FLOWS FROM FINANCING ACTIVITIES
stock issued for cash 392,900
Cash paid for stock sales consulting ( 21,000)
Advances by (repayments to) stockholders 50,607 ( 54,862)
New installment loans 18,561 175,000
Principal payments on installment loans (142,128) ( 17,805)
NET CASH FINANCING ACTIVITIES 298,940 102,333
NET INCREASE IN CASH 203,458 1,469
CASH ON HAND beginning of year 22,960 21,491
end of year $226,418 $ 22,960
SUPPLEMENTAL DISCLOSURES
Interest paid $ 26,245 $ 25,098
Income taxes paid 0 10,588
</TABLE>
See accompanying summary of accounting policies and notes to financial
statements.
COLE COMPUTER CORPORATION
(formerly Pandora's Golden Box)
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business: Electronic Service Co., Inc. ("ESCI") was formed in
November 1991 as an Oklahoma corporation for the purpose of acquiring and
operating an electronics repair business. In 1996, the Company adopted the dba
Computer Masters and changed its business to personal computer "clone"
hardware assembly, sales, and repair, utilizing both the Intel and AMD
microprocessors. The Company changed its name to Cole Computer Corporation
(the "Company") and its state of incorporation (Nevada) incident to its
reverse acquisition ("reorganization") described in Note 3. ESCI is now a
wholly-owned subsidiary of the Company. The Company now has nine retail stores
in Oklahoma and Arkansas, and also sells to area government agencies and
military installations.
All shares transactions for the two-year period have been restated for the
3-for-1 split occurring December 1998. All significant intercompany
transactions have been eliminated in the consolidated financial statements.
In preparing financial statements, management makes estimates and assumptions
that affect the reported amounts of assets and liabilities in the balance
sheet and revenue and expenses in the income statement. Actual results could
differ from those estimates.
Cash and Cash Equivalents include highly liquid investments, which are readily
convertible into cash and have maturities of three months or less.
Revenue is recognized when products are delivered. Bad debts are insignificant
and are recognized when collection is deemed doubtful by management.
Inventories, include component parts, sub-assemblies and merchandise held for
sale, and are valued at the lower of cost or market, using the first-in,
first-out method. Obsolete inventory is written down to liquidation value as
needed. Virtually all inventory on hand is component parts, as completed
computers are sold as they are built.
Equipment is carried at cost and consists of a vehicle and computers used for
inventory control and retail point-of-sale terminals.
Depreciation is determined Using the straight-line method based over their
estimated useful lives.
Deferred income taxes are determined on the liability method. Timing
differences between net income and taxable income as reported result mostly
from depreciation timing differences.
Warranty repair expenses are immaterial and no reserve for warranty repairs
has been established.
NOTE 2 - RELATED PARTY DEMAND NOTE PAYABLE
The majority stockholder advanced monies to the Company in 1998. The notes
attach no collateral, are repayable on demand, and carry a 12% interest rate.
NOTE 3 - INSTALLMENT NOTES PAYABLE
Installment debt is as follows:
l998 1997
Notes payable to GMAC and Union
Acceptance, payable in remaining
installments of $418 and $386,
respectively, including interest
at 4.9% and 13.5% APR, respectively,
secured by equipment and a vehicle $ 33,628 $ 20,091
Notes payable to American State Bank,
payable in installments of $2,763
including interest at 10.5% APR,
secured by substantially all assets 137,104
Less: current maturities ( 9,272) (32,100)
Net long-term debt $ 24,356 $125,095
The principal portion is due $7,599 in 2000, $8,262 in 2001, $5,632 in 2002
and $2,862 in 2003.
NOTE 4 - INCOME TAXES
As of December 31, 1998, the Company had a net operating loss carryforward of
about $200,000, which expires in 2018.
NOTE 5 - COMMON STOCK
in early to mid-1998, the Company paid various consultants and advisers
255,725 shares, which it has valued at $76,718.
In December 1998, the Company agreed to a reorganization with Pandora's Golden
Box ("Pandora"), a Nevada publicly-held shell company, whereby the Company's
shareholders exchanged 100% of the Company's outstanding stock for 73% of the
outstanding shares of Pandora. Pandora had no significant assets or
liabilities.
Immediately following this reorganization, all shares were given a 3-for-1
split. A summary of shares issued in connection with the reorganization is as
follows:
original shareholders of Cole Computer 7,300,002
original shareholders of Pandora 641,025
Promoters and consultants 1,006,975
Attorneys 600,000
9,548,002
Add: shares sold at $1 in December 1998 392,898
Total shares outstanding at
December 31, 1998 9,940,900
Stock issued to promoters, consultants and attorneys in connection with the
reorganization and fundraising efforts is valued at $1 and is shown as a
reduction of paid in capital.
Shortly after the reorganization, $442,900 in cash was raised by the sales of
stock at $1 per share, with $392,900 raised in December 1998 and another
$50,000 received January 1999. These Monies were used to pay off $118,000 of
installment debt, $21,000 in offering costs, with the balance available for
operating expenses.
As of March 15, 1999, there were no stock options or warrants outstanding and
none have ever been issued.
NOTE 6 - OPERATING LEASES
The Company has nine retail stores and one corporate office. Leases on these
spaces vary in cost and term. Rent expense for 1998 and 1997 is $89,785 and
$27,236, respectively. Net minimum lease payments are due $84,770 in 1999,
$73,645 in 2000 and $21,233 in 2001.
NOTE 7 - MAJOR VENDORS
The following were significant vendors during 1998 and 1997:
1998 1997
Mighty Micro, Inc. $2,222,461 32% $1,168,628 30%
Lasertech Computer
Distributors, Inc. 1,361,898 19 769,898 20
Lasertech owns 100,000 shares or 1% of outstanding Company stock. No single
customer accounted for as much as 10% of total sales during either year.
(b) Pro forma consolidating income statement and pro forma
consolidated condensed balance sheet, taking into account the Agreement and
Plan of Reorganization between the Registrant and Electronic Service Co.,
Inc., an Oklahoma corporation.
Pro Forma Consolidating Income Statement
Pro Forma Consolidated Condensed Balance Sheet
Notes to Pro Forma Consolidated Condensed Balance Sheet
Pro Forma Consolidated Condensed Balance Sheet
The following condensed pro forma balance sheet has been derived from
the balance sheet of Pandora's Golden Box ("Pandora") adjusted to give effect
to the December 23, 1998 reverse acquisition ("reorganization") of Pandora by
Electronic Service Co, Inc.("ESCI") as if such reorganization had occurred on
September 30, 1998. The pro forma balance sheet is presented for
informational purposes only and does not purport to be indicative of the
financial condition that actually would have resulted if the reorganization
had occurred on September 30, 1998. The pro forma balance sheet should be
read in conjunction with the attached notes and the separate financial
statements as of December 31, 1998 and for the year then ended including
footnotes.
<TABLE>
<CAPTION>
In thousands (000's) At Sept.30, 1998 Adjust-
ASSETS ESCI Pandora ments Combined
<S> <C> <C> <C> <C> <C>
Current Assets (a) $( 3)
Cash $ 41 $ 3 (b) 303 $ 344
Accounts receivable 74 74
Inventory and other 611 611
Total Current Assets 726 3 300 1,029
Equipment, net 74 74
TOTAL ASSETS $800 $ 3 $ 300 $1,103
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of notes payable $ 35 (b) $( 25) $ 10
Note payable - stockholder 30 30
Accounts payable and other 583 $ 8 (a) ( 3) 588
Total Current Liabilities 648 8 ( 28) 628
Long-term debt 125 (b) ( 93) 32
Total Liabilities 773 8 (121) 660
Stockholders' Equity
Common stock, $.10 par value,
100,000 shares authorized,
5,000 shares issued and o/s 1 (a) ( 1) -
Common stock, $.001 par value,
25,000,000 shares authorized,
180,341 shares issued and o/s 1 (a) ( 1) -
Common stock $.001 par value,
25,000,000 shares authorized,
9,990,900 shares issued and o/s (a) 10
(b) 10
Paid in capital 6 273 (a) (287)
(b) 421 413
Retained earnings 20 (279) (a) 279 20
Total Stockholders' Equity 27 ( 5) 443
Total Liabilities & Equity $800 $ 3 $1,103
</TABLE>
See notes to consolidated condensed balance sheet.
Notes to Pro Forma Consolidated Condensed Balance Sheet
(a) Per the Agreement dated December 23, 1998, shareholders of Pandora, a
Nevada publicly-held shell without operations, agreed to cancel certain
shares and issue shares to the shareholders of ESCI, an Oklahoma
corporation, in exchange for 100% of the outstanding shares of ESCI.
Immediately following this share cancellation and issuance was a 3 for 1
forward split of outstanding shares. Adjustments to reflect such
issuance and cancellation of shares in Pandora are as follows:
<TABLE>
<CAPTION>
Pre- Post-
Split Split
<S> <C> <C>
Pandora shares outstanding
as of September 30, 1998 240,341
Shares canceled per agreement (26,666) 641,025
Shares issued in connection with
the reverse merger
to promoters 335,658 1,006,975
to lawyers 200,000 600,000
to shareholders of ESCI 2,433,334 7,300,002
Sales of stock in December 1998
and January 1999 442,898
Totals 3,333,333 9,990,900
</TABLE>
Pandora has adopted the name and all accounting attributes of ESCI.
According to SEC rules, the legal acquiree becomes the accounting
acquirer, and all post-combination reporting will include only the
historical information from the former Oklahoma corporation.
Stock issued to promoters and lawyers is valued at $.01 per share and
will be charged to operations in the last quarter of 1998.
In connection with the reorganization, Pandora was renamed Cole Computer
Corporation, and ESCI became a wholly-owned subsidiary.
(b) In connection with the reorganization, $442,900 in funds were raised
during December 1998 and January 1999 pursuant to an offering of stock
exempt from registration under Regulation D, Section 506. The stock was
sold for $1 per share, post-split, and the proceeds were used to retire
$118,000 in installment debt, $21,000 in offering costs, with the
balance available for operating expenses.
Pro Forma Consolidating Income Statement
The following pro forma consolidating statement of income has been
derived from the income statements of the Company (Electronic Service Co.,
Inc. or "ESCI") prior to the reorganization) to show the results as if the
December 23, 1998 reorganization of ESCI and Pandora's Golden Box ("Pandora")
had occurred on January 1, 1998. The pro forma income statements are
presented for informational purposes only and do not purport to be indicative
of the results of operations that actually would have resulted if the
Reorganization had been consummated on January 1, 1998, nor which may result
from future operations.
This statement should be read in conjunction with the Company's financial
statements and related notes thereto contained elsewhere in this Prospectus.
<TABLE>
<CAPTION>
ESCI Pandora Consol.
<S> <C> <C> <C>
Revenues $8,305,479 $8,305,479
Cost of Sales 7,415,397 7,415,397
Gross margin 890,082 890,082
Selling expenses 629,897 629,897
General and administrative 433,538 $ 1,047 434,585
Net income from operations ( 173,353) ( 1,047) ( 174,400)
Interest (income) ( 651) ( 651)
Interest expense 26,245 26,245
Net loss) before income taxes ( 198,947) ( 1,047) ( 199,994)
Income tax (benefit) ( 7,588) ( 7,588)
Net income (loss) $( 191,359) $( 1,047) $( 192,406)
</TABLE>
(1) Pursuant to SEC rules regarding "reverse mergers," Pandora's has adopted
the name and all accounting attributes of ESCI. All post-combination
reporting will include only the historical information from ESCI.
Contemporaneous with the reorganization, Pandora changed its name to
Cole Computer Corporation.
Exhibits
99.1 Letter from Malone and Bailey PLLC*
99.2 8-K Current Report dated December 23, 1998, with the
following exhibits*
Agreement and Plan of Reorganization
Exhibit A- Stockholders and Subscribers of
of Electronic Service, Co., Inc.*
Exhibit B- Pandora's Financial Statements for
the years ended 12/31/97 and 12/31/96*
Exhibit B-1- Pandora's Unaudited Balance Sheet
and Statement of Operations for the
Nine Months ended 9/30/98*
Exhibit C- Pandora's Exceptions*
Exhibit D- Electronic Service Co., Inc. Unaudited
Financial Statement for the period
ended 12/31/97*
Exhibit D-1 Electronic Service Co., Inc. Unaudited
Balance Sheet for the period ended
5/31/98*
Exhibit E- Electronic Service Co., Inc. Exceptions*
Exhibit F- Investment Letter*
Exhibit G- Pandora's Compliance Certificate*
Exhibit H- Electronic Service Co., Inc. Compliance
Certificate*
Certificate of Amendment effecting the name change to
"Cole Computer Corporation" and the three for one
forward split*
Form 10-KSB Annual Report for the year ended December
31, 1997*
Letter regarding change in certifying accountants*
Information Statement*
* Incorporated by reference.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned hereunto duly authorized.
COLE COMPUTER CORPORATION
Date: 5/18/99 By: /s/ Homer O. Cole III
President and Director
Date: 5/18/99 By: /s/ Cynthia A. Cole
Secretary and Director
Date: _____________ By: /s/ Kam Mar
Director
Date: 5/7/99 By: /s/ Shirley F. Hartley
Director
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 226,418
<SECURITIES> 0
<RECEIVABLES> 86,058
<ALLOWANCES> 0
<INVENTORY> 651,596
<CURRENT-ASSETS> 975,703
<PP&E> 103,039
<DEPRECIATION> 33,704
<TOTAL-ASSETS> 1,045,538
<CURRENT-LIABILITIES> 769,909
<BONDS> 0
0
0
<COMMON> 9,941
<OTHER-SE> 241,332
<TOTAL-LIABILITY-AND-EQUITY> 1,045,538
<SALES> 8,305,479
<TOTAL-REVENUES> 8,305,479
<CGS> 7,415,397
<TOTAL-COSTS> 7,415,397
<OTHER-EXPENSES> 1,063,435
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26,245
<INCOME-PRETAX> (198,947)
<INCOME-TAX> (7,588)
<INCOME-CONTINUING> (191,359)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (191,359)
<EPS-PRIMARY> (0.025)
<EPS-DILUTED> (0.025)
</TABLE>
