<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A-2
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
May 16, 1994
Date of Report (Date of Earliest Event Reported)
SA TELECOMMUNICATIONS, INC.
(f/k/a SA Holdings, Inc.)
(Exact Name of Registrant as Specified in Charter)
Delaware 0-18048 75-2258519
(State or Other (Commission File (IRS Employer
Jurisdiction of Number) Identification No.)
Incorporation)
1912 Avenue K, Suite 100 75074
Plano, Texas (Zip Code)
(Address of Principal
Executive Offices)
(214) 516-0662
(Registrant's Telephone Number, Including Area Code)
(Former Name or Former Address, if Changed Since Last Report)
_____________________________________________________________
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<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(a) Audited Financial Statements of Long Distance
Network, Inc. as of December 31, 1993 and 1992.
(b) Pro Forma Financial Information
Pro Forma Statement of Operations for the year
ended December 31, 1993 for SA Holdings, Inc. and its
subsidiaries.
(c) Exhibits.
Exhibit No. Document
Exhibit 23.1 Consent of Auditors*
______________________
*Filed herewith
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the registrant has duly caused this second amendment
to the Current Report on Form 8-K to be signed on its behalf by the
undersigned, thereunto duly authorized.
SA TELECOMMUNICATIONS, INC.
(f/k/a SA Holdings, Inc.)
Dated: December 8, 1995 /s/ J. David Darnell
----------------------------
J. David Darnell
Vice President, Finance
and Chief Financial Officer
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<PAGE>
LONG DISTANCE NETWORK, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 1993 AND 1992
(With Independent Auditors' Report Thereon)
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<PAGE>
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITORS' REPORT F-1
BALANCE SHEETS F-2
STATEMENTS OF OPERATIONS F-3
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) F-4
STATEMENTS OF CASH FLOWS F-5
NOTES TO FINANCIAL STATEMENTS F-6-10
PRO FORMA FINANCIAL INFORMATION F-11-13
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<PAGE>
SAMSON, ROBBINS & ASSOCIATES
Certified Public Accountants
Regency Plaza
3710 Rawlins
Suite 930, LB 58
Dallas, TX 75219
214-526-4191
Fax: 214-526-3902
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Long Distance Network, Inc.
We have audited the accompanying balance sheets of Long Distance
Network, Inc. (a Texas corporation) as of December 31, 1993 and
1992 and the related statements of operations, stockholders' equity
(deficit) and cash flows for 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 above present
fairly, in all material respects, the financial position of Long
Distance Network, Inc. as of December 31, 1993 and 1992, and the
results of its operations, and its cash flows for the two years
then ended in conformity with generally accepted accounting
principles.
June 22, 1994
/s/ SAMSON, ROBBINS & ASSOCIATES
-F-1-
<PAGE>
<TABLE>
<CAPTION>
December 31,
_____________________
1993 1992
____ ____
<S> <C> <C>
ASSETS
Current assets
Cash $ 41,760 $ 100,394
Certificate of deposit, pledged
(Note 1) 19,700 -
Accounts receivable, net of
allowances for doubtful accounts
of $56,591 and $126,300,
respectively (Note 2) 514,528 244,046
Accounts receivable - other (Note 3) 31,265 6,000
--------- ---------
Total current assets 607,253 350,440
Note receivable (Note 3) 189,210 102,210
Leasehold, furniture and equipment
(Note 1) 151,111 133,233
Less accumulated depreciation (87,958) (61,808)
--------- ---------
Net leasehold, furniture and
equipment 63,153 71,425
Other assets 22,211 10,283
--------- ---------
Total assets $ 881,827 $ 534,358
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Liabilities
Current liabilities
Accounts payable - trade $ 686,295 $ 333,466
Accounts payable - other (Note 3) 25,673 2,381
Accrued expenses 117,839 73,180
Short-term debt (Note 4) - 80,584
Note payable on matured obligation
(Note 4) 99,000 99,000
--------- ---------
Total current liabilities 928,807 588,611
--------- ---------
Total liabilities 928,807 588,611
Commitments and contingencies
(Notes 4, 5 and 7) - -
Stockholders' equity (deficit)
Common stock, no par value,
10,000,000 shares authorized,
3,000,000 shares issued and
outstanding 108,750 108,750
Retained earnings (deficit) (155,730) (163,003)
--------- ---------
Total stockholders' equity
(deficit) (46,980) (54,253)
--------- ---------
Total liabilities and stock-
holders' equity (deficit) $ 881,827 $ 534,358
========= =========
The accompanying notes are an integral part
of these financial statements.
</TABLE>
-F-2-
<PAGE>
LONG DISTANCE NETWORK, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the years
ended December 31,
__________________
1993 1992
---- ----
<S> <C> <C>
REVENUES $8,505,513 $3,664,493
COST OF REVENUES 7,424,327 2,830,573
---------- ----------
GROSS PROFIT 1,081,186 833,920
OPERATING EXPENSES
General and administrative 1,044,120 976,405
Depreciation 26,150 22,780
---------- ----------
Total operating expenses 1,070,270 999,185
---------- ----------
INCOME (LOSS) FROM OPERATIONS 10,916 (165,265)
OTHER EXPENSE
Interest expense 3,643 20,718
---------- ----------
NET INCOME (LOSS) $ 7,273 $ (185,983)
========== ==========
The accompanying notes are an integral part
of these financial statements.
</TABLE>
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<PAGE>
LONG DISTANCE NETWORK, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
For the years ended December 31, 1993 and 1992
<TABLE>
<CAPTION>
RETAINED
COMMON STOCK EARNINGS
SHARES AMOUNT (DEFICIT) TOTAL
--------- --------- --------- --------
<S> <C> <C> <C> <C>
Balance at 1/1/92 3,000,000 $ 108,750 $ 22,980 $131,730
Net loss (185,983) (185,983)
--------- --------- --------- --------
Balance at 12/31/92 3,000,000 $ 108,750 $(163,003) $(54,253)
========= ========= ========= ========
Net income 7,273 7,273
--------- --------- --------- --------
Balance at 12/31/93 3,000,000 $ 108,750 $(155,730) $(46,980)
========= ========= ========= ========
The accompanying notes are an integral part
of these financial statements.
</TABLE>
-F-4-
<PAGE>
LONG DISTANCE NETWORK, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the years
ended December 31,
------------------
1993 1992
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 7,273 $(185,983)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation 26,150 22,780
Provision for doubtful accounts receivable 38,555 113,670
(Increase) in accounts receivable (309,037) (49,678)
(Increase) in prepaids and other assets (11,928) -
Increase in accounts payable and
accrued expenses 397,488 148,048
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 148,501 48,837
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of certificate of deposit (19,700) -
Purchase of leasehold, furniture
and equipment (17,878) (21,356)
Loans and advances to related parties (112,265) (10,639)
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (149,843) (31,995)
CASH FLOWS FROM FINANCING ACTIVITIES
Short-term borrowings - 138,983
Principal payments on debt (80,584) (58,399)
Borrowings from related parties 23,292 -
--------- ---------
NET CASH PROVIDED (USED) BY FINANCING
ACTIVITIES (57,292) 80,584
--------- ---------
NET INCREASE (DECREASE) IN CASH (58,634) 97,426
CASH AT BEGINNING OF PERIOD 100,394 2,968
--------- ---------
CASH AT END OF PERIOD $ 41,760 $ 100,394
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest $ 3,643 $ 9,685
========= =========
The accompanying notes are an integral part
of these financial statements.
</TABLE>
-F-5-
<PAGE>
LONG DISTANCE NETWORK, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1993 AND 1992
NOTE 1 - THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
The Company is a domestic interexchange long distance carrier
located in Dallas, Texas, which began operations five years ago.
In addition to providing intrastate, interstate and international
service, the Company provides a variety of operator and other
services. The Company specializes in meeting the long distance
needs of small to medium sized companies.
RECOGNITION OF REVENUE
Customer long distance calls are routed through a switching
center operated over long distance telephone lines provided by
others. The Company sells its services to its customers primarily
on a measured time basis. The cost to the Company for using the
facilities of others is lower than the rates the Company charges
its customers. The Company records revenue from its operator and
direct dial long distance services based upon customer usage. The
allowance for doubtful accounts receivable is established based
upon periodic analysis of uncollectible accounts receivable.
COST OF REVENUE
Cost of revenue consists of line costs (representing right of
way payments and payments to local exchange carriers and
interexchange carriers for accessed transport charges), switching
costs, commissions, and costs incurred under a billing and
collection agreement.
INCOME TAXES
Effective January 1, 1992, the Company has elected to be taxed
under the provisions of Subchapter S of the Internal Revenue Code.
Accordingly, the financial statements do not include a provision
for federal income taxes because the Company does not incur federal
income taxes. Instead, its earnings and losses are included in the
stockholders' personal income tax returns and are taxed based on
their personal strategies.
-F-6-
<PAGE>
LEASEHOLD, FURNITURE AND EQUIPMENT
Leasehold, furniture and equipment are stated at cost.
Depreciation is computed on a straight line basis over the
estimated useful lives of the related assets which range from five
to seven years. Expenses for maintenance and repairs are charged
to expense as incurred. Major improvements are capitalized. The
cost and related accumulated depreciation are removed from the
accounts and the resulting gain or loss is reflected in other
income for that period when assets are disposed of. The components
of leasehold, furniture and equipment at December 31, are as
follows:
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Leasehold $ 1,583 $ -
Furniture 32,230 27,588
Equipment 117,298 105,645
--------- ---------
Total leasehold, furniture
and equipment $ 151,111 $ 133,233
========= =========
</TABLE>
CASH AND CASH EQUIVALENTS
The Company considers all cash on hand and in banks, demand
and time deposits and all other highly liquid investments with
maturities of three months or less when purchased, to be cash and
cash equivalents.
CERTIFICATE OF DEPOSIT
At December 31, 1993, the Company owned one certificate of
deposit in the amount of $19,700 which is pledged as security for
sales tax liabilities with the State of Texas. The maturity date
is October 29, 1994, with interest paid at maturity at the fixed
rate of 2.85% per annum.
NOTE 2 - ACCOUNTS RECEIVABLE
The components of accounts receivable at December 31, are as
follows:
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
One Plus $ 374,511 $ 285,869
Zero Plus/Zero Minus 157,541 81,751
Plan Mundo 39,067 -
Other miscellaneous - 2,726
--------- ---------
Total accounts receivable 571,119 370,346
Less allowance for doubtful
accounts (56,591) (126,300)
--------- ---------
Accounts receivable $ 514,528 $ 244,046
========= =========
</TABLE>
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<PAGE>
NOTE 3 - RELATED PARTY TRANSACTIONS
The Company has advanced funds to various related parties
which are accounted for as receivable amounts by the Company.
Signed agreements were executed for the majority of the outstanding
amounts owed to the Company with payment terms and interest rates
included. The amounts outstanding are classified as current
accounts receivable or long-term notes receivable based upon the
terms of the agreements. It should be noted that all the related
party receivables were subsequently collected when the Company was
acquired during 1994 with the exception of one which is due from
the President of the Company (see Note 7).
The components of accounts receivable - other which represent
loans and advances to related parties at December 31, are as
follows:
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
David Hover $ 25,265 $ -
NUPAC 6,000 6,000
--------- ---------
$ 31,265 $ 6,000
========= =========
</TABLE>
David Hover is a stockholder of the Company with an ownership
of 21.5% of the outstanding shares. NUPAC is a company which is
owned jointly by stockholders of the Company and whose operations
are totally independent of the Company.
The component of note receivable at December 31, is as
follows:
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Terry Houston $ 189,210 $ 102,210
</TABLE>
Terry Houston is the President of the Company with an
ownership of 75% of the outstanding shares at year end 1993.
Certain stockholders and controlled entities were paid
commissions for acting as agents for the Company. The amounts paid
are based upon sales generated by these agents and are comparable
to the amounts paid other agents for similar services.
-F-8-
<PAGE>
The components of accounts payable - other at December 31, are
as follows:
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
David Hover $ 2,381 $ 2,381
Pay Phone Management 23,292 -
--------- ---------
$ 25,673 $ 2,381
========= =========
</TABLE>
NOTE 4 - DEBT
Short-term debt during 1992 is comprised of a note payable to
NTS Communications, Inc. for the payment of invoices related to
balances owed for line charges. The note dated July 17, 1992, was
in the principal amount of $138,983 with an interest rate of 18%
and was payable in nine monthly installments commencing September
15, 1992 with the final payment due May 15, 1993. This note was
repaid per the terms of the agreement.
Note payable on matured obligation is comprised of a note
payable to the FDIC. This note is the result of the FDIC taking
over Continental National Bank during 1991. The Company had a
revolving line of credit with this bank in the amount of $99,000
when the FDIC assumed control. During 1993, the Company had
initial communications with the FDIC regarding negotiations for
settlement of this outstanding amount. Negotiations are ongoing
with no settlement expected in the near future. It should be noted
that interest on this note has not been accrued since 1992 per
management's view of the uncertainty of the final settlement.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
The Company leases equipment and office space under non-
cancelable operating leases. Rental expenses for 1993 and 1992,
were $86,090 and $73,913, respectively. Future minimum lease
payments under these leases at December 31, 1993, are as follows:
<TABLE>
<CAPTION>
Year Ending December 31,
------------------------
<S> <C>
1994 $ 82,226
1995 75,888
1996 50,987
---------
Total minimum lease payments $ 209,101
=========
</TABLE>
-F-9-
<PAGE>
The Company is presently not involved in any legal actions or
claims as the result of the ordinary course of business. The
Company does not believe that any claims or proceedings are likely
which would have an adverse effect on the Company's financial
position or results of operations.
NOTE 6 - COMMON STOCK
The Company has issued three million (3,000,000) shares of no
par common stock of the ten million (10,000,000) shares authorized.
The President of the Company held 75% of the outstanding shares at
year end 1993. One other stockholder held 21.5% of the remaining
25% of outstanding shares.
NOTE 7 - SUBSEQUENT EVENTS
On May 16, 1994, the Company was acquired by SA Holdings, Inc.
This acquisition was accomplished through the payment of $1,354,660
in cash and the issuance of 1,302,086 shares of unregistered,
restricted common stock of SA Holdings, Inc. to the stockholders of
the Company for all the outstanding shares of common stock of the
Company. Of the total 1,302,086 shares of unregistered, restricted
common stock issued, 1,041,666 shares related to the acquisition of
the common stock of the Company and 260,420 shares related to
"Confidentiality and Noncompete Agreements" with two key employees
of the Company. These two key employees will continue to function
in senior management positions of the Company. From the March 1,
1994 effective date of the acquisition, the Company will operate as
a wholly owned subsidiary of SA Holdings, Inc.
As a result of the acquisition of the Company, various related
party receivables were collected at the closing date of the sale.
These amounts were included as adjustments to the actual cash
payments received by the various stockholders. The note receivable
of $189,210 at December 31, 1993 due from the President was to be
repaid over fifteen years at $1,470 per month including interest at
5.0%. Currently, SA Holdings, Inc. and the President of the
Company are renegotiating the payment terms so that the obligation
will be repaid by December 31, 1994.
-F-10-
<PAGE>
SA HOLDINGS, INC. AND SUBSIDIARIES
INTRODUCTION TO PRO FORMA CONSOLIDATED
FINANCIAL INFORMATION
(Unaudited)
The Pro Forma Consolidated Statement of Operations for the
year ended December 31, 1993 present the results of operations of
the Company assuming the purchase of Long Distance Network, Inc.
had been consummated as of January 1, 1993. The Company
acquired LDN effective March 1, 1994 for $1,354,660 in cash and the
issuance of 1,302,086 shares of unregistered, restricted common
stock valued at $3,750,000.
The pro forma information does not purport to be indicative of
the results of operations which would have actually been attained
if the acquisition transaction had been consummated on the date
indicated. In addition, the pro forma financial information does
not purport to be indicative of the results of operations which may
be attained in the future.
The pro forma financial information has been prepared by the
Company and all calculations have been made by the Company based on
assumptions deemed appropriate by the Company. Certain of these
assumptions are set forth under the Notes to Pro Forma Consolidated
Financial Information.
The pro forma financial information should be read in
conjunction with the Company's historical Consolidated Financial
Statements and Notes thereto contained in the Annual Report on Form
10-KSB for the year ended December 31, 1993 and the Quarterly
Report on Form 10-QSB for the quarter ended March 31, 1994.
-F-11-
<PAGE>
SA HOLDINGS, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1993
(Unaudited)
<TABLE>
<CAPTION>
SA Holdings,
Inc. and Long Distance Pro Forma
Subsidiaries Network, Inc. Adjustments Pro Forma
------------ ------------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues $ 2,907,551 $ 8,505,513 $ 11,413,064
Cost of revenues 2,497,109 7,424,327 9,921.436
----------- ----------- ------------
Gross Profit 410,442 1,081,186 1,491,628
Operating expenses 1,496,412 1,070,270 $ 278,579(A) 2,845,261
----------- ----------- ---------- ------------
Income (loss) from operations (1,085,970) 10,916 (278,579) (1,353,633)
Other income (expenses) 7,684 (3,643) 4,041
Minority interests 2,678 - 2,678
----------- ----------- ---------- ------------
Net income (loss) $(1,075,608) $ 7,273 $ (278,579) $ (1,346,914)
=========== =========== ========== ============
Loss per weighted average
common share outstanding $ (0.20) $ (0.19)
=========== ============
Weighted average shares outstanding 5,479,747 7,081,833
=========== ============
</TABLE>
The accompanying notes are an integral part
of the pro forma financial information.
-F-12-
<PAGE>
SA HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED
FINANCIAL INFORMATION
(Unaudited)
The Pro Forma Consolidated Statement of Operations for the
year ended December 31, 1993 was derived from the Company's
historical Statement of Operations incorporated in the Annual
Report on Form 10-KSB as of December 31, 1993, as well as LDN's
audited Statement of Operations for the year ended December 31,
1993.
(A) Adjustment reflects the amortization of goodwill over a
25 year period and covenants not to compete and customer
acquisition costs over a 10 year period.
(B) The business combination did not result in any
significant change in federal income taxes.
-F-13-
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DOCUMENT DESCRIPTION
23.1 Consent of Auditors*
___________________
*Filed herewith
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference of our report dated June 22, 1994, on
the financial statements of Long Distance Network, Inc. as of
December 31, 1993 and 1992, included in this Form 8-K/A-2, and into
SA Holdings, Inc.'s previously filed Registration Statements on Form
S-8 dated February, 1992, November, 1992, January, 1993, June,
1993, and September, 1993.
Dallas, Texas
December 11, 1995 /s/ SAMSON, ROBBINS & ASSOCIATES
