<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 8-K/A
AMENDMENT NO. 1
TO
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): MAY 1, 2000
PROBEX CORP.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
COLORADO 001-15567 33-0294243
------------------------------- ------------------------ -------------------
<S> <C> <C>
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation or organization) Identification No.)
</TABLE>
1467 LEMAY, SUITE 111
CARROLLTON, TEXAS 75007
-------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (972) 466-1555
<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
This Current Report on Form 8-K/A (Amendment No. 1) amends the
Current Report on Form 8-K previously filed with the Commission on May 16,
2000, relating to the acquisition by Probex Corp., a Colorado corporation (the
"Registrant" or "Probex"), through its newly formed, wholly-owned subsidiary,
Probex Fluids Recovery, Inc., a Delaware corporation ("PFR"), of substantially
all of the assets of Petroleum Products, Inc., an Ohio corporation ("PPI"), and
Intercoastal Trading Company, Inc., an Ohio corporation ("ITC"), on May 1,
2000. The following documents are included as part of this report:
(a) Financial Statements of the Businesses Acquired.
(i) Audited Combined Financial Statements.
The following audited combined financial statements of PPI and ITC are hereby
included as part of this report:
<TABLE>
<S> <C>
Report of Independent Auditors....................................................F-1
Combined Balance Sheets as of December 31, 1999 and 1998..........................F-2
Combined Statements of Income for the years ended December 31,
1999, 1998 and 1997...............................................................F-3
Combined Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997..................................................F-4
Combined Statements of Changes In Stockholders' Equity for
years ended December 31, 1999, 1998, 1997 and 1996................................F-5
Notes to Combined Financial Statements............................................F-6
</TABLE>
(ii) Interim Condensed Combined Financial Statements
(Unaudited). The following interim condensed combined financial statements of
PPI and ITC are hereby included as part of this report.
<TABLE>
<S> <C>
Condensed Combined Balance Sheet at March 31, 2000................................F-10
Condensed Combined Statements of Income for the three months ended March 31,
2000 and 1999.....................................................................F-11
Combined Statements of Cash Flows for the three months ended March 31,
2000 and 1999.....................................................................F-12
Notes to Interim Condensed Combined Financial Statements..........................F-13
</TABLE>
(b) Pro Forma Financial Information (Unaudited). The pro forma
financial statements of the Registrant are hereby included as part of this
report:
<TABLE>
<S> <C>
Pro Forma Combined Condensed Financial Statements (unaudited).....................PF-1
Pro Forma Combined Condensed Balance Sheet (unaudited) as
of December 31, 1999..............................................................PF-2
Pro Forma Combined Condensed Statement of Operations (unaudited)
for the Year Ended September 30, 2000............................................PF-3
Pro Forma Combined Condensed Statement of Operations (unaudited)
for the Six Months Ended March 31, 2000 ..........................................PF-3
</TABLE>
2
<PAGE> 3
(c) Exhibits.
None
3
<PAGE> 4
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, thereunto duly authorized.
Dated: July 17, 2000.
PROBEX CORP.
By: /s/ Bruce A. Hall
-----------------------------
Bruce A. Hall
Chief Financial Officer
4
<PAGE> 5
REPORT OF INDEPENDENT AUDITORS
Stockholders
Petroleum Products,Inc. and Intercoastal Trading Company, Inc.
We have audited the accompanying combined balance sheets of Petroleum Products,
Inc. and Intercoastal Trading Company, Inc. ("the Company") as of December 31,
1999 and 1998, and the related combined statements of income, cash flows and
changes in stockholders' equity 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 auditing standards generally accepted
in the United States. 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 audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the combined financial position of Petroleum Products,
Inc. and Intercoastal Trading Company, Inc. at December 31, 1999 and 1998, and
the combined results of their operations and their cash flows for the years then
ended, in conformity with accounting principles generally accepted in the United
States.
/s/ Ernst & Young LLP
Dallas, Texas
June 9, 2000
F-1
<PAGE> 6
PETROLEUM PRODUCTS, INC. AND INTERCOASTAL TRADING COMPANY, INC.
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
1999 1998
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $155,301 $ 8,547
Accounts receivable 87,544 186,600
Accounts receivable - employees -- 27,177
Inventories 236,397 --
Other current assets 59,995 20,625
-------- --------
Total current assets 539,237 242,949
Property and equipment--net 296,444 296,647
-------- --------
Total assets $835,681 $539,596
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $133,787 $ 4,566
Current portion of long-term debt 44,126 53,800
-------- --------
Total current liabilities 177,913 58,366
Long-term debt, less current portion 76,582 68,292
-------- --------
Total liabilities 254,495 126,658
Commitments and Contingencies -- --
Stockholders' equity:
Common stock, $1.00 par value:
Authorized -- 500 shares, Petroleum Products and
Intercoastal Trading Company
Issued -- 500 shares in 1999 and 1998, Petroleum Products
and 500 shares in 1999, Intercoastal Trading Company 1,000 500
Retained earnings 580,186 412,438
-------- --------
Total stockholders' equity 581,186 412,938
-------- --------
Total liabilities and stockholders' equity $835,681 $539,596
======== ========
</TABLE>
See accompanying notes.
F-2
<PAGE> 7
PETROLEUM PRODUCTS, INC. AND INTERCOASTAL TRADING COMPANY, INC.
COMBINED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998
----------- -----------
<S> <C> <C>
Revenues $ 2,658,840 $ 1,603,683
Cost of goods sold (1,309,717) (672,418)
----------- -----------
Gross margin 1,349,123 931,265
Expenses:
Payroll and employee benefits 353,874 310,195
Repairs and Maintenance 115,710 106,489
Depreciation 54,453 44,147
Taxes & Licenses 46,285 44,993
Advertising 581 189
Fuel 102,076 94,890
Insurance 97,349 78,963
Utilities 24,971 9,634
Rent 57,047 --
Other 63,604 49,236
----------- -----------
Total Operating Expenses 915,950 738,736
----------- -----------
Operating income 433,173 192,529
Other income (expense): (14,483) 13,122
----------- -----------
Net income $ 418,690 $ 205,651
=========== ===========
</TABLE>
See accompanying notes.
F-3
<PAGE> 8
PETROLEUM PRODUCTS, INC. AND INTERCOASTAL TRADING COMPANY, INC.
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 418,690 $ 205,651
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 54,453 44,147
Changes in operating assets and liabilities:
Accounts receivable 99,056 70,768
Accounts receivable - employees 27,177 --
Inventories (236,397) --
Other current assets (39,370) (3,258)
Accounts payable and accrued expenses 129,221 (31,411)
--------- ---------
Net cash provided by operating activities 452,830 285,897
INVESTING ACTIVITIES
Purchases of property and equipment (54,250) (109,550)
--------- ---------
Net cash used in investing activities (54,250) (109,550)
FINANCING ACTIVITIES
Proceeds from sale of stock 500 --
Cash distributions to investors (250,942) (229,151)
Proceeds from (principal payments on) revolving
line of credit and long-term debt--net (1,384) 60,709
--------- ---------
Net cash used in financing activities (251,826) (168,442)
Increase in cash and cash equivalents 146,754 7,905
Cash and cash equivalents at beginning of year 8,547 642
--------- ---------
Cash and cash equivalents at end of year $ 155,301 $ 8,547
========= =========
SUPPLEMENTAL DISCLOSURES
Cash paid for interest $ 14,483 $ 9,617
========= =========
</TABLE>
See accompanying notes.
F-4
<PAGE> 9
PETROLEUM PRODUCTS, INC. AND INTERCOASTAL TRADING COMPANY, INC.
COMBINED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON TOTAL
STOCK RETAINED STOCKHOLDERS'
(DOLLARS) EARNINGS EQUITY
--------- --------- -------------
<S> <C> <C> <C>
BALANCE AT DECEMBER 31, 1997 $ 500 $ 435,938 $ 436,438
DISTRIBUTIONS TO SHAREHOLDERS -- (229,151) (229,151)
NET INCOME -- 205,651 205,651
--------- --------- ---------
BALANCE AT DECEMBER 31, 1998 500 412,438 412,938
ISSUANCE OF STOCK BY INTERCOASTAL TRADING COMPANY 500 -- 500
DISTRIBUTIONS TO SHAREHOLDERS -- (250,942) (250,942)
NET INCOME -- 418,690 418,690
--------- --------- ---------
Balance at December 31, 1999 $ 1,000 $ 580,186 $ 581,186
========= ========= =========
</TABLE>
See accompanying notes.
F-5
<PAGE> 10
PETROLEUM PRODUCTS, INC. AND INTERCOASTAL TRADING COMPANY, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF OPERATIONS
Petroleum Products, Inc. ("PPI") was incorporated in the state of Ohio in 1981
and operates as a waste oil recycling company primarily in Ohio. Intercoastal
Trading Company, Inc. ("ITC"), which was incorporated in 1999 in the state of
Ohio, purchases recycled oil from PPI and other used oil collectors and sells
primarily in the Gulf Coast market.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF COMBINATION
The combined financial statements include the accounts of PPI and ITC
(collectively, the "Companies"). Intercompany balances and transactions have
been eliminated.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include all highly liquid investments with a maturity
date of three months or less when purchased.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is computed on a
first-in, first-out basis. There is a risk that the Companies will forecast
demand for its products and market conditions incorrectly and accumulate excess
inventories. Therefore, there can be no assurance that the Companies will not
accumulate excess inventory and incur inventory lower of cost or market charges
in the future.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Provisions for depreciation are
computed on straight-line over the estimated useful lives, ranging from 10 to 40
years for buildings and improvements and 7 to 10 years for equipment.
F-6
<PAGE> 11
PETROLEUM PRODUCTS, INC. AND INTERCOASTAL TRADING COMPANY, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
LONG-LIVED ASSETS
Impairment losses are recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less then the assets' carrying value. If
impairment has occurred, an impairment loss would be recognized for the excess
of the carrying value over the fair value of the assets.
REVENUE RECOGNITION
Revenue is recognized when title passes to the customer, typically upon
delivery.
FAIR VALUE OF FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK
The Companies' financial instruments that are exposed to credit risk consist
primarily of cash and cash equivalents, accounts receivable, and accounts
payable, for which the carrying amounts approximate fair value.
INCOME TAXES
The Companies have elected to be taxed as an "S corporation", whereby the
taxable income or loss is allocated to the stockholders and reported in their
individual income tax returns. Accordingly, there is no provision for income
taxes in the accompanying financial statements.
USE OF ESTIMATES
Preparation of financial statements requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
3. PROPERTY AND EQUIPMENT
The cost and accumulated depreciation of property and equipment are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1999 1998
--------- ---------
<S> <C> <C>
Land and improvements $ 15,000 $ 15,000
Buildings and improvements 110,705 110,705
Fleet equipment 474,319 420,069
Equipment 130,139 130,139
--------- ---------
730,163 675,913
Less accumulated depreciation (433,719) (379,266)
--------- ---------
$ 296,444 $ 296,647
========= =========
</TABLE>
F-7
<PAGE> 12
PETROLEUM PRODUCTS, INC. AND INTERCOASTAL TRADING COMPANY, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
4. NOTES PAYABLE AND LINE OF CREDIT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1999 1998
--------- ---------
<S> <C> <C>
Note payable for machinery and equipment, payable in 60 monthly installments
of $1,736.11, including interest at 8.75% per annum, due
June 2003, secured by personal guarantee of stockholders. $ 61,334 $ 76,092
Note payable for machinery and equipment, payable in 48 monthly
installments of $560.89, including interest at 8.16% per annum. The
note is secured by the machinery and equipment. 4,881 10,456
Note payable for machinery and equipment, payable in 60 monthly installments
of $1,292.30, including interest at 10.5% per annum, secured by the
machinery and equipment. -- 12,322
Note payable for machinery and equipment, payable in 48 monthly installments
of $1,056.14, including interest at 10.5% per annum, due July 2003, secured
by personal guarantee by a stockholder. 36,987 --
$75,000 line of credit with interest at prime plus 1.5% not less than 8%,
due May 2005, collateralized by personal guarantee by stockholders. 17,506 23,222
--------- ---------
120,708 122,092
Less current portion (44,126) (53,800)
--------- ---------
Total long-term debt $ 76,582 $ 68,292
========= =========
</TABLE>
In addition, there is a $30,000 line of credit that had no balance at December
31, 1999 or 1998.
At December 31, 1999, maturities of long-term debt for the five succeeding years
are as follows:
<TABLE>
<S> <C>
2000 $ 44,126
2001 27,469
2002 30,165
2003 18,948
--------
$120,708
========
</TABLE>
F-8
<PAGE> 13
PETROLEUM PRODUCTS, INC. AND INTERCOASTAL TRADING COMPANY, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
5. LEASES
The Companies lease oil storage tanks under long term operating leases. Total
expenses under these operating leases was $60,283 and $10,575 during 1999 and
1998, respectively.
Future minimum rentals under operating leases are as follows:
<TABLE>
<S> <C>
2000 $219,150
2001 116,550
--------
$335,700
========
</TABLE>
The leases include terms for renewal and for additional rents based upon volume
of oil received.
6. RELATED PARTY TRANSACTIONS
The Companies purchase oil from a company owned by a relative of the principal
stockholders. Purchases were $177,774, and $149,522 during the years ended
December 31, 1999, and 1998, respectively.
7. SIGNIFICANT CUSTOMERS AND SUPPLIERS
Customers representing over 10% of revenue were as follows:
<TABLE>
<CAPTION>
Customer: 1999 1998
---- ----
<S> <C> <C>
A (Ecogard, Inc aka First Recovery) 10% 38%
B (Gladieux Trading) 14% 16%
C (Stone Co., Inc) -- 13%
D (Stark Materials) 7% 12%
E (Rio Energy) 12% --
F (Fortis International) 21% --
</TABLE>
Suppliers representing over 10% of purchases of used oil were as follows:
<TABLE>
<CAPTION>
Supplier: 1999 1998
---- ----
<S> <C> <C>
A (Akron Waste Oil) 17% 15%
B (Central Ohio Oil) 17% 14%
C (Tri-State Petroleum) 10% 11%
</TABLE>
8. SUBSEQUENT EVENT
The assets of the Companies were acquired by Probex Corp. on May 1, 2000.
F-9
<PAGE> 14
PETROLEUM PRODUCTS, INC. AND INTERCOASTAL TRADING COMPANY, INC.
INTERIM CONDENSED COMBINED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31
2000
----------
<S> <C>
Assets
Current assets:
Cash and cash equivalents $ 360,072
Accounts receivable 52,723
Inventories 73,000
Other current assets 56,995
----------
Total current assets 542,790
Property and equipment--net 282,831
----------
Total assets $ 825,621
==========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued expenses $ 135,723
Current portion of long-term debt 44,126
----------
Total current liabilities 179,849
Long-term debt, less current portion 53,065
----------
Total liabilities 232,914
Commitments and Contingencies --
Stockholders' equity 592,707
----------
$ 825,621
==========
</TABLE>
See accompanying notes.
F-10
<PAGE> 15
PETROLEUM PRODUCTS, INC. AND INTERCOASTAL TRADING COMPANY, INC.
INTERIM CONDENSED COMBINED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
2000 1999
----------- -----------
<S> <C> <C>
Revenues $ 1,771,842 $ 286,861
Cost of goods sold (859,388) (117,117)
----------- -----------
Gross margin 912,454 169,744
Expenses:
Selling, general and administrative 744,881 123,030
Depreciation 13,613 20,091
----------- -----------
Total Operating Expenses 758,494 143,121
----------- -----------
Operating income (loss) 153,960 26,623
Other income (expense): 27,561 (4,595)
----------- -----------
Net income (loss) $ 181,521 $ 22,028
=========== ===========
</TABLE>
See accompanying notes.
F-11
<PAGE> 16
PETROLEUM PRODUCTS, INC. AND INTERCOASTAL TRADING COMPANY, INC.
INTERIM CONDENSED COMBINED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
2000 1999
--------- ---------
<S> <C> <C>
Operating activities
Net income $ 181,521 $ 22,028
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 13,613 20,091
Changes in operating assets and liabilities: 203,154 (13,966)
--------- ---------
Net cash provided by operating activities 398,288 28,153
Investing activities -- --
Financing activities
Cash distributions to investors (170,000) (15,000)
Proceeds from (principal payments on) revolving (23,517) (12,173)
line of credit and long-term debt--net
--------- ---------
Net cash used in financing activities (193,517) (27,173)
Increase in cash and cash equivalents 204,771 980
Cash and cash equivalents at beginning of period 155,301 8,547
--------- ---------
Cash and cash equivalents at end of period $ 360,072 $ 9,527
========= =========
SUPPLEMENTAL DISCLOSURES
Cash paid for interest $ 2,625 $ 4,595
========= =========
</TABLE>
See accompanying notes.
F-12
<PAGE> 17
PETROLEUM PRODUCTS, INC. AND INTERCOASTAL TRADING COMPANY, INC.
NOTES TO INTERIM CONDENSED COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION AND SUMMARY OF OPERATIONS
Petroleum Products, Incorporated ("PPI") was incorporated in the state of Ohio
in 1981 and operates as a waste oil recycling company primarily in Ohio.
Intercoastal Trading Company ("ITC"), which was incorporated in 1999 in the
state of Ohio, purchases recycled oil from PPI and other used oil collectors
and sells primarily in the Gulf Coast market.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INTERIM FINANCIAL INFORMATION
In the opinion of management, the accompanying interim financial statements,
which have not been audited, reflect all adjustments necessary to present
fairly the results for the interim periods. All of the accounting adjustments
reflected in the accompanying interim financial statements are of a normal
recurring nature. These interim financial statements should be read in
conjunction with the Company's annual financial statements.
The accompanying interim financial statements have been prepared on the accrual
basis of accounting in accordance with U.S. generally accepted accounting
principles for interim financial information, which requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities as of March
31, 2000, and revenues and expenses for each of the three month periods ended
March 31, 2000 and 1999. Actual results may differ from the estimates and
assumptions used. The results of operations for the three month period ended
March 31, 2000, are not necessarily indicative of the results to be expected
for the year ended December 31, 2000.
PRINCIPLES OF COMBINATION
The combined financial statements include the accounts of PPI and ITC
(collectively, the "Companies"). Intercompany balances and transactions have
been eliminated.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include all highly liquid investments with a maturity
date of three months or less when purchased.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is computed on a
first-in, first-out basis. There is a risk that the Companies will forecast
demand for its products and market conditions incorrectly and
F-13
<PAGE> 18
PETROLEUM PRODUCTS, INC. AND INTERCOASTAL TRADING COMPANY, INC.
NOTES TO INTERIM CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
accumulate excess inventories. Therefore, there can be no assurance that the
Company will not accumulate excess inventory and incur inventory lower of cost
or market charges in the future.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Provisions for depreciation are
computed on straight-line over the estimated useful lives, ranging from 10 to
40 years for buildings and improvements and 7 to 10 years for equipment.
LONG-LIVED ASSETS
Impairment losses are recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less then the assets' carrying value. If
impairment has occurred, an impairment loss would be recognized for the excess
of the carrying value over the fair value of the assets.
REVENUE RECOGNITION
Revenue is recognized when title passes to the customer, typically upon
delivery.
FAIR VALUE OF FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK
The Company's financial instruments that are exposed to credit risk consist
primarily of cash and cash equivalents, accounts receivable, and accounts
payable, for which the carrying amounts approximate fair value.
INCOME TAXES
The Companies have elected to be taxed as an "S corporation", whereby the
taxable income or loss is allocated to the stockholders and reported in their
individual income tax returns. Accordingly, there is no provision for income
taxes in the accompanying financial statements.
USE OF ESTIMATES
Preparation of financial statements requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
F-14
<PAGE> 19
PROBEX CORP.
PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
As discussed in "Item 2. Acquisition or Disposition of Assets," of Probex's
Current Report on Form 8-K filed on May 16, 2000, dated May 1, 2000, Probex
purchased substantially all of the assets of Petroleum Products, Inc. (PPI) and
Intercoastal Trading Company, Inc. (ITC) for $4.6 million consisting of cash of
$1.6 million, a promissory note of $1.5 million and the issuance of 800,000
shares of Probex common stock valued at $1.875 per share.
The accompanying pro forma combined condensed financial statements are based on
the historical financial statements of Probex for the year ended September 30,
1999, and the six months ended March 31, 2000. The pro forma adjustments are
based upon available information and assumptions that management of Probex
believes are reasonable.
The pro forma combined condensed financial statements do not purport to
represent the financial position or results of operations of Probex which would
have occurred had such transaction been consummated on the dates indicated or
Probex's financial position or results of operations for any future date or
period.
The pro forma combined condensed financial statements do not include a provision
for income taxes because Probex Corp. has sufficient losses to absorb income
generated by Petroleum Products, Inc. and Intercoastal Trading Company, Inc.
PF-1
<PAGE> 20
PRO FORMA COMBINED CONDENSED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
Historical at Pro Forma
March 31, 2000 Adjustments As Adjusted
-------------- ------------ ------------
<S> <C> <C> <C>
CURRENT ASSETS
Cash $ 4,443,407 $ (1,600,000)(1) $ 2,843,407
Receivables 31,572 8,500 (2) 40,072
Inventory 73,278 (2) 73,278
Prepaid expense 57,482 -- 57,482
------------ ------------ ------------
Total Current Assets 4,532,461 (1,518,222) 3,014,239
PROPERTY AND EQUIPMENT 1,703,562 927,375 2,630,937
Goodwill -- 3,712,070 (2) 3,712,070
OTHER LONG TERM ASSETS 97,654 -- 97,654
------------ ------------ ------------
Total Assets $ 6,333,677 $ 3,121,223 $ 9,454,900
============ ============ ============
CURRENT LIABILITIES
Accounts payable $ 71,452 $ 71,452
Line of Credit -- $ 54,941 (2) 54,941
Promissory note 750,000 300,000 (1) 1,050,000
Accrued expenses 759,342 759,342
------------ ------------ ------------
1,580,794 354,941 1,935,735
LONG TERM LIABILITIES 15,080 1,200,000 (1) 1,281,362
66,282 (2)
STOCKHOLDERS EQUITY
Preferred Stock 4,634,412 4,634,412
Common Stock 10,017,527 1,500,000 (1) 11,517,527
Deficit (9,913,509) (9,913,509)
Treasury Stock (627) (627)
------------ ------------ ------------
Total Stockholders Equity 4,737,803 1,500,000 6,237,803
------------ ------------ ------------
Total Liabilities and Stockholders' Equity $ 6,333,677 $ 3,121,223 $ 9,454,900
============ ============ ============
</TABLE>
(1) To record purchase price consideration of cash of $1,600,000, note
payable to seller of $1,500,000 and the issuance of 800,000 shares of
common stock valued at $1.875 per share
(2) To allocate the purchase price to the assets acquired and the
liabilities assumed and to recognize goodwill.
PF-2
<PAGE> 21
PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Fiscal Year Ended September 30, 1999
<TABLE>
<CAPTION>
Historical
Year Ended
September 30, Pro Forma Pro Forma
1999 Adjustments As Adjusted
------------- ----------- -----------
<S> <C> <C> <C>
Revenue $ -- $ 2,658,840 (3) $ 2,658,840
Cost of Goods Sold -- (1,309,717) (1,309,717)
----------- ----------- -----------
Gross Profit -- 1,349,123 1,349,123
Operating Expenses 2,318,224 1,221,554(3,4,5) 3,539,778
----------- ----------- -----------
Operating profit (loss) (2,318,224) 127,569 (2,190,655)
Other income (expense) (96,803) (14,483)(3) (111,286)
----------- ----------- -----------
Net income (loss) $(2,415,027) $ 113,086 $(2,301,941)
=========== =========== ===========
Net loss per share $ (0.15) $ (0.14)
=========== ===========
</TABLE>
Six Months Ended March 31, 2000
<TABLE>
<CAPTION>
Historical
Six Months
Ended Pro Forma Pro Forma
March 31, 2000 Adjustments As Adjusted
-------------- ----------- -----------
<S> <C> <C> <C>
Revenue $ -- $ 3,018,864(6) $ 3,018,864
Cost of Goods Sold -- (1,588,364) (1,588,364)
----------- ----------- -----------
Gross Profit -- 1,430,500 1,430,500
Operating Expenses 1,860,509 1,058,464(4,5,6) 2,918,973
----------- ----------- -----------
Operating profit (1,860,509) 372,036 (1,488,473)
Other income (expense) 51,321 23,940 (6) 75,261
----------- ----------- -----------
Net profit $(1,809,188) $ 395,976 $(1,413,212)
=========== =========== ===========
Net loss per share $ (0.09) $ (0.07)
=========== ===========
</TABLE>
(3) To record the combined operations of PPI and ITC for the year ended
December 31, 1999.
(4) To record amortization of goodwill recorded in connection with the
acquisition of PPI and ITC of $185,604 and $92,802 for the periods
ended September 30, 1999 and March 31, 2000, respectively.
(5) To record interest expense on $1.5 million promissory note at 8% of
$120,000 and $60,000 for the periods ended September 30, 1999 and
March 31, 2000, respectively.
(6) To record the combined operations of PPI and ITC for the six months
ended March 31, 2000.
PF-3
