<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A NO. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
December 31, 1996
----------------------------------------
Date of Report
(Date of Earliest Event Reported)
TOPRO, INC.
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(Exact name of Registrant as specified in its charter)
Colorado 84-1042227
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(State or other jurisdiction of I.R.S. Employer I. D. Number
incorporation or organization)
2525 West Evans Avenue, Denver, Colorado 80219
- ----------------------------------------- ----------
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (303) 935-1221
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 31, 1996, Topro, Inc. ("Registrant"), entered into an
Agreement of Merger pursuant to which a newly formed subsidiary will merge
into, and the Registrant will acquire all the outstanding capital stock of All
Control Systems, Inc.("ACSI") and ProMeta Consulting, Inc. ("ProMeta")
(combined collective company "ACS") independent control systems integrators
located in West Chester, PA organized as Subchapter S corporations under the
federal tax code. ACS's operations are carried out through two affiliated
companies ACS and ProMeta under common ownership. On the effective date of the
merger the Registrant's subsidiary will merge with ACSI and ProMeta leaving ACS
as a wholly owned subsidiary of the Registrant. ACS's core business parallels
that of the Registrant's, with emphasis on some different/additional markets
and a generally more technically sophisticated product offering in the food and
pharmaceutical industries. ACS is focused on the following vertical markets:
food processing, pharmaceutical, and discrete manufacturing. In accordance
with an Agreement of Merger, the Registrant will acquire all of the outstanding
capital stock of ACS in exchange for 1,800,000 restricted shares of the
Registrant's Common Stock. The
<PAGE> 3
shares issued under the Agreement of Merger will be held in escrow pending the
effective date of the Registrants Form S-3 currently being reviewed by the SEC
at which time the shares will be released to the ACS shareholders. The
Agreement of Merger will result in ACS's termination of its Subchapter S
classification creating a deferred tax liability relating to capitalized
software costs deductions previously received by the shareholders. It is
estimated that the deferred tax liability relating to the capitalized software
assumed by the Registrant will total no more than $340,000. The Agreement of
Merger provides for future tax liability to be borne one-half by the Registrant
and one-half by the ACS shareholders pro rata according to their respective
pre-merger interest in ACS. Shares will be held in escrow to satisfy any
incurred tax liability based on a value of $2.25 per share or 151,111 shares.
Such shares will be released in annual installments to former ACS shareholders
at the rate of one share for each $4.50 total reduction (through amortization
of the software costs to earnings) in the capitalized software deferred tax
reflected on the June 30, 1997 audited financial statements of the Registrant.
Such amortization and escrow period shall not exceed five years. During the
term of this escrow period the ACS shareholders shall have the option to
replace the escrowed shares valued at $2.25 per share with cash or other
collateral acceptable to the Registrant. Any replacement collateral shall be
released at the same rate as escrowed shares would be released.
ACS operates from a modern 35,000 square foot facility in West
Chester, PA. ACS staff currently numbers 65, with over 49 engineers and 4
sales personnel and 12 corporate personnel. The Registrant intends to continue
the business of ACS, having effected the transaction in order to establish a
market presence for its Control Systems Integration operations in the regions
served by ACS.
In connection with the Merger, the past President of ACS, Kevin Fallon
will enter into an employment agreement with the Registrant. This agreement
and its terms will be finalized prior to the closing date of the Agreement of
Merger, which the Registrant anticipates will be on or before January 18, 1997.
Prior to this transaction, there was no material relationship between
ACS and the Registrant or any of its affiliates, any director or officer of the
registrant, or any associate of such director or officer.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED - Audited financial
statements of ACS for the 12 months ending December 31, 1995 and 1994 along
with interim financial statements are not presently available but will be
provided in the proscribed filing period.
(b) PRO FORMA FINANCIAL INFORMATION - The pro forma financial
statements reflect the acquisition of ACSI and ProMeta, (combined company
"ACS") accounted for as a purchase. ACS's previous fiscal year end is December
31. The pro forma balance sheet set forth the financial position as of
September 30, 1996. The pro forma income statements as of September 30, 1996
reflect the 3 months of operation of ACS for the periods ending September 30,
1996. The unaudited pro forma income
3
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statement for the year ending June 30, 1996. This pro forma information has
been restated to reflect the 12 months of operations of ACS, the six months of
operation for Advanced Control Technology, Inc. ("ACT"), and the 10 months of
operation of Visioneering Holding Corp ("VHC"). ACT was acquired on January 1,
1996 resulting in 6 months of operation consolidated in the Registrant's
financial results and VHC was acquired on May 1, 1996 resulting in 2 months of
operations consolidated in the Registrant financial results. The combined pro
forma income statement was consolidated to show the cumulative effect of 12
months of operation for the acquisitions of ACS, ACT and VHC. The June 30,
1996 and September 30, 1996 pro forma balance sheet reflects the consolidated
position of the Registrant, MDCS, Inc., ACT and VHC and ACS.
(c) Exhibits
2.1* Agreement of Merger dated December 31, 1996.
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* Previously filed.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Topro, Inc.
Date: January 15, 1997 By: /s/ John Jenkins
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John P. Jenkins
President and CEO
4
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TOPRO, INC.
NOTES TO THE PRO FORMA FINANCIAL INFORMATION
Pursuant to an Agreement of Merger dated December 31, 1996, Topro,
Inc. ("Registrant"), through a merger undertaken by a newly formed subsidiary,
will acquire all the outstanding capital stock of ACSI and ProMeta
(collectively "ACS") independent control systems integrators located in West
Chester, PA. The Registrant agrees to acquire all of the outstanding capital
stock of ACS, in exchange for 1,800,000 restricted shares of the Registrant's
Common Stock. The effective date for accounting purposes will be December 1,
1996 for purposes of recording the acquisition of ACS.
The September 30, 1996 pro forma income statement of ACS, includes
goodwill amortization of $77,000 was recorded for the period. The June 30,
1996 income statement was restated to reflect goodwill amortization of
$310,000.
The accompanying condensed combined pro forma balance sheet presents
the financial position of the Registrant as if the merger between the
Registrant's subsidiary and ACS had occurred on September 30, 1996. The pro
forma balance sheet was prepared utilizing the September 30, 1996 balance sheet
of ACS The pro forma statement of operations combined the statements of
operations of the Registrant for the years ended June 30, 1996 and interim
period ending September 30, 1996. The ACS financial statements were recast to
reflect three months of operations for the period ending September 30, 1996.
The combined consolidated income statement for the period ending June 30, 1996
reflects the recast operating results of ACS for the twelve months ending June,
30, 1996. The Registrant's September 30, 1996 consolidated income statements
reflects the 3 months of operation of ACT, MDCS, Inc, VHC. Additionally, 6
months of operations for ACT ending 12/31/96 was included to reflect 12 months
of operations ended June 30, 1996 for the acquisition of ACT included in
previous 8-K filings. The combined consolidated income statements for June 30,
1996 and September 30, 1996 reflect the combined acquisitions of MDCS, Inc
(pooling of interest), Advanced Control Technology, Inc. (purchase method),
Visioneering Holding Corporation (purchase method), and ACS (purchase method)
for the respective periods.
These statements are not necessarily indicative of future operations
or the actual results that would have occurred had the transactions been
consummated at the beginning of the periods indicated. The pro forma condensed
combined financial statements should be read in conjunction with the notes
thereto of the Registrant's financial statements included in it annual report
on Form 10-K and notes to financials of ACS included elsewhere in this 8-K.
5
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TOPRO INC., AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
PURCHASE OF ACS
(UNAUDITED)
<TABLE>
<CAPTION>
TOPRO, INC. TOPRO, INC.
CONSOLIDATED ACS PRO FORMA CONSOLIDATED PRO
09/30/96 09/30/96 ADJUST FORMA
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ASSETS
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<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash $156,000 $129,786 $285,786
Receivables:
Trade, net of allowance for doubtful
accounts 5,234,000 3,380,816 8,614,816
Other 1,000 10,401 11,401
Cost and estimated earnings in excess of
billings on uncompleted contracts 2,866,000 700,449 3,566,449
Inventories 151,000 0 151,000
Prepaid expense 244,000 24,161 268,161
Assets of discontinued operations 581,000 581,000
Refundable income taxes 222,000 222,000
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Total current assets 9,455,000 4,245,613 0 13,700,613
PROPERTY AND EQUIPMENT, AT COST:
Building and land 850,000 0 850,000
Equipment, fixture & equipment 2,497,000 1,478,243 (1,322,876) 2,652,367
Leasehold improvements 784,000 24,262 808,262
4,131,000 1,502,505 (1,322,876) 4,310,629
Less accumulated depreciation (1,370,700) (1,322,876) 1,322,876 (1,370,700)
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Net property and equipment 2,760,300 179,629 0 2,939,929
CAPITALIZED SOFTWARE DEVELOPMENT COSTS,
net of amortization 680,700 671,192 1,351,892
OTHER ASSETS
Goodwill, net of amortization - 5,024,000 0 4,565,917 9,589,917
Debt issuance costs, net of amortization 333,000 0 0 333,000
Other assets 145,000 44,818 0 189,818
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TOTAL ASSETS $ 18,398,000 $ 5,141,252 $ 4,565,917 $ 28,105,169
=================================================================
</TABLE>
6
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TOPRO INC., AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
PURCHASE OF ACS
(UNAUDITED)
<TABLE>
<CAPTION>
TOPRO, INC. TOPRO, INC.
CONSOLIDATED ACS PRO FORMA CONSOLIDATED PRO
09/30/96 09/30/96 ADJUST FORMA
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<S> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES:
Line-of-credit $ 927,000 $1,237,000 $2,164,000
Current portion of long-term debt:
Related parties 230,000 230,000
Financial institutions and other 1,422,000 1,422,000
Capital Lease obligation 41,000 16,729 57,729
Accounts payable 5,770,000 1,853,012 7,623,012
Billings in excess of costs and estimated
earnings 988,000 2,135,545 3,123,545
on uncompleted contracts
Accrued expenses 1,362,000 479,093 1,841,093
Deferred gain & expense 24,000 10,737 34,737
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Total current liabilities 10,764,000 5,732,116 0 16,496,116
LONG-TERM DEBT, NET OF CURRENT PORTION:
Renaissance 3,500,000 0 3,500,000
Financial institutions and other 861,000 0 861,000
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Capital Lease Obligations 146,000 2,441 148,441
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Total long-term debt 4,507,000 2,441 0 4,509,441
DEFERRED GAIN
Sale of bldg 39,000 39,000
STOCKHOLDERS' EQUITY:
Preferred stock, par value $1.00 per share;
authorized 10,000,000 shares, no shares issued - - -
Common stock, par value $.0001 per share;
authorized 200,000,000 shares, 6,639,403
shares issued and outstanding 9/30/96 1,000 1,375 (1,195) 1,180
Additional paid-in capital 7,775,000 126,101 3,923,719 11,824,820
Accumulated deficit (4,688,000) (720,781) 643,393 (4,765,388)
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Total stockholders' equity 3,088,000 (593,305) 4,565,917 7,060,612
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 18,398,000 $ 5,141,252 $ 4,565,917 $ 28,105,169
================================================================
</TABLE>
7
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TOPRO INC., AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED INCOME STATEMENT
PURCHASE OF ACS
(UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 1996
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TOPRO, INC. VISIONEERING TOPRO, INC.
CONSOLIDATED ACT, INC. CORPORATION ACS PRO FORMA CONSOLIDATED
06/30/96 12/31/95 04/30/96 6/30/96 ADJUST PRO FORMA
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<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Control systems integration $19,726,000 $2,605,129 $8,165,012 $7,939,321 $38,435,462
Distributorship 907,000 907,000
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20,633,000 2,605,129 8,165,012 7,939,321 39,342,462
COST OF SALES:
Control systems integration 14,025,000 2,228,112 5,370,899 5,262,505 26,886,516
Distributorship 652,000 652,000
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14,677,000 2,228,112 5,370,899 5,262,505 27,538,516
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GROSS PROFIT 5,956,000 377,017 2,794,113 2,676,816 11,803,946
EXPENSES:
Sales expense 1,168,000 498,541 1,666,541
General and admin expense 3,921,000 582,220 5,224,510 3,762,273 13,490,003
Distributorship selling
& other exp. 871,000 0 0 871,000
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5,960,000 1,080,761 5,224,510 3,762,273 16,027,544
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OTHER INCOME (EXPENSES)
Gain (loss) on sales of assets 435,000 10,436 0 445,436
Other (expenses) income 79,000 73 (6,583) 72,490
Interest expense (380,000) (172,057) (116,674) (131,306) 0 (800,037)
Goodwill amortization (114,000) (74,165) (188,512) (309,554) (686,231)
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20,000 (235,713) (311,769) (131,306) (309,554) (968,342)
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INC TAXES 16,000 (939,457) (2,742,166) (1,216,763) (309,554) (5,191,940)
INCOME TAX BENEFIT (PROVISION):
Current 0 (7,831) 69,315 0 0 61,484
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Total income tax benefit 0 (7,831) 69,315 0 0 61,484
INCOME (LOSS) FROM CONTINUING
OPERATIONS $ 16,000 (947,288) (2,672,850) (1,216,763) (309,554) (5,130,455)
============================================================================================
NET INCOME (LOSS) PER SHARE:
Continuing operations $0.00 ($0.61)
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SHARES OUTSTANDING 6/30/96 6,639,403 1,800,000 8,439,403
============================================================================================
NOT REPORTED AS A WEIGHTED
AVERAGE PER GAAP
</TABLE>
8
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TOPRO INC., AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED INCOME STATEMENT
PURCHASE OF ACS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, 1996
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TOPRO, INC. TOPRO, INC.
CONSOLIDATED ACS PRO FORMA CONSOLIDATED
9/30/96 09/30/96 ADJUST PRO FORMA
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<S> <C> <C> <C> <C>
REVENUES:
Control systems integration $ 7,967,000 $ 3,307,203 $11,274,203
-------------------------------------------------------------------------------
7,967,000 3,307,203 11,274,203
COST OF SALES:
Control systems integration 5,082,000 2,484,543 7,566,543
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5,082,000 2,484,543 7,566,543
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GROSS PROFIT 2,885,000 822,660 3,707,660
EXPENSES:
Sales expense 598,000 0 598,000
General and administrative expense 1,948,000 475,302 2,423,302
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2,546,000 475,302 3,021,302
INCOME FROM SYSTEMS INTEGRATION 339,000 347,358 686,358
OTHER INCOME (EXPENSE)
Gain on sale of assets (3,000) 0 (3,000)
Other (expense) income 4,000 0 4,000
Interest expense (172,000) (32,073) (204,073)
Goodwill amortization (87,000) 0 (77,388) (164,388)
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(258,000) (32,073) (77,388) (367,461)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES 81,000 315,285 (77,388) 318,897
INCOME TAX BENEFIT (PROVISION):
Current 0 0 0
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Total income tax benefit (provision) 0 0 0
INCOME (LOSS) FROM CONTINUING OPERATIONS 81,000 315,285 (77,388) 318,897
===============================================================================
NET INCOME (LOSS) PER SHARE:
Continuing operations $0.01 $0.04
SHARES OUTSTANDING 6/30/96 6,639,403 1,800,000 8,439,403
===============================================================================
NOT REPORTED AS A WEIGHTED AVERAGE PER GAAP
</TABLE>
9
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TOPRO INC., AND SUBSIDIARIES
ASSUMPTIONS
PURCHASE OF ACS
(UNAUDITED)
<TABLE>
<S> <C> <C> <C>
INCOME STATEMENT ADJUSTMENTS - 9/30/96
Goodwill amortization 77,388
INCOME STATEMENT ADJUSTMENTS - 06/30/96
Goodwill amortization - yearly 15 Years 309,554
STOCK EXCHANGED & GOODWILL
Assets 5,141,252
Liability (5,734,557)
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Net assets purchased (593,305)
Total Shares 1,800,000 2.25 4,050,000
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Total goodwill 09/30/96 4,643,305
============
EQUITY
Common stock, par value $.0001 per share;
ACS common stock 1,375
ACS shares issued 1,800,000 0.0001 (180)
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1,195
============
ADDITIONAL PAID-IN CAPITAL
ACS additional paid in capital (126,101)
ACS shares issued 1,800,000 2.25 4,050,000
ACS shares issued 1,800,000 .0001 (180)
------------
3,923,719
============
RETAINED EARNINGS RECONCILIATION
ACS Common Stock (1,375)
ACS additional paid in capital (126,101)
ACS retained earnings 720,781
Registrant's common stock 4,050,000
Goodwill Adjustment (77,388)
Adjustment to equity 4,565,917
============
</TABLE>
10
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EXHIBIT INDEX
<TABLE>
<CAPTION>
No. Description
---- -----------
<S> <C>
2.1* Agreement of Merger dated December 31, 1996.
</TABLE>
- ----------
* Previously filed.
