SCHEDULE 13E-4
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 30549
ISSUER TENDER OFFER STATEMENT
(Pursuant to Section 13(e)(1) of the Securities Exchange Act of 1934)
AMENDMENT NO. 1
INDUSTRIAL HOLDINGS, INC.
(Name of Issuer)
INDUSTRIAL HOLDINGS, INC.
(Name of Person(s) Filing Statement)
Class A Redeemable Common Stock Purchase Warrants
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of the Person(s)
Filing Statement)
================================================================================
Transaction Valuation(1) Amount of Filing Fee
$3,795,000 $759.00
================================================================================
(1) Calculated in accordance with Rule 0-11(b), on the basis of 632,500 Class
A Redeemable Common Stock Purchase Warrants outstanding as of November 6,
1996, which were valued at the exercise price of $6.00 per warrant.
[ X ] Check box if any part of the fee is offset as provided by Rule
0-11 (a)(2) and identify the filing with which the offsetting fee
was previously paid. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
Amount Previously Paid: $9,609.64
Form or Registration No.: 333-13323
Filing Party: Industrial Holdings, Inc.
Date Filed: October 2, 1996
<PAGE>
This Amendment No. 1 to Schedule 13E-4 relates to an offer (the
"Offer") by Industrial Holdings, Inc. (the "Company"), upon the terms and
conditions set forth in the Offering Circular- Prospectus, dated November 12,
1996, (the "Offering Circular-Prospectus"), a copy of which is filed as Exhibit
9(a) (2) hereto, to the holders ("Warrantholders") of its issued and outstanding
Class A Redeemable Common Stock Purchase Warrants ("Class A Warrants") to
exchange each Class A Warrant and $6.00 cash for one share of the Company's
Common Stock, $.01 par value, one Class B Redeemable Common Stock Purchase
Warrant ("Class B Warrant"), and one Class C Redeemable Common Stock Purchase
Warrant ("Class C Warrant"), commencing on November 12, 1996 and ending on
December 13, 1996, (the "Expiration Date") unless extended.
The Offering-Circular Prospectus contains certain information relating
to the Company's business, management and financial condition and is
incorporated herein by this reference. The Offering Circular-Prospectus is part
of the Company's Amendment No. 1 to its Registration Statement on Form S-1,
which was declared effective by the Securities and Exchange Commission on
November 12, 1996. The Offering Circular-Prospectus relates to up to an
aggregate of 1,265,000 Class B and Class C Warrants to be issued in the Offer
and to the issuance of up to 2,530,000 shares of the Company's Common Stock upon
exercise of the Class A Warrants (632,500 shares), currently outstanding Class B
Warrants (632,500 shares), and Class B and Class C Warrants to be issued in the
Offer (1,265,000 shares).
ITEM 7. FINANCIAL INFORMATION.
Item 7 is being supplemented as follows: The materials referred to in
(a)(2) and (4) of this Item are set forth below. Those sections require
the requested financial information included in the most recent
quarterly report filed under the Securities Exchange Act of 1934.
2
<PAGE>
INDUSTRIAL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
September 30 December 31
1996 1995
------------ -----------
ASSETS
Current assets:
Cash and equivalents ............................ $ 1,131,091 $ 428,430
Accounts receivable - trade, net ................ 6,026,847 5,640,253
Inventories ..................................... 8,781,641 7,945,871
Equipment held for sale ......................... 100,000 275,000
Advances to shareholders ........................ 17,436 65,210
Notes receivable, current portion ............... 284,058 259,452
Other current assets ............................ 494,726 267,330
----------- -----------
Total current assets ......................... 16,835,799 14,881,546
Property and equipment, net ........................ 10,258,069 9,125,422
Notes receivable ................................... 1,249,150 1,475,956
Other assets ....................................... 151,698 127,658
Goodwill, net ...................................... 1,830,758 1,882,974
----------- -----------
Total assets ................................. $30,325,474 $27,493,556
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable ................................... $ 6,500,295 $ 6,688,570
Accounts payable - trade ........................ 4,609,891 4,748,339
Accrued expenses and other ...................... 1,049,947 1,213,176
Current portion of long-term debt ............... 1,135,751 772,858
----------- -----------
Total current liabilities ................ 13,295,884 13,422,943
Long-term debt, less current portion ............... 4,252,190 5,890,849
Deferred income taxes payable ...................... 819,120 576,771
----------- -----------
Total liabilities ............................ 18,367,194 19,890,563
----------- -----------
Shareholders' equity:
Common stock, $.01 par value, 20,000,000
shares authorized 4,081,580 and 3,091,162
shares issued and outstanding ................ 40,816 30,912
Additional paid-in capital ...................... 11,134,824 7,553,662
Retained earnings ............................... 782,640 18,419
----------- -----------
Total shareholders' equity ................... 11,958,280 7,602,993
----------- -----------
Total liabilities and shareholders' equity ......... $30,325,474 $27,493,556
=========== ===========
Book value per share ............................... $ 2.93 $ 2.46
=========== ===========
3
<PAGE>
INDUSTRIAL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Nine Months ended September 30
1996 1995
------------ -------------
Sales ...................................... $ 38,497,695 $ 28,795,285
Cost of sales .............................. 29,974,770 22,508,781
------------ ------------
Gross profit ............................... 8,522,925 6,286,504
Operating expenses
Selling, general and administrative ..... 6,185,391 4,860,405
Depreciation and amortization ........... 293,425 308,027
------------ ------------
Total operating expenses ............. 6,478,816 5,168,432
Income from operations ..................... 2,044,109 1,118,072
Other income
Interest expense ........................ (960,340) (726,998)
Other income ............................ 93,492 165,881
------------ ------------
Total other income (expenses) ........ (866,848) (561,117)
Income before income taxes ................. 1,177,261 556,955
Income tax expense ......................... 413,040 73,049
------------ ------------
Net income ................................. $ 764,221 $ 483,906
============ ============
Earnings per share $ .19 $ .16
============ =============
4
<PAGE>
INDUSTRIAL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months
ended September 30
1996 1995
----------- ---------
Cash flows from operating activities:
Net income ...................................... $ 764,221 $ 483,906
Adjustments to reconcile net income
to net cash provided (used) by operating
activities:
Depreciation and amortization ................ 912,348 621,324
Deferred income tax provision ................ 242,349 73,049
Loss on sales of equipment ................... -- 14,768
Changes in current assets and liabilities:
Accounts receivable and advances to
shareholders ............................. (347,643) (898,502)
Inventory .................................. (835,770) (68,515)
Notes receivable ........................... 202,200 5,688
Other current assets ....................... (251,436) (159,067)
Accounts payable and accrued expenses ...... (301,677) 272,329
----------- ---------
Net cash provided by operating activities .. 384,592 344,980
Cash flows from investing activities:
Purchase of property and equipment .............. (1,752,269) (496,211)
Additional consideration paid to former
shareholders of LEC and PVS .................. (99,396) (202,629)
----------- ---------
Net cash used by investing activities ....... (1,851,665) (698,840)
----------- ---------
Cash flows from financing activities:
Net borrowings under revolving
line of credit ............................. 708,396 86,446
Proceeds from long-term debt .................... 468,361 --
Principal payments on notes payable,
long-term debt and capital lease obligations . (1,021,698) (103,301)
Proceeds from issuance of common stock .......... 2,014,675 261,300
----------- ---------
Net cash provided by financing activities ..... 2,169,734 244,445
----------- ---------
Net increase (decrease) in cash and equivalents .... 702,661 (109,415)
Cash and equivalents, beginning of period .......... 428,430 188,627
----------- ---------
Cash and equivalents, end of period ................ $ 1,131,091 $ 79,212
=========== =========
Non-cash financing activities:
Debt converted to equity ........................ $ 1,619,100
5
<PAGE>
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Item 9 is being supplemented as follows:
(a)(2) Offering Circular-Prospectus Supplement dated November 25,
1996, to Offering Circular-Prospectus dated November 12, 1996.
(b)(4) Corrected press release issued by the Company on November 12,
1996.
6
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
DATED: November 25, 1996
INDUSTRIAL HOLDINGS, INC.
By: /s/ CHRISTINE A. SMITH
Christine A. Smith
Vice President and
Chief Financial Officer
<PAGE>
ITEM 9.(A)(2)
OFFERING CIRCULAR - PROSPECTUS SUPPLEMENT
(TO OFFERING CIRCULAR-PROSPECTUS DATED NOVEMBER 12, 1996)
INDUSTRIAL HOLDINGS, INC.
OFFER TO EXCHANGE ONE CLASS A REDEEMABLE WARRANT FOR
ONE SHARE OF COMMON STOCK, ONE CLASS B REDEEMABLE WARRANT AND
ONE CLASS C REDEEMABLE WARRANT
================================================================================
THIS OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE ON DECEMBER 13,
1996 AT 5:00 P.M., NEW YORK CITY TIME, UNLESS EXTENDED
================================================================================
CONSUMMATION OF THE AMERICAN ACQUISITION
On November 18, 1996, Industrial Holdings, Inc. (the "Company") acquired
all of the capital stock of American Rivet Company, Inc. ("American"), formerly
a primary competitor of its subsidiary Landreth Engineering Company ("LEC"), for
a purchase price of $11.2 million (the "American Acquisition").
The first paragraph of "Recent Developments" on page 5 of the Offering
Circular-Prospectus, dated November 12, 1996 (the "Offering
Circular-Prospectus), the second paragraph of "Use of Proceeds" on page 21 of
the Offering Circular-Prospectus, the paragraph titled "Recent Developments"
under "Management's Discussion and Analysis of Financial Condition and Results
of Operations" on page 34 and the paragraph titled "Recent Developments" on page
40 of the Offering Circular-Prospectus are hereby amended and replaced to read
in their entirety as follows:
"On November 18, 1996, Industrial Holdings, Inc. (the "Company") acquired
all of the capital stock of American Rivet Company, Inc. ("American"), formerly
a primary competitor of its subsidiary Landreth Engineering Company ("LEC"), for
a purchase price of $11.2 million (the "American Acquisition"). The American
Acquisition purchase price was funded with cash and marketable securities of
American, $1.8 million 8.25% term debt secured by American's machinery and
equipment, $3.5 million 12% demand notes from a private source ("Bridge
Financing"), a $2.0 million 8.25% demand note payable to Comerica Bank-Texas and
secured by inventory and equipment of the Company and a $1.7 million 8.25%
demand note and line of credit payable to Comerica Bank-Texas, secured by the
inventory and receivables of American (the "Demand Note"). The Company
anticipates that $1.6 million of the Bridge Financing will be replaced by the
proceeds from term debt to be entered into subsequent to the completion of the
American Acquisition and secured by the real estate of American and that the
remaining $1.9 million Bridge Financing will be repaid through future debt or
equity financing. The Company anticipates that it will use the majority of the
estimated $3,695,000 net proceeds from the exercise of the Class A Warrants to
repay the Company's Demand Note incurred in connection with the American
Acquisition."
The third sentence of the second paragraph of "Recent Developments" on
page 5 of the Offering Circular-Prospectus is hereby amended and replaced to
read as follows:
"Net sales of American were $8.7 million for its fiscal year ended August
31, 1996."
The date of this Offering Circular-Prospectus Supplement is November 25,
1996.
<PAGE>
SELECTED OPERATIONAL AND FINANCIAL DATA
The Company reported net income of $205,794 for the quarter ended
September 30, 1996 as compared to net income of $129,817 for the quarter ended
September 30, 1995. Net income was $764,221 for the nine months ended September
30, 1996 compared to $483,906 for the nine months ended September 30, 1995.
Sales for the quarter and nine months ended September 30, 1996 were $12,870,367
and $38,497,695, respectively compared to sales for the quarter and nine months
ended September 30, 1995 of $9,072,490 and $28,795,285, respectively.
At September 30, 1996, the Company had working capital of $3,539,915,
long-term debt of $4,252,190 and shareholders' equity of $11,958,280.
QUARTER ENDED SEPT. 30 NINE MONTHS ENDED SEPT. 30
---------------------- --------------------------
(UNAUDITED) (UNAUDITED)
OPERATIONS DATA:
(IN THOUSANDS EXCEPT EPS) .. 1996 1995 1996 1995
---- ---- ---- ----
SALES ...................... $12,870 $9,072 $38,498 $28,795
OPERATING INCOME ........... 573 352 2,044 1,118
INCOME BEFORE
INCOME TAXES ............... 332 169 1,177 557
INCOME TAX EXPENSE ......... 126 39 413 73
NET INCOME ................. 206 130 764 484
EARNINGS PER SHARE ......... $ .05 $ .04 $ .19 $ .16
WEIGHTED AVERAGE COMMON AND
COMMON STOCK EQUIVALENTS ... 4,559 3,151 4,102 3,102
BALANCE SHEET DATA SEPTEMBER 30, 1996 DECEMBER 31, 1995
(IN THOUSANDS) ------------------ -----------------
WORKING CAPITAL ............. $ 3,540 $ 1,459
TOTAL ASSETS ................ 30,325 27,494
LONG-TERM OBLIGATIONS ....... 4,252 5,891
TOTAL LIABILITIES ........... 18,367 19,891
SHAREHOLDERS' EQUITY ........ 11,958 7,603
BOOK VALUE PER SHARE ........ $ 2.93 $ 2.46
Holders of Class A Warrants wishing to receive a copy of the Company's
Report on Form 10-Q for the quarter ended September 30, 1996 (the "Form 10-Q")
may obtain one without charge by making a written request to Deborah Bonefas,
Industrial Holdings, Inc., 7135 Ardmore, Houston, Texas 77054 or by calling Ms.
Bonefas at (713) 747-1025. In addition, the Form 10-Q may be inspected and
copied at the public reference facilities maintained by the Commission at the
address set forth under "Available Information" in the Offering
Circular-Prospectus.
2
<PAGE>
ITEM 9.(B)(4)
FOR IMMEDIATE RELEASE FOR INFORMATION CONTACT
ALL NAMES VERIFIED ROBERT E. CONE, CEO
(713) 747-1025
INDUSTRIAL HOLDINGS, INC.
COMMENCES OFFER TO
CLASS A REDEEMABLE WARRANTHOLDERS
HOUSTON, TX (NOVEMBER 12, 1996) - Industrial Holdings, Inc. (NASDAQ/NMS-IHII)
announces today that it has commenced its offer (the "Offer") to the holders of
its Class A Redeemable Warrants to exchange each Class A Warrant and $6.00 for
one share of IHI Common Stock and, as an incentive, one new Class B Redeemable
Warrant and one newly created Class C Redeemable Warrant. Each Class B
Redeemable Warrant and each Class C Redeemable Warrant will be exercisable and
entitle the holder to purchase one share of Common Stock at an exercise price of
$10.00 and $15.00, respectively. The Class B and Class C Redeemable Warrants
will expire January 14, 1999. However, each Class B Redeemable Warrant and Class
C Redeemable Warrant may be sooner redeemed by the Company, if for a period of
20 consecutive trading days the closing bid price of the Common Stock equals or
exceeds $12.00 per share and $20.00 per share, respectively. In addition, the
expiration date of the currently outstanding Class B Redeemable Warrants has
been extended to January 14, 1999.
The Offer and withdrawal rights will expire on December 13, 1996 at 5:00 p.m.,
New York City time, unless extended.
Industrial Holdings is a holding company organized to operate light-niche
manufacturing and distribution companies, with growth potential internally and
by acquisition.
