SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
AMENDMENT NO. 1 TO
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 5, 1996
Response USA, INC.
Exact name of registrant as specified in charter
Delaware 0-20770 52-1441922
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
11-K Princess Road, Lawrenceville, NJ 08648
(Adress of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code (609) 896-4500
(Former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets.
On June 5, 1996 Response USA, Inc. ("the Company"), through its wholly-owned
subsidiary, United Security Associates, Inc. ("USA"), completed the acquisition
of 571 electronic security monitoring accounts and related agreements, equip-
ment, and inventory of Alarm Data, Inc., a Delaware corporation ("ADI"). In
consideration of the acquisition, the Company paid ADI $352,462.53 (of which
$74,370.8 was held back to secure ADI's performance of the warranties, and
representations as set forth in the Asset Purchase Agreement.
EXHIBITS
Exhibit 1 Asset Purchase Agreement by and among Response USA,
Inc., United Security Associates, Inc., and Alarm
Data Inc (previously filed).
Exhibit 2 Financial Statements
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The following unaudited pro forma combined statements of operations for the
nine months ended March 31, 1996 and 1995, give effect to the Company's acqui-
sitions of Alarm Data, Inc. as of June 5, 1996 (ADI), Shelton Security, Inc. as
of March 14, 1996 (SSI), MSG Security Systems, Inc. as of February 26, 1996
(MSG), and Monitoring Acquisition Corp. as of February 29, 1996 (MAC) as if
such acquisitions had been completed at July 1, 1994. The historical informa-
tion pertaining to ADI, SSI, MSG, MAC is for the period prior to their respec-
tive dates of acquisition. The pro forma information is based on the histori-
cal financial statements of the Company, ADI, SSI, MSG and MAC, giving effect
to the transactions under the purchase method of accounting and the assumptions
and adjustments described in the accompanying notes to the unaudited pro forma
financial statements. The following unaudited pro forma combined balance sheet
gives effect to the Company's acquisition of ADI, SSI, MSG, and MAC as if such
acquisitions had been completed at March 31, 1996. In the preparation of the
pro forma combined balance sheet, the columns pertaining to ADI, SSI, MSG, and
MAC contain information as to the assets and the liabilities acquired as of
their respective dates of acquisition.
These pro forma statements of operations may not be indicative of the results
that actually would have occurred if the acquisitions had occurred on July 1,
1994.
<TABLE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED MARCH 31, 1995
<CAPTION>
Historical Pro Forma
-------------------------------------------------- -------------------------
Response ADI SSI MSG MAC Adjust. Combined
-------------------------------------------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES
Product sales $3,785,543 $213,951 $282,545 $68,774 $4,350,813
Services 2,412,469 179,105 715,744 110,015 $140,548 3,557,881
Finance and rentals 745,243 7,192 23,625 776,060
-------------------------------------------------- ---------- ------------
6,943,255 393,056 1,005,481 202,414 140,548 0 8,684,754
-------------------------------------------------- ---------- ------------
COST OF REVENUES
Product sales 2,375,608 173,835 189,305 37,003 2,775,751
Services and rentals 626,933 413,984 30,216 22,148 (159,617)(G) 933,664
-------------------------------------------------- ---------- ------------
3,002,541 173,835 603,289 67,219 22,148 (159,617) 3,709,415
-------------------------------------------------- ---------- ------------
GROSS PROFIT 3,940,714 219,221 402,192 135,195 118,400 159,617 4,975,339
-------------------------------------------------- ---------- ------------
OPERATING EXPENSES
Selling, general and administrative 5,110,309 207,411 368,913 118,413 96,594 (34,522)(G) 5,867,118
Depreciation and amortization 834,172 4,578 2,679 1,163 72,775 (72,775)(A) 1,194,836
352,244 (B)
Termination benefits cost (392,699) (392,699)
Interest 703,356 1,082 1,130 1,310 69,838 (72,278)(C) 1,260,912
556,474 (D)
-------------------------------------------------- ---------- ------------
6,255,138 213,071 372,722 120,886 239,207 729,143 7,930,167
-------------------------------------------------- ---------- ------------
INCOME (LOSS) FROM OPERATIONS (2,314,424) 6,150 29,470 14,309 (120,807) (569,526) (2,954,828)
INTEREST INCOME 33,082 2,405 630 (18,525)(E) 17,592
-------------------------------------------------- ---------- ------------
NET INCOME (LOSS) BEFORE INCOME TAXES (2,281,342) 6,150 31,875 14,309 (120,177) (588,051) (2,937,236)
INCOME TAXES 3,825 3,125 (6,950)(F) 0
-------------------------------------------------- ---------- ------------
NET INCOME (LOSS) ($2,281,342) $6,150 $28,050 $11,184 ($120,177) ($581,101) ($2,937,236)
================================================== ========== ============
LOSS PER COMMON SHARE ($4.00) ($5.03)
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 570,742 12,787 (H) 583,529
============ ========== ============
</TABLE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(A) To eliminate amortization of monitoring contracts and organization costs
purchased from MAC.
(B) To provide for amortization on the net increase of purchased monitoring
contracts. Monitoring contracts purchased from ADI, SSI, MSG, and MAC
are amortized using the straight-line method over the ten-year estimated
lives.
(C) To eliminate interest expense on debt not acquired
(D) To record additional interest expense on debt incurred in acquisitions.
(E) To reduce the Company's interest income due to the use of funds for the
acquisitions.
(F) To eliminate the current tax provision for SSI and MSG.
(G) To reduce expenses to contracted amounts under a monitoring agreement.
(H) In calculating earnings per share, effect has been given to the shares
issued in the acquisition of MAC.
<TABLE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1996
<CAPTION>
Historical Pro Forma
-------------------------------------------------- ---------------------------
Response ADI SSI MSG MAC Adjustments Combined
-------------------------------------------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash $840,097 $13,543 $95,260 $1,635 (110,438)(A) $840,097
Marketable securities 118,750 118,750
Accounts receivable 1,839,400 6,133 72,398 19,727 $55,920 (182,991)(A) 1,810,587
Note receivable 99,338 99,338
Loan receivable 60,000 (60,000)(A) 0
Inventory 730,315 9,600 13,000 3,500 (17,600)(A) 738,815
Prepaid expenses and other
current assets 231,891 995 8,900 525 (10,420)(A) 231,891
-------------------------------------------------- ------------ ------------
Total current assets 3,859,791 30,271 189,558 25,387 115,920 (381,449) 3,839,478
-------------------------------------------------- ------------ ------------
MONITORING CONTRACT COSTS - Net of
accumulated amortization 16,944,084 1,228,786 (856,932)(A) 17,315,938
-------------------------------------------------- ------------ ------------
PROPERTY AND EQUIPMENT - Net of
accumulated amortization and
depreciation 1,222,162 7,219 15,711 5,660 (4,090)(A) 1,246,662
-------------------------------------------------- ------------ ------------
OTHER ASSETS
Accounts receivable 341,648 341,648
Note receivable 85,142 85,142
Loan to shareholder 15,057 99,464 (114,521)(A) 0
Deposits 32,535 50,381 (50,381)(A) 32,535
Organization costs 1,268)(A) 1,281,165
Deferred revenue 1,515,254 28,253 16,055 49,821 (74,096)(A) 1,535,287
-------------------------------------------------- ------------ ------------
Total current liabilities 7,524,075 50,653 213,022 75,567 504,530 (745,823) 7,622,024
-------------------------------------------------- ------------ ------------
LONG-TERM LIABILITIES - Net of current
portion
Long-term debt 12,525,179 905,667 (627,575)(A) 12,803,271
Purchase holdbacks 72,619 72,619
Deferred revenue 10,252 10,252
-------------------------------------------------- ------------ ------------
12,608,050 0 0 0 905,667 (627,575) 12,886,142
-------------------------------------------------- ------------ ------------
STOCKHOLDERS' EQUITY
Common stock 15,516 1,000 2,000 100 500 (3,600)(A) 15,516
Additional paid-in capital 14,513,160 1,268)(A) 1,281,165
Deferred revenue 1,515,254 28,253 16,055 49,821 (74,096)(A) 1,535,287
-------------------------------------------------- ------------ ------------
Total current liabilities 7,524,075 50,653 213,022 75,567 504,530 (745,823) 7,622,024
-------------------------------------------------- ------------ ------------
LONG-TERM LIABILITIES - Net of current
portion
Long-term debt 12,525,179 905,667 (627,575)(A) 12,803,271
Purchase holdbacks 72,619 72,619
Deferred revenue 10,252 10,252
-------------------------------------------------- ------------ ------------
12,608,050 0 0 0 905,667 (627,575) 12,886,142
-------------------------------------------------- ------------ ------------
STOCKHOLDERS' EQUITY
Common stock 15,516 1,000 2,000 100 500 (3,600)(A) 15,516
Additional paid-in capital 14,513,160 14,513,160
Unrealized holding loss on available-
for-sale securities (174,593) (174,593)
Accumulated deficit (11,643,980) 51,275 89,711 (44,620) (65,421) (30,945)(A)(11,643,980)
-------------------------------------------------- ------------ ------------
2,710,103 52,275 91,711 (44,520) (64,921) (34,545) 2,710,103
-------------------------------------------------- ------------ ------------
$22,842,228 $102,928 $304,733 $31,047 $1,345,276 ($1,407,943) $23,218,269
================================================== ============ ============
</TABLE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(A) To reflect the acquisitions of ADI,SSI, MSG and MAC as if the acquisi-
tions had been completed on March 31, 1996.
<TABLE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED MARCH 31, 1996
<CAPTION>
Historical Pro Forma
-------------------------------------------------- ---------------------------
Response ADI SSI MSG MAC Adjust. Combined
-------------------------------------------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES
Product sales $1,984,146 $211,038 $149,418 $38,015 $2,382,617
Services 4,689,132 177,203 657,744 113,810 $332,820 5,970,709
Finance and rentals 1,361,762 7,968 19,007 1,388,737
-------------------------------------------------- ------------ ------------
8,035,040 388,241 815,130 170,832 332,820 0 9,742,063
-------------------------------------------------- ------------ ------------
COST OF REVENUES
Product sales 1,409,579 156,581 100,110 22,441 1,688,711
Services and rentals 1,098,089 388,968 25,058 53,900 (130,402)(G) 1,435,613
-------------------------------------------------- ------------ ------------
2,507,668 156,581 489,078 47,499 53,900 (130,402) 3,124,324
-------------------------------------------------- ------------ ------------
GROSS PROFIT 5,527,372 231,660 326,052 123,333 278,920 130,402 6,617,739
-------------------------------------------------- ------------ ------------
OPERATING EXPENSES
Selling, general and administrative 4,329,022 242,343 306,684 116,762 50,068 (50,357)(G) 4,994,522
Depreciation and amortization 1,602,071 2,366 3,065 1,162 100,357 (100,357)(A) 1,924,869
316,205 (B)
Interest 2,282,864 576 1,200 1,300 114,116 (116,616)(C) 2,794,934
511,494 (D)
-------------------------------------------------- ------------ ------------
8,213,957 245,285 310,949 119,224 264,541 560,369 9,714,325
-------------------------------------------------- ------------ ------------
INCOME (LOSS) FROM OPERATIONS (2,686,585) (13,625) 15,103 4,109 14,379 (429,967) (3,096,586)
INTEREST INCOME 18,512 3,010 (9,839)(E) 11,683
-------------------------------------------------- ------------ ------------
NET INCOME (LOSS) BEFORE INCOME TAXES (2,668,073) (13,625) 18,113 4,109 14,379 (439,806) (3,084,903)
INCOME TAXES 2,200 800 (3,000)(F) 0
-------------------------------------------------- ------------ ------------
NET LOSS ($2,668,073)($13,625) $15,913 $3,309 $14,379 ($436,806) ($3,084,903)
================================================== ============ ============
LOSS PER COMMON SHARE ($2.37) ($2.49)
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 1,123,536 112,989 (H) 1,236,525
============ ============ ============
</TABLE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(A) To eliminate amortization of monitoring contracts and organization costs
purchased from MAC.
(B) To provide for amortization on the net increase of purchased monitoring
contracts. Monitoring contracts purchased from ADI, SSI, MSG, and MAC
are amortized using the straight-line method over the ten-year estimated
lives.
(C) To eliminate interest expense on debt not acquired
(D) To record additional interest expense on debt incurred in acquisitions.
(E) To reduce the Company's interest income due to the use of funds for the
acquisitions.
(F) To eliminate the current tax provision for SSI and MSG.
(G) To reduce expenses to contracted amounts under a monitoring agreement.
(H) In calculating earnings per share, effect has been given to the shares
issued in the acquisition of MAC.
STOCKHOLDER
ALARM DATA, INC. OF DELAWARE
NEWARK, DELAWARE
Independent Auditors' Report
We have audited the accompanying balance sheets of ALARM DATA, INC. OF
DELAWARE as of May 31, 1996 and 1995 and the related statements of operations
and retained earnings and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our responsi-
bility is to express an opinion on these financial statements based on our
audits.
We conducted our audits 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 audits provide 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 ALARM DATA, INC. OF
DELAWARE as of May 31, 1996 and 1995 and the results of its operations and its
cash flows for the years then ended in conformity with generally accepted
accounting principles.
by:/s/Simon, Master and Sidlow, P.A.
Wilmington, Delaware
August 8, 1996
ALARM DATA, INC. OF DELAWARE
----------------------------
BALANCE SHEETS
--------------
ASSETS
------
May 31,
-----------------------
1996 1995
--------- ---------
CURRENT ASSETS
Cash $ 15,079 $ 5,863
Inventory 8,976 12,719
Accounts receivable 4,970 11,945
Refundable income taxes 995 995
---------- ---------
30,020 31,522
---------- ---------
PROPERTY AND EQUIPMENT - at cost
Equipment 29,507 29,507
Office furniture 2,478 2,478
Transportation equipment 53,818 53,818
Leasehold improvements 5,297 5,297
--------- ---------
91,100 91,100
Less accumulated depreciation 84,671 81,515
--------- ---------
6,429 9,585
--------- ---------
OTHER ASSETS
Deposits 50,381 40,117
Loan receivable - Stockholder 15,057 15,057
--------- ---------
65,438 55,174
--------- ---------
$ 101,887 $ 96,281
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
May 31,
----------------------
1996 1995
--------- ---------
CURRENT LIABILITIES
Accounts payable $ 33,877 $ 6,933
Payroll taxes payable 16,586 12,796
Current maturities of long-term debt 3,690 6,962
--------- ---------
54,153 26,691
LONG-TERM DEBT, less current maturities 3,690
--------- ---------
54,153 30,381
--------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY
Common stock, no par value, authorized
100 share issued and outstanding 10 shares
stated at 1,000 1,000
Retained earnings 46,734 64,900
--------- ---------
47,734 65,900
--------- ---------
$ 101,887 $ 96,281
========= =========
See notes to financial statements.
ALARM DATA, INC. OF DELAWARE
----------------------------
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
----------------------------------------------
Year ended May 31,
-----------------------
1996 1995
--------- ---------
REVENUE $ 517,655 $ 524,074
--------- ---------
COST OF GOODS SOLD
Inventory - Beginning of year 12,719 20,682
Purchases 205,032 223,817
--------- ---------
217,751 244,499
Inventory - End of year 8,976 12,719
--------- ---------
208,775 231,780
--------- ---------
GROSS PROFIT 308,880 292,294
OPERATING EXPENSES 327,046 284,095
--------- ---------
NET INCOME (LOSS) ( 18,166) 8,199
RETAINED EARNINGS
Beginning of year 64,900 56,701
--------- ---------
End of year $ 46,734 $ 64,900
========= =========
See notes to financial statements.
ALARM DATA, INC. OF DELAWARE
----------------------------
STATEMENTS OF CASH FLOWS
----------------------------
Year ended May 31,
----------------------
1996 1995
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers $ 524,629 $ 516,474
Cash paid to suppliers and employees ( 497,420) ( 494,645)
Interest paid ( 768) ( 1,443)
--------- ---------
Net cash provided by operating activities 26,441 20,386
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash advances on mortgage ( 10,263) ( 11,196)
--------- ---------
Net cash used by investing activities ( 10,263) ( 11,196)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of debt ( 6,962) ( 6,287)
--------- ---------
Net cash used by financing activities ( 6,962) ( 6,287)
--------- ---------
NET INCREASE IN CASH 9,216 2,903
CASH
Beginning of year 5,863 2,960
--------- ---------
End of year $ 15,079 $ 5,863
========= =========
RECONCILIATION OF NET INCOME (LOSS) TO
NET CASH PROVIDED BY OPERATING ACTIVITIES
Net income (loss) ($ 18,166) $ 8,199
Adjustments to reconcile net income (loss)
to net cash provided by operating activities
Depreciation 3,155 6,104
(Increase) decrease in accounts receivable 6,975 ( 7,600)
Decrease in inventory 3,743 7,963
Increase in accounts payable 26,944 2,967
Increase in payroll taxes 3,790 2,753
--------- ---------
44,607 12,187
--------- ---------
Net cash provided by operating activities $ 26,441 $ 20,386
========= =========
See notes to financial statements.
ALARM DATA, INC. OF DELAWARE
----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
YEARS ENDED MAY 31, 1996 AND 1995
---------------------------------
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Nature of Operations -- The Company is engaged primarily in the retail sales
and service of alarm systems in Delaware.
2. Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenue
and expenses during the reporting period. Actual results could differ
from those estimates.
3. Depreciation -- Depreciation of property and equipment is provided by the
use of the accelerated cost recovery system prior to January 1, 1987.
For assets acquired after December 31, 1986 the modified accelerated
recovery system (MACRS) of depreciation is used. The write-off period
under ACRS and MACRS is shorter than the estimated useful lives for
certain assets and, accordingly, the depreciation expense is higher in
early years. This additional expense does not materially affect the
amount of total depreciation expense reported in the financial state-
ments.
4. Amortization -- Customer leases and organization cost are being amortized
over a four year and a five year period, respectively, by use of the
straight-line method.
5. Inventory -- Inventory is stated at lower of cost (first-in first-out
method) or market.
6. Income Taxes -- Effective June 1, 1987, the Corporation elected S Corpor-
ation status under the Internal Revenue Code and will be treated as a
partnership, instead of a corporation for income tax purposes. As a
result, the stockholder reports the entire corporate taxable income on
his individual return. Retained earnings of $46,045 have been accumulated
in years prior to the Subchapter S election and would be taxed to the
stockholder in the event of subsequent distributions.
B. LONG-TERM DEBT
1996 1995
-------- --------
Delaware Trust - 9.75% payable in monthly
installments of $325, which includes
interest, until December 1996
collateralized by automobile $ 2,135 $ 5,637
Delaware Trust - 10.75% payable in monthly
installments of $319, which includes
interest, until October 1996
collateralized by automobile 1,555 5,015
------- -------
3,690 10,652
Less current maturities 3,690 6,962
------- -------
$ -0- $ 3,690
======= =======
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 under-
signed thereunto duly authorized.
RESPONSE USA, INC.
------------------
(registrant)
Dated: August 15, 1996 By:/s/RICHARD M. BROOKS
--------------------
Richard M. Brooks,
President
