<PAGE>
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) February 29, 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
- --------------------------------------------------------------------------------
(Address 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)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On February 26, 1996, Response USA, Inc. (the "Company"), through
its wholly-owned subsidiary, United Security Systems, Inc. ("USS"), completed
the acquisition of all of the outstanding capital stock of MSG Security Systems,
Inc., a Pennsylvania corporation ("MSG"), in exchange for $404,070.60 (of which
$60,160.59 was paid by the issuance of a promissory note bearing interest at the
rate of 10% per annum, payable in August (30%), September (30%) and October
(40%) 1996). MSG is engaged in the installation, servicing and monitoring of
electronic security systems. Substantially all of MSG's assets and liabilities
except its monitoring accounts were retained by the former stockholders of MSG.
On February 29, 1996, the Company, through USS, completed the
acquisition of 1,853 electronic security monitoring and leasing accounts and
related agreements and outstanding accounts receivable of Monitoring
Acquisitions Corp., a Pennsylvania corporation ("MAC"). In consideration of the
acquisition, the Company paid MAC $1,598,347.80 and issued and aggregate of
127,868 shares of the Company's common stock, with certain registration rights.
The principal of MAC, Alan B. Lundy, also entered into a non-competition
agreement with USS.
EXHIBITS
Exhibit 1 Asset Purchase Agreement by and among Response USA, Inc.,
United Security Systems, Inc. and Monitoring Acquisitions
Corp. (previously filed).
Exhibit 2 Stock Purchase Agreement by and among United Security Systems,
Inc., Melvin S. Goldberg and Susan S. Goldberg (previously
filed).
Exhibit 3 Financial Statements - filed herewith.
2
<PAGE>
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
undersigned thereunto duly authorized.
RESPONSE USA, INC.
(registrant)
Dated: May 13, 1996 By:/s/RICHARD M. BROOKS
------------------------
Richard M. Brooks,
President
3
<PAGE>
EXHIBIT 3
4
<PAGE>
MSG SECURITY SYSTEMS, INC.
T/A AMERICAN SECURITY SYSTEMS, INC.
FINANCIAL STATEMENTS
JUNE 30, 1995
<PAGE>
MSG SECURITY SYSTEMS, INC.
T/A AMERICAN SECURITY SYSTEMS, INC.
FINANCIAL STATEMENTS
JUNE 30, 1995
TABLE OF CONTENTS
PAGE
----
INDEPENDENT AUDITOR'S REPORT 1
FINANCIAL STATEMENTS
Balance sheets as of June 30, 1994 and 1995 2
Statements of operations for the years ended
June 30, 1994 and 1995 3
Statements of stockholder's equity deficiency
for the years ended December 31, 1994 and 1995 4
Statements of cash flows for the years ended
June 30, 1994 and 1995 5
Notes to financial statements 6 - 8
<PAGE>
Stockholder and Director
MSG Security Systems, Inc.
T/A American Security Systems, Inc.
Elkins Park, Pennsylvania
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheets of MSG SECURITY SYSTEMS,
INC. T/A AMERICAN SECURITY SYSTEMS, INC. as of June 30, 1994 and 1995, and the
related statements of operations, stockholder's equity deficiency and cash flows
for each of the two years in the period ended June 30, 1995. 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 generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 MSG Security Systems, Inc.
T/A American Security Systems, Inc. as of June 30, 1994 and 1995, and the
results of its operations and its cash flows for each of the two years in the
period ended June 30, 1995, in conformity with generally accepted accounting
principles.
As described in Note 6, in March, 1996, the Company distributed to its
stockholder substantially all of its recorded net assets, and all of the
outstanding common stock of the Company was sold.
Elkins Park, Pennsylvania
April 24, 1996
/s/ FISCHBEIN & COMPANY, P.C.
1
<PAGE>
MSG SECURITY SYSTEMS, INC.
T/A AMERICAN SECURITY SYSTEMS, INC.
BALANCE SHEETS
ASSETS
June 30,
-----------------------
1994 1995
---------- ----------
CURRENT ASSETS
Cash $ 3,244 $ 9,011
Accounts receivable 24,150 37,792
Inventory 5,000 3,500
Prepaid expenses and other current assets 756 605
---------- ----------
Total current assets 33,150 50,908
PROPERTY AND EQUIPMENT - Net of
accumulated depreciation 3,695 2,146
---------- ----------
$ 36,845 $ 53,054
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY DEFICIENCY
CURRENT LIABILITIES
Accounts payable $ 10,678 $ 4,248
Accrued expenses and other current liabilities 4,950 11,407
Income taxes payable 3,729
Unearned revenue 37,289 41,399
Due to stockholder 45,000 40,000
---------- ----------
Total current liabilities 97,917 100,783
STOCKHOLDER'S EQUITY DEFICIENCY
Common stock - Par value $1
Authorized 1,000 shares
Issued and outstanding 200 shares 200 200
Deficit ( 61,272) ( 47,929)
---------- ----------
( 61,072) ( 47,729)
---------- ----------
$ 36,845 $ 53,054
========== ==========
See notes to financial statements.
Page 2
<PAGE>
MSG SECURITY SYSTEMS, INC.
T/A AMERICAN SECURITY SYSTEMS, INC.
STATEMENTS OF OPERATIONS
Year Ended June 30,
-----------------------
1994 1995
---------- ----------
OPERATING REVENUES
Services $ 163,223 $ 151,746
Product sales 116,787 114,044
---------- ----------
280,010 265,790
---------- ----------
DIRECT COSTS
Services 59,506 33,411
Product sales 47,296 44,882
---------- ----------
106,802 78,293
---------- ----------
GROSS PROFIT 173,208 187,497
---------- ----------
OPERATING EXPENSES
Selling, general and administrative 192,428 169,115
Interest 1,280 1,310
---------- ----------
193,708 170,425
---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES (BENEFIT) ( 20,500) 17,072
INCOME TAXES (BENEFIT) - Net of tax benefit
of $3,427 - 1995 from the use of net
operating loss carryforwards 3,729
---------- ----------
NET INCOME (LOSS) ($ 20,500) $ 13,343
========== ==========
See notes to financial statements.
Page 3
<PAGE>
MSG SECURITY SYSTEMS, INC.
T/A AMERICAN SECURITY SYSTEMS, INC.
STATEMENTS OF STOCKHOLDER'S EQUITY DEFICIENCY
Common
Stock Deficit Total
---------- ---------- ----------
BALANCE - JUNE 30, 1993 $ 200 ($ 40,772) ($ 40,572)
Net loss ( 20,500) ( 20,500)
---------- ---------- ----------
BALANCE - JUNE 30, 1994 200 ( 61,272) ( 61,072)
Net income 13,343 13,343
---------- ---------- ----------
BALANCE - JUNE 30, 1995 $ 200 ($ 47,929) ($ 47,729)
========== ========== ==========
See notes to financial statements.
Page 4
<PAGE>
MSG SECURITY SYSTEMS, INC.
T/A AMERICAN SECURITY SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash
<TABLE>
<CAPTION>
Year Ended June 30,
-----------------------
1994 1995
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) ($ 20,500) $ 13,343
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities
Depreciation 2,464 1,549
(Increase) decrease in accounts receivable 9,184 ( 13,642)
(Increase) decrease in inventory ( 2,500) 1,500
(Increase) decrease in prepaid expenses and
other current assets ( 366) 151
Increase (decrease) in accounts payable 617 ( 6,430)
Increase in accrued expenses and other
current liabilities 653 6,457
Increase in income taxes payable 3,729
Increase in unearned revenue 5,429 4,110
---------- ----------
Net cash provided by (used in) operating activities ( 5,019) 10,767
CASH FLOWS FROM INVESTING ACTIVITIES - None
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in due to stockholder - Net cash
used in financing activities ( 5,000)
---------- ----------
NET INCREASE (DECREASE) IN CASH ( 5,019) 5,767
CASH - BEGINNING 8,263 3,244
---------- ----------
CASH - ENDING $ 3,244 $ 9,011
========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for interest $ 1,280 $ 1,310
</TABLE>
See notes to financial statements.
Page 5
<PAGE>
MSG SECURITY SYSTEMS, INC.
T/A AMERICAN SECURITY SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business and Concentration of Credit Risk
The Company's operations consist principally of the sale, installation and
monitoring and maintenance services of security and fire alarm systems for
residential and commercial properties in the greater Philadelphia,
Pennsylvania area. Accounts receivable are from a large number of customers.
Use of Estimates
The presentation 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 revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Revenue Recognition
Revenues under contracts for monitoring and service are deferred and
recognized ratably over the contract period. The Company recognizes revenue
on the sale of alarm systems when installed.
Allowance for Doubtful Accounts
An allowance for doubtful accounts is provided by the Company, if necessary,
based on historical collection experience and a review of the current status
of accounts receivable. At June 30, 1994 and 1995, all uncollectible
accounts had been written off and, in the opinion of management, no
allowance is necessary.
Inventory
Inventory, consisting of alarm systems and parts, is stated at the lower of
cost (first-in, first-out method) or market.
Property and Equipment and Depreciation
Property and equipment are stated at cost. Expenditures for additions,
renewals and betterments are capitalized; expenditures for maintenance and
repairs are charged to expense as incurred. Upon retirement or disposal of
assets, the cost and accumulated depreciation are eliminated from the
accounts and any resulting gain or loss is credited or charged to
operations. Depreciation is provided using the straight-line and declining
balance methods over the estimated useful lives of the assets.
Page 6
<PAGE>
MSG SECURITY SYSTEMS, INC.
T/A AMERICAN SECURITY SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes
The liability method is used in accounting for income taxes. Under this
method, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and
liabilities and are measured using enacted tax rates and laws that will be
in effect when the differences are expected to reverse. Also, the tax
benefits resulting from the utilization of net operating loss carryforwards
are recorded as ordinary income rather than extraordinary income. A
valuation allowance is established for deferred tax assets not expected to
be realized.
The principal differences between the Company's financial reporting and tax
bases include accounts receivable and deferred revenue.
2. PROPERTY AND EQUIPMENT
1994 1995
---------- ----------
Transportation equipment $ 11,590 $ 11,590
Office equipment 4,803 4,803
---------- ----------
16,393 16,393
Less accumulated depreciation 12,698 14,247
---------- ----------
$ 3,695 $ 2,146
========== ==========
3. DUE TO STOCKHOLDER
The balance is due on demand and is noninterest-bearing.
Page 7
<PAGE>
MSG SECURITY SYSTEMS, INC.
T/A AMERICAN SECURITY SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
4. INCOME TAXES
The differences between the provision for income taxes (benefit) and income
taxes (benefit) computed using the federal income statutory tax rate are as
follows:
Year Ended June 30,
-----------------------
1994 1995
---------- ----------
Amount computed using the statutory rate ($ 3,075) $ 2,561
Increase (decrease) in taxes resulting from:
State taxes - Net of federal taxes 292 2,895
Prior net operating loss carryforwards ( 3,427)
Federal tax valuation allowance 2,783 1,700
---------- ----------
Income tax expense (benefit) $ - $ 3,729
========== ==========
At June 30, 1995, the cumulative temporary differences resulted in net
deferred tax assets consisting of:
Accounts receivable $ 1,415
Deferred revenue 9,729
Miscellaneous 496
----------
11,640
Less valuation allowance ( 11,640)
----------
Deferred tax assets - Net $ -
==========
Page 8
<PAGE>
MSG SECURITY SYSTEMS, INC.
T/A AMERICAN SECURITY SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
5. FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosure about Fair
Value of Financial Instruments," requires disclosure of estimated fair value
of all financial instruments for which it is practicable to estimate fair
value.
The carrying amount of cash approximates its fair value because of its short
maturity.
It was not deemed practicable to estimate the fair value of the amount due
to stockholder since this financial instrument is not readily marketable.
6. SUBSEQUENT EVENT
On March 29, 1996, the Company distributed to its stockholder substantially
all of its net assets other than monitoring and service contracts, and,
simultaneously, all of the outstanding common stock of the Company was sold.
Page 9
