SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
AMENDMENT NO. 3 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)
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 $1,604,446.19 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 - Historical financial statements have
previously been filed, pro forma financial information is
filed herewith.
EXHIBIT 3
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 acquisition
of 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 information pertaining to MSG and
MAC is for the period prior to its date of acquisition. The pro forma infor-
mation is based on the historical financial statements of the Company, 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 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 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 MSG MAC Adjustments Combined
--------------------------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES
Product sales $3,785,543 $68,774 $3,854,317
Services 2,412,469 110,015 140,548 2,663,032
Finance and rentals 745,243 23,625 768,868
--------------------------------- ------------ -------------
6,943,255 202,414 140,548 0 7,286,217
--------------------------------- ------------ -------------
COST OF REVENUES
Product sales 2,375,608 37,003 2,412,611
Services and rentals 626,933 30,216 22,148 (19,451)(G) 659,846
--------------------------------- ------------ -------------
3,002,541 67,219 22,148 (19,451) 3,072,457
--------------------------------- ------------ -------------
GROSS PROFIT 3,940,714 135,195 118,400 19,451 4,213,760
--------------------------------- ------------ -------------
OPERATING EXPENSES
Selling, general and administrative 5,110,309 118,413 96,594 5,325,316
Depreciation and amortization 834,172 1,163 72,775 (72,775)(A) 1,037,488
202,153 (B)
Termination benefits cost (392,699) (392,699)
Interest 703,356 1,310 69,838 (71,148)(C) 1,015,784
312,428 (D)
--------------------------------- ------------ -------------
6,255,138 120,886 239,207 370,658 6,985,889
--------------------------------- ------------ -------------
INCOME (LOSS) FROM OPERATIONS (2,314,424) 14,309 (120,807) (351,207) (2,772,129)
INTEREST INCOME 33,082 630 (16,120)(E) 17,592
--------------------------------- ------------ -------------
NET INCOME (LOSS) BEFORE INCOME TAXES (2,281,342) 14,309 (120,177) (367,327) (2,754,537)
INCOME TAXES 3,125 (3,125)(F) 0
--------------------------------- ------------ -------------
NET INCOME (LOSS) ($2,281,342) $11,184 ($120,177) ($364,202) ($2,754,537)
================================= ============ =============
LOSS PER COMMON SHARE ($4.00) ($4.72)
============ =============
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 570,742 12,787 (H) 583,529
============ ============ =============
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 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 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>
<TABLE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1996
<CAPTION>
Historical Pro Forma
-------------------------------- ----------------------------
Response MSG MAC Adjustments Combined
-------------------------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash $840,097 $1,635 (1,635)(A) $840,097
Marketable securities 118,750 118,750
Accounts receivable 1,839,400 19,727 55,920 (75,647)(A) 1,839,400
Note receivable 99,338 99,338
Loan receivable 60,000 (60,000)(A)
Inventory 730,315 3,500 (3,500)(A) 730,315
Prepaid expenses and other
current assets 231,891 525 (525)(A) 231,891
-------------------------------- ------------ -------------
Total current assets 3,859,791 25,387 115,920 (141,307) 3,859,791
-------------------------------- ------------ -------------
MONITORING CONTRACT COSTS - Net of
accumulated amortization 16,944,084 1,228,786 (1,228,786)(A) 16,944,084
-------------------------------- ------------ -------------
PROPERTY AND EQUIPMENT - Net of
accumulated amortization and
depreciation 1,222,162 5,660 (5,660)(A) 1,222,162
-------------------------------- ------------ -------------
OTHER ASSETS
Accounts receivable 341,648 341,648
Note receivable 85,142 85,142
Deposits 32,535 32,535
Organization costs 570 (570)(A)
Deferred financing costs - Net of
accumulated amortization 356,866 356,866
-------------------------------- ------------ -------------
816,191 570 (570) 816,191
-------------------------------- ------------ -------------
$22,842,228 $31,047 $1,345,276 ($1,376,323) $22,842,228
================================ ============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $3,572,154 $40,000 $298,426 ($338,426)(A) $3,572,154
N/P - Related party 120,000 (120,000)(A)
Accounts payable 545,995 3,515 (3,515)(A) 545,995
Purchase holdbacks 609,507 609,507
Accrued expenses and other current
liabilities 1,281,165 15,997 36,283 (52,280)(A) 1,281,165
Deferred revenue 1,515,254 16,055 49,821 (65,876)(A) 1,515,254
-------------------------------- ------------ -------------
Total current liabilities 7,524,075 75,567 504,530 (580,097) 7,524,075
-------------------------------- ------------ -------------
LONG-TERM LIABILITIES - Net of current
portion
Long-term debt 12,525,179 905,667 (905,667)(A) 12,525,179
Purchase holdbacks 72,619 72,619
Deferred revenue 10,252 10,252
-------------------------------- ------------ -------------
12,608,050 905,667 (905,667) 12,608,050
-------------------------------- ------------ -------------
STOCKHOLDERS' EQUITY
Common stock 15,516 100 500 (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) (44,620) (65,421) 110,041 (A) (11,643,980)
-------------------------------- ------------ -------------
2,710,103 (44,520) (64,921) 109,441 2,710,103
-------------------------------- ------------ -------------
$22,842,228 $31,047 $1,345,276 ($1,376,323) $22,842,228
================================ ============ =============
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(A) To reflect the acquisitions of MSG and MAC.
</TABLE>
<TABLE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED MARCH 31, 1996
<CAPTION>
Historical Pro Forma
-------------------------------- ----------------------------
Response MSG MAC Adjustments Combined
-------------------------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES
Product sales $1,984,146 $38,015 $2,022,161
Services 4,689,132 113,810 332,820 5,135,762
Finance and rentals 1,361,762 19,007 1,380,769
-------------------------------- ------------ -------------
8,035,040 170,832 332,820 8,538,692
-------------------------------- ------------ -------------
COST OF REVENUES
Product sales 1,409,579 22,441 1,432,020
Services and rentals 1,098,089 25,058 53,900 (46,045)(G) 1,131,002
-------------------------------- ------------ -------------
2,507,668 47,499 53,900 (46,045) 2,563,022
-------------------------------- ------------ -------------
GROSS PROFIT 5,527,372 123,333 278,920 46,045 5,975,670
-------------------------------- ------------ -------------
OPERATING EXPENSES
Selling, general and administrative 4,329,022 116,762 50,068 4,495,852
Depreciation and amortization 1,602,071 1,162 100,357 (100,357)(A) 1,805,386
202,153 (B)
Interest 2,282,864 1,300 114,116 (115,416)(C) 2,559,195
276,331 (D)
-------------------------------- ------------ -------------
8,213,957 119,224 264,541 262,711 8,860,433
-------------------------------- ------------ -------------
INCOME (LOSS) FROM OPERATIONS (2,686,585) 4,109 14,379 (216,666) (2,884,763)
INTEREST INCOME 18,512 (6,829)(E) 11,683
-------------------------------- ------------ -------------
NET INCOME (LOSS) BEFORE INCOME TAXES (2,668,073) 4,109 14,379 (223,495) (2,873,080)
INCOME TAXES 800 (800)(F)
-------------------------------- ------------ -------------
NET LOSS ($2,668,073) $3,309 $14,379 ($222,695) ($2,873,080)
================================ ============ =============
LOSS PER COMMON SHARE ($2.37) ($2.32)
============ =============
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 1,123,536 112,989 (H) 1,236,525
============ ============ =============
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 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 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>
SIGNATURE
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 30, 1996 By:/s/RICHARD M. BROOKS
--------------------
Richard M. Brooks,
President
