SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
AMENDMENT NO.2 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 26, 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 an 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
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 14, 1996 By:/s/ RICHARD M. BROOKS
Richard M. Brooks
President
EXHIBIT 3
MONITORING ACQUISITION CORPORATION
FINANCIAL STATEMENTS
YEAR ENDED JULY 31, 1995
MONITORING ACQUISITION CORPORATION
CONTENTS
Financial Statements PAGE
Independent Auditors' Report 1
Balance Sheet 2
Statement of Operations and Accumulated (Deficit) 3
Statement of Cash Flows 4
Notes to Financial Statements 5 - 7
April 18, 1996
Board of Directors
MONITORING ACQUISITION CORPORATION
Cheltenham, Pennsylvania
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying balance sheet of
MONITORING ACQUISITION CORPORATION as of July 31, 1995, and
the related statement of operations and accumulated
(deficit) and cash flows for the year then ended. 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 MONITORING ACQUISITION CORPORATION as
of July 31, 1995 and the results of its operations and its
cash flows for the year then ended in conformity with
generally accepted accounting principles.
/s/ Bush, Levin & Tecosky
Certified Public Accountants
MONITORING ACQUISITION CORPORATION
BALANCE SHEET
JULY 31, 1995
ASSETS
CURRENT ASSETS
Cash (Note 1) $ 30,142
Accounts Receivable (Note 1) 39,805
Loan Receivable - Individual (Note 2) 15,000
------
TOTAL CURRENT ASSETS 84,947
------
OTHER ASSETS
Monitoring Contracts (Net of Accumulated
Amortization of $76,814) (Note 3) 1,124,891
Organization Costs (Net of Accumulated
Amortization of $170) (Note 1) 680
---------
TOTAL OTHER ASSETS 1,125,571
---------
TOTAL ASSETS $1,210,518
=========
LIABILITIES AND STOCKHOLDER'S (DEFICIENCY)
CURRENT LIABILITIES
Current Portion of Long-Term Debt (Note 4) $ 252,606
Note Payable - Related Party (Note 5) 120,000
Accrued Expenses 17,888
Sales Taxes Payable 945
Unearned Income (Note 1) 61,747
-------
TOTAL CURRENT LIABILITIES 453,186
LONG-TERM DEBT (Net of Current Portion) (Note 4) 820,269
---------
TOTAL LIABILITIES 1,273,455
---------
STOCKHOLDER'S (DEFICIENCY)
Common Stock (1000 Shares Authorized;
500 Shares Issued and Outstanding; No Par Value) 500
Accumulated (Deficit) ( 63,437)
---------
TOTAL STOCKHOLDER'S (DEFICIENCY) ( 62,937)
---------
TOTAL LIABILITIES AND STOCKHOLDER'S (DEFICIENCY) $1,210,518
==========
See Notes to Financial Statements
2
MONITORING ACQUISITION CORPORATION
STATEMENT OF OPERATION AND ACCUMULATED (DEFICIT)
YEAR ENDED JULY 31, 1995
MONITORING INCOME $ 258,791
MONITORING, BILLING AND COLLECTIONS 33,548
-------
GROSS PROFIT 225,243
-------
OPERATING EXPENSES
Selling, General and Administrative 174,595
Interest 114,715
-------
TOTAL OPERATING EXPENSES 289,310
-------
(LOSS) - From Operations ( 64,067)
OTHER INCOME 630
--------
NET (LOSS) ( 63,437)
ACCUMULATED (DEFICIT):
Beginning of Year -
--------
End of Year ($ 63,437)
========
See Notes to Financial Statements
3
MONITORING ACQUISITION CORPORATION
STATEMENT OF CASH FLOWS
YEAR ENDED JULY 31, 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss) ($ 63,437)
Adjustments to Reconcile Net (Loss) to
Net Cash (Used) by Operating Activities:
Amortization 76,984
(Increase) in Accounts Receivable ( 39,805)
(Increase) in Monitoring Contracts ( 1,201,705)
(Increase) in Organization Costs ( 850)
Increase in Accrued Expenses 17,888
Increase in Sales Taxes Payable 945
Increase in Unearned Income 61,747
------------
NET CASH (USED) BY OPERATING ACTIVITIES ( 1,148,233)
------------
CASH FLOWS FROM INVESTING ACTIVITIES
Advance for Loan Receivable - Individual ( 25,000)
Payments Received from Loan Receivable -
Individual 10,000
------------
NET CASH (USED) BY INVESTING ACTIVITIES ( 15,000)
------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Issuance of Long-Term Debt 1,200,000
Payments of Long-Term Debt ( 127,125)
Net Proceeds from Note Payable-Related Party 120,000
Proceeds from Issuance of Common Stock 500
------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,193,375
------------
NET INCREASE IN CASH 30,142
CASH BALANCE:
Beginning of Year -
-----------
End of Year $ 30,142
===========
Note: Cash Paid During the Year for:
Interest $ 99,577
See Notes to Financial Statements
4
MONITORING ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JULY 31, 1995
(1) Summary of Significant Accounting Policies:
The significant accounting policies followed by the Company in
maintaining accounting records and presenting financial statements
are as follows:
Nature of Business and Concentration of Credit Risk
The Company commenced business in August, 1994. The Company's
operations consist principally of the monitoring and maintenance
services of security and fire alarm systems for residential and
commercial properties in the Mid-Atlantic states. Accounts
receivable are from a large number of customers.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers
all highly liquid debt instruments purchased with a maturity of
three months or less to be cash equivalents.
Accounting Methods
Assets, liabilities, revenues and expenses are recognized on the
accrual method of accounting.
Revenue Recognition
The Company recognizes monitoring services as revenue in the
accounting period that corresponds to the month for which the
service is billed. Monitoring services received or receivable,
but not recognized as revenue as of July 31, are recorded as
unearned income.
Accounts Receivable/Allowance for Bad Debts
For financial reporting purposes, the Company utilizes the
allowance method of accounting for doubtful accounts. At July 31,
1995, management estimates that all of the receivables are
collectible; therefore, no allowance has been established.
Organization Costs
Legal fees associated with the organization of the Corporation are
being amortized on the straight line method over 60 months.
Amortization expense charged to operations for the year ended July
31, 1995 was $170.
5
MONITORING ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JULY 31, 1995
(2) Loan Receivable - Individual
The loan receivable from an unrelated individual bears interest at
10.5% and is unsecured. Interest income for the year ended July
31, 1995 was $540.
(3) Monitoring Contracts
The Company purchased twelve packages of monitoring contracts
during the year. The contracts are being amortized over a period
of 10 years using the straight-line method. Amortization expense
was $76,814 for the year ended July 31, 1995.
(4) Long-Term Debt
The following is a summary of long-term debt at July 31, 1995:
Notes payable to various individuals, payable
in monthly installments of $2,938 including
interest at 18%, maturity date August 1,
1998, secured by specific alarm accounts
stated in the installment note agreement. $ 165,893
Notes payable to various individuals, payable
in monthly installments of $2,783 including
interest at 15%, maturity dates ranging from
September 1, 1998 to July 1, 1999, secured by
specific alarm accounts stated in the installment
note agreement. 906,982
---------
Total Long-Term Debt 1,072,875
Less: Current Portion of Long-Term Debt 252,606
---------
Net Long-Term Debt $ 820,269
=========
6
MONITORING ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JULY 31, 1995
(4) Long-Term Debt (Continued)
Maturities of long-term debt are as follows:
July 31, 1996 $ 252,606
1997 298,426
1998 348,240
1999 173,603
---------
$1,072,875
=========
(5) Note Payable - Related Party
The note payable to a related party is unsecured and bears
interest at 10%. Interest expense for the year ended July 31,
1995 was $1,971.
(6) Income Taxes
The Company, operating as a C Corporation, sustained a net
operating loss of $63,437 which can be carried forward to offset
future federal taxable income to the year 2010 and state taxable
income to the year 1996. No deferred income taxes existed at July
31, 1995.
(7) Subsequent Events
On February 29, 1996, the Company entered into an asset purchase
agreement, whereby the Company sold certain assets and accounts
receivable in exchange for cash of $1,604,446 and shares of the
purchaser's common stock valued at $639,339.
The proceeds from the asset purchase agreement were used to retire
all of the Company's outstanding debts.
7
