SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
February 27, 1997
Date of Report
Forestry International, Inc.
(Exact name of registrant as specified in its charter)
Colorado
(State or other jurisdiction of incorporation)
0-023310 84-1116284
(Commission File Number) (IRS Employer Identification Number)
3573 East Sunrise Drive, Suite 225, Tucson, Arizona 85718
(Address of principal executive offices including zip code)
520-299-9447
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Item 1. Changes in Control of Registrant
Not Applicable
Item 2. Acquisition or Disposition of Assets.
On December 16, 1996, Forestry International, Inc. (the
"Company") entered into a share purchase agreement (the
"Agreement") with Dixieland Forest Products, Inc., a Mississippi
corporation, and Mr. Randy Pope ("Pope), a resident of
Mississippi. The Agreement provided, inter alia, that as at
December 16, 1996, the Company would acquire all of the business,
operations and prospects of Dixieland Forest Products, Inc. For
the purposes of the Form 8-K Current Report, Dixieland Forest
Products, Inc., is hereinafter collectively referred to as
"Dixieland".
Under the terms of the Agreement, the purchase price to be
paid for Dixieland by the Company is One Million Eight Hundred
Fifty Thousand ($1,850,000) Dollars. The consideration given by
the Company to Pope consists of the following, subject to
adjustments as hereinafter described:
(i) As of December 16, 1996, payment of the sum of Four Hundred
Thousand ($400,000) dollars in cash; and:
(ii) On or prior to January 3, 1997, Two Hundred Fifty Thousand
dollars ($250,000) through the delivery by the Company to Pope of
250,000 shares of the $0.0001 par value per share restricted
common stock of the Company (the "Purchase Shares").
(iii) An agreement whereby a third party would supply
400,000 shares of free trading common stock which is subject to
the terms and conditions of a stock repurchase agreement between
Pope and a non-affiliated third party. Such agreement provides
as follows:
(A) On or prior to January 16, 1997, Two Hundred Thousand
dollars ($200,000) would be provided to Mr. Pope by way of the
provision by the third party of a pledge to acquire two hundred
thousand shares of the Company's common stock held by Mr. Pope at
$1.00 per share, and:
(B) On or prior to April 1, 1997, Two Hundred Fifty
Thousand dollars ($250,000) would be provided to Mr. Pope by way
of the provision by the third party of a pledge to acquire two
hundred thousand shares of the Company's common stock held by Mr.
Pope at $1.25 per share. Mr. Pope has the option to sell the
shares for $1.00 per share and receive 50,000 restricted common
shares, or to sell all of the shares for $1.25 per share and the
Company would provide 50,000 restricted common shares to the non-affiliated
third party, and:
(C) As of December 16, 1996, Seven Hundred Fifty
Thousand dollars ($750,000) by way of the provision of a
promissory note (the "Note") and secured by a stock pledge
agreement.
The Note provides for, inter alia, payment of the principal
sum of $750,000 plus interest calculated thereon at the rate of
seven per cent (7%) per annum, calculated monthly and compounded
into principal at a rate equal to one-twelfth (1/12th) the annual
rate. All payments of principal and interest shall be made
quarterly and ratably in forty (40) equal installments, with the
first such installment being due and payable on April 1, 1997, in
the amount of $26,762.29, and each succeeding installment in a
like amount shall be due and payable on the first day of each
third month thereafter.
The aforementioned stock pledge agreement (the "Stock Pledge
Agreement") provides, inter alia, that until all required
payments have been made under the Note, Pope, as the pledgee,
shall have the exclusive right to exercise all voting rights
connected to the shares of Dixieland which have been pledged by
the Company pursuant to the Stock Pledge Agreement. Further,
once all required payments have been made under the Note, the
Company shall be entitled to receive any dividends or other
distributions payable in respect to the aforementioned Dixieland
shares.
The Agreement provides, inter alia, that on or prior to
March 31, 1997, the Company shall obtain the full and complete
release of Pope from his personal guarantees on the debt of
Dixieland as are reflected in the disclosure schedule to be
provided by Dixieland and to be attached to and form a part of
the Agreement.
Pope has, as a term of the Agreement, entered into an
employment agreement (the "Employment Agreement") with the
Company. The Employment Agreement is for a term of two years,
commencing December 16, 1996 and may be extended by either Pope
or the Company for further one year periods. Pope shall receive
an annual gross base salary of $100,000. Pope shall further be
entitled to an amount equal to 1% of the gross sales of Dixieland
subject to a minimum requirement of annual sales in excess of
$8,000,000 and 10% of the pre-tax profits of Dixieland ("Bonus
Payments") for distribution to Pope and members of his management
and operational "teams", as such are constituted by Pope and in
such amounts and proportions as are determined by Pope. Bonus
Payments shall be in addition to Pope's gross base salary and the
normal and customary salaries of the teams and shall be awarded
by the 105th day following the fiscal year end of the Company.
The Bonus Payments shall be made 50% in cash and 50% in the
restricted common stock of the Company, which stock shall be
valued at 50% of the average closing bid price during the 30 days
following the fiscal year end in which minimum sales requirements
have been met or profits have been made.
The Employment Agreement also provides that Pope shall
receive an annual four week vacation, an automobile similar to
his existing vehicle and health care and medical coverage
substantially identical to Pope's present coverage.
Under the terms of the Employment Agreement, Pope is
restricted from competing with Dixieland, either directly or
indirectly, for a period of three years following the termination
of the Employment Agreement for any reason or cause whatsoever.
Pursuant to the Agreement, during the period commencing
December 16, 1996, through April 1, 1997, Dixieland shall, at the
request of Pope, distribute to Pope certain assets free and clear
(the "Excluded Assets") comprised of (i) all interest in real
property and improvements to real property (other than interests
in timberland held by Dixieland as inventory) owned or retained
by Dixieland on December 16, 1996, (ii) all taxidermy work and
art work, and, (iii) cash, in the amount in all accounts of
Dixieland as of December 16, 1996.
Pursuant to the Agreement, Pope has also agreed to lease
various office premises to Dixieland, effective December 16, 1996
through December 15, 2001. Such leases shall provide for the
lease of property utilized by Dixieland in the operation of its
business, including three office buildings and a woodyard for a
combined annual lease of $100,000 per year, triple net.
Forestry International, Inc. completed the acquisition of
Dixieland and its subsidiaries on December 1, 1995 and filed a
Form 8-K for that acquisition on December 13, 1995. The Company
was unable to arrange all required financing to complete that
transaction and defaulted on the payment of the notes required in
those agreements. This report is for the acquisition on December
16, 1996 of the same company as the December 13, 1995 report at
a reduced purchase price. The previously reported purchase price
was $2,500,000 as compared to the current purchase price of
$1,850,000.
Financing of the acquisition:
The financing of the acquisition was provided from various
sources as follows:
1) Four hundred thousand dollars cash was provided by a
Regulation "S" transaction with a foreign individual for shares
of common stock priced at $.75 per share for a total amount of
533,333 shares.
2) Two hundred thousand dollars cash provided for the
purchase of collateral shares on January 13, 1997 was provided by
a Regulation "S" transaction with a foreign individual for shares
of common stock priced at $1.00 per share for a total of 200,000
shares.
3) Two hundred fifty thousand dollars cash will be provided
on April 1, 1997 for the purchase of the second collateral shares
by a Regulation "S" transaction with a foreign individual for
shares of common stock priced at $1.25 per share if Mr. Pope
elects to sell the shares provided as collateral.
4) Other requirements for collateral deposits and working
capital were provided from the proceeds of a Regulation "S"
transaction in the amount of $1,125,000 with a foreign
institution for 1,500,000 shares of common stock priced at $.75
per share.
5) An additional 620,000 shares were issued to individuals
and institutions for commissions, consulting and services related
to the provision of collateral shares, the completion of the
funding and assistance with the negotiations. All of these shares
were Regulation "S" shares except 50,000 which were restricted
shares issued to an individual who is an affiliate of the
Company.
Item 3. Bankruptcy or Receivership.
Not Applicable
Item 4. Changes in Registrant's Certifying Accountant.
Not Applicable
Item 5. Other Events.
Not Applicable
Item 6. Resignation of Registrant's Directors.
Not Applicable
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
Condensed financial statements are presented herin for
Dixieland Forest Products, Inc. including the balance sheet and
statement of operations for the years ended December 31, 1995 and
1996 and for the interim quarters ended March 31, June 30, and
September 30, 1996. The statements were condensed from
compilation reports perpared by Tann, Brown & Russ Co., Ltd.,
certified public accountants for Dixieland Forest Products.
Also included herein are a proforma combined balance sheet
and a combined statement of operations for the periods noted
above. As previously reported in the Company's 8-K dated
February 14, 1997, the Company's board of directors has elected
to change its fiscal year end to December 31 from March 31 to
coincide with the year end of Dixieland Forest Products.
Therefore, the proforma statement of operations has been restated
for the years ended December 31, 1996 and 1995 and the quarter
ended March 31, 1996 as though the year end change had been
effective in those periods.
Combined, audited financial statements will be presented
with the Company's annual report on Form 10-KSB.
DIXIELAND FOREST PRODUCTS, INC.
BALANCE SHEET
12/31/96 9/30/96 6/30/96 3/31/96 12/31/95
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
------------ ------------ ------------ ------------ ------------
ASSETS
CURRENT ASSETS:
CASH $61,948 $0 $88,810 $0 $462
INVENTORY 495,603 471,712 580,057 551,257 498,895
OTHER 492,514 682,689 454,599 516,529 507,412
------------ ------------ ------------ ------------ ------------
TOTAL CURRENT
ASSETS 1,050,066 1,154,401 1,123,466 1,067,786 1,006,769
------------ ------------ ------------ ------------ ------------
PROPERTY AND
EQUIPMENT, NET 184,813 488,023 407,826 415,433 404,549
------------ ------------ ------------ ------------ ------------
OTHER ASSETS:
ACCOUNTS
RECEIVABLE 31,658 190,078 195,401 356,413 370,559
OTHER 529,494 564,515 314,759 82,274 99,554
------------ ------------ ------------ ------------ ------------
TOTAL OTHER
ASSETS 561,152 754,593 510,160 438,687 470,113
------------ ------------ ------------ ------------ ------------
TOTAL ASSETS $1,796,031 $2,397,017 $2,041,452 $1,921,906 $1,881,431
============ ============ ============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
LIABILITIES $1,119,722 $1,379,573 $1,210,021 $1,251,277 $1,119,809
LONG TERM
LIABILITIES 625,289 757,140 498,215 389,821 443,318
STOCKHOLDERS'
EQUITY 51,020 260,304 333,216 280,808 318,304
------------ ------------ ------------ ------------ ------------
TOTAL LIABILITIES
AND STOCKHOLDERS'
EQUITY $1,796,031 $2,397,017 $2,041,452 $1,921,906 $1,881,431
============ ============ ============ ============ ============
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DIXIELAND FOREST PRODUCTS, INC.
STATEMENT OF OPERATIONS
THREE MONTHS ENDED
YEAR ENDED -------------------------------------- YEAR ENDED
12/31/96 9/30/96 6/30/96 3/31/96 12/31/95
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
------------ ------------ ------------ ------------ ------------
OPERATING
REVENUE $5,997,329 $1,723,901 $1,326,668 $1,293,574 $7,874,653
COST OF SALES 4,640,477 1,492,541 992,175 967,652 6,086,004
------------ ------------ ------------ ------------ ------------
GROSS MARGIN 1,356,852 231,360 334,493 325,922 1,788,649
------------ ------------ ------------ ------------ ------------
OPERATING EXPENSES:
SALARIES 361,786 87,960 94,082 83,271 521,640
INSURANCE 180,937 38,571 42,173 55,373 236,861
OTHER GENERAL
& ADMIN 657,366 165,792 107,166 176,491 783,249
------------ ------------ ------------ ------------ ------------
TOTAL OPERATING
EXPENSES 1,200,089 292,323 243,421 315,135 1,541,750
------------ ------------ ------------ ------------ ------------
INCOME FROM
OPERATIONS 156,763 (60,963) 91,072 10,787 246,899
------------ ------------ ------------ ------------ ------------
OTHER INCOME
(EXPENSE):
INTEREST (122,922) (37,129) (28,636) (22,822) (165,514)
OTHER 17,595 11,180 3,972 9,540 35,569
------------ ------------ ------------ ------------ ------------
TOTAL OTHER
INCOME (EXP) (105,327) (25,949) (24,664) (13,282) (129,945)
------------ ------------ ------------ ------------ ------------
INCOME (LOSS)
BEFORE TAXES 51,436 (86,912) 66,408 (2,495) 116,954
INCOME TAXES 13,000 (14,000) 14,000 0 0
------------ ------------ ------------ ------------ ------------
NET INCOME
(LOSS) $38,436 ($72,912) $52,408 ($2,495) $116,954
============ ============ ============ ============ ============
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FORESTRY INTERNATIONAL, INC.
PROFORMA COMBINED BALANCE SHEET
12/31/96 9/30/96 6/30/96 3/31/96 12/31/95
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
------------ ------------ ------------ ------------ ------------
ASSETS
CURRENT ASSETS:
CASH $1,041,976 $9,558 $93,299 $0 $30,688
INVENTORY 687,817 513,926 619,684 597,422 982,041
OTHER 579,703 769,878 505,170 565,269 1,036,180
------------ ------------ ------------ ------------ ------------
TOTAL CURRENT
ASSETS 2,309,497 1,293,362 1,218,153 1,162,691 2,048,909
------------ ------------ ------------ ------------ ------------
PROPERTY AND
EQUIPMENT, NET 1,770,281 1,973,491 1,908,249 2,071,162 2,645,551
------------ ------------ ------------ ------------ ------------
OTHER ASSETS:
ACCOUNTS
RECEIVABLE 31,658 190,078 195,401 356,413 370,559
OTHER 3,413,669 1,748,690 1,495,112 1,274,301 1,630,646
------------ ------------ ------------ ------------ ------------
TOTAL OTHER
ASSETS 3,445,327 1,938,768 1,690,513 1,630,714 2,001,205
------------ ------------ ------------ ------------ ------------
TOTAL ASSETS $7,525,105 $5,205,621 $4,816,915 $4,864,567 $6,695,665
============ ============ ============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
LIABILITIES $2,067,591 $2,459,442 $2,143,758 $2,592,738 $3,565,937
LONG TERM
LIABILITIES 3,170,643 2,552,494 2,196,475 2,271,630 1,594,060
STOCKHOLDERS'
EQUITY 2,286,871 193,685 476,682 199 1,535,668
------------ ------------ ------------ ------------ ------------
TOTAL
LIABILITIES AND
STOCKHOLDERS'
EQUITY $7,525,105 $5,205,621 $4,816,915 $4,864,567 $6,695,665
============ ============ ============ ============ ============
- --------------------------------------------------------------------------------
FORESTRY INTERNATIONAL, INC.
PROFORMA COMBINED STATEMENT OF OPERATIONS
THREE MONTHS ENDED
YEAR ENDED -------------------------------------- YEAR ENDED
12/31/96 9/30/96 6/30/96 3/31/96 12/31/95
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
------------ ------------ ------------ ------------ ------------
OPERATING
REVENUE $6,057,981 $1,734,552 $1,345,787 $1,324,456 $8,077,238
COST OF SALES 4,683,160 1,497,122 1,000,913 997,016 6,150,102
------------ ------------ ------------ ------------ ------------
GROSS MARGIN 1,374,821 237,430 344,874 327,440 1,927,136
------------ ------------ ------------ ------------ ------------
OPERATING EXPENSES:
GENERAL AND
ADMIN 1,824,926 458,602 397,449 619,665 2,675,450
RESEARCH AND
DEVELOPMENT 0 0 0 0 216,321
------------ ------------ ------------ ------------ ------------
TOTAL OPERATING
EXPENSES 1,824,926 458,602 397,449 619,665 2,891,771
------------ ------------ ------------ ------------ ------------
INCOME FROM
OPERATIONS (450,105) (221,172) (52,575) (292,225) (964,635)
------------ ------------ ------------ ------------ ------------
OTHER INCOME
(EXPENSE):
INTEREST (372,338) (87,005) (91,010) (159,988) (457,637)
OTHER (827,105) 11,180 (24,989) (806,199) (117,341)
------------ ------------ ------------ ------------ ------------
TOTAL OTHER
INCOME
(EXPENSES) (1,199,443) (75,825) (115,999) (966,187) (574,978)
------------ ------------ ------------ ------------ ------------
INCOME (LOSS)
BEFORE TAXES (1,649,548) (296,997) (168,574) (1,258,412) (1,539,613)
INCOME TAXES (175,453) 0 0 (175,453) (532,128)
------------ ------------ ------------ ------------ ------------
NET INCOME
(LOSS) ($1,474,095) ($296,997) ($168,574) ($1,082,959) ($1,007,485)
============ ============ ============ ============ ============
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FORESTRY INTERNATIONAL, INC.
EXHIBITS TO FORM 8-K
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IN ACCORDANCE WITH RULE 202 OF REGULATION S-T,
THE EXHIBITS INDEXED BELOW WERE FILED IN PAPER
PURSUANT TO A CONTINUING HARDSHIP EXEMPTION
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1. Share Purchase Agreement 12/16/96
2. Promissory Note 12/16/96
3. Stock Pledge Agreement
4. Irrevocable Power of Attorney - Transfer of Stock -
Dixieland to Pope
5. Irrevocable Power of Attorney - Transfer of Stock -
Dixieland to Forestry International, Inc.
6. Employment Agreement 12/16/96
7. Butler, Snow, O'Mara, Stevens & Cannada, PLLC (attorney's
opinion letter)
8. Patrick Tobin (attorney's opinion letter) 12/16/96
9. Lease 12/16/96 Randy Pope and Dixieland Forest Products,
Inc.
10. Exhibit 1.04 (B) Sublease
11. Stock Purchase Agreement 12/16/96 Pope - Turp
12. Turp - 12/16/96 Notice of Intent
13. Assumption Agreement - R. Pope $10.00 dated 10/14/96
14. Assumption Agreement - R. Pope $10.00 dated 10/15/96
15. Assumption Agreement - R. Pope $10.00 dated 7/29/96
16. Agreement to Defend
17. Escrow Agreement 12/16/96
18. Escrow Agreement 12/18/96 (two page 8's)
19. Durable General Power of Attorney
20. Exhibit 1.04 Excluded Assets
21. Forestry International, Inc. Disclosure Schedule
22. Forestry International Form 10K (Draft)
- --------------------------------------------------------------------------------
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, as amended, Registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
FORESTRY INTERNATIONAL, INC.
(Registrant)
Dated: February 27, 1997 By: /s/ David L. Shorey
-------------------------------
David L. Shorey, Chairman & CEO
