PROTOSOURCE CORP
8-K/A, 1997-02-20
COMPUTER INTEGRATED SYSTEMS DESIGN
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                       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

               Date of Report (Date of earliest event reported):
                               February 20, 1997

                            PROTOSOURCE CORPORATION
              ----------------------------------------------------
             (Exact name of registrant as specified in its charter)

          California                   33-86242                77-0190772
- -----------------------------        -----------            ------------------
(State or other jurisdiction         (Commission            (IRS Employer I.D.
       of incorporation)             File Number)               Number)


                         2300 Tulare Street, Suite 100
                            Fresno, California 93721
                     --------------------------------------
                    (Address of principal executive offices)

       Registrant's telephone number, including area code (209) 486-8638
                                                          --------------

                                 2580 West Shaw
                            Fresno, California 93711
          ------------------------------------------------------------
         (Former name or former address, if changed since last report)



================================================================================
<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION

                              FINANCIAL STATEMENTS
                                       TO
                                   FORM 8-K/A

                             DATED JANUARY 3, 1997



<PAGE>

                            PROTOSOURCE CORPORATION
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                        PAGE
                                                                        ----

Proforma Condensed Financial Statements Summary
   of Presentation                                                      F-2

Proforma Condensed Balance Sheet as of September 30, 1996               F-3

Proforma Condensed Statement of Operations for the nine
   months ended September 30, 1996                                      F-5

Proforma Condensed Statement of Operations for the nine
   months ended September 30, 1995                                      F-6

Notes to Proforma Condensed Financial Statements                        F-7


                                      F-1

<PAGE>


                            PROTOSOURCE CORPORATION
                    PROFORMA CONDENSED FINANCIAL STATEMENTS

The following unaudited proforma condensed financial  statements gives effect to
the  divestiture  of  ProtoSource   Corporation's  (the  "Company's")   software
development,   MarketStreet   and  computer   training  center   divisions  (the
"divisions")  to the former  management of the Company.  The proforma  condensed
financial  statements are based on the Company's historical financial statements
and estimates and assumptions set forth below.

The proforma  condensed  balance  sheet as of September 30, 1996 gives effect to
the  divestiture of the divisions to the former  management of the Company as if
the sale took place on September 30, 1996.

The  proforma  condensed  statement  of  operations  for the nine  months  ended
September  30,  1996  includes  the  divestiture  of  the  divisions  as if  the
transaction  was completed at the beginning of the year. The proforma  condensed
statement of  operations  for the nine months ended  September 30, 1995 includes
the  divestiture  of the  divisions as if the  transaction  was completed at the
beginning of the year.

Proforma adjustments are based upon preliminary estimates, available information
and  certain  assumptions  that  management  deems  appropriate.  The  unaudited
proforma financial information presented herein is not necessarily indicative of
the results of  operations  or financial  position  that the Company  would have
obtained had such events occurred at the beginning of the period, as assumed, or
of the future results of the Company.  The proforma financial  statements should
be read in  conjunction  with the  historical  financial  statements  and  notes
thereto  included  in the  Company's  Annual  Report on Form 10-KSB for the year
ended  December 31, 1995 and the Company's  Quarterly  Report on Form 10-QSB for
the nine months ended September 30, 1996.

                                      F-2



<PAGE>
<TABLE>
<CAPTION>
                                     PROTOSOURCE CORPORATION
                                    (Formerly SHR Corporation
                                  dba Software Solutions Company)
                                  PROFORMA CONDENSED BALANCE SHEET
                                          SEPTEMBER 30, 1996
                                              (UNAUDITED)

                                                 ASSETS
                                                 ------
                                                                             Proforma            Proforma
                                                        ProtoSource         Adjustments          Combined
                                                        -----------         -----------          --------
<S>                                                     <C>                 <C>                   <C>   
Current Assets:
  Cash and cash equivalents                             $    2,370          $1,070,000 (1)       $1,072,370
                                                                               250,000 (2)
                                                                              (250,000)(3)
  Accounts receivable, net of allowance
   for doubtful accounts of $199,848 and $-0-,
   as adjusted                                              178,256           (129,438)(3)           48,818
  Inventories                                                50,288            (50,288)(3)               --
  Deposits and other current assets                          46,775            (20,000)(1)           14,275
                                                                               (12,500)(3)
                                                        -----------        -----------           ----------
      Total Current Assets                                  277,689            857,774            1,135,463
                                                        -----------        -----------           ----------

Property and Equipment, at cost:
  Land                                                      411,176                 --              411,176
  Building and improvements                               1,389,590                 --            1,389,590
  Equipment                                                 738,947            (67,806)(3)          671,141
  Furniture                                                 132,750            (38,375)(3)           94,375
  Vehicles                                                   10,090                 --               10,090
                                                        -----------        -----------           ----------
                                                          2,682,553           (106,181)           2,576,372
  Less accumulated depreciation and
   amortization                                             423,789            (31,732)(3)          392,057
                                                        -----------        -----------           ----------

       Net Property and Equipment                         2,258,764            (74,449)           2,184,315
                                                        -----------        -----------           ----------

Other Assets:
  Software development costs, net of                                          (250,000)(2)
   accumulated amortization of $895,868                     710,215           (460,215)(3)               --
  Deferred tax assets                                        71,550                 --               71,550
  Note receivable                                            35,000            (35,000)(3)          770,850
                                                                               770,850 (3)
  Deposits and other assets                                  74,141                 --               74,141
                                                        -----------        -----------           ----------          

       Total Other Assets                                   890,906             25,635              916,541
                                                        -----------        -----------           ----------
       
       Total Assets                                     $ 3,427,359         $  808,960           $4,236,319
                                                        ===========         ==========           ==========

                            The accompanying notes are an integral
               part of these unaudited proforma condensed financial statements.



                                             F-3
</TABLE>


<PAGE>
<TABLE>
<CAPTION>
                                    PROTOSOURCE CORPORATION
                                   (Formerly SHR Corporation
                                dba Software Solutions Company)
                               PROFORMA CONDENSED BALANCE SHEET
                                     SEPTEMBER 30, 1996
                                          (UNAUDITED)

                             LIABILITIES AND SHAREHOLDERS' EQUITY
                             ------------------------------------

                                                                                 Proforma                 Proforma
                                                     ProtoSource                Adjustments               Combined
                                                     -----------                -----------               --------
<S>                                                  <C>                        <C>                       <C>   
Current Liabilities:
  Accounts payable                                   $  417,194                 $ (275,438)(3)            $ 141,756
  Accrued liabilities                                   294,710                    (81,611)(3)              213,099
  Customer deposits                                      44,415                         --                   44,415
  Notes payable                                         200,000                   (200,000)(1)                   --
  Current portion of long-term debt                     116,008                         --                  116,008
  Unearned customer support revenue                      25,099                    (25,099)(3)                   --
                                                     ----------                 ----------                ---------

      Total Current Liabilities                       1,097,426                   (582,148)                 515,278
                                                     ----------                 ----------                ---------
Long-Term Debt, net of current portion above:
  Bank                                                    3,130                         --                    3,130
  Individuals                                            45,907                    (45,907)(3)                   --
  Obligations under capital leases                    1,801,161                        --                 1,801,161
  Less current portion above                           (116,008)                       --                  (116,008)
                                                     ----------                 ----------                ---------
         
      Total Long-Term Debt                            1,734,190                    (45,907)               1,688,283
                                                     ----------                 ----------                ---------

Commitments and contingencies                                --                         --                       --

Shareholders' Equity:
  Preferred stock, no par value;
   5,000,000 shares authorized, 900,000
   shares issued and outstanding, -O- adjusted               --                         -- (4)                   --
  Common stock, no par value;  10,000,000
   shares  authorized,  1,330,001  shares
   issued and outstanding, 7,730,001 as adjusted      3,464,286                  1,350,000 (1)            4,814,286
  Retained earnings (deficit)                        (2,868,543)                   187,015 (3)           (2,781,528)
                                                                                  (100,000)(1)
                                                     ----------                 ----------               ----------

       Total Shareholders' Equity                       595,743                  1,437,015                2,032,758
                                                     ----------                 ----------               ----------
       
       Total Liabilities and Shareholders'
        Equity                                      $ 3,427,359                 $  808,960               $4,236,319
                                                    ===========                 ==========               ==========

                              The accompanying notes are an integral
                   part of these unaudited proforma condensed financial statements.

                                                F-4
</TABLE>


<PAGE>
<TABLE>
<CAPTION>
                                           PROTOSOURCE CORPORATION
                                          (Formerly SHR Corporation
                                       dba Software Solutions Company)
                                 PROFORMA CONDENSED STATEMENT OF OPERATIONS
                                 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
                                                 (UNAUDITED)
                                                                                 Proforma                  Proforma
                                                     ProtoSource                Adjustments                Combined
                                                     -----------                -----------                --------
<S>                                                  <C>                        <C>                        <C>   
Net Revenues:
   Product sales                                     $   19,120                 $ (19,120) (5)             $     --
   Hardware equipment sales                             244,366                  (244,366) (5)                   --
   Professional service fees                            808,949                  (265,993) (5)              542,956
   Other                                                     --                        --                        --
                                                     ----------                 ---------                  --------
   
     Total Revenues                                   1,072,435                  (529,479)                  542,956
                                                     ----------                 ---------                  --------

Operating Expenses:
   Cost of product sales                                132,339                  (132,339) (5)                   --      
   Cost of hardware equipment sales                     204,236                  (204,236) (5)                   --        
   Cost of professional services                        342,612                   113,648  (5)              456,260
   Sales and marketing                                  384,808                  (384,808) (5)                   --            
   Research and development                             213,126                  (213,126) (5)                   --           
   General and administrative                           419,624                  (113,648) (5)              305,976
                                                     ----------                 ---------                 ---------

      Total Operating Expenses                        1,696,745                  (934,509)                  762,236
                                                     ----------                 ---------                 ---------

      Operating Loss                                   (624,310)                  405,030                  (219,280)
                                                     ----------                 ---------                 ---------
Other Income (Expense):
   Interest income                                        1,140                        --                     1,140
   Interest expense                                    (137,007)                       --                  (137,007)
   Financing costs                                           --                        --                       --  
   Rent income                                               --                   108,000 (6)               108,000
   Other, net                                            78,189                        --                    78,189
                                                     ----------                 ---------                 ---------
        
      Total Other Income (Expense)                      (57,678)                  108,000                    50,322
                                                     ----------                 ---------                 ---------         

Loss Before Provision
 (Benefit) For Income Taxes                            (681,988)                  513,030                  (168,958)

Provision (benefit) for income taxes                         --                        --                        --
                                                     ----------                 ---------                 ---------


Net Loss                                            $  (681,988)                $ 513,030                 $(168,958)
                                                    ===========                 =========                 =========

Net Loss Per Share of Common
 Stock                                              $      (.51)                                          $    (.02)
                                                    ===========                                           =========
Weighted Average Number of
 Common Shares Outstanding                            1,330,001                                           7,730,001
                                                    ===========                                           =========

                                     The accompanying notes are an integral
                         part of these unaudited proforma condensed financial statements.

                                                        F-5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                   PROTOSOURCE CORPORATION
                                                  (Formerly SHR Corporation
                                                dba Software Solutions Company)
                                          PROFORMA CONDENSED STATEMENT OF OPERATIONS
                                          FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
                                                          (UNAUDITED)

                                                                     Proforma           Proforma
                                                     ProtoSource    Adjustments         Combined
                                                     -----------    -----------         --------
<S>                                                 <C>              <C>              <C>   
Net Revenues:
   Product sales                                     $  283,029     $  (283,029)(5)    $        --
   Hardware equipment sales                             801,316        (801,316)(5)             --
   Professional service fees                            426,963        (404,493)(5)         22,470
   Other                                                     --              --                 --
                                                    -----------     -----------        -----------

      Total Revenues                                  1,511,308      (1,488,838)            22,470
                                                    -----------     -----------        -----------

Operating Expenses:
   Cost of product sales                                227,250        (227,250)(5)             --
   Cost of hardware equipment sales                     632,904        (632,904)(5)             --
   Cost of professional services                        209,493        (133,947)(5)         75,546
   Sales and marketing                                  443,528        (443,528)(5)             --
   Research and development                             315,684        (315,684)(5)             --
   General and administrative                           401,424              --            401,424
                                                    -----------     -----------        -----------

     Total Operating Expenses                         2,230,283      (1,753,313)           476,970
                                                    -----------     -----------        -----------

     Operating Loss                                    (718,975)        264,475           (454,500)
                                                    -----------     -----------        -----------

Other Income (Expense):
   Interest income                                       48,255              --             48,255
   Interest expense                                    (122,266)             --           (122,266)
   Financing costs                                           --              --                 --
   Rent income                                               --         108,000 (6)        108,000
   Other, net                                            83,893              --             83,893
                                                    -----------      ----------        -----------

     Total Other Income (Expense)                         9,882         108,000            117,882
                                                    -----------     -----------        -----------

Loss Before Provision
 (Benefit) For Income Taxes                            (709,093)        372,475           (336,618)

Provision (benefit) for income taxes                   (170,183)             --           (170,183)
                                                    -----------     -----------        -----------

Net Loss                                            $  (538,910)    $   372,475        $  (166,435)
                                                    ===========     ===========        ===========

Net Loss Per Share of Common
 Stock                                              $      (.45)                       $      (.02)
                                                    ===========                        ===========

Weighted Average Number of
 Common Shares Outstanding                            1,205,441                          7,605,441
                                                    ===========                        ===========


                             The accompanying notes are an integral
                 part of these unaudited proforma condensed financial statements.


                                               F-6

</TABLE>
<PAGE>


                            PROTOSOURCE CORPORATION
                NOTES TO PROFORMA CONDENSED FINANCIAL STATEMENTS
                                  (UNAUDITED)

1.  Basis of Presentation
    ---------------------

     In  1996,  the  Company  retained  the  Kriegsman  Group  ("Kriegsman"),  a
     financial  consulting firm, to assist it with a financial  restructuring of
     its operations.  Kriegsman was to use its best efforts to provide a minimum
     of $1,500,000 of financing for the Company  through  bridge loans or equity
     financing.  In August  1996,  a bridge loan of $200,000 was obtained by the
     Company for which the Company  issued 400,000 shares of common stock to the
     bridge  lenders as  additional  consideration  for the  $200,000  loan.  In
     October and November 1996 the Company sold  6,000,000  shares of its common
     stock  at $.25  per  share  through  an  Underwriter,  which  included  the
     conversion of the $200,000 bridge loan into common stock.  The Company paid
     the  Underwriter a 10% sales  commission  and a 3%  nonaccountable  expense
     allowance  on the bridge loan and sale of common  stock.  The Company  also
     entered into a two year financial consulting agreement with the Underwriter
     which  provides  for a monthly  consulting  fee of $5,000  for the two year
     period.

     As a part of the  financing  transaction,  the  Company  granted  both  the
     Underwriter and Kriegsman  warrants to purchase  common stock.  The Company
     granted 2,200,000  warrants to each which are exercisable at $.25 per share
     for a four year period through October 31, 2001. The Company also agreed to
     use its best efforts to file a Registration Statement within 90 days of the
     closing of the  Private  Placement  to  register  the shares  issued in the
     Private  Placement  and the shares  underlying  the warrants  issued to the
     Underwriter and Kriegsman.

     In connection with the financial restructuring the Company agreed to divest
     the software  development,  MarketStreet  and the computer  training center
     divisions. The divisions were spun-off to a new Company owned by the former
     management  of the Company on December 31,  1996.  All of the assets of the
     three  divisions and the related  liabilities  and  facilities  leases were
     assumed  by the  former  management.  Also  included  in the  assets of the
     divested  divisions  will be $500,000 in cash less expenses of the divested
     divisions paid prior to closing.  The management of the divested  divisions
     will also assume all litigation  and claims related to the divisions  which
     includes one law suit in the amount of approximately $70,000. The Kriegsman
     Group  will also  nominate  new  members  for the Board of  Directors  upon
     completion  of the  divestiture  of the three  divisions.  The Company will
     receive a 25%  ownership  interest  in the common  stock of the new company
     formed to acquire the divested  divisions and the divested  divisions  will
     lease the principal office from the Company for a period of eighteen months
     at the current market rate.



                                      F-7
<PAGE>

                            PROTOSOURCE CORPORATION
                NOTES TO PROFORMA CONDENSED FINANCIAL STATEMENTS
                                  (UNAUDITED)

2.  Proforma Net Income (Loss) Per Share of Common Stock
    ----------------------------------------------------

     The  proforma  net income  (loss) per share of common stock is based on the
     weighted average number of common shares outstanding during the period. The
     shares issued in the Private Placement  described above are given effect to
     as if they were  issued at the  beginning  of the  period  for each  period
     presented in the proforma combined calculations.

3.  Proforma Adjustments
    --------------------

     Adjustments to present the proforma combined condensed financial statements
     are as follows:

     1.   Adjustment  to record the sale of 6,000,000  shares of common stock at
          $.25 per share, which includes  conversion of the $200,000 Bridge Loan
          into common stock, net of offering expenses of approximately $250,000.
          Also includes issuance of 400,000 shares of common stock as additional
          consideration to the bridge lenders.

     2.   Adjustment  to record the receipt of  approximately  $250,000 from the
          sale of additional interest in the Software, net of expenses.

     3.   Adjustment to record the  divestiture of the assets and liabilities of
          the divested divisions.

     4.   Adjustment to record cancellation of all of the outstanding  Preferred
          Stock of the Company in accordance  with the terms of the  Divestiture
          Agreement.

     5.   Adjustment to remove the operations of the divested  divisions for the
          period.

     6.   Adjustment  to record rent income for the  sublease of office space to
          the divested divisions of $12,000 per month.

                                      F-8
<PAGE>


     The Registrant  hereby amends Item 7, Financial  Statements and Exhibits of
its Current Report on Form 8-K dated January 3, 1997 as follows:

ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS
         ---------------------------------

     (b)  Pro forma financial information.

            Proforma Condensed Financial Statements Summary of Presentation

            Unaudited Proforma Condensed Balance Sheet as of September 30, 1996

            Unaudited Proforma Condensed Statement of Operations for the nine
            months ended September 30, 1996

            Unaudited Proforma Condensed Statement of Operations for the nine
            months ended September 30, 1995

            Notes to Proforma Condensed Financial Statements


                                   SIGNATURES


     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned hereunto duly authorized.


                                            PROTOSOURCE CORPORATION
                                            (Registrant)


                                            By:  /s/  ANDY CHU
                                                --------------------------------
                                                Andy Chu, President


Dated:  February 20, 1997
        -----------------





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