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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
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(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
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(Address of principal executive offices)
Registrant's telephone number, including area code (209) 486-8638
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2580 West Shaw
Fresno, California 93711
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(Former name or former address, if changed since last report)
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<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
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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
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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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