<PAGE> 1
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): May 22, 1998
BUSINESS RESOURCE GROUP
(Exact name of Registrant as specified in its charter)
0-26208
(Commission File Number)
CALIFORNIA 77-0150337
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation)
2150 North First Street, Suite 101
San Jose, CA 95131
(Address of principal executive offices, with zip code)
408-325-3200
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
<PAGE> 2
The Registrant hereby amends the following item of its Report on Form
8-K filed with the Securities and Exchange Commission on June 8, 1998. The
Registrant is amending Item 7 to include certain required financial statements
and pro forma financial statements and exhibits associated therewith.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
Exhibit 99.1 hereto contains the audited balance sheets for OFN, INC. as
of March 31, 1998, unaudited income statements for the 12-months ended December
31, 1997 and the six months ended June 30, 1998, an unaudited balance sheet as
of April 30, 1998 and the related statements of operations, shareholder's
equity, and cash flows for the period ended March 31, 1998.
(b) Pro Forma Financial Information.
Exhibit 99.1 hereto contains the unaudited pro forma combined condensed
balance sheet as of April 30, 1998, the unaudited pro forma combined condensed
statements of operations for the year ended October 31, 1997 and the six months
ended April 30, 1998 and the notes thereto.
(c) Exhibits.
2.1* Asset Purchase Agreement dated May 22, 1998 , among the
Company, OFN, INC., BRG Acquisition Corp. and David &
Rebecca Nagorski, Husband and Wife as Joint Tenants.
23.1 Independent Auditor's Consent
99.1 OFN, INC. Financial Statements with Report of Deloitte &
Touche LLP.
* Filed with the Commission on June 8, 1998 and incorporated as an exhibit
hereto pursuant to Rule 12b-32 promulgated under the Securities Exchange Act
of 1934, as amended.
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<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
BUSINESS RESOURCE GROUP
Date: July 31, 1998 By: /s/ John Palmer
-------------------------------------
John Palmer, Chief Financial Officer
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
No. Exhibit
------- -------
<S> <C> <C>
2.1* Asset Purchase Agreement dated May 22, 1998, among the
Company, OFN, INC., BRG Acquisition Corp. and David & Rebecca
Nagorski, Husband and Wife as Joint Tenants.
23.1 Independent Auditor's Consent
99.1 OFN, INC. Financial Statements with Report
of Deloitte & Touche LLP.
</TABLE>
* Filed with the Commission on June 8, 1998 and incorporated as an exhibit
hereto pursuant to Rule 12b-32 promulgated under the Securities Exchange Act
of 1934, as amended.
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We hereby consent to the incorporation by reference in Business Resource
Group's Registration Statements Nos. 33-95144, 333-02388, 333-23495, 333-49849
on Forms S-8 our report, dated May 7, 1998, relating to the financial
statements of OFN, Inc., which appears in this Current Report on Form 8-K/A of
Business Resource Group.
/s/ Deloitte & Touche LLP
San Jose, California
July 30, 1998
<PAGE> 1
BUSINESS RESOURCE GROUP
PRO FORMA CONDENSED COMBINED
BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
Pro forma
Combined
BRG OFN Combined Pro forma Balance Sheet
4/30/98 4/30/98 4/30/98 Adjustments 4/30/98
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and equivalents 636 233 869 - 869
Accounts receivable, net 14,866 453 15,319 - 15,319
Inventory 8,211 490 8,701 - 8,701
Prepaids and other current assets 2,110 27 2,137 - 2,137
-----------------------------------------------------------------------
Total current assets 25,823 1,203 27,026 - 27,026
Property and equipment, net 2,344 45 2,389 - 2,389
Goodwill - - - 2,341 (1) 2,341
Other assets 819 15 834 - 834
-----------------------------------------------------------------------
28,986 1,263 30,249 2,341 32,590
=======================================================================
LIABILITIES AND SHAREHOLDERS EQUITY
Current liabilities:
Line of credit 4,990 - 4,990 2,093 (1) 7,083
Accounts payable 6,678 78 6,756 - 6,756
Accrued liabilities 3,906 114 4,020 - 4,020
Current portion, notes payable - - - 356 (1) 356
Income taxes payable 316 - 316 - 316
-----------------------------------------------------------------------
Total current liabilities 15,890 192 16,082 2,449 18,531
Deferred income tax liability 75 - 75 - 75
Notes payable - - - 713 (1) 713
Shareholder's equity:
Common stock 49 5 54 (5) (2) 49
Additional paid-in capital 11,016 - 11,016 250 (1) 11,266
Retained earnings 1,956 1,066 3,022 (1,066) (2) 1,956
-----------------------------------------------------------------------
Total shareholder's equity 13,021 1,071 14,092 (821) 13,271
-----------------------------------------------------------------------
28,986 1,263 30,249 2,341 32,590
=======================================================================
</TABLE>
Footnotes:
(1) To record the acquisition of OFN, Inc. including recording goodwill
($2.3 million), borrowing from line of credit ($2.1 million), issuance
of note ($1.1 million) and issuance of 100,000 Business Resource Group
common stock ($250,000).
(2) To eliminate the shareholders equity of OFN, Inc.
<PAGE> 2
BUSINESS RESOURCE GROUP
PRO FORMA CONDENSED COMBINED INCOME STATEMENT
(UNAUDITED)
<TABLE>
<CAPTION>
BRG OFN, Inc. Pro forma
12 months 12 months Combined
ended ended Pro forma Income
10/31/97 12/31/97 Combined Adjustments Statement
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Revenues $ 72,701 $ 3,373 $ 76,074 $ - $ 76,074
Cost of Net Revenues 57,430 1,644 59,074 - 59,074
--------------------------------------------------------------------
Gross Profit 15,271 1,729 17,000 - 17,000
Selling, General and Administrative expenses 16,622 987 17,609 117 (1) 17,726
--------------------------------------------------------------------
Income (loss) from operations (1,351) 742 (609) (117) (726)
Net interest income / (expenses) 66 - 66 (232) (2) (166)
--------------------------------------------------------------------
Income (loss) before income taxes (1,285) 742 (543) (349) (892)
Income taxes (523) - (523) 160 (3) (363)
--------------------------------------------------------------------
Net Income/(loss) $ (762) $ 742 $ (20) $ (509) $ (529)
====================================================================
Net Income/(loss) per common and common
equivalent share, basic and diluted $ (0.16) $ (0.11)
============= =============
Shares used on computation 4,902 100 (4) 5,002
============= ============= =============
</TABLE>
Footnotes:
(1) To record amortization ($117,000) of goodwill. Goodwill amortization
period is 20 years.
(2) To record estimated interest ($167,000) on line of credit borrowings for
acquisition under assumption line of credit is outstanding for full year
and to record interest ($64,000) on note payable issued to seller.
(3) To record income tax expense for OFN, Inc. net of the tax benefit of pro
forma adjustments.
(4) To reflect shares issued in connection with OFN, Inc. acquisition.
<PAGE> 3
BUSINESS RESOURCE GROUP
PRO FORMA CONDENSED COMBINED INCOME STATEMENT
(UNAUDITED)
<TABLE>
<CAPTION>
BRG OFN, Inc. Pro forma
6 months 6 months Combined
ended ended Pro forma Income
04/30/98 06/30/98 Combined Adjustments Statement
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Revenues $ 40,093 $ 1,853 $ 41,946 $ - $ 41,946
Cost of Net Revenues 31,565 920 32,485 - 32,485
---------------------------------------------------------------------
Gross Profit 8,528 933 9,461 - 9,461
Selling, General and Administrative
expenses 7,761 587 8,348 59 (1) 8,407
---------------------------------------------------------------------
Income from operations 767 346 1,113 (59) 1,054
Other income / (expense):
Net Interest Income / (expense) (51) - (51) (116) (2) (167)
Gain on Sale of Assets 50 - 50 - 50
---------------------------------------------------------------------
Total other income / (expense) (1) - (1) (116) (117)
---------------------------------------------------------------------
Income before income taxes 766 346 1,112 (175) 937
Income taxes 316 - 316 71 (3) 387
---------------------------------------------------------------------
Net Income $ 450 $ 346 $ 796 $ (246) $ 550
=====================================================================
Basic net earnings per share: $ 0.09 $ 0.11
============= =============
Weighted average common shares outstanding 4,913 100 (4) 5,013
============= ============= =============
Diluted net earnings per share: $ 0.09 $ 0.11
============= =============
Total common stock and common
stock equivalents 4,951 100 (4) 5,051
============= ============= =============
</TABLE>
Footnotes:
(1) To record amortization ($59,000) of goodwill for six month period.
Goodwill amortization period is 20 years.
(2) To record estimated interest ($84,000) on line of credit borrowings for
acquisition under assumption line of credit is outstanding for full six
months and to record six months interest ($32,000) on note payable
issued to seller.
(3) To record income tax expense for OFN, Inc. net of the tax benefit of pro
forma adjustments.
(4) To reflect shares issued in connection with OFN, Inc. acquisition.
<PAGE> 4
[DELOITTE & TOUCHE LLP LOGO]
OFN, INC.
Financial Statements as of March 31, 1998
and Independent Auditors' Report
- ---------------
Deloitte Touche
Tohmatsu
International
- ---------------
<PAGE> 5
[DELOITTE & TOUCHE LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Shareholders of
OFN, Inc.:
We have audited the accompanying balance sheet of OFN, Inc. (the Company) as of
March 31, 1998, and the related statements of income, shareholders' equity 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit 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 audit provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company at March 31, 1998, and the
results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
/s/ DELOITTE & TOUCHE LLP
May 7, 1998
<PAGE> 6
OFN, INC.
BALANCE SHEET
MARCH 31, 1998
ASSETS
<TABLE>
<S> <C>
Current assets:
Cash.......................................................... $ 421,000
Accounts receivable........................................... 266,000
Inventory..................................................... 469,000
Prepaids and other current assets............................. 18,000
----------
Total current assets...................................... 1,174,000
Property and equipment - net.................................... 45,000
Deposits........................................................ 15,000
----------
Total........................................................... $1,234,000
==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.............................................. $ 22,000
Accrued liabilities........................................... 147,000
----------
Total current liabilities................................. 169,000
Shareholders' equity:
Common stock, no par value; 1,000,000 shares authorized;
5,000 shares issued and outstanding......................... 5,000
Retained earnings............................................. 1,060,000
----------
Total shareholders' equity................................ 1,065,000
----------
Total........................................................... $1,234,000
==========
</TABLE>
See notes to financial statements.
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<PAGE> 7
OFN, INC.
STATEMENT OF INCOME
YEAR ENDED MARCH 31, 1998
<TABLE>
<S> <C>
Net revenues....................................................$ 3,431,000
Cost of net revenues............................................ (1,684,000)
-----------
Gross profit.................................................... 1,747,000
Selling, general and administrative expenses.................... 1,340,000
-----------
Net income......................................................$ 407,000
===========
</TABLE>
See notes to financial statements.
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<PAGE> 8
OFN, INC.
STATEMENT OF SHAREHOLDERS' EQUITY
YEAR ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
Common Stock
----------------------- Retained
Shares Amount Earnings Total
<S> <C> <C> <C> <C>
Balances, April 1, 1997.................... 5,000 $5,000 $ 653,000 $ 658,000
Net income................................. 407,000 407,000
------ ------ ---------- ----------
Balances, March 31, 1998................... 5,000 $5,000 $1,060,000 $1,065,000
====== ====== ========== ==========
</TABLE>
See notes to financial statements.
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<PAGE> 9
OFN, INC.
STATEMENT OF CASH FLOWS
YEAR ENDED MARCH 31, 1998
<TABLE>
<S> <C>
Cash flows from operating activities:
Net income........................................................................... $407,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization....................................................... 20,000
Changes in operating assets and liabilities:
Inventory.......................................................................... (125,000)
Prepaids and other current assets.................................................. (18,000)
Accounts payable................................................................... (112,000)
Accrued liabilities................................................................ 2,000
--------
Net cash provided by operating activities........................................ 174,000
Cash flows from investing activities:
Purchase of property and equipment................................................... (27,000)
-------
Increase in cash...................................................................... 147,000
Cash:
Beginning of period.................................................................. 274,000
-------
End of period........................................................................ $421,000
========
</TABLE>
See notes to financial statements.
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<PAGE> 10
OFN, INC.
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED MARCH 31, 1998
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - OFN, Inc., a California corporation (the Company), sells
refurbished workspace products and services.
USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Such
estimates include the allowance for doubtful accounts receivable,
inventory reserves, estimated useful lives of fixed assets and certain
accrued liabilities. Actual results could differ from those estimates.
CONCENTRATION OF CREDIT RISK - Financial instruments that potentially
subject the Company to concentration of credit risk consist of cash and
accounts receivable. Management believes the credit risk associated with
cash is minimal. Substantially all of the Company's business activities
are located in Southern California. The Company believes that its credit
evaluation, approval and monitoring processes substantially mitigate
potential credit risks. Collateral generally is not required.
CASH - Cash consists of demand deposits in a single bank.
INVENTORY is stated at the lower of cost (determined on a standard cost
basis) or market value.
PROPERTY AND EQUIPMENT are stated at cost and are depreciated using the
straight-line method over useful lives of five years.
REVENUE RECOGNITION - Revenues from product sales are recognized upon
shipment or installation of products.
2. INCOME TAXES
The Company is not subject to federal income taxes since it elected to be
taxed as an S corporation pursuant to the Internal Revenue code. In lieu
of corporate income taxes, the shareholders of an S corporation are taxed
on their proportionate share of the Company's taxable income. Therefore,
no provision for federal income taxes has been included in these financial
statements. As an S corporation California requires the Company to pay tax
at 1.5% of taxable income, which is included in selling, general and
administrative expenses.
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<PAGE> 11
<TABLE>
<CAPTION>
3. PROPERTY AND EQUIPMENT
Property and equipment at March 31, 1998 consist of the following:
<S> <C>
Office furniture and equipment ............................. $ 63,000
Vehicles ................................................... 37,000
Warehouse equipment ........................................ 29,000
--------
129,000
Accumulated depreciation ................................... (84,000)
--------
Total property and equipment -- net ........................ $ 45,000
========
4. ACCRUED LIABILITIES
Accrued liabilities at March 31, 1998 consist of the following:
Bonuses .................................................... $ 86,000
Sales taxes ................................................ 29,000
Vacation ................................................... 20,000
Payroll taxes .............................................. 12,000
--------
Total accrued liabilities .................................. $147,000
========
</TABLE>
5. LEASE OBLIGATIONS
The Company leases operating facilities under operating leases which
expire in fiscal year 2000 and may be canceled with sixty days notice after
September 1998. Future scheduled lease payments under these operating leases
are as follows:
<TABLE>
<CAPTION>
YEARS ENDING
MARCH 31,
<S> <C>
1999 ......................................................... $192,000
2000 ......................................................... 95,000
--------
Total future payments .......................................... $287,000
========
</TABLE>
Rent expense for the year ended March 31, 1998 was approximately $190,000.
6. MAJOR CUSTOMERS AND VENDORS
Three customers represented 28%, 16% and 13% of accounts receivable as of
March 31, 1998, respectively. Two vendors accounted for 24% and 21% of the
purchases for the year ended March 31, 1998, respectively.
7. SUBSEQUENT EVENT (UNAUDITED)
In 1998, the Company entered into negotiations with Business Resource
Group, Inc. (BRG), whereby BRG may purchase certain assets and assume
certain liabilities of the Company.
* * * * *
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