SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(a) of
the Securities Exchange Act of 1934
Date of Report
September 5, 1995
CORCAP, INC.
(Exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation)
1-09964 06-1237135
(Commission File Number) (IRS Employer Identification No.)
90 State House Square
Hartford, Connecticut 06103-3720
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code
(203) 247-7611
Item 1. Changes in Control of Registrant.
On August 21, 1995, CompuDyne Corporation ("CompuDyne") an affiliate of
Corcap, Inc. ("Corcap" or the "Registrant") entered into and consummated a Stock
Purchase Agreement (the "Stock Purchase Agreement") by and among CompuDyne,
Martin A. Roenigk and Alan Markowitz (Messrs. Roenigk and Markowitz are,
collectively, the "Sellers") and MicroAssembly Systems, Inc. ("MicroAssembly"),
pursuant to which CompuDyne issued to the Sellers 1,260,460 shares of its
Convertible Preference Stock, Series D ("Series D Preference Stock") in exchange
for all of the Sellers' shares of capital stock of MicroAssembly, which shares
represent all of MicroAssembly's issued and outstanding capital stock. The
consummation of the Stock Purchase Agreement is hereinafter referred to as the
"Transaction".
As part of the Transaction, in return for $400,000 paid to CompuDyne at the
closing, CompuDyne issued to the Sellers Senior Convertible Promissory Notes
(the "Notes") in the aggregate principal amount of $400,000, which Notes are
convertible, prior to redemption by CompuDyne, into CompuDyne common stock at
a conversion rate of $1.50 per share of common stock, or 266,667 shares of
common stock if the entire principal amount of the Notes is converted. Of the
$400,000 principal amount of Notes issued, $300,000 principal amount of the
Notes was issued to Mr. Roenigk, and $100,000 principal amount of the Notes was
issued to Mr. Markowitz.
As a part of the Transaction, Norman Silberdick, Corcap's Chairman,
President and Chief Executive Officer, has resigned as such and as a director
of Corcap. Corcap's Board of Directors has elected Mr. Roenigk to fill Mr.
Silberdick's seat on the Board of Directors. In recognition of Mr. Roenigk's
agreement to serve on the Registrant's Board of Directors and in order to
facilitate the consummation of the Transaction, Corcap has issued to him options
to purchase up to 450,000 shares of its common stock for $.15 per share. The
options are divided into two tranches, one of 300,000 shares and the other of
150,000 shares. The options for the 300,000 shares expire on August 20, 1996
("Option I"). Exercise of the options for the entire 300,000 shares available
under and in accordance with the terms of Option I is a precondition to the
availability of the options for the remaining 150,000 shares, which remaining
options expire on August 20, 2005.
Prior to the Transaction, Mr. Roenigk held 70,000 shares of Corcap common
stock, which is approximately 2.4% of Corcap's voting shares. Upon exercise of
his options to purchase the 450,000 additional shares of Corcap's common stock,
Mr. Roenigk would hold approximately 15.4% of its common stock.
Mr. Roenigk has, in his filing with the Securities and Exchange Commission
pursuant to Section 13(d) of the Securities and Exchange Act of 1934, disclaimed
any arrangements or understandings with respect to the future election of
Corcap's directors or other matters in connection with the operation and
management of Corcap. Upon consummation of the Transaction, Corcap's executive
officers are, respectively, John Sundman, Chairman, Diane W. Burns, President,
and Elaine Chen, Treasurer and Chief Financial Officer.
Item 2. Acquisition or Disposition of Assets.
I. Acquisition of MicroAssembly Systems, Inc. Common Stock.
In connection with the Stock Purchase Agreement, CompuDyne acquired on
August 21, 1995 all of the capital stock of MicroAssembly (the "MicroAssembly
Stock") from the Sellers. MicroAssembly, located in Willimantic, Connecticut,
is a manufacturer of a custom automated process called the "Stick-Screw
System". The Stick-Screw System uses uniquely designed screws in a stick
format for the insertion of fasteners in electronic and other assembly
environments. The Stick-Screw System provides for insertion of the
fasteners at a faster speed than can be accomplished by competing systems or
processes. MicroAssembly operates out of owned facilities, utilizing
automatic screw machines to manufacture the Stick-Screws. MicroAssembly
also manufactures the specially designed pneumatic drivers for inserting the
screws. Sales are primarily throughout the United States via a network of
independent sales representatives, with modest sales in Europe and South
America.
The consideration to the Sellers for the MicroAssembly Stock was the
issuance to them of 1,260,460 shares of CompuDyne's Series D Preference Stock.
Each share of Series D Preference Stock carries an annual aggregate dividend
equal to the lower of: (a) sixty percent (60%) of MicroAssembly's after-tax net
income in the previous calendar year, divided by 1,260,460, or (b) eight percent
(8%) of the Redemption Value of $1.50 per share of the Series D Preference
Stock. Dividends may be paid on the Series D Preference Stock, at CompuDyne's
option, in cash, CompuDyne common stock, or a combination thereof, based upon
the average closing price of CompuDyne's common stock for the prior thirty (30)
trading days as quoted on a national securities exchange or, if not so quoted,
on the NASDAQ, or if not so quoted, on the OTC Bulletin Board maintained by the
NASD, or, if not so quoted, by the average closing bid prices quoted by three
dealers regularly making a market or maintaining bid and asked prices on such
stock (or such fewer number of dealers which may be making a market or
maintaining bid and asked prices).
Beginning on August 21 in the year 2000, CompuDyne may, at its option,
redeem all or any part of the Series D Preferred Stock for a price of $1.80 per
share, that being one hundred twenty percent (120%) of the Redemption Value,
plus accrued and unpaid dividends. Beginning on August 31, 2006, and on that
date in each of the four succeeding years, CompuDyne shall redeem 252,092 shares
of Series D Preference Stock, or such lesser number as may be issued and
outstanding, for their $1.50 per share Redemption Value.
CompuDyne reviewed the recent financial performance of MicroAssembly,
visited the manufacturing facilities, evaluated management, and considered the
strong balance sheet of MicroAssembly in coming to the determination of the
consideration to be paid. CompuDyne considered both the value of MicroAssembly
and the ability of MicroAssembly and its shareholders to bring considerable
additional financial strength to CompuDyne's operations.
II. Disposition of the Assets and Liabilities of the Suntec Division.
On August 21, 1995, Quanta Systems Corporation ("Quanta"), a wholly-owned
subsidiary of CompuDyne, transferred all of the assets and liabilities of
Quanta's Suntec division to Suntec Service Corporation, a newly-formed
corporation ("Suntec"), in return for (i) all of Suntec's issued and outstanding
common stock and (ii) Suntec's agreement to pay to Quanta a royalty of 2% of
Suntec's net sales and other revenues for thirty (30) years from the date of the
closing. Quanta then sold all of Suntec's common stock to Norman Silberdick,
who resigned on that date as Chairman, President, CEO and director of both
Corcap and CompuDyne. Suntec is engaged in the business of tele-marketing home
improvements in the middle Atlantic states, primarily in the Baltimore, Maryland
and Washington, D.C., area from leased offices in Gaithersberg, Maryland.
Suntec helps arrange home improvement financing for homeowners and provides the
home improvement services through subcontractors located in its market area.
As consideration for the shares of Suntec, Mr. Silberdick executed a
nonrecourse promissory note in the initial principal amount of $79,000 (the
"Silberdick Note"), payment of which is secured by a pledge of all Suntec shares
held by Mr. Silberdick, which shares must at all times equal or exceed 33% of
all outstanding shares of Suntec capital stock. The Silberdick Note bears
interest at an annual rate equal to the Wall Street Journal prime rate, plus
2%. Through August 31, 2000, the principal of the Silberdick Note is payable
annually in amounts equal to 25% of Suntec's net, after-tax income for the year
in question. Thereafter, the unpaid principal balance, as of that date, shall
be paid in five equal annual installments.
As a condition precedent to the sale of the Suntec shares to Mr.
Silberdick, he turned in to CompuDyne 60,000 shares of CompuDyne Common Stock
and relinquished purchase rights held by him to acquire an additional 50,000
shares of additional CompuDyne Common Stock.
The amount of consideration determined by Quanta to be appropriate for the
sale of the Suntec common stock to Mr. Silberdick resulted from a number of
factors. While a division of Quanta, Suntec's business had never produced a
profit. As a result, and in light of Quanta's retention of the 2% royalty on
Suntec's net sales and other revenues for 30 years, Quanta decided that the
business should be valued at its net book value at the Closing Date. The amount
of the Silberdick Note was, at the Closing Date, based upon Suntec's net book
value at June 30, 1995 and is subject to adjustment to its net book value based
upon a Closing Date balance sheet to be completed on or before September 20,
1995.
Item 7. Financial Statements and Exhibits
(a) Audited financial statements of MicroAssembly Systems, Inc. are
not currently available, and will be filed as soon as practicable, but within
60 days from the date of this report.
(b) (i) Pro-forma financial statements to reflect the acquisition of
MircoAssembly Systems, Inc. are not currently available, and will be filed as
soon as practicable, but within 60 days of the date of this report.
(ii) Pro-forma financial statements of CompuDyne Corporation to
reflect the discposition of Suntec Service Corporation including (A) a
consolidated balance sheet as at June 30, 1995; (B) a consolidated statement of
operations for the six months ended June 30, 1995; and (C) a consolidated
statement of operations for the year ended December 31, 1994 are as follows:
COMPUDYNE CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
DISPOSITION OF SUNTEC ASSETS AND LIABILITIES
(in Thousands)
(Unaudited)
Actual Balance Pro forma Pro forma
June 30, 1995 Adjustments Results
ASSETS
Current Assets
Accounts receivable, net 2,244 (165) 2,079
Inventories:
Work in process 377 (25) 352
Raw Materials and
supplies 270 (18) 252
Total Inventories 647 (43) 604
Prepaid expenses and
other current assets 96 (18) 78
Total Current Assets 2,987 (226) 2,761
Non-current receivables,
related parties 13 13
Property, plant and
equipment, at cost 706 (32) 674
Less: accumulated
depreciation and
amortization (677) 14 (663)
Net property, plant
and equipment 29 (18) 11
Other assets, net 10 10
Promissory notes
receivable 129 129
Total Assets 3,039 (115) 2,924
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
Current Liabilities
Accounts payable 1,831 (92) 1,739
Bank line payable 48 50 98
Customer deposits 21 (21) 0
Accrued pension costs 25 25
Accrued expenses 801 (52) 749
Current portion of
deferred compensation 96 96
Total Current Liabilities 2,822 (115) 2,707
Long term pension liability 298 298
Deferred compensation,
net of current portion 61 61
Total Liabilities 3,181 (115) 3,066
SHAREHOLDERS' (DEFICIT) EQUITY
Common Stock, par value
$.75 per share 10,000,000
shares authorized:
1,603,372 shares issued
and outstanding 1,202 1,202
Other Capital 7,988 7,988
Receivable from
Management (92) (92)
Deficit (9,240) (9,240)
Total Shareholders'
Equity (Deficit) (142) 0 (142)
Total Liabilities and
Shareholders' Equity
(Deficit) 3,039 (115) 2,924
NOTES:
1. All adjustments other than Cash and Promissory Notes Receivable reflect
the book value of the Suntec assets and liabilities that were disposed
of.
2. $50,000 was loaned to Norman Silberdick in exchange for a Promissory
Note. The bank line payable is increased to reflect the source of money.
3. The other $79,000 included in the Promissory Notes Receivable represents
the consideration received from Norman Silberdick for the purchase of
Suntec assets and liabilities.
COMPUDYNE CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
DISPOSITION OF SUNTEC ASSETS AND LIABILITIES
(in Thousands, Except Per Share Data)
(Unaudited)
Six Months
Ended Pro forma Pro forma
June 30, 1995 Adjustments Results
Net sales 5,223 (608) 4,615
Cost of sales 4,330 (337) 3,993
Gross margin 893 (271) 622
Selling, general and
administrative
expenses 974 (517) 457
Research and development 39 0 39
Operating income (loss) (120) 246 126
Other (income) expense
Interest (income) expense 10 10
Other (income) expense 12 12
Total other (income)
expense, net 22 22
Income (loss) from
Continuing operations
before income tax
provision (142) 246 104
Income tax provision
(benefit) 0
Net income (loss) (142) 246 104
Weighted average common
shares:
Primary 1,603 1,727
Fully diluted 1,603 1,727
Net income (loss) per
share:
Net income (loss) (0.09) 0.06
Net income (loss) per
share--full dilution:
Net income (loss) (0.09) 0.06
NOTES:
1. The pro forma adjustments were calculated assuming the disposition of
Suntec operations was consummated at the beginning of fiscal year 1994.
2. Suntec division was operated in a separate building with personnel
separate from other operations. Therefore the adjustments for the
disposition involve mainly the revenue and cost incurred directly related
to the Suntec Division. Other effects of the disposition were immaterial
and not considered in this report.
3. No Income Tax Provision is shown against the resulting net income; there
are sufficient credits from loss-carry-forwards to offset any required
tax provision.
COMPUDYNE CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
DISPOSITION OF SUNTEC ASSETS AND LIABILITIES
(in Thousands, Except Per Share Data)
(Unaudited)
Fiscal Year
Ended Pro forma Pro forma
December 31, 1994 Adjustments Results
Net sales 12,287 (2,588) 9,699
Cost of sales 9,683 (1,570) 8,113
Gross margin 2,604 (1,018) 1,586
Selling, general and
administrative
expenses 2,973 (1,878) 1,095
Research and development 66 0 66
Operating income (loss) (435) 860 425
Other (income) expense
Interest (income) expense (7) (7)
Other (income) expense (1,662) (1,662)
Total other (income)
expense, net (1,669) 0 (1,669)
Income (loss) from
Continuing operations
before income tax
provision 1,234 860 2,094
Income tax provision
(benefit) 29 29
Income (loss) before
extraordinary items 1,205 860 2,065
Extraordinary items,
debt forgiveness 523 523
Net income (loss) 1,728 860 2,588
Weighted average common
shares:
Primary 1,748 1,748
Fully diluted 1,748 1,748
Net income (loss) per
share:
Continuing operations
before extraordinary
items 0.69 1.18
Extraordinary items 0.30 0.30
Net income (loss) (0.99) 1.48
Net income (loss) per
share--fully diluted
Continuing operations
before extraordinary
items 0.69 1.18
Extraordinary items 0.30 0.30
Net income (loss) (0.99) 1.48
NOTES:
1. The pro forma adjustments were calculated assuming the disposition of
Suntec operations was consummated at the beginning of fiscal year 1994.
2. Suntec division was operated in a separate building with personnel
separate from other operations. Therefore the adjustments for the
disposition involve mainly the revenue and cost incurred directly related
to the Suntec Division. Other effects of the disposition were immaterial
and not considered in this report.
3. No additional Income Tax Provision is shown against the resulting net
income: there are sufficient credits from loss-carry-forwards to offset
any required tax provision.
(c) Exhibit (4.1) CompuDyne Corporation Certificate of
Designations of the Convertible Preference Stock, Series D.
Exhibit (4.2) CompuDyne Senior Convertible
Promissory Notes.
Exhibit (99.1) Stock Purchase Agreement dated
August 21, 1995 by and among CompuDyne Corporation, MicroAssembly
Systems, Inc., Martin Roenigk and Alan Markowitz.
Exhibit (99.2) Asset Purchase and Sale Agreement,
dated August 21, 1995 by and among Quanta Systems Corporation,
Suntec Service Corporations and Norman Silberdick.
Exhibit (99.3) Stock Option Agreement dated
August 21, 1995 by and between Martin A. Roenigk and Corcap, Inc.
____________________
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.
CORCAP, INC.
Date: September 5, 1995 By: /s/ Diane Burns
Diane Burns, President
INDEX TO EXHIBITS
Exhibit (4.1) CompuDyne Corporation Certificate of
Designations of the Convertible Preference Stock, Series D.
Exhibit (4.2) CompuDyne Senior Convertible Promissory Notes.
Exhibit (99.1) Stock Purchase Agreement dated August 21, 1995
by and among CompuDyne Corporation, MicroAssembly Systems, Inc.,
Martin Roenigk and Alan Markowitz.
Exhibit (99.2) Asset Purchase and Sale Agreement, dated
August 21, 1995 by and among Quanta Systems Corporation, Suntec
Service Corporations and Norman Silberdick.
Exhibit (99.3) Stock Option Agreement dated August 21,
1995 by and between Martin A. Roenigk and Corcap, Inc.
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