UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported)
March 27, 2002 (January 15, 2002)
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ND Holdings, Inc.
(Exact name of registrant as specified in its charter)
North Dakota 0-25958 45-040406
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(State or other (Commission (IRS Employer
Jurisdiction File Number) Identification No.)
Of Incorporation)
1 North Main Street, Minot, North Dakota 58703
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (701) 852-5292
This Document consists of 5 pages
Item 2:
Acquisition of Capital Financial Services, Inc.
Through an agreement executed on January 15, 2002, the Registrant, ND Holdings,
Inc. acquired one hundred percent of the equity stock of Capital Financial
Services, Inc., a Wisconsin Corporation from two individuals, Charles G.
Hartman and Geoffrey Legler. Capital Financial Services, Inc. is an NASD
Regulation, Inc. member Broker Dealer with offices in Madison, Wisconsin.
The transaction was an arms length purchase and sale transaction negotiated
by the representatives of each party to the agreement. On January 15, 2002,
the final closing of the transaction occurred and control and ownership of
Capital Financial Services, Inc. passed to ND Holdings, Inc. As a wholly
owned subsidiary of ND Holdings, Inc., Capital Financial Services, Inc.
will continue its same line and manner of business, that of a Broker Dealer
involved in the sale and distribution of mutual funds, annuities and variable
insurance products. The total purchase price for Capital Financial Services,
Inc. was as follows: $1,140,000 in cash at closing; a convertible debenture
in the principal amount of $250,000 with certain provisions for reduction; the
issuance of 750,000 shares of no par value common stock of ND Holdings, Inc.
in three installments together with certain put rights; and the issuance of
250,000 options to purchase 250,000 shares of no par value common stock of ND
Holdings, Inc. at a strike price of $1.00 per share, with the provisions and
restrictions with respect to each item further defined in the Stock Purchase
Agreement (see attached Exhibit to Form 8K - Stock Purchase Agreement). Prior
to the acquisition of Capital Financial Services, Inc. by ND Holdings, Inc.,
ND Holdings, Inc. had no affiliation with Capital Financial Services, Inc.,
nor its individual shareholders, nor any of the officers, directors, or other
affiliated persons of Capital Financial Services, Inc. ND Holdings, Inc.
utilized existing current assets, working capital and credit lines to fund the
acquisition.
Item 7.
Financial Statements and Pro Forma Financial Information related to acquisition
of Capital Financial Services, Inc.
Financial statements and pro forma financial information required by Item 7 of
Form 8K with respect to the acquisition of Capital Financial Services, Inc. as
a wholly owned subsidiary corporation by ND Holdings, Inc. follow:
1
PRO-FORMA CONSOLIDATED PROFIT AND LOSS STATEMENT (UNAUDITED)
THREE MONTHS ENDED 12-31-01 ND HOLDINGS, INC. CAPITAL FINANCIAL ADJUSTMENTS PRO-FORMA
AND SUBSIDIARIES SERVICES, INC. CONSOLIDATED
REVENUES
Fee Income 751,281 43,950 795,231
Commissions 1,104,954 1,610,391 2,715,345
Internet revenues 146,875 146,875
Total revenue 2,003,110 1,654,341 - 3,657,451
OPERATING EXPENSES
Compensation and Benefits 430,294 430,294
General and administrative expenses 871,942 20,765 892,707
Commission expense 511,492 1,616,608 2,128,100
Sales commission amortized 155,777 155,777
Depreciation and amortization 146,101 146,101
Total operating expenses 2,115,605 1,637,373 - 3,752,978
OPERATING INCOME (LOSS) (112,495) 16,968 - (95,527)
OTHER INCOME (EXPENSES)
Interest and other income 24,293 24,293
Interest expense (76,002) (76,002)
Net other expense (51,709) - - (51,709)
INCOME (LOSS) BEFORE INCOME
TAX EXPENSE (164,204) 16,968 - (147,236)
INCOME TAX BENEFIT (EXPENSE) 35,588 35,588
INCOME (LOSS) BEFORE MINORITY
INTEREST AND CUMULATIVE EFFECT
OF AN ACCOUNTING CHANGE (128,616) 16,968 - (111,648)
Minority interest, net of income taxes 9,344 9,344
Cumulative effect of an
accounting change, net of income taxes - -
NET INCOME (LOSS) AFTER
MINORITY INTEREST AND
CUMULATIVE EFFECT OF AN
ACCOUNTING CHANGE (119,273) 16,968 - (102,305)
EARNINGS (LOSS) PER COMMON SHARE:
Basic (0) (0)
Diluted (0) (0)
SHARES USED IN COMPUTING
EARNINGS (LOSS) PER COMMON SHARE:
Basic 6,545,282 750,000 7,295,282
Diluted 6,545,282 750,000 7,295,282
2
PRO-FORMA CONSOLIDATED BALANCE SHEET (UNAUDITED)
THREE MONTHS ENDED 12-31-01 ND HOLDINGS, INC. CAPITAL FINANCIAL PRO-FORMA PRO-FORMA
AND SUBSIDIARIES SERVICES, INC. ADJUSTMENTS CONSOLIDATED
CURRENT ASSETS
Cash and Cash Equivalents 1,834,683 13,228 (1,153,228) a 694,683
Cash segregated for the exclusive
benefit of customers 298,536 298,536
Securities available-for-sale 128,556 24,267 (24,267) b 128,556
Accounts Receivable 509,490 420,722 (320,722) c 609,490
Prepaids 111,678 111,678
Total current assets 2,882,943 458,217 (1,498,217) 1,842,943
PROPERTY AND EQUIPMENT 2,049,236 2,049,236
Less accumulated depreciation (607,597) (607,597)
Net property and equipment 1,441,639 - 1,441,639
OTHER ASSETS
Deferred sales commissions 1,459,536 1,459,536
Covenant not to compete (net of accumulated
amoritization of $122,624 for 2001 and
of $368,124 for 2000) 95,376 95,376
Investment adviser's agreements (net of
accumulated amortization of $1,754,816 for
2001 and $1,449,689 for 2000) 4,350,657 4,350,657
Other 984,641 38,300 2,040,000 d 3,062,941
Total other assets 6,890,210 38,300 2,001,700 8,930,210
TOTAL ASSETS 11,214,792 496,517 503,483 12,214,792
LIABILITIES
CURRENT LIABILITIES
Service fees payable 89,525 89,525
Accounts payable 65,836 65,836
Other current liabilities 464,756 385,802 (385,802) b 464,756
Deferred tax liability 273,434 273,434
Current portion of long-term debt 952,773 952,773
Total current liabilities 1,846,324 385,802 (385,802) 1,846,324
LONG-TERM LIABILITIES
Note Payable 474,375 474,375
Subordinate debentures 645,000 645,000
Debentures 940,000 250,000 e 1,190,000
Corporate notes 962,000 962,000
Common Stock Payable 500,000 e 500,000
Less current portion shown above (952,773) (952,773)
Total long-term liabilities 2,068,602 - 750,000 2,818,602
TOTAL LIABILITIES 3,914,926 385,802 364,198 4,664,926
MINORITY INTEREST IN SUBSIDIARY 411,029 411,029
STOCKHOLDERS' EQUITY
Common stock - 20,000,000 shares
authorized, no par value; 6,462,240 and
7,444,687 shares issued and
outstanding, respectively 8,588,793 5,000 245,000 f 8,838,793
Additional paid in Capital 105,715 (105,715) -
Receivable - unearned ESOP shares (97,093) (97,093)
Accumulated deficit (1,596,862) (1,596,862)
Accumulated other comprehensive
income (loss) (6,001) (6,001)
Total stockholders' equity 6,888,837 110,715 139,285 7,138,837
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY 11,214,792 496,517 503,483 12,214,792
Adjustment Notes to Pro-forma Consolidated Balance Sheet (Unaudited) for the
three months ended December 31, 2001.
3
<FN>
a. Adjustment for cash paid in the acquisition.
b. Adjustment for items not included in the acquisition
c. Adjustment for accounts receivable not included in the acquisition
d. Adjustment for purchase price of acquisition less current assets acquired
e. Adjustment for Debentures and common stock payable with respect to the
acquisition
f. Adjustment for net effect of issuing 250,000 shares and 250,000 options with
respect to the acquisition.
</FN>
Pro-forma Consolidated Profit and Loss Statement (Unaudited)
Twelve Months Ended 12-31-01 ND Holdings, Inc. Capital Financial Adjustments Pro-forma
and Subsidiaries Services, Inc. Consolidated
Fee Income 2,970,581 218,135 3,188,716
Commissions 4,554,559 6,192,932 10,747,491
Internet revenues 642,584 642,584
Total revenue 8,167,724 6,411,067 - 14,578,791
OPERATING EXPENSES
Compensation and Benefits 1,833,715 1,833,715
General and administrative expenses 1,751,487 232 1,751,719
Commission expense 3,583,310 6,411,307 9,994,617
Sales commission amortized 613,738 613,738
Depreciation and amortization 578,534 578,534
Total operating expenses 8,360,784 6,411,539 - 14,772,323
OPERATING INCOME (LOSS) (193,060) (472) - (193,532)
OTHER INCOME (EXPENSES)
Interest and other income 164,641 2,865 167,506
Interest expense (317,924) (317,924)
Net other expense (153,283) 2,865 - (150,418)
INCOME (LOSS) BEFORE INCOME
TAX EXPENSE (346,343) 2,393 - (343,950)
INCOME TAX BENEFIT (EXPENSE) 20,148 (359) 19,789
INCOME (LOSS) BEFORE MINORITY
INTEREST AND CUMULATIVE EFFECT
OF AN ACCOUNTING CHANGE (326,195) 2,034 - (324,161)
Minority interest, net of income taxes 26,367 26,367
Cumulative effect of an
accounting change, net of income taxes -
NET INCOME (LOSS) AFTER
MINORITY INTEREST AND
CUMULATIVE EFFECT OF AN
ACCOUNTING CHANGE (299,828) 2,034 - (297,794)
EARNINGS (LOSS) PER COMMON SHARE:
Basic (0) (0)
Diluted (0) (0)
SHARES USED IN COMPUTING
EARNINGS (LOSS) PER COMMON SHARE:
Basic 6,469,025 750,000 7,219,025
Diluted 6,469,025 7,219,025
4
Exhibits:
None
Signatures
Date: March 27, 2002
ND Holdings, Inc. (Registrant)
/S/ ROBERT WALSTAD
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Robert Walstad, Authorized Officer
CEO