SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): June 1, 1998
IMTEK OFFICE SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 33-24464-NY 11-2958856
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
8003 CORPORATE DRIVE, SUITE C, BALTIMORE, MARYLAND 21236
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (410) 931-2054
Not applicable
(Former name or former address, if changed since last report.)
Item 2. Acquisition or Disposition of Assets.
The Registrant, through its direct wholly-owned subsidiary, Imtek
Corporation ("Corporation"), purchased the business and certain assets of
Perfect Copy, Inc., a Georgia corporation ("Perfect Copy"), pursuant to an
Agreement for the Sale of Assets dated as of June 1, 1998 (the "Agreement").
Prior to the acquisition, Perfect Copy was engaged in the business of selling
and servicing photocopy equipment, typewriters, facsimile machines and other
automated office equipment (the "Business"). Jimi Epps was the sole owner of
Perfect Copy.
The assets acquired by Corporation include all furniture, fixtures,
equipment, automobiles, supplies, tools of trade, accounts receivable,
inventory, contract rights and leasehold interests, books and records, cash in
transit, goodwill, intellectual property, price lists, supplier lists, customer
lists, advertising, and the non-competition obligations of Jimi Epps and Donald
Blackburn (the "Purchased Assets"). The Agreement excludes from Purchased Assets
all cash on hand or on deposit, the cash surrender value of any life insurance
policies, marketable securities and certain other assets set forth in the
schedules to the Agreement. Corporation did not expressly assume any liabilities
in connection with the acquisition, except that Corporation agreed to assume
Perfect Copy's liabilities and responsibilities under the unexpired terms of
certain maintenance and service contracts, provided such liabilities do not
exceed One Hundred Thousand Dollars ($100,000) in the aggregate (the "Assumed
Contractual Responsibilities"). In exchange for the Purchased Assets,
Corporation paid Perfect Copy Three Hundred Sixty Thousand Dollars ($360,000) at
closing, and agreed to pay, and has paid, Fifty Thousand Dollars ($50,000) to
Perfect Copy within one year of closing. In addition, Corporation agreed to
assume the Assumed Contractual Responsibilities.
Corporation paid a business broker $23,000 in connection with the
acquisition of Perfect Copy. Payment of the cash consideration by Corporation is
subject to a right of set-off in the event that Perfect Copy fails to pay all of
its liabilities, accounts payable or other obligations which are not expressly
disclosed or which are not expressly assumed by Corporation pursuant to the
Agreement. The consideration provided by the Agreement represents a price which
was negotiated between the management of the Registrant and Corporation, on one
hand, and the management of Perfect Copy, on the other.
The Purchased Assets, including the equipment and other physical
property acquired under the Agreement, were used by Perfect Copy in
connection with the Business and continue to be used after the closing date
by Corporation in connection with Corporation's business of selling, leasing
and servicing of photocopy equipment, typewriters, facsimile machines and
other automated office equipment. None of the officers, directors or
beneficial or record holders of Perfect Copy securities were officers,
directors, or beneficial or record holders of the Registrant's securities or
otherwise affiliated with the Registrant or any of its affiliates, directors,
officers or associates of such directors or officers.
The funds used by the Registrant to acquire the assets of Perfect
Copy were funds made available to the Registrant from FINOVA Mezzanine
Capital Corp. (formerly Sirrom Capital Corporation, a Tennessee corporation)
("FINOVA"), in accordance with that certain Loan Agreement dated May 29, 1998
by and among FINOVA, the Registrant and the Registrant's subsidiaries.
The only audited financial statement available to Registrant and
included in this Report is the audited balance sheet for Perfect Copy for the
year ended December 31, 1997 (the "1997 Balance Sheet"). Rule 3-05 and
Article 11 of Regulation S-X require the Registrant to disclose additional
audited financial statements and other financial information which are not
provided in this Report because the information and documentation necessary
to prepare and audit the financial statements and prepare such other
financial information relating to Perfect Copy, other than the 1997 Balance
Sheet, are not currently available to the Registrant. The Registrant, by
filing this Report together with the 1997 Balance Sheet and the unaudited
balance sheet for Perfect Copy as of May 31, 1998, is attempting to provide
all required audited financial statements as are currently available to it
relating to Perfect Copy. The Registrant will file all other required
financial statements and other financial information upon receipt of the
information and documentation necessary to permit the preparation and audit
of such financial statements and financial information, but can provide no
assurance that it will indeed receive such information and documentation in a
form which will permit the preparation and audit of the additional financial
statements and information required by Rule 3-05 and Article 11 of Regulation
S-X.
(1)
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Available Audited Financials. Certain Financial Statements
are not included herein. SEE Item 2.
(i) Report of Independent Certified Public Accountants
(ii) Audited Balance Sheet of Perfect Copy for the Year
Ended December 31, 1997 and unaudited Balance
Sheet of Perfect Copy for the Period ended May 31,
1998
(iii) Notes to Balance Sheets
(b) Proforma Financial Statements--None Available. SEE Item 2.
(c) Exhibits
2.1 Perfect Copy Agreement for Sale of Assets dated June
3, 1998 but made effective as of June 1, 1998 by and
between Imtek Corporation and Perfect Copy, Inc., is
fully set forth as Exhibit 2.6 of the Annual Report
of Registrant filed on Form 10-K on October 13, 1998,
and is incorporated herein by reference.
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.
IMTEK OFFICE SOLUTIONS, INC.
(Registrant)
Date: October 7, 1999 By: /s/ EDWIN C. HIRSCH
-------------------------------------
Edwin C. Hirsch, Chief Executive Officer
(2)
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Perfect Copy, Inc.
We have audited the accompanying balance sheet of Perfect Copy, Inc. (the
Company) as of December 31, 1997. This financial statement is the responsibility
of the Company's management. Our responsibility is to express an opinion on this
financial statement 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 balance sheet is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall balance sheet presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above present fairly, in all
material respects, the financial position of Perfect Copy, Inc. as of December
31, 1997, in conformity with generally accepted accounting principles.
/s/ Grant Thornton LLP
-------------------------------
Grant Thorton
BALTIMORE, MARYLAND
MARCH 26, 1999
F-1
PERFECT COPY, INC.
BALANCE SHEETS
MAY 31, 1998 AND DECEMBER 31, 1997
- -------------------------------------------------------------------------------------------------------------------
May 31, 1998
ASSETS (Unaudited) December 31, 1997
-------------- -----------------
CURRENT ASSETS
Cash and cash equivalents $ 39,444 $4,641
Accounts receivable 56,327 109,561
Inventory 242,000 56,794
Deferred taxes 29,500 21,745
------- -------
Total current assets 367,271 192,741
PROPERTY AND EQUIPMENT - AT COST, less accumulated
depreciation and amortization 3,389 6,777
OTHER ASSETS
Deposits 1,539 855
------- -------
$372,199 $200,373
------- -------
------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $154,900 $ 64,220
Accrued expenses 4,604 1,562
Due to related party - 24,316
Accrued income taxes payable 27,525 7,038
Deferred revenue 75,000 55,283
------- -------
Total current liabilities 187,029 97,136
NONCURRENT LIABILITIES
Deferred revenue 25,000 18,427
COMMITMENTS - -
STOCKHOLDERS' EQUITY
Common stock, $1 par value; authorized 500,000 shares; 500 issued
and outstanding 500 500
Additional paid-in capital 17,800 17,800
Retained earnings 66,870 11,227
------- -------
85,170 29,527
------- -------
$372,199 $200,373
------- -------
------- -------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT.
F-2
NOTE A - SUMMARY OF ACCOUNTING POLICIES
A summary of significant accounting policies consistently applied in the
preparation of the accompanying balance sheet follows.
DESCRIPTION OF BUSINESS
Perfect Copy, Inc. (the Company) a Georgia corporation, is in the business
of selling and servicing copiers, facsimile machines and printers; sales of
office supplies; and commercial printing and copying. The Company conducts
business in the Gainesville, Georgia metropolitan area.
CASH AND CASH EQUIVALENTS
The Company considers all investments instruments purchased with a maturity
of three months or less to be cash equivalents.
ACCOUNTS RECEIVABLE
The Company utilizes the allowance method of accounting for doubtful
accounts. The Company performs ongoing credit evaluations of its customers
and maintains an allowance for potential credit losses. The allowance is
based on an experience factor and review of current accounts receivable.
Uncollectible accounts are written off against the allowance when deemed
uncollectible. Management considers the accounts receivable to be fully
collectible, accordingly, no allowance for doubtful accounts is recorded.
INVENTORY
Inventories consist of copy machines, facsimile machines, duplicators, and
parts and supplies used in the maintenance of office machines and consumable
supplies. Inventories are stated at lower of cost or market using the
first-in, first-out (FIFO) method.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost and depreciated over the
estimated useful lives using the straight-line method. Expenditures for
maintenance are repairs are charged to expense in the period the charges are
incurred.
Property and equipment estimated useful lives are as follows:
Furniture and fixture 5-7 year
Computer equipment and software 5 year
Vehicles 5 year
F-3
NOTE A - SUMMARY OF ACCOUNTING POLICIES - CONTINUED
USE OF ESTIMATES
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
financial statements and revenue and expenses during the reporting period.
Actual results could differ from those estimates.
INCOME TAXES
Income taxes are provided based on the liability method for financial
reporting purposes.
NOTE B - PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
May 31, 1998 December 31, 1997
------------ -----------------
Computer equipment and software $ 2,830 $ 2,830
Furniture and fixtures 12,060 12,060
Vehicles 25,861 25,861
------ ------
Total property and equipment 40,751 40,751
Less accumulated depreciation and amortization 37,362 33,974
------ ------
Property and equipment, net $ 3,389 $ 6,777
------ ------
------ ------
NOTE C - COMMITMENTS
OPERATING LEASES
The Company conducts its operations in leased facilities. These leases are
month-to-month operating leases which require monthly payments ranging from
$500 to $1,700. The total rent expense for the five month period ended May
31, 1998 was $8,420 and year ended December 31, 1997 was $20,900.
DEFERRED REVENUE
Revenue under maintenance agreements is deferred and recognized ratably over
the term of the agreement, generally one to three years.
F-4
NOTE D - INCOME TAXES
The Company recognizes deferred tax liabilities and assets for the expected
future tax consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred tax liabilities and
assets are determined based on the difference between the financial
statement and tax basis of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to reverse at May
31, 1998 and December 31, 1997. These differences result from the use of the
deferred revenue method for prepaid maintenance contracts for financial
reporting purposes versus the current inclusion method for income tax
purposes.
NOTE E - SUBSEQUENT EVENTS
On June 1, 1998, the Company sold substantially all of its operating assets to
Imtek Office Solutions, Inc.. The assets acquired include furniture and
fixtures ($90,000), accounts receivable ($100,000), inventory ($242,000),
rental equipment ($20,000), and a non-compete agreement ($35,000). The
transaction was funded by a cash payment of $337,000 at settlement, a $50,000
escrow deposit and the assumption of certain maintenance contract liabilities
of $100,000.
F-5