8-K/A 1 d26987_8-k.txt CURRENT REPORT 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): July 17, 2001 Commission File Number 001112279 R-TEC HOLDING, INC. (Exact name of registrant as specified in its charter) IDAHO 82-0515707 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1471 E. COMMERCIAL AVE., BOISE, IDAHO 83642 (Address of Principal Executive Office) (Zip Code) (208) 887-0953 Registrant's Telephone No., including area code: Indicate by a check mark whether Registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. YES (X) NO ( ) EXPLANATION OF AMENDMENT The Registrant, R-Tec Holding, Inc., ("The Company"), filed an initial report on Form 8-K on August 01, 2001 with the Securities and Exchange Commission. This report amends Item 7, FINANCIAL STATEMENTS, PRO-FORMA INFORMATION AND EXHIBITS, for the purchase of R-Tec Machine Tool, Inc., an Idaho corporation, within 60 days of August 01, 2001, the date the initial report on Form 8-K was required to be filed. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (A) Financial Statements of Business Acquired. Financial Statements BROWAND, LAMEIRE & ASSOCIATES, INC. December 31, 2000 2 INDEPENDENT AUDITORS' REPORT To the Shareholders Browand, LaMeire & Associates, Inc. Forest Grove, Oregon We have audited the accompanying balance sheet of Browand, LaMeire & Associates, Inc. as of December 31, 2000, and the related statements of operations, changes in 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 auditing standards generally accepted in the United States. 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 provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Browand, LaMeire & Associates, Inc. as of December 31, 2000, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States. Balukoff, Lindstrom, & Co., P.A. Boise, Idaho September 18, 2001 3 BROWAND, LAMEIRE & ASSOCIATES, INC. BALANCE SHEET December 31, 2000 Current assets Cash $ 8,966 Accounts receivable 176,855 Notes receivable 23,938 Other assets 1,274 -------- Total current assets 211,033 Fixed assets, net of accumulated depreciation 9,394 Investment in partnership 80,000 -------- Total assets $300,427 ======== Current liabilities Accounts payable $ 56,717 Notes payable, related parties 89,731 -------- Total current liabilities 146,448 Shareholders' equity Common stock, no par value, 1,000 authorized, 1,000 shares issued and outstanding 1,000 Retained earnings 152,979 -------- Total shareholders' equity 153,979 -------- Total liabilities and shareholders' equity $300,427 ======== See accompanying notes 4 BROWAND, LAMEIRE & ASSOCIATES, INC. STATEMENT OF OPERATIONS Year Ended December 31, 2000 Revenues $450,040 Cost of revenues 64,169 -------- Gross profit 385,871 Selling, general and administrative expenses 214,352 -------- Operating income 171,519 Interest income 2,506 -------- Net income $174,025 ======== Net income per common share $ 0.17 Weighted average shares outstanding 1,000 See accompanying notes 5 BROWAND, LAMEIRE & ASSOCIATES, INC. STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY Year Ended December 31, 2000 Common Retained Stock Earnings Total ------ --------- --------- Balance at January 1, 2000 $1,000 $ 73,442 $ 74,442 Net income -- 174,025 174,025 Dividends -- (94,488) (94,488) ------ --------- --------- Balance at December 31, 2000 $1,000 $ 152,979 $ 153,979 ====== ========= ========= See accompanying notes 6 BROWAND, LAMEIRE & ASSOCIATES, INC. STATEMENT OF CASH FLOWS Year Ended December 31, 2000 Cash flows from operating activities Net income $ 174,025 Adjustments to reconcile net income to net cash provided by operating activities Depreciation 4,617 Changes in assets and liabilities Accounts receivable (119,903) Other assets (450) Accounts payable 36,846 --------- Net cash provided by operating activities 95,135 Cash flows from investing activities Loans made (24,000) Collection on loans 62 Dividends paid (94,488) Purchase of fixed assets (2,043) --------- Net cash used by investing activities (120,469) Cash flows from financing activities Proceeds from notes payable 134,386 Payments on notes payable (110,580) --------- Net cash provided by financing activities 23,806 --------- Net decrease in cash (1,528) Beginning cash 10,494 --------- Ending cash $ 8,966 ========= See accompanying notes 7 BROWAND, LAMEIRE & ASSOCIATES, INC. NOTES TO FINANCIAL STATEMENTS December 31, 2000 NOTE A - SIGNIFICANT ACCOUNTING POLICIES Organization Browand, LaMeire & Associates, Inc., (the Company), an S-Corporation formed in 1990, is a company specializing in marketing and sales of test interface devices to the high tech industry. Revenue Recognition The Company's revenue is derived primarily from providing marketing services to clients in the high tech industry. Revenues are recognized at the time the actual product is sold by the Company's clients. Credit Risk The Company grants credit to customers primarily in the technology industry throughout the United States. The accounting loss incurred if all parties failed entirely to perform on their obligation is equal to the balance outstanding for trade accounts receivable. Cash Equivalents The Company considers all highly liquid investments maturing in three months or less as cash equivalents. Fixed Assets Capital additions are classified as fixed assets and are recorded at cost. Depreciation is recorded by use of the straight-line method. The book value of each asset is reduced by equal amounts over its estimated useful life. Maintenance and repairs are charged to operations as incurred. When an asset is disposed of, accumulated depreciation is deducted from the original cost, and any gain or loss arising from its disposal is credited or charged to operations. 8 BROWAND, LAMEIRE & ASSOCIATES, INC. NOTES TO FINANCIAL STATEMENTS December 31, 2000 Significant Customers and Suppliers The Company recorded revenue from services provided to customers that exceeded ten percent of total revenue as follows: 2000 --------- Connect2it (related party) $ 148,169 Gamma Technologies 61,350 R-Tec Corporation 197,056 --------- $ 406,575 ========= Income Taxes The shareholders have elected to be taxed as an "S" Corporation as defined by the Internal Revenue Code, wherein the shareholders report net earnings of the Corporation on their personal tax returns. Accordingly, no provision or liability for income taxes has been included in the financial statements. Value of Financial Instruments The Company estimates that the fair value of all financial instruments, at December 31, 2000, do not differ materially from the aggregate carrying values of its financial instruments recorded in the accompanying balance sheet. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. Considerable judgment is required in interpreting market data to develop the estimates of fair value, and accordingly, the estimates are not necessarily indicative of the amounts that the Company could realize in a current market exchange. Estimates Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and reported revenues and expenses. Significant estimates used in preparing these financial statements include those assumed in determining the collectibility of receivables. It is at least reasonably possible that the significant estimates used will change within the next year. Earnings Per Share Earnings per share are computed by dividing net income available to common shareholders by the weighted average number of shares outstanding. 9 BROWAND, LAMEIRE & ASSOCIATES, INC. NOTES TO FINANCIAL STATEMENTS December 31, 2000 NOTE B - FIXED ASSETS Fixed assets consists of: 2000 -------- Furniture and fixtures $ 40,140 Software 977 -------- 41,117 Accumulated depreciation and amortization (31,723) -------- $ 9,394 ======== The estimated useful lives of furniture and fixtures is five to seven years and software is three years. NOTE C - NOTES RECEIVABLE During 2000, the Company made an advance to a Company representative. The advance was recorded as a note receivable. The note bears interest at 15% and is payable from future commissions owed to the representative. NOTE D - INVESTMENT IN PARTNERSHIP The Company purchased a 5% interest in Connect2it, LLC for $30,000 during 1998, which was accounted for using the cost method. During 1999, the Company purchased an additional 15% of Connect2it, LLC for $50,000. The investment continued to be accounted for using the cost method. Subsequent to year end, July 13, 2001, the Company sold their share of the investment back to Connect2it, LLC for $109,742. NOTE E - NOTES PAYABLE TO SHAREHOLDERS At December 31, 2000 the Company owes the shareholders $89,731. The note does not bear interest and is due on demand. NOTE F - RELATED PARTY TRANSACTIONS As described in Note D, the Company owns 20% of Connect2it, LLC. Sales to Connec2it, LLC for 2000 were $148,168. The Company has accounts receivable from Connect2it, LLC at December 31, 2000 in the amount of $34,050. 10 BROWAND, LAMEIRE & ASSOCIATES, INC. NOTES TO FINANCIAL STATEMENTS December 31, 2000 NOTE G - SUBSEQUENT EVENT On July 17, 2001, R-Tec Holding, Inc. acquired certain assets from the Company pursuant to an Asset Purchase Agreement by and between R-Tec Holding, Inc. and the two individual shareholders of the Company. Under the terms of the Agreement, R-Tec Holding, Inc. agreed to acquire certain assets, which include the client list and industry contacts and certain items of office equipment. Consideration for the acquisition was 380,000 shares of the common stock of R-Tec Holding, Inc. valued at $1.00 per share, which the parties agree and acknowledge was the fair market value of R-Tec Holding, Inc.'s shares as of the date of the Agreement. The Agreement provides for each of the two Company's shareholders to receive equal shares of R-Tec Holding, Inc.'s common stock in the transaction. NOTE H - RECENTLY ISSUED ACCOUNTING STATEMENTS In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." This statement establishes accounting and reporting standards for derivatives as assets or liabilities in the statement of financial position and measurement of those instruments at fair value. In June 1999, the FASB issued SFAS No. 137 "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133" which delays the effective date of SFAS No. 133 to fiscal years beginning after June 15, 2000. In June 2000 the FASB issued SFAS No. 138 "Accounting for Certain Derivative Instruments and Certain Hedging Activities" which amends some of the provisions of FASB 133. The Company believes that the adoption of these accounting standards will not have any material effect on the financial statements of the Company. 11 (B) Pro Forma Financial Information These financial statements do not purport to represent the combined results of operations of R-Tec Holding, Inc. (R-TEC or The Company) and Browand, LaMeire & Associates, Inc. (BLA) that might have occurred had the BLA acquisition been completed on such dates, nor are they indicative of future results of operations. The pro forma adjustments relate to the purchase allocation of and give effect to marking certain assets to fair market value. The Company has made reclassifications to certain liabilities of BLA consistent with the purchase method of accounting. Other adjustments may be recorded based upon information received in the future. Such adjustments may have a significant impact on total assets and liabilities, cost of operations, depreciation and amortization, and other expense accounts. Any purchase accounting adjustments, or related costs and possible charges arising from the purchase of BLA, may materially impact the Company's future combined financial position and combined financial results of operations. These pro forma financial statements also do not give effect to possible future sales of assets or certain of the operations or to any cost savings of other benefits of the business combination that may result from the integration of BLA and the Company. The unaudited pro forma combined financial statements should be read in conjunction with the notes to the unaudited pro forma combined financial statements, the historical consolidated financial statements of the Company and related notes as previously filed with the Securities and Exchange Commission and incorporated herein. 12 R-TEC HOLDING, INC. AND SUBSIDIARIES PRO FORMA COMBINED BALANCE SHEET AS OF DECEMBER 31, 2000

The accompanying notes are an integral part of these pro forma financial statements 13 R-TEC HOLDING, INC. AND SUBSIDIARIES PRO FORMA COMBINED STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2000 R-TEC HOLDING, INC. AND SUBSIDIARIES Pro Forma Combined Statement Of Operations Year Ended December 31, 2000

The accompanying notes are an integral part of these pro forma financial statements 14 NOTE 1. R-TEC HOLDING, INC. AND SUBSIDIARIES HISTORICAL. The historical balances represent the balance sheet and results of operations for R-TEC as of each period indicated as previously reported in the combined pro forma financial statements (including the stock acquisition of R-Tec Machine Tool, Inc. (RTMT)) of R-TEC reported pursuant to Form 8-KA filed on September 17, 2001. NOTE 2. BROWAND, LAMEIRE & ASSOCIATES, INC. HISTORICAL The historical balances represent the balance sheet and results of operations for BLA, as of December 31, 2000 and each period indicated as reported. NOTE 3. PRO FORMA ADJUSTMENTS. The pro forma adjustments were made to reflect the purchase price paid for the assets by R-TEC and to reflect the acquisition as if it had occurred on January 1, 2000. The pro forma adjustments related to the purchase allocation of BLA give effect to the marking of certain assets to fair market value, consistent with the purchase method of accounting. R-TEC will consider future operational activities and results to determine if appraisals to both asset and liability accounts are required due to circumstances which may arise in the ordinary course of business. Other adjustments may be recorded based upon information to be received in the future and may have a significant impact on total assets, total liabilities, cost of operations, depreciation and amortization, and other expense accounts. Any purchase accounting adjustments, or related costs and possible charges arising from the purchase of BLA may materially impact the Company's future combined financial position and combined financial results of operations. These pro forma financial statements do not give effect to possible future sales of assets or certain of the operations or to any cost savings or other benefits of the business combination, which may result from the integration of R-TEC and BLA. The pro forma adjustments reflected in the pro forma combined financial statements give effect to the following: 15 a) Other assets, Shareholders' Equity To adjust pro forma combined assets to fair market value of BLA assets acquired. Other assets to include customer lists amortized over a five year time period. b) Revenue, Direct Operating Costs To eliminate intercompany sales between R-TEC and the BLA. c) Non-acquired Assets and Liabilities To eliminate non-acquired assets and liabilities not acquired and not assumed in the asset purchase. 16 (C) Exhibits 23.1 Consent of Balukoff, Lindstrom & Co., P.A. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. R-Tec Holding, Inc. (Registrant) Date: September 14, 2001 By: /s/ Douglas G. Hastings -------------------------- Douglas G. Hastings President / CEO By: /s/Michael T. Montgomery -------------------------- Michael T. Montgomery Chief Financial Officer 17

R-TEC HOLDING INC 8-K/A