8-K/A 1 e-8962.txt AMENDMENT NO. 1 TO FORM 8-K 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 March 20, 2002 Date of Report (Date of Earliest Reported) FUTRONIX GROUP, INC. (Exact name of registrant as specified in its charter) NEVADA 0-29943 86-0979534 (State of (Commission (I.R.S. Employer Incorporation) File Number) Identification Number) 1760 S. Dimensions Terrace, Homosassa, FL, 34448 (Address of Principal Executive Offices Including Zip Code) (352) 628 1900 (Registrant's Telephone Number) ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS As reported in the registrant's 10-QSB filed on May 20, 2002, on March 20, 2002 the registrant entered into a Stock Purchase Agreement purchasing all the issued and outstanding shares in Futronix, Inc. from its shareholders. All pertinent documents were attached as exhibits to the 8-K/A filed on April 18, 2002. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial statements of business acquired. Audited financial statements for the years ending December 31, 2001 and 2000 and unaudited financial statements for the three months ended March 31, 2002 and 2001 of Futronix, Inc. 2 Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant caused this registration statement to be signed on its behalf by the undersigned thereunto duly authorized. DATE: SEPTEMBER 5, 2002 FUTRONIX GROUP, INC. BY: /s/ Nevin Jenkins ------------------------------------ Nevin Jenkins Its: President and Chief Executive Officer BY: /s/ Tom Smith ------------------------------------ Tom Smith Its: Chief Financial Officer, Principal Financial Officer 3 FUTRONIX, INC. CONTENTS PAGE ---- FINANCIAL STATEMENTS Report of Independent Public Accountants F-2 Report of Independent Public Accountants (to be filed by amendment) F-3 Balance Sheets for the year ended December 31, 2001 and March 31, 2002 (unaudited) F-4 Statements of Operations for the years ended December 31, 2001 and 2000 and for the three months ended March 31, 2002 and 2001 (unaudited) F-5 Statements of Changes in Stockholders' Equity for the years ended December 31, 2001 and 2000 and the three months ended March 31, 2002 (unaudited) F-6 Statements of Cash Flows for the years ended December 31, 2001 and 2000 and for the three months ended March 31, 2002 and 2001 (unaudited) F-7 Notes to Financial Statements F-9 F-1 JAMES C. MARSHALL, CPA, P.C. 14455 N. Hayden Rd, Suite 206 Scottsdale, AZ 85260 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS TO THE BOARD OF DIRECTORS Futronix, Inc. Homosassa, Florida We have audited the accompanying balance sheet of Futronix, Inc., as of December 31, 2001, and the related statements of income, changes in stockholders' 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 of America. 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, the financial statements referred to above present fairly, in all material respects the financial position of Futronix, Inc. as of December 31, 2001 and the results of their operations and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ James C. Marshall, CPA, P.C. June 28, 2002 Scottsdale, Arizona F-2 The year ended December 31, 2000 is subject to re-audit. The report of independent accountants will be filed by amendment as soon as completed. F-3 FUTRONIX, INC. Balance Sheets December 31, 2001 and March 31, 2002 (unaudited)

The accompanying notes are an integral part of these financial statements. F-4 FUTRONIX, INC. Statements of Operations for the years ended December 31, 2001 and 2000 and for the three months ended March 31, 2002 and 2001 (unaudited)

The accompanying notes are an integral part of these financial statements. F-5 FUTRONIX, INC. Statements of Stockholders' Equity for the years ended December 31, 2001 and 2000 and for the three months ended March 31, 2002 (unaudited)

The accompanying notes are an integral part of these financial statements. F-6 FUTRONIX, INC. Statements of Cash Flows for the years ended December 31, 2001 and 2000 and for the three months ended March 31, 2002 and 2001 (unaudited)

Continued F-7 Supplemental Cash Flow Information

The accompanying notes are an integral part of these financial statements. F-8 FUTRONIX, INC. Notes to financial statements for the years ended December 31, 2001 and 2000 and for the three months ended March 31, 2002 and 2001 NOTE 1 - THE COMPANY ORGANIZATION Futronix, Inc. (the "Company") was incorporated in the state of Florida in 1988. The Company is an ISO 9002-certified consignment and turnkey contract electronics manufacturer. The Company provides engineering support, design, production and in-circuit testing services, as well as full turnkey box build manufacturing for both consumer products and commercial applications. The Company has customers throughout the United States. On February 20, 2002 the Company changed its par value of common stock to $0.0001 from $1.00 per share, increased the authorized number of shares to 1,000,000 and declared a 10,000 for 1 stock split. This stock split has been reflected as of the earliest period presented to show 1,000,000 shares outstanding with an aggregate par value of $100. On March 20, 2002 the Company entered into an agreement and plan of reorganization with FourthCAI, Inc., a public shell corporation, whereby FourthCAI, Inc. changed its name to Futronix Group, Inc., acquired all of the outstanding stock of the Company, and entered into a recapitalization. Thereafter, the Company is a wholly owned subsidiary of Futronix Group, Inc. GOING-CONCERN CONSIDERATIONS As shown in the accompanying financial statements, the Company has incurred an accumulated deficit of $1,957,762 and has a deficit in working capital of approximately $2,055,770 as of December 31, 2001. The ability of the Company to continue as a going concern is dependent on obtaining additional capital and financing and operating at a profitable level. The Company intends to seek additional capital either through debt or equity offerings and to increase operating margins and sales volume to achieve profitability. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING The Company prepares its financial statements on the accrual accounting basis. Consequently, certain revenue and related assets are recognized upon completion of the earning process rather than when received, and certain expenses are recognized when the obligation is incurred or the asset consumed, rather than when paid. CASH AND CASH EQUIVALENTS Cash and cash equivalents are composed of highly liquid investments with an original maturity of less than three months. As a result of the Company's cash management system, including the borrowing against receivables, certain payments may create negative book cash balances. Such negative balances are included in liabilities for each period end. F-9 FUTRONIX, INC. Notes to financial statements for the years ended December 31, 2001 and 2000 and for the three months ended March 31, 2002 and 2001 (continued) NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued) ACCOUNTS RECEIVABLE Accounts receivable are stated net of allowances for doubtful accounts of $38,451 and $55,117 at December 31, 2001 and March 31, 2002, respectively. FINANCIAL INSTRUMENTS The carrying amount of the Company's financial instruments, which include cash equivalents, accounts receivable, accounts payable and short and long term debt, approximates their fair value at the end of each period. INVENTORIES Inventories are stated at the lower of cost (determined on the first-in, first-out basis) or market and consist of electronic parts, components and finished goods. PROPERTY, PLANT AND EQUIPMENT Property, plant, and equipment are stated on the basis of cost. Depreciation is computed principally by the straight-line method. Estimated useful lives for financial reporting purposes are as follows: Buildings 31.5 years Machinery and equipment 3-7 years LAND HELD FOR SALE Land not used by the Company for its manufacturing site is available for sale. This land is carried at cost which is not in excess of its fair market value. OTHER ASSETS The prepaid assets is subject to amortization as loan-closing costs, these costs are being amortized over the term of the loan. INCOME TAXES The Company and its stockholders elected at incorporation under the Internal Revenue Code to be taxed as an S corporation. In lieu of corporate income taxes, the stockholders are taxed on their proportionate share of the Company's net income. Accordingly, no provision or liability for income taxes has been made in the accompanying financial statements. As a result of the reorganization on March 20, 2002, the subchapter S election was terminated and will be subject to taxation as a C corporation subsequent to that date. F-10 FUTRONIX, INC. Notes to financial statements for the years ended December 31, 2001 and 2000 and for the three months ended March 31, 2002 and 2001 (continued) NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued) ADVERTISING EXPENSE The cost of advertising is expensed as incurred. EARNINGS PER SHARE Earnings per common share are calculated under the provisions of SFAS No. 128, "Earnings per Share," which established new standards for computing and presenting earnings per share. SFAS No. 128 requires the Company to report both basic earnings per share, which is based on the weighted average number of common shares outstanding, and diluted earnings per share, which is based on the weighted average number of common shares outstanding plus all potential dilutive common shares outstanding. There were no potentially dilutive instruments outstanding. Therefore, basic and dilutive earnings per share are the same for each period. IMPAIRMENT OF LONG-LIVED ASSETS The Company accounts for impairment of long-lived assets in accordance with Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" (SFAS 121"). SFAS 121 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the book value of the asset may not be recoverable. The Company evaluates on each balance sheet date whether events or circumstances have occurred that indicate a possible impairment. In accordance with SFAS 121, the Company uses an estimate of the future undiscounted net cash flows of the related asset or asset group over the remaining life in measuring whether the assets are recoverable. 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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. F-11 FUTRONIX, INC. Notes to financial statements for the years ended December 31, 2001 and 2000 and for the three months ended March 31, 2002 and 2001 (continued) NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued) IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets." This statement establishes accounting and reporting standards for goodwill and intangibles for years commencing after December 15, 2001. Whether already acquired or subsequently acquired after the effective date, companies are required to identify intangibles with finite lives and those with indefinite lives. Those intangibles with finite lives are to be amortized over the estimates useful lives of the assets while those with indefinite lives are not to be amortized. Goodwill is not be amortized. Each intangible or goodwill asset should be analyzed at least annually for impairment where the carrying value is in excess of the fair value of the intangibles and in excess of the implied fair value in the case of goodwill assets. The asset's carrying value is to be reduced by a charge to income if the fair value is lower than the carrying value. The Company has no amortizing intangibles or goodwill, therefore, the impact of implementation of SFAS No. 142 is not material. NOTE 3 - ACCOUNTS RECEIVABLE AND ACCOUNTS RECEIVABLE USED AS COLLATERAL The Company has recorded a bad debt reserve against its accounts receivable of $38,451 and $55,117 as of December 31, 2001 and March 31, 2002, respectively. The Company has pledged with recourse certain accounts receivable in exchange for cash advances received by the Company on a revolving basis. The outstanding advances were $708,330 and $963,780 as of December 31, 2001 and March 31, 2002, respectively. The lender maintains the restricted cash balance as additional collateral against the collection of the receivables. The interest rate on these factored receivables is the prime rate plus 2%. NOTE 4 - INVENTORY Components of inventory are as follows at December 31, 2001 and March 31, 2002: December 31, 2001 March 31, 2002 ----------------- -------------- Raw materials $517,726 $779,961 Work-in progress 89,700 139,877 Finished goods 1,697 74 -------- -------- $609,123 $919,912 ======== ======== F-12 FUTRONIX, INC. Notes to financial statements for the years ended December 31, 2001 and 2000 and for the three months ended March 31, 2002 and 2001 (continued) NOTE 5 - PROPERTY AND EQUIPMENT Property and equipment consist of the following as of December 31, 2001 and March 31, 2002: December 31, 2001 March 31, 2002 ----------------- -------------- Land $ 25,000 $ 25,000 Building 357,701 357,701 Furniture and equipment 1,988,561 1,993,916 Vehicles 18,319 18,319 ---------- ---------- 2,389,581 2,394,936 Accumulated depreciation 1,636,057 1,664,974 ---------- ---------- $ 753,524 $ 729,962 ========== ========== Depreciation expense for the years ended December 31, 2001 and 2000 was $179,980 and $174,195, and for the three months ended March 31, 2002 and 2001 was $28,917 and $51,480, respectively. NOTE 6 - ACCOUNTS PAYABLE Under the Company's working relationship with a financial institution it routinely maintains an overdraft position in its bank balance. Included in accounts payable are bank overdrafts of $70,198 and $121,014 as of December 31, 2001 and March 31, 2002, respectively. NOTE 7 - NOTES PAYABLE

F-13 FUTRONIX, INC. Notes to financial statements for the years ended December 31, 2001 and 2000 and for the three months ended March 31, 2002 and 2001 (continued) NOTE 7 - NOTES PAYABLE (continued)

F-14 FUTRONIX, INC. Notes to financial statements for the years ended December 31, 2001 and 2000 and for the three months ended March 31, 2002 and 2001 (continued) NOTE 8 - NOTE PAYABLE - RELATED PARTY At March 31, 2002, the Company had notes payable to its parent company, Futronix Group, Inc., in the amount of $182,568. There are no repayment terms. NOTE 9 - CONCENTRATION OF CREDIT RISK Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and trade accounts receivable. The Company maintains cash and cash equivalents and short and long-term investments with various financial institutions. The Company performs periodic evaluations of the relative credit standing of those financial institutions that are considered in the Company's investment strategy. The Company does not require collateral on these financial instruments. As of December 31, 2001 and March 31, 2002, the Company had no cash deposits in excess of federally insured limits. Concentrations of credit risk with respect to trade accounts receivable are limited due to the relatively large size of the individual entities comprising the Company's customer base and the evaluation of the entities credit worthiness. However, as of December 31, 2001 and March 31, 2002, the Company's net receivables from companies were approximately $772,536 and $1,121,623, respectively. The Company does not require collateral for trade accounts receivable, and, therefore, the Company could record losses up to this amount if these customers fail to pay. Sales to the Company's three major customers accounted for approximately 54% for the year ended December 31, 2001 and the three months ended March 31, 2002. The individual customers comprised 25%, 16% and 13% of net sales. The Company anticipates that significant customer concentration will continue for the foreseeable future, although the companies which constitute the Company's largest customers may change. NOTE 10 - RELATED PARTY TRANSACTIONS An owner and officer of the Company was paid royalties on sales of certain products. Royalty expenses for the years ending December 31, 2001 and 2000 totaled approximately $5,040 and $52,000, respectively. There were no royalty payments during the quarter ended March 31, 2002. An owner of the Company received payments on a loan to the Company totaling approximately $13,864 and $54,000 during the years ending December 31, 2001 and 2000, respectively. At December 31, 2001, the owner converted the remaining principal of $112,085 to additional paid in capital. Additionally, during the quarter ended March 31, 2002 the owners converted notes payable of $171, 240 to additional paid in capital The owners of the Company transferred ownership of the land and building used in the Company's operations to the Company during the year ended December 31, 2000. The Company had previously leased the property. The property was transferred at the owners' book value of $729,800. Liabilities associated with the property totaling $1,116,810 were transferred to the Company and the owners forgave debt and related interest owed to them by the Company in the amount of $387,010. F-15 FUTRONIX, INC. Notes to financial statements for the years ended December 31, 2001 and 2000 and for the three months ended March 31, 2002 and 2001 (continued) NOTE 11 - COMMITMENTS AND CONTINGENCIES A financial institution is suing the Company for an alleged covenant violation on an equipment loan. In 2002 the Company has subsequently settled this matter at an additional cost of $32,000 by making total payments due, including interest, to the financial institution of $467,885 by November 19, 2002. A vendor is suing the Company for payment on inventory that the Company has not received. The Company does not believe there will be a material adverse effect from this. NOTE 12 - UNRECORDED BUSINESS COMBINATION AND LITGATION Effective May 2000, the Company entered into an agreement to be acquired by Salient Cybertech, Inc. ("Salient") pursuant to an Agreement and Plan of Reorganization (the "Merger Agreement"). The Merger Agreement called for consideration to be paid to the Company's shareholders in the form of shares of Salient's common and preferred stock. The Merger Agreement also called for working capital totaling $3,000,000 to be infused into the Company by Salient. The Company believes that the terms of the Merger Agreement were not fulfilled by Salient because the aggregate required funding was never received by the Company. Additionally, no articles of merger were filed with the Florida Department of State. Therefore, the Company does not believe a change in ownership occurred. In March 2001, Salient entered into an agreement to sell the Company to Trident Systems International, Inc. ("Trident"). It is the Company's belief that this transaction was not completed and Trident did not acquire an interest in the Company. In connection with the above described Merger Agreement, Salient filed a lawsuit against the Company and its shareholders alleging its ownership of the Company and alternatively, seeking the return of the capital advances of $1,325,000, paid to the Company, plus additional damages. The Company has taken the position that it is not liable to Salient for the full return of the cash advances it received from Salient. Subsequent to December 31, 2001, the parties have been involved in settlement negotiations. Although the Company anticipates settling this litigation in the near future, no settlement agreement has been finalized. The proposed terms of the settlement require the issuance of 900,000 shares of preferred convertible stock, stated value $1.00 per share of Futronix Group, Inc. ("Futronix"), the parent company of the Company. As a result of these settlement negotiations and subsequent to December 31, 2001, the Company has capitalized the advances as additional paid in capital of $1,325,000. In the event that the settlement negotiations fail and the lawsuit is decided against the Company, the Company could be liable to Salient for some or all of the advances, plus applicable interest, and possibly other damages, all of which would likely have a material adverse impact on the Company and Futronix. NOTE 13 - COMMON STOCK On February 20, 2002 the Company changed its par value of common stock to $0.0001 from $1.00 per share, increased the authorized number of shares to 1,000,000 and declared a 10,000 for 1 stock split. This stock split has been reflected as of the earliest period presented to show 1,000,000 shares outstanding with an aggregate par value of $100. F-16 FUTRONIX, INC. Notes to financial statements for the years ended December 31, 2001 and 2000 and for the three months ended March 31, 2002 and 2001 (continued) NOTE 14 - EARNINGS (LOSS) PER SHARE Earnings and loss per share of common stock has been computed based on the weighted average number of shares outstanding after giving effect to the stock split. For all periods, the outstanding shares were 1,000,000. There were no outstanding stock options and there were no other dilutive items outstanding; therefore, basic and diluted loss per share are the same. F-17

FUTRONIX GROUP INC 8-K/A