8-K/A 1 b315996_8ka.txt AMENDMENT TO 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) November 14, 2001 ------------------ PHOENIX WASTE SERVICES COMPANY, INC. -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 0-27832 22-3755400 -------------------------------------------------------------------------------- (State or other (Commission (IRS Employer jurisdiction of File Number) Identification No.) incorporation) 60 Park Place, Suite 509, Newark, New Jersey 07102 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (973) 297-5400 -------------- N/A -------------------------------------------------------------------------------- (Former name or former address, if changed since last report.) PLEASE ADDRESS ALL CORRESPONDENCE TO: Mark Gasarch, Esq. 40 West 57th Street 33rd Floor New York, New York 10019 Item 2. Acquisition or Disposition of Assets As reported in its Form 8-K filed November 15, 2001, on November 14, 2001 Phoenix Waste Services Company, Inc. (the "Company") acquired, pursuant to a Restated and Amended Stock Purchase Agreement with Jeffrey Parker, David Parker and Jamie Parker, all of the outstanding shares of Miners Fuel Company, Inc.; acquired, pursuant to a Restated and Amended Stock Purchase Agreement with Jeffrey Parker and Michael Fiorillo, all of the outstanding shares of Miners Environmental Inc. and acquired, pursuant to a Restated and Amended Stock Purchase Agreement with Jeffrey Parker, David Parker and Jamie Parker, all of the outstanding shares of Miners Oil Company, Inc. (Miners Fuel Company, Inc., Miners Environmental Inc. and Miners Oil Company, Inc., collectively the "Miners Entities"), Pennsylvania corporations located in Tremont, Pennsylvania for a purchase price of no less than $8,000,000 and no greater than $8,600,000 depending upon the Miners Entities' earnings before interest, taxes, depreciation and amortization ("EBITDA") for its fiscal years 2001 and 2002. At closing, the Company paid to the owners of the Miners Entities $7,823,189 in cash plus promissory notes in the amount of $176,811. In addition, the Company will pay up to $300,000 in total for each of fiscal years 2001 and 2002 provided that the EBITDA of the Miners Entities exceeds $4,000,000 in each of those two years. Included in this filing is the financial information required by Item 7 of Form 8-K. Item 7. Financial Statements and Exhibits (a) Combined Financial Statements and Independent Auditors' Report for the Miners Group as at October 31, 2001 and December 31, 2000 (b) Unaudited Consolidated Pro Forma Financial Information MINERS GROUP COMBINED FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT OCTOBER 31, 2001 AND DECEMBER 31, 2000 MINERS GROUP CONTENTS ================================================================================ Independent Auditors' Report F-1 Combined Financial Statements Balance Sheets F-2 Statements of Operations and Retained Earnings F-3 Statements of Cash Flows F-4 - F-5 Notes to Financial Statements F-6 - F-11 INDEPENDENT AUDITORS' REPORT Board of Directors Miners Group We have audited the accompanying combined balance sheets of Miners Group (the "Company") as of December 31, 2000 and the related combined statements of operations and retained earnings, and cash flows for the two years ended December 31, 2000. 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 audits. We conducted our audits 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 audits provide a reasonable basis for our opinion. In our opinion, the combined financial statements referred to above present fairly, in all material respects, the combined financial position of Miners Group as of December 31, 2000 and the results of their operations and their cash flows for the two years ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. /s/ Rothstein, Kass & Company, P.C. Roseland, New Jersey December 14, 2001 F-1 MINERS GROUP COMBINED BALANCE SHEETS

See accompanying notes to combined financial statements. F-2 MINERS GROUP COMBINED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS

See accompanying notes to combined financial statements. F-3 MINERS GROUP COMBINED STATEMENTS OF CASH FLOWS

See accompanying notes to combined financial statements. F-4 MINERS GROUP COMBINED STATEMENTS OF CASH FLOWS (CONTINUED)

See accompanying notes to combined financial statements. F-5 MINERS GROUP NOTES TO COMBINED FINANCIAL STATEMENTS ================================================================================ 1. Nature of operations and summary of significant accounting policies Basis of Combination The accompanying combined financial statements include the accounts of Miners Fuel Company, Inc., Miners Oil Company, Inc., and Miners Environmental Inc. (collectively the "Company" or "Miners Group") all of which are under common control. While these financial statements have been combined, the financial position, results of operations and cash flows do not represent those of a single legal entity. All significant intercompany transactions have been eliminated in combination. Nature of Operations Miners Fuel Company, Inc. ("Fuel") operates a waste transportation business utilizing its fleet of tractors and trailers. Fuel has several large contracts with operators of waste transfer stations, whereby Fuel transports municipal waste from the transfer stations located primarily in the metropolitan areas of New Jersey, Pennsylvania, and Maryland to landfills located primarily in Pennsylvania, Maryland, and Virginia. Miners Oil Company, Inc. ("Oil") is in the business of selling heating oil, fuel and various other commodities primarily to businesses and homeowners located in northeastern Pennsylvania. Miners Environmental Inc. ("Environmental") operates a specialty transportation and service company which transports various materials such as construction and demolition waste and asbestos to landfills approved to accept such materials. Cash Equivalents The Company considers money market accounts and certificates of deposits to be cash equivalents. Inventories Inventories are stated on the first-in, first-out method, at the lower of cost, or market. Inventory costs are comprised of oil and fuel commodities and trucking fleet supply parts. Impairment of Long-Lived Assets The Company periodically assesses the recoverability of the carrying amounts of long-lived assets, including intangible assets. A loss is recognized when expected undiscounted future cash flows are less than the carrying amount of the asset. The impairment loss is the difference by which the carrying amount of the asset exceeds its fair value. Property and Equipment Property and equipment is recorded at cost. Depreciation and amortization are provided on the straight-line method over the estimated useful lives of the assets as follows: Machinery and equipment 5 years Vehicles 5 years Buildings and improvements 40 years Furniture and fixtures 5 years Equipment under capital leases 5 years F-6 MINERS GROUP NOTES TO COMBINED FINANCIAL STATEMENTS ================================================================================ 1. Nature of operations and summary of significant accounting policies (continued) Revenue Recognition The Company recognizes revenues from transportation of waste upon final disposal. Revenue from the delivery of heating oil and other commodities is recognized upon delivery. Income Taxes The Company complies with Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes," which requires an asset and liability approach to financial reporting of income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce the deferred income tax assets to the amount expected to be realized. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. 2. Property and equipment Property and equipment consists of the following at October 31, 2001 and December 31, 2000: October 31, December 31, 2001 2000 (unaudited) Land $ 198,400 $ 198,400 Machinery and equipment 5,653,892 5,706,830 Vehicles 6,726,944 5,088,053 Buildings and improvements 856,886 856,885 Furniture and fixtures 50,329 41,317 Equipment under capital leases 1,864,810 507,470 ----------- ----------- 15,351,261 12,398,955 Accumulated depreciation and amortization (including $237,234 in 2001 (unaudited) and $50,750 in 2000 under capital leases) 8,186,828 6,494,042 ----------- ----------- $ 7,164,433 $ 5,904,913 =========== =========== F-7 MINERS GROUP NOTES TO COMBINED FINANCIAL STATEMENTS ================================================================================ 3. Lines of credit At October 31, 2001 and December 31, 2000, the Company had available lines of credit from a financial institution, which aggregated $1,550,000. The amounts outstanding on these lines were $725,000 and $900,000 at October 31, 2001 (unaudited) and December 31, 2000, respectively. The credit lines bear interest at the financial institution's prime rate (5.5% and 9.5% at October 31, 2001 (unaudited) and December 31, 2000, respectively) plus 1.0%. These lines were repaid subsequent to October 31, 2001 and are no longer available to the Company. 4. Contingencies The Company is subject to various legal proceedings and claims that arise in the ordinary course of business. In the opinion of management, after consultation with legal counsel, the amount of any ultimate liability with respect to these actions will not materially affect the Company's combined financial statements or results of operations. 5. Obligations under capital leases The Company leases certain equipment used for waste hauling under capital leases. Aggregate minimum lease payments for obligations under capital leases in the years subsequent to October 31, 2001 (unaudited) are as follows: Year ending October 31, 2002 $ 438,297 2003 440,676 2004 443,281 2005 256,564 ----------- Total minimum lease payments 1,578,818 Less current portion 438,297 ----------- $ 1,140,521 =========== 6. Related parties Periodically, an officer advances the Company various amounts to meet cash flow requirements. These advances are non-interest bearing and are due on demand. At October 31, 2001 and December 31, 2000, there were no amounts due to the officer. At October 31, 2001 and December 31, 2000, the Company had a note payable to a former shareholder in the amount of approximately $95,000 (unaudited) and $111,000, respectively. This note originated from the Company's buyback and retirement of the former shareholder's outstanding shares of common stock. This note is payable in monthly installments of $1,579, through June 2006. This note is non-interest bearing. F-8 MINERS GROUP NOTES TO COMBINED FINANCIAL STATEMENTS ================================================================================ 7. Notes payable At October 31, 2001 and December 31, 2000, notes payable consists of the following:

Aggregate future required principal payments at October 31, 2001 (unaudited) are as a follows: Year ending October 31, 2002 $ 1,549,866 2003 1,465,934 2004 1,415,423 2005 561,207 2006 51,514 ----------- $ 5,043,944 =========== F-9 MINERS GROUP NOTES TO COMBINED FINANCIAL STATEMENTS ================================================================================ 8. Segment information The Company complies with SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." SFAS No. 131 requires disclosures of segment information on the basis that is used internally for evaluating segment performance and deciding how to allocate resources to segments. Segment information listed below reflects the three principal business units of the Company (as described in Note 1). Each segment is managed according to the products or services, which are provided to the respective customers, and information is reported on the basis of reporting to the Company's Chief Operating Decision Maker ("CODM"). The Company's CODM uses segment information relating to the operations of each segment. Operating segment information for the ten months ended October 31, 2001 and the twelve months ended December 31, 2000 and 1999 is summarized as follows:

9. Common stock Miners Fuel Company, Inc. had 100 shares of common stock authorized, issued and outstanding at October 31, 2001 (unaudited) and December 31, 2000. Miners Oil Company, Inc. had 1,800 shares of common stock authorized, issued and outstanding at October 31, 2001 (unaudited) and December 31, 2000. Miners Environmental Inc. had 20,000,000 shares of common stock authorized and 930,000 shares issued and outstanding at October 31, 2001 (unaudited) and December 31, 2000. F-10 MINERS GROUP NOTES TO COMBINED FINANCIAL STATEMENTS ================================================================================ 10. Income taxes Income taxes consists of the following:

11. Major customers The Company generated revenues from two major customers during the ten months ended October 31, 2001, and for the twelve months ended December 31, 2000 and 1999, aggregating approximately $27,700,000 (unaudited), $18,410,000, and $12,820,000, respectively. Amounts due from these customers in accounts receivable were approximately $3,704,000 (unaudited) and $1,970,000 at October 31, 2001 and December 31, 2000, respectively. 12. Subsequent event Stock Purchase Agreement On November 14, 2001, the owners of the Company sold all of their shares of common stock in the Company to Phoenix Waste Services, Inc. pursuant to a stock purchase agreement for a purchase price of approximately $8,000,000, subject to an earn out agreement. In connection with the purchase, the Company has entered into employment agreements with three shareholders/officers for a term of three years for amounts defined in the agreements. Also in connection with the purchase, the Company has refinanced a significant portion of its debt through an equipment sales-leaseback arrangement with three of its former shareholders. Under the arrangement, the former shareholders assumed and satisfied the debt related to the equipment and are leasing the equipment back to the Company under a 36-month capital lease. F-11 (b) Pro Forma Financial Information On November 14, 2001, Phoenix Waste Services, Inc. (the Registrant) consummated its acquisition of all of the outstanding shares of the common stock of Miners Fuel Company, Inc., Miners Oil Company, Inc. and Miners Environmental Inc. (collectively The "Miners Group"). The unaudited pro forma financial statements provided herein are based on assumptions that the Registrant believes to be reasonable, factually supportable and directly attributable to the acquisition. Such unaudited pro forma financial statements and accompanying notes should be read in conjunction with the audited financial statements of the Registrant and the related notes thereto that are included in the Registrant's Annual Report on form 10-KSB for the Year ended April 30, 2001, its Quarterly Reports on Form 10-QSB for the six months ended October 31, 2001, and its Current Report on form 8-K for the event dated November 14, 2001 as filed with the Securities and Exchange Commission on November 15, 2001 and the Financial Statements of the Acquired Company for the ten months ended October 31, 2001 and the years ended December 31, 2000 and 1999 and the respective accompanying notes thereto included in item 7(a) of this report. The following pro forma financial data are not necessarily indicative of the Registrant's results of operations that might have occurred had the transaction been completed at the beginning of the period specified, and do not purport to represent what the Registrant's consolidated results of operations might be for any future period. UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET The Unaudited Pro Forma Consolidated Condensed Balance Sheet as of October 31, 2001 presented herein reflects the historical balance sheets of the Registrant and the Acquired Company, adjusted to give effect to the acquisition of Acquired Company, as if the acquisition had occurred at October 31, 2001. The Unaudited Pro forma Consolidated Condensed Balance Sheet combines the financial position of the Registrant and the Acquired Company as of October 31, 2001. The Registrant has accounted for the acquisition as a purchase and all required purchase accounting adjustments to record assets and liabilities at their estimated fair value have been made based on the actual allocation price and actual levels of the Acquired Company assets acquired and liabilities assumed on the acquisition date. UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS The Unaudited Pro Forma Consolidated Condensed Statements of Operations for the six months ended October 31, 2000 and the year ended April 30, 2001 presented herein are based on the respective historical consolidated statements of operations of the Registrant and of the Acquired Company, adjusted to give effect to the acquisition of all of the outstanding common stock of the Acquired Company as if the acquisition had occurred on May 1, 2000. The unaudited Pro forma Consolidated condensed Statement of Operations for the six months ended October 31, 2001 and the year ended April 30, 2001 combines the results of operations of the Registrant with the results of operations of the Acquired Company. The Unaudited Pro Forma Consolidated Condensed Statements of Operations do not reflect certain additional cost savings and synergies that management of the Registrant has identified related to areas such as vendor and staffing consolidation. F-12 PHOENIX WASTE SERVICES COMPANY, INC. UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET OCTOBER 31, 2001

See accompanying notes to unaudited pro forma consolidated condensed financial statements. F-13 NOTE TO PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET A. On November 14, 2001, Phoenix Waste Services, Inc. (the Registrant) acquired the stock of Miners Fuel Company, Inc., Miners Oil Company, Inc., and Miners Environmental Inc. (collectively "The Miners Group") for a purchase price of no less than $8,000,000 and no greater than $8,600,000 contingent upon the Miners Groups' earnings before interest, taxes, depreciation and amortization ("EBITDA") through the fiscal years 2001 and 2002. $8,000,000 of the purchase price was paid to the former shareholders of the Miners Group at closing through $7,823,189 in cash and $176,811 in promissory notes. The cash portion of the purchase price was financed through the sale of accounts recievables of the Miners Group to a financial institution in the amount of $3,642,689 and through debt to the same financial institution in the amount of $4,180,500. The remaining purchase price will be paid in two installments of up to $300,000 each for each of the fiscal years ended 2001 and 2002 provided that EBITDA of the Miners Groups exceeds $4,000,000 in each of those two years. The Registrant also borrowed an additional $774,311 at closing from the above financial institution for working capital purposes. In connection with the debt, $152,500 in financing costs were paid and capitalized. These costs with be amortized over the maturity of the related debt. Calculation of Goodwill: Purchase price at closing, November 14, 2001 $ 8,000,000 Less net assets acquired (3,127,498) ----------- Excess cost over fair value $ 4,872,502 =========== Allocation of purchase price: Cash $ 300,118 Accounts receivable 6,963,872 Inventory 326,029 Prepaid expenses and other current assets 932,440 Property, plant and equimpent 7,164,433 Accounts payable (4,729,112) Accrued expenses and other current liabilities (387,727) Lines of credit (725,000) Related party debt (94,793) Capital leases payable (1,578,818) Long term debt (5,043,944) Goodwill 4,872,502 ----------- $ 8,000,000 ===========

The Company is in the process of determining the final allocation of the purchase price and determining the proper valuation of customer contracts, fixed assets and other intangible assets. For purposes of this analysis, all excess cost over fair value has been allocated to goodwill. The following table summarizes sources and uses of funds used in connection with this transaction: Sources: Sale of receivables $ 4,500,000 Long term debt 4,250,000 Related party debt to sellers 176,811 ----------- $ 8,926,811 =========== Uses: Purchase price $ 8,000,000 Cash borrowed for working capital 774,311 Financing costs 152,500 ----------- Amount financed $ 8,926,811 ===========

A subsidiary of Phoenix Waste Services, Inc. is a subcontractor for the Miners Group and thus accounts receivable and accounts payable in the amount of $125,086 have been eliminated. F-14 PHOENIX WASTE SERVICES COMPANY, INC. UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS FOR THE YEAR ENDED APRIL 30, 2001

See accompanying notes to unaudited pro forma consolidated condensed financial statements. F-15 PHOENIX WASTE SERVICES COMPANY, INC. UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED OCTOBER 31, 2001

See accompanying notes to unaudited pro forma consolidated condensed financial statements. F-16 NOTES TO PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS A Interest expense on debt incurred, including A/R financing to acquire the Miners Group at 7% per annum. If interest rates changed by 1% there would be an immaterial effect on the statements of operations presented. B Reflects reduction in tax expense based on the Miners Group filing consolidated income tax returns with Phoenix Waste Services, Inc. C A subsidiary of Phoenix Waste Services, Inc. is a subcontractor for the Miners Group and thus revenues and cost of revenues have been adjusted accordingly. F-17 (c) Exhibits 2.1 Restated and Amended Stock Purchase Agreement By and Between Phoenix Waste Services Company, Inc., as Buyer, and Jeffrey Parker, David Parker and Jamie Parker, as Sellers, for the purchase of all of the outstanding shares of Miners Fuel Company, Inc. dated November 14, 2001 (without schedules).* 2.2 Restated and Amended Stock Purchase Agreement By and Between Phoenix Waste Services Company, Inc., as Buyer, and Jeffrey Parker and Michael Fiorillo, as Sellers, for the purchase of all of the outstanding shares of Miners Environmental Inc. dated November 14, 2001 (without schedules).* 2.3 Restated and Amended Stock Purchase Agreement By and Between Phoenix Waste Services Company, Inc., as Buyer, and Jeffrey Parker, David Parker and Jamie Parker, as Sellers for the purchase of all of the outstanding shares of Miners Oil Company, Inc. dated November 14, 2001 (without schedules).* 99.1 Employment and Covenant Not To Compete Agreement between Miners Fuel Company, Inc. and Jeffrey Parker** 99.2 Employment and Covenant Not To Compete Agreement between Miners Fuel Company, Inc. and Jamie Parker** 99.3 Employment and Covenant Not To Compete Agreement between Miners Fuel Company, Inc. and David Parker** * Previously filed with Form 8-K filed November 15, 2001. ** Previously filed with Form 8-K filed July 16, 2001. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this first amendment to this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: January 14, 2002 PHOENIX WASTE SERVICES COMPANY, INC. (Registrant) By /s/ Richard L. Franks -------------------------------------- Richard L. Franks, Vice-President, General Counsel, Secretary

PHOENIX WASTE SERVICES CO INC 8-K/A