UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): March 27, 2002
FLEXXTECH, INC.
(Exact name of Registrant as specified in charter)
Nevada 000-25499 88-0390360
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
577 W. Century Blvd.
Suite 775
Los Angeles, California 90045
(Address of principal executive offices)
Registrant's telephone number, including area code: (310) 342-07914
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
This Amended Current Report is being filed to include the audited
financial statements of Primavera Corporation, the parent company of North Texas
Circuit Board Company, Inc. by our wholly-owned subsidiary, Flexxtech Holdings,
Inc. The acquisition of Primavera Corporation and the related documents was
filed on Form 8-K on December 4, 2000 and the pro-forma financial statements for
the acquisition was Filed on Form 8-K on April 10, 2001
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Primavera Corporation:
We have audited the accompanying consolidated balance sheet of Primavera
Corporation (a Texas corporation) (the "Company") as of June 30, 2000, and the
related consolidated statements of operations, stockholders' deficit and cash
flows for the period from April 26, 2000 (date of inception) to June 30, 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 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 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Primavera Corporation as of June 30, 2000, and the consolidated results of its
operations and its cash flows for the period from April 26, 2000 (date of
inception) to June 30, 2000, in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial statements,
the Company has incurred a net loss of $251,322 during the period ended June 30,
2000. The company's current liabilities exceed its current assets by $1,740,866
and total liabilities exceed its total assets by $250,122 at June 30, 2000.
These factors, among others, as discussed in Note 3 to the financial statements,
raise substantial doubt about the Company's ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note 3. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
CERTIFIED PUBLIC ACCOUNTANTS
Fountain Valley, California
September 29, 2000, except note 12, for which the date is November 1, 2000.
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PRIMAVERA CORPORATION & SUBSIDIARY
CONSOLIDATED BALANCE SHEET
JUNE 30, 2000
ASSETS
------
CURRENT ASSETS:
Cash & cash equivalents $ 70,273
Accounts receivable, net of allowance for
bad debts of $25,303 1,618,326
Prepaid Expenses 12,863
Inventory 811,497
------------
Total current assets 2,512,959
PROPERTY AND EQUIPMENT, NET 1,514,358
------------
$ 4,027,317
============
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
CURRENT LIABILITIES:
Overdraft $ 139,598
Accounts payable 1,548,597
Accrued expenses 46,921
Notes Payable - Current 2,465,750
Capital lease obligations-current 32,159
Loans from stockholders 20,800
------------
Total current liabilities 4,253,825
LONG-TERM LIABILITIES
Capital lease obligation 23,614
COMMITMENTS (SEE NOTES)
STOCKHOLDERS' DEFICIT:
Common stock, no par value; 1,000 shares 1,200
authorized; issued and outstanding 80
Accumulated deficit (251,322)
------------
Total stockholders' deficit (250,122)
------------
Total liabilities and stockholders' deficit $ 4,027,317
============
The accompanying notes are an integral part of these
consolidated financial statements
2
PRIMAVERA CORPORATION & SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FROM APRIL 26, 2000 (DATE OF INCEPTION) TO JUNE 30, 2000
NET REVENUE $ 1,130,549
COST OF GOODS SOLD 920,149
------------
GROSS PROFIT 210,400
Operating expenses:
Selling, General and administrative 101,003
------------
INCOME FROM OPERATIONS 109,397
Non- operating expenses:
Interest expenses (33,049)
Loss on disposal of land and building (327,670)
------------
Total non-operating income (expenses) (360,719)
------------
NET LOSS $ (251,322)
============
------------
WEIGHTED AVERAGE SHARES OF COMMON STOCK
OUTSTANDING, BASIC & DILUTED 80
============
------------
BASIC & DILUTED NET INCOME (LOSS) PER SHARE $ (3,141.53)
============
The accompanying notes are an integral part of these
consolidated financial statements
3
PRIMAVERA CORPORATION & SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
FROM APRIL 26, 2000 (DATE OF INCEPTION) TO JUNE 30, 2000
COMMON STOCK
--------------------------
NUMBER OF PAR ACCUMULATED STOCKHOLDERS'
SHARES VALUE DEFICIT EQUITY (DEFICIT)
---------- ---------- ---------- ----------
Issuance of shares 80 $ 1,200 $ -- $ 1,200
Net loss for the year ended -- -- (251,322) (251,322)
---------- ---------- ---------- ----------
Balance January 31, 1999 80 $ 1,200 $(251,322) $(250,122)
========== ========== ========== ==========
The accompanying notes are an integral part of these
consolidated financial statements
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PRIMAVERA CORPORATION & SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FROM APRIL 26, 2000 (DATE OF INCEPTION) TO JUNE 30, 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(251,322)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization 41,129
Loss on disposal of land and building 327,670
(Increase) / decrease in current assets:
Accounts receivable 35,301
Inventory (8,497)
Prepaid expenses 5,137
Increase / (decrease) in current liabilities:
Overdraft 4,598
Accounts payable 49,597
Accrued expenses (43,486)
----------
Net cash provided by operating activities 160,127
----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of shares capital 1,200
Notes payable (111,537)
Loans from stockholders 20,483
----------
Net cash used in financing activities (89,854)
----------
NET INCREASE IN CASH 70,273
CASH, BEGINNING BALANCE --
----------
CASH, ENDING BALANCE $ 70,273
==========
The accompanying notes are an integral part of these
consolidated financial statements
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PRIMAVERA CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Primavera Corporation ("the Company"), was incorporated in the state of Texas on
April 26, 2000. The Company's activities from inception until June 30, 2000
consisted primarily of an acquisition, and maintaining the business entity. The
Company had only nominal net assets and insignificant operational activities
through June 30, 2000.
The Company is a holding Company which operates primarily through its wholly
owned subsidiary, North Texas Circuit Board Co., Inc. ("NTCB"), which was
incorporated in 1978 in state of Texas. NTCB manufactures printed circuit
boards. The products are sold through its distribution center in Irving, Texas
utilizing outside sales people. Deliveries are made primarily throughout the
United States. Pursuant to an acquisition agreement, dated May 11, 2000, the
Company acquired 1,000 new capital shares of NTCB representing one hundred
percent (100%) of the common shares outstanding of the Company to Primavera
Corporation for $1,000. As a part of the acquisition agreement, NTCB acquired
and retired all the outstanding shares owned by prior shareholders in exchange
for land and building of the company. On June 15, 2000, the Company contributed
$250,000 in capital to NTCB.
The accompanying consolidated financial statements of the Company and its
subsidiary have been prepared in accordance with generally accepted accounting
principles. All significant inter-company balances and transactions have been
eliminated in consolidation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
The Company considers all liquid investments with a maturity of three months or
less from the date of purchase that are readily convertible into cash to be cash
equivalents.
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.
PROPERTY & EQUIPMENT
Property and equipment is carried at cost. Depreciation of property and
equipment is provided using the straight-line method over the estimated useful
lives of the assets. Expenditures for maintenance and repairs are charged to
expense as incurred.
INCOME TAXES
Deferred income tax assets and liabilities are computed annually for differences
between the financial statements and tax basis of assets and liabilities that
will result in taxable or deductible amounts in the future based on enacted laws
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PRIMAVERA CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
and rates applicable to the periods in which the differences are expected to
affect taxable income (loss). Valuation allowance is established when necessary
to reduce deferred tax assets to the amount expected to be realized.
BASIC AND DILUTED NET LOSS PER SHARE
Net loss per share is calculated in accordance with the Statement of financial
accounting standards No. 128 (SFAS No. 128), "Earnings per share". SFAS No. 128
superseded Accounting Principles Board Opinion No.15 (APB 15). Net loss per
share for all periods presented has been restated to reflect the adoption of
SFAS No. 128. Basic net loss per share is based upon the weighted average number
of common shares outstanding. Diluted net loss per share is based on the
assumption that all dilutive convertible shares and stock options were converted
or exercised. Dilution is computed by applying the treasury stock method. Under
this method, options and warrants are assumed to be exercised at the beginning
of the period (or at the time of issuance, if later), and as if funds obtained
thereby were used to purchase common stock at the average market price during
the period.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of financial accounting standard No. 107, Disclosures about fair value
of financial instruments, requires that the Company disclose estimated fair
values of financial instruments. The carrying amounts reported in the statements
of financial position for current assets and current liabilities qualifying as
financial instruments are a reasonable estimate of fair value.
COMPREHENSIVE INCOME
Statement of financial accounting standards No. 130, Reporting comprehensive
income (SFAS No. 130), establishes standards for reporting and display of
comprehensive income, its components and accumulated balances. Comprehensive
income is defined to include all changes in equity, except those resulting from
investments by owners and distributions to owners. Among other disclosures, SFAS
No. 130 requires that all items that are required to be recognized under current
accounting standards as components of comprehensive income be reported in
financial statements that are displayed with the same prominence as other
financial statements. The implementation of this standard did not have a
material impact on the Company's financial statements.
REPORTING SEGMENTS
Statement of financial accounting standards No. 131, Disclosures about segments
of an enterprise and related information (SFAS No. 131), which superceded
statement of financial accounting standards No. 14, Financial reporting for
segments of a business enterprise, establishes standards for the way that public
enterprises report information about operating segments in annual financial
statements and requires reporting of selected information about operating
segments in interim financial statements regarding products and services,
geographic areas and major customers. SFAS No. 131 defines operating segments as
7
PRIMAVERA CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
components of an enterprise about which separate financial information is
available that is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing performances. The
implementation of this standard did not have a material impact on the Company's
financial statements.
COSTS OF START-UP ACTIVITIES
In April 1998, the ASEC of AICPA issued SOP No. 98-5, "Reporting on the costs of
start-up activities", effective for fiscal years beginning after December 15,
1998. SOP 98-5 requires the costs of start-up activities and organization costs
to be expensed as incurred. The implementation of this standard did not have a
material impact on the Company's financial statements.
REVENUE RECOGNITION
The Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin
(SAB) 101, "Revenue Recognition in Financial Statements," in December 1999. The
SAB summarizes certain of the SEC staff's views in applying generally accepted
accounting principles ("GAAP") to revenue recognition in financial statements.
The management of the Company believes its revenue recognition policies are in
accordance with the relevant accounting pronouncements. The Company recognizes
revenue at the time of shipments, net of sales returns and allowances. Expenses
are recognized in the period in which the corresponding liability is incurred.
ALLOWANCE FOR DOUBTFUL ACCOUNTS
In determining the allowance to be maintained, management evaluates many factors
including industry and historical loss experience. The allowance for doubtful
accounts is maintained at an amount management deems adequate to cover estimated
losses. The allowance for doubtful accounts at June 30, 2000 was $25,303 for
trade receivables.
ADVERTISING
The Company expenses advertising costs as incurred.
INVENTORY
Inventory is valued at the lower of cost or market value. Cost is determined
using the first-in, first-out method. Inventory at June 30, 2000 consisted of:
Raw materials $330,967
Work-in-process 457,050
Gold Tank 23,480
---------
$811,497
=========
8
PRIMAVERA CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
RISKS AND UNCERTAINTIES
In the normal course of business, the Company is subject to certain risks and
uncertainties:
The Company provides its product on unsecured credit to most of its customers,
the majority of which are in the defense industry. Consequently, the Company's
ability to collect the amounts due from customers is affected by the economic
fluctuations in that industry.
3. GOING CONCERN
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles which contemplate continuation of the
Company as a going concern. However, the Company has incurred net losses from
inception to June 30, 2000 of $251,322. The continuing losses have adversely
affected the liquidity of the Company. The Company's total liabilities exceed
its total assets by $250,122 at June 30, 2000. The Company faces continuing
significant business risks, including but not limited to, its ability to
maintain vendor and supplier relationships by making timely payments when due.
In view of the matters described in the preceding paragraph, recoverability of a
major portion of the recorded asset amounts shown in the accompanying balance
sheet is dependent upon continued operations of the Company, which in turn is
dependent upon the Company's ability to raise additional capital, obtain
financing and to succeed in its future operations. The financial statements do
not include any adjustments relating to the recoverability and classification of
recorded asset amounts or amounts and classification of liabilities that might
be necessary should the Company be unable to continue as a going concern.
Management has taken the following steps to revise its operating and financial
requirements, which it believes are sufficient to provide the Company with the
ability to continue as a going concern. Management devoted considerable effort
during the period ended June 30, 2000, towards (i) obtaining additional equity
financing (ii) reduction of salaries and general and administrative expenses
(iii) management of accounts payable and (iv) evaluation of its distribution and
marketing methods.
4. PROPERTY AND EQUIPMENT
Machinery and equipment $2,030,592
Furniture & fixtures 121,031
Computer software 141,893
Transportation equipment 69,530
-----------
2,363,046
Less Accumulated Depreciation 848,688
-----------
$1,514,358
===========
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PRIMAVERA CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
5. NOTES PAYABLE
Lender Terms Current Long-term
------ ----- ----------- ---------
Comerica Bank Due on demand unpaid balance plus interest at $ 823,130 -
lower of Maximum rate defined as maximum
nonuserous rate of interest or prime rate plus
2%. The interest rate is subject to changes under
various conditions. The note and other debtness
to the bank are secured by assets of the Company.
Comerica Bank Receivable line of credit, payable on demand, 1,392,620 -
unpaid balance plus interest at lower of Maximum
rate defined as maximum nonuserous rate of
interest or prime rate plus 2%. The interest rate
is subject to changes under various conditions.
The note and other debtness to the bank are
secured by assets of the Company. The note is
personally guaranteed by the president of NTCB.
Legacy Bank of Texas Bridge Financing - Due on demand. Bears an 200,000 -
interest rate of 1% plus prime rate (9.5% at
June 30, 2000). Guaranteed by all the
shareholders of the company on June 9, 2000.
BECO M-A, L.P Note Payable to an affiliated company related 50,000 -
through common ownership. Due on demand,
unsecured and bears an inteerst rate of 9% per
year.
----------- ---------
Total- Current $2,465,750 -
=========== =========
6. CAPITAL LEASE OBLIGATIONS
At June 30, 2000, the Company had the following capital lease:
Lessor Payments Monthly Security Interest Rate
------ -------- ------- -------- -------------
CIT Group 60 $2,955 Pumiflex SHD/A/Prime/ 9.44%
Aluminum Oxide
The equipment is recorded as Machinery & equipment in the balance sheet and the
amortization is included in depreciation expense.
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PRIMAVERA CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
A schedule of maturities is as follows:
Twelve months ended June 30 Amount
2001 $ 32,159
2002 23,614
---------
Total $ 55,773
=========
7. INCOME TAXES
No provision was made for Federal income tax since the Company has significant
net operating loss carryforwards. Through June 30, 2000, the Company incurred
net operating losses for tax purposes of approximately $250,953. Differences
between financial statement and tax losses consist primarily of amortization,
allowance for doubtful accounts. The net operating loss carryforwards may be
used to reduce taxable income through the year 2016.
The gross deferred tax asset balance as of June 30, 2000 was approximately
$100,381. A 100% valuation allowance has been established against the deferred
tax assets, as the utilization of the loss carrytforwards can not reasonably be
assured. There was no significant difference between reportable
8. CONTRACTS AND AGREEMENTS
Lease - The Company leases its office and business facilities in Irving, Texas
under a lease agreement for two years beginning May 2000, for $10,000 per month,
with an option to renew the lease for three additional years at a rental rate of
$12,500 per month. The Company shall have an option to purchase the property for
$690,000 during the initial two-year rental term and for $750,000 during the
3-year renewal period.
9. RELATED PARTY TRANSACTIONS
In normal course of business, the Company purchases and sells inventory and
services from a Company affiliated through ownership by an officer of NTCB. The
total of all the transactions is immaterial to the financial statements.
At June 30, 2000, the Company had an account receivable of $148,967 from an
officer of NTCB and a note receivable of $100,000 from the officer of NTCB. The
note carries an interest rate of 6% per annum and is due on January 15, 2001.
10. SUPPLEMENTAL DISCLOSURE OF CASH FLOWS
The Company prepares its statements of cash flows using the indirect method as
defined under the Financial Accounting Standard No. 95.
11
PRIMAVERA CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
The Company did not pay any amount for income tax during the period ended June
30, 2000. The Company paid interest of $39,199 during the period ended June 30,
2000. The cash flows statement does not include non-cash transaction of
acquisition of North Texas Circuit Board Co., Inc. on May 11, 2000.
The acquisition was accounted for as follows:
Total current assets acquired $2,463,627
Property & Equipment less land & Building acquired 1,765,000
Other assets acquired 10,000
-----------
Total Assets acquired 4,238,627
Total liabilities assumed 3,997,000
-----------
Negative Goodwill $ 241,627
===========
In accordance with APB 16, negative Goodwill was adjusted by reducing values of
the non-current assets acquired.
11. ACQUISITION
Effective May 11, 2000, the Company acquired North Texas Circuit Board Co.,
Inc.(NTCB). The acquisition was consummated by issuance of 1000 new capital
shares to the Company for a consideration of $1,000 cash paid into NTCB. As a
part of the acquisition agreement, NTCB reacquired and terminated all the
previously issued shares from its shareholders in exchange of land and building.
The exchange transaction resulted in a loss of $327,670 to NTCB. The acquisition
was recorded by the Company under the purchase method of accounting.
Accordingly, the operating results of the acquired business are included in the
statement of operations from the date of acquisition, May 11, 2000. The purchase
resulted in a negative Goodwill amounting $241,627 representing net worth of
NTCB after recording of loss on exchange of shares with land and building. In
accordance with APB 16, negative Goodwill was adjusted by reducing values of the
non-current assets acquired. In June 2000, the Company contributed additional
equity of $250,000 into NTCB.
12. SUBSEQUENT EVENTS
On August 15, 2000, the company entered into an agreement with Flexxtech
Holdings, Inc., whereby Flexxtech Holdings, Inc. acquired 67% newly issued and
outstanding common stock of the Company. Flexxtech Holdings, Inc. was issued 203
newly issued shares of the Company in consideration of $1,575,000. On October
31, 2000, the ownership of Flexxtech was increased to 80% of Primavera
Corporation. The consideration is payable in cash of $1,250,000 by installments
through January 15, 2001 and remaining amount in form of 130,000 shares of
Flexxtech Corporation's common stock at $2.50 per share. Flexxtech Corporation
is the parent company of Flexxtech Hodings, Inc.
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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.
Flexxtech Corporation
By: /S/ GREG MARDOCK
----------------------------
Greg Mardock, President
Dated: March 28, 2002
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