8-K 1 phazar_8-k.txt PHAZAR AEROCORP SALE U.S. 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): May 31, 2003 PHAZAR CORP (Exact name of registrant as specified in its charter) Delaware (State of other jurisdiction of incorporation) 0-12866 75-1907070 (Commission File Number) (IRS Employer Identification No.) 101 S.E. 25th Avenue Mineral Wells, Texas 76067 (Address of Principal Executive Officers) (Zip Code) Registrant's telephone number, including area code: (940) 325-3301 1 Item 2. Acquisition or Disposition of Assets. Phazar Aerocorp Inc., a Texas Corporation and 80% owned subsidiary of PHAZAR CORP sold the assets and business of Phazar Aerocorp Inc. to Phaero LLC. Phaero LLC is a new corporation that was formed by Gary Havener, principal shareholder and President of PHAZAR CORP and Brian Perryman, General Manager of Phazar Aerocorp Inc. The sale was effective on May 31, 2003, PHAZAR CORP's fiscal year end. Phaero LLC purchased the assets of Phazar Aerocorp Inc. and assumed the liabilities, including all indebtedness and lease obligation of Phazar Aerocorp Inc. except for the intercompany debt. Phaero LLC also assumed PHAZAR CORP's subsidiary, Antenna Products Corporation's $800,000 indebtedness to Sinan Corp as additional consideration for the sale. No land or buildings were included as part of this sale. See the Asset Purchase Agreement filed herewith as Exhibit 2. 2 Item 7. Financial Statements and Exhibits. (b) Pro forma Financial Statements. Pro forma PHAZAR CORP without Phazar Aerocorp Inc. o Unaudited Pro Forma Balance Sheets as of May 31, 2002 o Unaudited Pro Forma Statements of Operations as of May 31, 2002 o Unaudited Pro Forma Balance Sheets as of February 28, 2003 o Unaudited Pro Forma Statements of Operations as of February 28, 2003 o Unaudited Pro Forma Balance Sheets as of April 30, 2003 3 The following shows the unaudited pro forma consolidated balance sheets of PHAZAR CORP without Phazar Aerocorp Inc. as of May 31, 2002 and assumes the sale of the assets of Phazar Aerocorp Inc. occurred on May 31, 2002: UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS OF PHAZAR CORP WITHOUT PHAZAR AEROCORP INC. AS OF MAY 31, 2002 ASSETS PHAZAR CORP PRO FORMA PRO FORMA CONSOLIDATED ADJUSTMENTS CONSOLIDATED ------------ ------------ ------------ CURRENT ASSETS Cash and cash equivalents $ 213,375 $ (11,569) $ 201,806 Accounts receivable: Trade, net of allowance for doubtful accounts of $56,208 915,458 (204,482) 710,976 United States Government 62,512 - 62,512 Inventories 2,016,720 - 2,016,720 Costs and estimated earnings in excess of billings on refurbishing contracts in progress 19,627 (19,627) - Prepaid expenses and other assets 90,423 (6,888) 83,535 Income taxes receivable 479,282 - 479,282 Deferred income taxes 218,949 - 218,949 ----------- ----------- ----------- Total current assets 4,016,346 (242,566) 3,773,780 Property and equipment, net 2,073,682 (336,165) 1,737,517 Intangible Assets (Goodwill) 461,969 (461,969) - Identifiable Intangible Assets 1,258,123 (976,867) 281,256 ----------- ----------- ----------- TOTAL ASSETS $ 7,810,120 $(2,017,567) $ 5,792,553 =========== =========== =========== 4 LIABILITIES AND SHAREHOLDERS' EQUITY PHAZAR CORP PRO FORMA PRO FORMA CONSOLIDATED ADJUSTMENTS CONSOLIDATED ------------ ------------ ------------ CURRENT LIABILITIES Notes payable $ 1,145,000 $ - $ 1,145,000 Current portion of long-term debt 307,594 (248,091) 59,503 Accounts payable 454,452 (214,784) 239,668 Accrued expenses 503,958 (179,174) 324,784 Billings on excess of costs and estimated earnings on refurbishing contracts in progress 42,593 (42,593) - Income taxes payable - - - ----------- ----------- ----------- Total current liabilities 2,453,597 (684,642) 1,768,955 ----------- ----------- ----------- Long-term debt 1,711,058 (1,015,531) 695,527 Note payable to shareholder 800,000 (800,000) - Deferred income taxes 182,780 - 182,780 ----------- ----------- ----------- Total long-term liabilities 2,693,838 (1,815,531) 878,307 ----------- ----------- ----------- Total liabilities 5,147,435 (2,500,173) 2,647,262 ----------- ----------- ----------- COMMITMENTS AND CONTINGENCIES - - - MINORITY INTEREST IN SUBSIDIARY - - - SHAREHOLDERS' EQUITY Preferred Stock, $1 par, 2,000,000 shares authorized, none issued or outstanding, attributes to be determined when issued Common Stock, $0.01 par, 6,000,000 shares authorized, 2,174,828 issued and outstanding 21,748 - 21,748 Additional paid in capital 2,753,136 - 2,753,136 Retained earnings (112,199) 482,606 370,407 ----------- ----------- ----------- Total shareholders' equity 2,662,685 482,606 3,145,291 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 7,810,120 $(2,017,567) $ 5,792,553 =========== =========== =========== 5 The following shows the unaudited pro forma consolidated statements of operations of PHAZAR CORP without Phazar Aerocorp Inc. as of May 31, 2002 and assumes the sale of the assets of Phazar Aerocorp Inc. occurred on June 1, 2001: UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS OF PHAZAR CORP WITHOUT PHAZAR AEROCORP INC. FOR THE YEAR ENDED May 31, 2002 PHAZAR CORP PRO FORMA PRO FORMA CONSOLIDATED ADJUSTMENTS CONSOLIDATED ------------ ------------ ------------ Sales and contract revenues $10,815,669 $ 4,047,411 $ 6,768,258 Cost of sales and contracts 8,153,167 3,633,216 4,519,951 ----------- ----------- ----------- Gross Profit 2,662,502 414,195 2,248,307 Sales and administration expenses 4,248,228 899,804 3,348,424 ----------- ----------- ----------- Operating Profit (Loss) (1,585,726) (485,609) (1,100,117) Other income (expense) Interest expense (236,341) (93,447) (142,894) Interest income 575 - 575 Gain on sale of assets 361 - 361 Other Income 32,224 (2,041) 34,265 ----------- ----------- ----------- Total Other Expense (203,181) (95,488) (107,693) ----------- ----------- ----------- Income (loss) from operations before (1,788,907) (581,097) (1,207,810) income taxes and minority interest ----------- ----------- ----------- Income tax provision (benefit) (613,835) (196,722) (417,113) ----------- ----------- ----------- Income (loss) before minority interest (1,175,072) (384,375) (790,697) Minority interest in Subsidiary's (income) loss 25,546 25,546 - ----------- ----------- ----------- Net Income (loss) (1,149,526) (358,829) (790,697) =========== =========== =========== Earnings (loss) per common share $ (0.53) (0.17) (0.36) =========== =========== =========== 6 The following shows the unaudited pro forma consolidated balance sheets of PHAZAR CORP without Phazar Aerocorp Inc. as of February 28, 2003 and assumes the sale of the assets of Phazar Aerocorp Inc. occurred on February 28, 2003: UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS OF PHAZAR CORP WITHOUT PHAZAR AEROCORP INC. AS OF FEBRUARY 28, 2003 ASSETS PHAZAR CORP PRO FORMA PRO FORMA CONSOLIDATED ADJUSTMENTS CONSOLIDATED ------------ ------------ ------------ CURRENT ASSETS Cash and cash equivalents $ 307,858 $ (8,484) $ 99,374 Accounts receivable: Trade, net of allowance for doubtful accounts of $42,035 1,087,106 (11,941) 1,075,165 United States Government 66,130 - 66,130 Inventories 1,819,909 - 1,819,909 Costs and estimated earnings in excess Of billings on refurbishing contracts in progress 141,118 (141,118) - Prepaid expenses and other assets 171,939 (26,862) 145,077 Income taxes receivable 2,000 - 2,000 Deferred income taxes 218,949 - 218,949 ----------- ----------- ----------- Total current assets 3,815,009 (188,405) 3,626,604 Property and equipment, net 1,860,469 (341,532) 1,518,937 Intangible Assets (Goodwill) 461,969 (461,969) - Indentifiable Intangible Assets 1,083,696 (873,967) 209,729 ----------- ----------- ----------- TOTAL ASSETS $ 7,221,143 $(1,865,873) $ 5,355,270 =========== =========== =========== 7 LIABILITIES AND SHAREHOLDERS' EQUITY PHAZAR CORP PRO FORMA PRO FORMA CONSOLIDATED ADJUSTMENTS CONSOLIDATED ------------ ------------ ------------ CURRENT LIABILITIES Notes payable $ 1,060,000 $ - $ 1,060,000 Current portion of long-term debt 194,202 (134,700) 59,502 Accounts payable 439,317 (302,849) 136,468 Accrued expenses 488,255 (109,099) 379,156 Billings in excess of costs and estimated earnings on refurbishing contracts in progress 12,220 (12,220) - Income taxes payable - - - ----------- ----------- ----------- Total current liabilities 2,193,994 (558,868) 1,635,126 ----------- ----------- ----------- Long-term debt 1,640,180 (988,720) 651,460 Note payable to shareholder 800,000 (800,000) - Deferred income taxes 182,780 3,749 186,529 ----------- ----------- ----------- Total long-term liabilities 2,622,960 (1,784,971) 837,989 ----------- ----------- ----------- Total liabilities 4,816,954 (2,343,839) 2,473,115 ----------- ----------- ----------- COMMITMENTS AND CONTINGENCIES - - - MINORITY INTEREST IN SUBSIDIARY - - - SHAREHOLDER'S EQUITY Preferred Stock, $1 par, 2,000,000 shares authorized, none issued or outstanding, attributes to be determined when issued Common stock, $0.01 par, 6,000,000 shares authorized 2,179,028 issued and outstanding 21,791 - 21,791 Additional paid in capital 2,759,809 - 2,759,809 Retained earnings (377,411) 477,966 100,555 ----------- ----------- ----------- Total shareholders' equity 2,404,189 477,966 2,882,155 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 7,221,143 $(1,865,873) $ 5,355,270 =========== =========== =========== 8 The following shows the unaudited consolidated statements of operations of PHAZAR CORP without Phazar Aerocorp Inc. for the nine months ended February 28, 2003 and assumes the sale of the assets of Phazar Aerocorp Inc. occurred on June 1, 2002: UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS OF PHAZAR CORP WITHOUT PHAZAR AEROCORP INC. FOR THE NINE MONTHS ENDED FEBRUARY 28, 2003 PHAZAR CORP PRO FORMA PRO FORMA CONSOLIDATED ADJUSTMENTS CONSOLIDATED ------------ ------------ ------------ Sales and contract revenues $ 8,330,327 $ 2,646,643 $ 5,683,684 Cost of sales and contracts 6,103,904 2,646,447 3,457,457 ----------- ----------- ----------- Gross Profit 2,226,423 196 2,226,227 Sales and administration expenses 2,319,639 687,194 1,632,445 ----------- ----------- ----------- Operating Profit (Loss) (93,216) (686,998) 593,782 ----------- ----------- ----------- Other income (expense) Interest expense (165,344) (45,846) (119,498) Interest income 452 - 452 Other Income (7,104) (3,008) (4,096) ----------- ----------- ----------- Total other Expense (171,996) (48,854) (123,142) ----------- ----------- ----------- Income (loss) from operations before income taxes and minority interest (265,212) (735,852) 470,640 Income tax (provision) benefit - - - ----------- ----------- ----------- Income (loss) before minority interest (265,212) (735,852) 470,640 Minority interest in subsidiary's loss - - - ----------- ----------- ----------- Net Income (loss) $ (265,212) $ (735,852) $ 470,640 =========== =========== =========== Earnings (loss) per common share $ (0.12) $ (0.34) $ 0.22 =========== =========== =========== 9 The following shows the pro forma consolidated balance sheets of PHAZAR CORP without Phazar Aerocorp Inc. as of April 30, 2003 and assumes the sale of the assets of Phazar Aerocorp Inc. occurred on April 30, 2003: UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS OF PHAZAR CORP WITHOUT PHAZAR AEROCORP INC. AS OF APRIL 30, 2003 ASSETS PHAZAR CORP PRO FORMA PRO FORMA CONSOLIDATED ADJUSTMENTS CONSOLIDATED ------------ ------------ ------------ CURRENT ASSETS Cash and cash equivalents $ 307,547 $ (13,232) $ 294,315 Accounts receivable: Trade, net of allowance for doubtful accounts of $42,035 677,879 (33,162) 644,717 United States Government 206,011 - 206,011 Inventories 1,956,829 - 1,956,829 Costs and estimated earnings in excess of billings on refurbishing contracts in progress 617,547 (617,547) - Prepaid expenses and other assets 124,684 (35,915) 88,769 Income taxes receivable 2,000 - 2,000 Deferred income taxes 218,949 - 218,949 ----------- ----------- ----------- Total current assets 4,111,446 (699,856) 3,411,590 Property and equipment, net 1,866,954 (333,456) 1,533,498 Intangible Assets (Goodwill) 461,969 (461,969) - Indentifiable Intangible Assets 1,044,269 (851,100) 193,169 ----------- ----------- ----------- TOTAL ASSETS $ 7,484,638 $(2,346,381) $ 5,138,257 =========== =========== =========== 10 LIABILITIES AND SHAREHOLDERS' EQUITY PHAZAR CORP PRO FORMA PRO FORMA CONSOLIDATED ADJUSTMENTS CONSOLIDATED ------------ ------------ ------------ CURRENT LIABILITIES Notes payable $ 907,000 $ - $ 907,000 Current portion of long-term debt 176,202 (116,700) 59,502 Accounts payable 321,247 (214,022) 107,225 Accrued expenses 440,481 (76,089) 364,392 Billings in excess of costs and estimated earnings on refurbishing contracts in progress 728,754 728,754) - Income taxes payable - - - ----------- ----------- ----------- Total current liabilities 2,573,684 (1,135,565) 1,438,119 ----------- ----------- ----------- Long-term debt 1,640,276 (998,944) 641,332 Note payable to shareholder 800,000 (800,000) - Deferred income taxes 182,780 3,749 186,529 ----------- ----------- ----------- Total long-term liabilities 2,623,056 (1,795,195) 827,861 ----------- ----------- ----------- Total liabilities 5,196,740 (2,930,760) 2,265,980 ----------- ----------- ----------- COMMITMENTS AND CONTINGENCIES - - - MINORITY INTEREST IN SUBSIDIARY - - - SHAREHOLDER'S EQUITY Preferred Stock, $1 par, 2,000,000 shares authorized, none issued or outstanding, attributes to be determined when issued Common stock, $0.01 par, 6,000,000 shares authorized 2,179,028 issued and outstanding 21,801 - 21,801 Additional paid in capital 2,761,649 - 2,761,649 Retained earnings (495,552) 584,379 (88,827) ----------- ----------- ----------- Total shareholders' equity 2,287,898 584,379 2,872,277 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 7,484,638 $(2,346,381) $ 5,138,257 =========== =========== =========== 11 NOTES TO PRO FORMA FINANCIAL STATEMENTS The pro forma adjustments consist of adjustments to remove the assets and liabilities of Phazar Aerocorp Inc., a subsidiary of PHAZAR CORP, that were sold to Phaero LLC, a company related through common ownership. Pro forma adjustment was also made to record the assumption of a $800,000 note payable by Antenna Products Corporation, a subsidiary of PHAZAR CORP, to another related Company by Phaero LLC as part of the sale. Adjustments to the balance sheets were made as of the dates indicated and for the 12 months ended May 31, 2002, nine months ended February 28, 2003 and eleven months ended April 30, 2002. (c) Exhibits. 2. Asset Purchase Agreement between Phazar Aerocorp Inc. and Phaero LLC. Index. Exhibits to Asset Purchase Agreement* 1. Financial Information 2. ERISA and Benefits Plans 3. Machinery and Equipment 4. Material Contracts 5. Bank Accounts 6. Directors, Officers and Certain Employees 7. Assignment of Lease 8. Bill of Sale 9. Seller's Secretary's Certificate 10. Buyer's Secretary's Certificate * Copies of the Exhibits to the Asset Purchase Agreement will be provided to the Commission upon request 12 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. PHAZAR CORP Date: June 13, 2003 /s/ Clark D. Wraight ------------------------------------ Clark D. Wraight, Vice President and Principal Financial Officer 13