SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) May 31, 2006
SYNERGX SYSTEMS INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 0-17580 11-2941299
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
209 Lafayette Drive, Syosset, New York 11791
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (516) 433-4700
Not Applicable
(Former Name or Former Address, If Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 40.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 2.01 Disposition of Assets.
On May 31, 2006, the Company's subsidiary, General Sound (Texas) Company
("General Sound") that operates in Dallas/Ft. Worth, Texas sold its inventory,
property, trade name, business and operations to LCR Sound, a Texas company.
Under terms of the Asset Purchase Agreement, General Sound received cash
proceeds from the buyer of $518,000 for its inventory, property and equipment.
The buyer assumed responsibility for the remaining term of the lease for its
office and warehouse space. General Sound retained cash and all accounts
receivable and remains responsible for all existing liabilities. After
collecting its accounts receivable and liquidating its liabilities, General
Sound expects to generate approximately an additional $490,000 of proceeds.
Item 9.01 Financial Statements and Exhibits
(a) Financial statements of businesses acquired.
N/A
(b) Pro forma financial information
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of March 31,
2006
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the
six months ended March 31, 2006
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the
year ended September 30, 2005
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
Introduction to Pro Forma Condensed Consolidated Financial Information
On May 31, 2006, the Company's subsidiary General Sound, sold to LCR Sound, a
Texas company, its inventory, property, trade name, business and operations for
$518,000. The transaction is more fully described above.
The following unaudited pro forma condensed consolidated financial information
gives effect to the above described disposition. The following unaudited pro
forma condensed consolidated balance sheet as of March 31, 2006 gives effect to
the disposition of assets sold and receipt of proceeds from the sale, as if the
disposition occurred on that date. The following unaudited pro forma condensed
consolidated statement of operations for the six months ended March 31, 2006 and
for the year ended September 30, 2005 reflect the elimination of the sales,
expenses, net loss (the six month period), net income (the twelve month period),
as if the disposition of assets and business of General Sound had occurred at
the beginning of each period presented.
The information presented is for illustrative purposes only and is not
necessarily indicative of the results of operations of the consolidated company
that would have actually occurred had the disposition been effected as of the
beginning of the periods indicated or that may be obtained in the future. This
unaudited pro forma financial information should be read in conjunction with the
historical financial information of the Company in other reports and documents
the Company files with the United States Securities and Exchange Commission.
SYNERGX SYSTEMS INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AT MARCH 31, 2006
(Unaudited)
AS PRO FORMA PRO FORMA
REPORTED (1) ADJUSTMENTS TOTAL
------------ ------------ -----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 371,831 $ 518,000(A) $ 889,831
Accounts receivable, principally trade, less allowance
for doubtful accounts of $323,523 5,603,006 5,603,006
Inventories, net 2,610,839 (203,215) (B) 2,407,624
Deferred taxes 301,700 301,700
Prepaid expenses and other current assets 475,158 (14,364) (C) 460,794
----------- ----------- -----------
TOTAL CURRENT ASSETS 9,362,534 300,421 9,662,955
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PROPERTY AND EQUIPMENT -at cost, less
accumulated depreciation and amortization of $1,747,921 811,028 (54,189) (D) 756,839
OTHER ASSETS 633,385 633,385
----------- ----------- -----------
TOTAL ASSETS $10,806,947 $ 246,232 $11,053,179
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(1) Based on the Company's interim financial statements filed on Form 10-QSB for
the quarter ended March 31, 2006.
SYNERGX SYSTEMS INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AT MARCH 31, 2006
(Unaudited)
AS PRO FORMA PRO FORMA
REPORTED (1) ADJUSTMENTS TOTAL
------------ ----------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable - current portion $ 35,995 35,995
Accounts payable and accrued expenses 1,881,796 1,881,796
Deferred revenue 807,718 807,718
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TOTAL CURRENT LIABILITIES 2,725,509 0 2,725,509
Note payable to bank 1,401,566 1,401,566
Notes payable - less current portion 60,506 60,506
Deferred taxes 90,000 90,000
----------- ----------- -----------
TOTAL LIABILITIES 4,277,581 0 4,277,581
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COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, 2,000,000 shares authorized-
none issued and outstanding -
Common stock, 10,000,000 shares authorized, $.001
par value; issued and outstanding 5,210,950 shares 5,211 5,211
Capital in excess of par 6,803,992 6,803,992
Accumulated deficit (279,837) 246,232 (E) (33,605)
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TOTAL STOCKHOLDERS' EQUITY 6,529,366 246,232 6,775,598
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $10,806,947 $ 246,232 $11,053,179
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(1) Based on the Company's interim financial statements filed on Form 10-QSB for
the quarter ended March 31, 2006.
SYNERGX SYSTEMS INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2006
(Unaudited)
AS PRO FORMA PRO FORMA
REPORTED (1) ADJUSTMENTS TOTAL
---------- ----------- -----------
Product sales $ 5,839,159 $(1,172,757)(F) $ 4,666,402
Subcontract sales 303,285 $ 303,285
Service revenue 2,469,635 $ 2,469,635
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Total revenues 8,612,079 (1,172,757) 7,439,322
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Cost of product sales 4,325,129 (836,690) (F) 3,488,439
Cost of subcontract sales 240,640 240,640
Cost of service revenue 1,350,795 1,350,795
Selling, general and administrative 3,041,624 (451,582)(F) 2,590,042
Interest expense 53,579 6,538 (F) 60,117
Depreciation and amortization 86,243 (19,339)(F) 66,904
Loss on equity investment 42,000 42,000
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9,140,010 (1,301,073) 7,838,937
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(Loss) before (benefit) from income taxes (527,931) 128,316(F) (399,615)
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(Benefit) from income taxes:
Current (183,000) 39,000(F) (144,000(
Deferred (24,000) 0 (24,000(
----------- ----------- -----------
(207,000) 39,000(F) (168,000(
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Net (Loss) ($ 320,931) $ 89,316(F) $ (231,615(
=========== =========== ===========
(Loss) Per Common Share:
Basic (Loss) Per Share $ (0.06) $ (0.04)
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Diluted (Loss) Per Share $ (0.06) $ (0.04)
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Weighted average number of common shares outstanding 5,201,639 5,201,639
Weighted average number of common and dilutive
common share equivalents outstanding 5,201,639 5,201,639
(1) Based on the Company's interim financial statements filed on Form 10-QSB for
the quarter ended March 31, 2006.
SYNERGX SYSTEMS INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 2005
(Unaudited)
AS PRO FORMA PRO FORMA
REPORTED (1) ADJUSTMENTS TOTAL
----------- ---------- ----------
Product sales $15,514,539 $(3,156,761)(G) $12,357,778
Subcontract sales 474,883 474,883
Service revenue 4,797,918 4,797,918
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Total revenues 20,787,340 (3,156,761) 17,630,579
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Cost of product sales 10,691,023 (2,013,639)(G) 8,677,384
Cost of subcontract sales 384,403 384,403
Cost of service revenue 3,121,998 3,121,998
Selling, general and administrative 6,000,223 (986,563)(G) 4,993,195
Interest expense 84,226 84,226
Depreciation and amortization 189,343 (28,410)(G) 160,933
Loss on equity investment 76,000 76,000
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20,547,216 (3,028,612) 17,498,139
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Income before provision for income taxes 240,124 (128,149)(G) 132,440
----------- ----------- -----------
Provison for income taxes:
Current 103,000 (49,000)(G) 54,000
Deferred 7,000 7,000
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110,000 (49,000)(G) 61,000
Net income 130,124 (79,149)(G) 71,440
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Earnings Per Common Share:
Basic Earnings Per Share $ 0.03 $ 0.01
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Diluted Earnings Per Share $ 0.03 $ 0.01
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Weighted average number of common shares outstanding 5,171,721 5,171,721
Weighted average number of common and dilutive
common share equivalents outstanding 5,193,276 5,193,276
(1) Based on the Company's audiited financial statements filed on Form 10-KSB
for the year ended September 30, 2006.
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
Description of Pro Forma Adjustments for all periods presented.
(A) To record proceeds of sale of assets
(B) To record transfer of inventory to buyer
(C) To record expensing of prepaid items.
(D) To record transfer property and equipment to buyer
(E) To record net increase in assets resulting from sale of business.
(F) To eliminate the sales, expenses, and net loss for the business of the
subsidiary that was sold.
(G) To eliminate the sales, expenses, and net income for the business of the
subsidiary that was sold.
(c) Shell company transactions.
N/A
(d) Exhibits
10.1 Asset Purchase Agreement dated May 31, 2006
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.
Date: June 5, 2006
SYNERGX SYSTEMS INC.
By: /s/ JOHN A. POSERINA
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Name: John A. Poserina
Title: Chief Financial Officer