UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
AMENDMENT TO FORM 8-K CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
AMENDMENT NO. 1
Date of Report (Date of earliest event reported): November 17, 2003
LINCOLN LOGS LTD.
(Exact name of small business issuer as specified in its charter)
New York 0-12172 14-1589242
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
5 Riverside Drive, Chestertown, New York 12817
(Address of principal executive offices)
(518) 494-5500
(Issuer's telephone number)
Neither name, address nor fiscal year has changed since last report
(Former name, former address, and former fiscal year, if changed since last
report)
Lincoln Logs Ltd. hereby amends Item 7 of its Current Report on Form 8-K
filed on November 20, 2003, in order to file certain financial statements and
information.
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Item 7. Financial Statements, Pro Forma Information and Exhibits
(a) Financial Statements of Businesses Acquired
This item is amended to include the following:
I. Snake River Log Homes, LLC
(i) Auditors' Report
(ii) Balance Sheet as of December 31, 2002
(iii) Statements of Earnings and Members' Equity for the year ended
December 31, 2002
(iv) Statement of Cash Flows for the year ended December 31, 2002
(v) Notes to the Financial Statements
(b) Pro Forma Financial Information
This item is amended to include the following:
I. Lincoln Logs Ltd.
(i) Introductory information
(ii) Unaudited Pro Forma Consolidated Balance Sheet as of October 31,
2003
(iii) Unaudited Pro Forma Consolidated Statement of Operations for
the nine months ended October 31, 2003
(iv) Unaudited Pro Forma Consolidated Statement of Operations for
the year ended January 31, 2003
(v) Notes to the Unaudited Pro Forma Financial Statements
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SNAKE RIVER LOG HOMES, LLC
FINANCIAL STATEMENTS AND REPORT
OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
DECEMBER 31, 2002
REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
To the Members
Snake River Log Homes, LLC
We have audited the accompanying balance sheet of Snake River Log Homes, LLC
(a Partnership) as of December 31, 2002 and the related statements of earnings
and members' 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 Snake River Log Homes LLC as of
December 31, 2002, and the results of its operations and its cash flows for the
year then ended, in conformity with accounting principles generally accepted in
the United States of America.
/s/ Poston Denney & Kilpack, PLLC
Certified Public Accountants
Idaho Falls, Idaho
May 21, 2003
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SNAKE RIVER LOG HOMES, LLC
BALANCE SHEET
DECEMBER 31, 2002
ASSETS
CURRENT ASSETS
Cash $ 86,050
Trade receivables, net of allowance for
doubtful accounts of $9,940 27,128
----------
Total current assets 113,178
PROPERTY, PLANT AND EQUIPMENT, at cost
Equipment 2,730
Office building 47,222
----------
49,952
----------
Accumulated depreciation ( 3,286)
----------
46,666
OTHER ASSETS
Covenant not to compete, net of amortization 399,278
----------
$ 559,122
==========
The accompanying notes are an integral part of this financial statement.
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SNAKE RIVER LOG HOMES, LLC
BALANCE SHEET
DECEMBER 31, 2002
LIABILITIES AND MEMBERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 21,567
Customer deposits 56,425
Other accrued liabilities 6,339
Current maturities of long-term debt 105,414
----------
189,745
LONG-TERM DEBT, less current maturities 306,636
MEMBERS' EQUITY 62,741
----------
$ 559,122
==========
The accompanying notes are an integral part of this financial statement.
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SNAKE RIVER LOG HOMES, LLC
STATEMENT OF EARNINGS AND MEMBERS' EQUITY
YEAR ENDED DECEMBER 31, 2002
Revenues $ 1,481,197
Cost of goods sold 1,129,842
------------
Gross profit 351,355
General and administrative 386,764
------------
Loss from operations ( 35,409)
Other income (expense)
Interest expense ( 4,466)
Interest income 966
Forgiveness of debt 44,175
------------
40,675
------------
NET EARNINGS 5,266
Members' equity, January 1, 2002 57,475
------------
Members' equity, December 31, 2002 $ 62,741
============
The accompanying notes are an integral part of this financial statement.
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SNAKE RIVER LOG HOMES, LLC
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2002
Increase (decrease) in cash and cash equivalents
Cash flows from operating activities
Net earnings $ 5,266
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 2,084
Amortization 13,768
Provision for bad debts 641
Forgiveness of debt ( 44,175)
Changes in assets and liabilities
Trade receivable 51,366
Accounts payable ( 15,687)
Customer deposits 24,435
Other accrued liabilities 2,137
----------
Total adjustments 34,569
----------
Net cash provided by operations 39,835
Cash flows from investing activities
Redemption of membership interest ( 225,000)
----------
Net cash used in investing activities ( 225,000)
Cash flows from financing activities
Proceeds from notes payable 225,000
Principal payments on long-term debt ( 996)
----------
Net cash provided by financing activities 224,004
----------
Net increase in cash and cash equivalents 38,839
Cash and cash equivalents at beginning of year 47,211
----------
Cash and cash equivalents at end of year $ 86,050
==========
Supplemental disclosures of cash flow information
-------------------------------------------------
Cash paid during the year for interest $ 1,857
Non-cash investing and financing activities
-------------------------------------------
During the year the Company redeemed the membership interest of its majority
member. This was done for $413,046; $225,000 of which was financed through
bank debt and a $188,046 note carried by the retiring member.
The accompanying notes are an integral part of these financial statements.
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SNAKE RIVER LOG HOMES, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Business Activity
Snake River Log Homes, LLC, (the Company) was organized under the laws of
the State of Idaho. The Company is primarily engaged in the marketing of
custom log homes. The Company's sole log source provider is Yellowstone
Log Homes.
2. Revenue Recognition
The Company recognizes revenues from log home packages when substantially
the entire package has been delivered. Customers are normally required
to pay 1/3 deposit before the package is ordered and the remainder upon
delivery. Revenue is recognized after the product has been shipped.
The Company maintains an allowance for doubtful accounts at an amount it
estimates to be sufficient to provide protection against losses resulting
from less than full payment on its receivables. The Company records the
allowance principally by specific identification. Accounts are written
off when collection efforts are exhausted.
3. Property and Equipment
Property and equipment are stated at cost less accumulated depreciation.
Depreciation is provided principally on accelerated methods over the
following estimated useful lives:
Equipment 5 years
Major expenditures and those which substantially increase useful lives are
capitalized. Maintenance, repairs and minor renewals are charged to
operations when incurred.
4. Intangible Assets
The intangible asset is a covenant not to compete from a prior member of
the Company. The costs are being amortized over the term of the covenant
not to compete of 60 months.
5. 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, liabilities,
revenues and expenses during the reporting period. Estimates also affect
the disclosure of contingent assets and liabilities at the date of the
financial statements. Actual results could differ from these estimates.
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SNAKE RIVER LOG HOMES, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
6. Concentrations of credit risk
A substantial portion of the Company's trade receivables are with several
significant customers. 100% of the log material costs are purchased from
Yellowstone Log Homes.
7. Income Taxes
The Company is not a taxpaying entity for purposes of federal and state
income taxes, and thus no income tax expense has been recorded in their
financial statements. Earnings of the Company are distributed to the
members and taxed in their respective returns.
8. Cash and cash equivalents
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
NOTE B - LONG-TERM DEBT
Long-term debt consists of the following at December 31, 2002:
Note payable to a financial institution with interest at
6.6% collateralized by equipment, payments of $1,989 due
monthly, the note is personally guaranteed by the
Company's members, note due October 15, 2007. $ 224,004
6.0% imputed note payable to former member, payments
of $50,000 due April 1, 2003 and November 1, 2003
and $100,000 due April 1, 2004. (Notes E & F) 188,046
-----------
412,050
Less current maturities ( 105,414)
-----------
$ 306,636
===========
Maturities of long-term debt are as follows:
Year ending December 31
-----------------------
2003 $ 105,414
2004 102,163
2005 10,773
2006 11,506
2007 182,194
-----------
$ 412,050
===========
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SNAKE RIVER LOG HOMES, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE C - COMMITMENTS AND CONTINGENCIES
The Company provides a 1-year workmanship warranty on work performed.
The Company has in place a "Memorandum Agreement" with Yellowstone Log Homes,
LLC. This agreement provided among other things that:
1. The Company will never sell or move the building. In the event the
building is moved or sold, the Company will pay to Yellowstone Log
Homes, LLC $44,175.
2. The Company can continue to locate its building on property owned by
Yellowstone Log Homes, LLC for an annual lease payment of $1.
3. The Company agrees it will continue to use Yellowstone Log Homes, LLC
as its provider of materials as long as Yellowstone Log Homes, LLC can
produce and supply material as needed.
4. The Company will maintain its accounts payable current with Yellowstone
Log Homes, LLC.
5. The agreement is binding on the Company and Yellowstone Log Homes, LLC
and their assigns.
As part of the membership redemption discussed in Note E, the Company has an
obligation to provide health insurance to the selling member and his family
until the date of the final redemption payment on April 1, 2004.
NOTE D - RELATED PARTY TRANSACTIONS
Amounts due to a related party consist of an amount payable to a member for
$1,500 in accounts payable for advertising costs at December 31, 2002.
The members of the Company have personally guaranteed the note payable to the
bank.
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SNAKE RIVER LOG HOMES, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE E - CAPITAL ACTIVITY
In November 2000, the Company's sole owner entered an agreement to sell a
portion of the Company. During 2001, the Company was organized as a limited
liability company and the Company's sole proprietor transferred his interest
into the Company and became the sole member. Also during 2001, two
individuals bought 33% of the ownership interest from the Company's sole
owner. Total compensation paid to the member for 33% of his ownership
interest was $310,000. This transaction was external to the books of the
Company and was between the members.
During 2002, as part of the change in ownership, the two minority members
entered into an agreement through the Company to redeem the 67% interest of
the majority member. To accomplish this, the Company secured a note from a
bank for $225,000 and has an obligation to pay the member an additional
$188,046 with imputed interest at 6.0%. Of the remaining balance, $48,800
plus interest is due on or before April 1, 2003, $47,170 plus interest is due
on or before November 1, 2003 and the balance of $92,076 plus interest is due
on or before April 1, 2004. As part of this agreement, the former member
agrees not to compete against the Company for a period of five years. The
redemption of this membership interest for $413,046 has been recorded as an
intangible asset and is being amortized as a covenant not to compete over five
years.
NOTE F - SUBSEQUENT EVENTS
Subsequent to the end of the year, the Company entered into a line of credit
agreement with a bank. $50,000 was drawn on the line as payment on a note
payable to a former member that was due April 1, 2003 for $50,000.
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LINCOLN LOGS LTD.
PRO FORMA FINANCIAL INFORMATION
INTRODUCTORY INFORMATION
On November 17, 2003, Lincoln Logs Ltd. ("Lincoln Logs") acquired the member-
ship interests of Snake River Log Homes, LLC ("Snake River"), a limited
liability company. The purchase had an aggregate consideration of approximately
$1,663,500, and consisted of a combination of cash, promissory notes, assumption
of debt and common stock.
The unaudited pro forma consolidated balance sheet was prepared as if the
acquisition had occurred on October 31, 2003. For purposes of consolidating the
unaudited balances of Lincoln Logs and the acquired business as of October 31,
2003, the unaudited balance sheets of the acquired business as of September 30,
2003 have been used to approximate the acquired business' financial position
as of October 31, 2003.
The unaudited pro forma consolidated statements of operations for the year
ended January 31, 2003 was prepared as if the acquisition had taken place as of
February 1, 2002. For the purposes of consolidating the statement of operations
of Lincoln Logs and the acquired business for the year ended January 31, 2003,
the audited statements of operations of the acquired business for the year ended
December 31, 2002 has been used to approximate the results of its operations as
of January 31, 2003. The unaudited statement of operations of Lincoln Logs used
for the purposes of the presentation of pro forma results of operations for the
year ended January 31, 2003 is the unaudited statement of operations filed by
Lincoln Logs in a Current Report on Form 8-K/A dated November 13, 2003. That
unaudited statement of operations includes the audited results of operations of
Lincoln Logs for the year ended January 31, 2003 and the unaudited statements of
operations of businesses acquired by Lincoln Logs on August 29, 2003, Hart & Son
Industries Ltd. ("Hart & Son") and True Craft Log Structures Ltd.("True Craft").
The unaudited pro forma consolidated statements of operations for the nine-
month period ended October 31, 2003 was prepared as if the acquisition had taken
place as of February 1, 2003. For the purposes of consolidating the statement
of operations of Lincoln Logs and the acquired business for the nine-month
period ended October 31, 2003, the unaudited statement of operations of the
acquired business for the nine-month period ended September 30, 2003 has been
used to approximate the results of its operations as of October 31, 2003. The
unaudited consolidated statement of operations of Lincoln Logs used for the
purpose of the presentation of pro forma results of operations for the nine-
month period ended October 31, 2003 is that unaudited consolidated statement of
operations for the nine months ended October 31, 2003 filed by Lincoln Logs in
its Quarterly Report on Form 10-QSB dated December 15, 2003, which Quarterly
Report includes the results of Hart & Son and True Craft for the period August
29, 2003 (date of acquisition) through October 31, 2003. Also included in the
unaudited pro forma consolidated financial statements for the nine-month period
ended October 31, 2003 are the unaudited results of operations of Hart & Son and
True Craft for the six-month period ended June 30, 2003, which unaudited results
of operations were filed by Lincoln Logs in a Current Report on Form 8-K/A dated
November 13, 2003.
For the purposes of presenting pro forma financial information, all
transactions between Lincoln Logs, Snake River, Hart & Son and True Craft have
been eliminated as if the acquisitions had been consummated on the assumed
- 12 -
effective dates. The pro forma financial information reflects other adjustments
that are directly attributable to the acquisition as described in the
accompanying notes.
For the purposes of this presentation, certain pro forma adjustments have been
made to the balance sheet and results of operations to provide information as to
how the acquisition might have affected the financial position and statements of
operations. This unaudited pro forma financial information does not purport to
be indicative of the results of operations that would have been obtained if the
operations had been combined as of the beginning of the period presented, and is
not intended to be a projection of future results.
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LINCOLN LOGS LTD.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
OCTOBER 31, 2003
(All amounts in US Dollars)
ASSETS
Lincoln Logs
Snake Consolidated Pro Forma Pro Forma
River 10Q-SB Filing Adjustments Consolidated
CURRENT ASSETS:
Cash and cash equivalents $ 199,739 $ 1,077,538 $( 491,478) $ 785,799
Trade accounts receivable,
net of allowance for
doubtful accounts ( 264) 248,050 247,786
Inventories:
Raw materials 0 2,022,117 2,022,117
Work in Process 0 257,543 257,543
Prepaid expenses and other
current assets 0 564,649 564,649
Due from related parties 0 43,427 43,427
Mortgage and note receivable 0 2,592 2,592
Prepaid income taxes 0 64,207 64,207
------------ ------------ ------------ ------------
Total current assets 199,475 4,280,123 ( 491,478) 3,988,120
PROPERTY, PLANT AND EQUIPMENT:
Cost 49,951 9,194,396 9,244,347
Less: accumulated depreciation ( 4,849) ( 4,497,629) (4,502,478)
------------ ------------ ------------ ------------
Property, plant and equipment 45,102 4,696,767 0 4,741,869
OTHER ASSETS:
Mortgage receivable 0 60,450 60,450
Assets held for resale 0 6,466 6,466
Goodwill 0 731,809 1,021,125 1,752,934
Deposits and other assets 0 64,007 64,007
Other intangible assets, net of
accumulated amortization 337,322 302,515 425,000 1,064,837
------------ ------------ ------------ ------------
Total other assets 337,322 1,165,247 1,446,125 2,948,694
------------ ------------ ------------ ------------
TOTAL ASSETS $ 581,899 $ 10,142,137 $ 954,647 $ 11,678,683
============ ============ ============ ============
See accompanying notes to pro forma consolidated financial statements.
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LINCOLN LOGS LTD.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
OCTOBER 31, 2003
(All amounts in US Dollars)
LIABILITIES
Lincoln Logs
Snake Consolidated Pro Forma Pro Forma
River 10Q-SB Filing Adjustments Consolidated
CURRENT LIABILITES:
Current installment of long-
term debt $ 224,004 $ 39,460 $ $ 263,464
Current installment of long-
term debt, related parties 57,566 93,458 151,024
Current installments of note
payable 205,740 93,458 299,198
Trade accounts payable 1,398,699 1,398,699
Accrued salaries and wages 197,630 197,630
Accrued income taxes 20,000 140,157 ( 14,500) 145,657
Accrued expenses 5,849 686,902 ( 28,685) 664,066
Due to related parties 34,651 34,651
Customer deposits 57,745 2,575,448 2,633,193
------------ ------------ ------------ ------------
Total current liabilities 307,598 5,336,253 143,731 5,787,582
LONG TERM DEBT, net of current installments:
Mortgage payable 571,216 571,216
Note payable 1,190,537 1,190,537
Note payable - related party 167,130 322,563 489,693
Other 188,046 47,934 322,563 558,543
------------ ------------ ------------ ------------
Total long term liabilities 188,046 1,976,817 645,126 2,809,989
------------ ------------ ------------ ------------
Total liabilities 495,644 7,313,070 788,857 8,597,571
STOCKHOLDERS' EQUITY:
Share Capital 42,395 ( 42,395) 0
Preferred stock, $.01 par
value; authorized 1,000,000
shares; issued and outstanding
-0- shares ---
Common stock, $.01 par value;
authorized 10,000,000 shares;
issued 8,046,799 shares 92,443 3,000 95,443
Additional paid-in capital 6,022,092 237,000 6,259,092
Retained Earnings (Accumulated
deficit) 43,860 ( 2,458,584) ( 31,815) ( 2,446,539)
Additional other comprehensive
income: foreign currency trans-
lation adjustment 57,551 57,551
------------ ------------ ------------ ------------
86,255 3,713,502 165,790 3,965,547
Less cost of 504,240 shares of
common stock in treasury ( 884,435) ( 884,435)
------------ ------------ ------------ ------------
Total stockholders' equity 86,255 2,829,067 165,790 3,081,112
------------ ------------ ------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 581,899 $ 10,142,137 $ 954,647 $ 11,678,683
============ ============ ============ ============
See accompanying notes to pro forma consolidated financial statements.
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LINCOLN LOGS LTD.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED OCTOBER 31, 2003
(All amounts in US Dollars)
Lincoln Logs
Consolidated Pro Forma Pro Forma
Hart & Son True-Craft Snake River 10Q-SB Filing Adjustments Consolidated
NET SALES $1,331,232 $ 434 $1,543,646 $ 11,723,296 $( 133,955) $ 14,464,653
COST OF SALES 1,092,799 --- 1,108,571 6,680,135 ( 69,299) 8,812,206
---------- ---------- ---------- ------------ ------------ ------------
GROSS PROFIT 238,433 434 435,075 5,043,161 ( 64,656) 5,652,447
OPERATING EXPENSES:
Commissions 22,697 90 0 1,312,836 1,335,623
Selling, general and admin-
istrative 277,442 413 371,697 3,352,034 55,380 4,056,966
---------- ---------- ---------- ------------ ------------ ------------
Total operating expenses 300,139 503 371,697 4,664,870 55,380 5,392,589
---------- ---------- ---------- ------------ ------------ ------------
INCOME (LOSS) FROM OPERATIONS ( 61,706) ( 69) 63,378 378,291 ( 120,036) 259,858
OTHER INCOME (EXPENSE):
Interest income 0 12,826 12,826
Interest expense 0 ( 25,366) ( 2,435) ( 27,801)
Other ( 2,362) 119 482 107,928 106,167
---------- ---------- ---------- ------------ ------------ ------------
Total other income (expense) ( 2,362) 119 482 95,388 ( 2,435) 91,192
---------- ---------- ---------- ------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES ( 64,068) 50 63,860 473,679 ( 122,471) 351,050
INCOME TAXES BENEFIT ( 13,175) --- 20,000 163,849 ( 27,166) 143,508
---------- ---------- ---------- ------------ ------------ ------------
NET INCOME (LOSS) $( 50,893) $ 50 $ 43,860 $ 309,830 $( 95,305) $ 207,542
========== ========== ========== ============ ============ ============
PER SHARE DATA:
Basic earnings per share $ 0.02
============
Diluted earnings per share $ 0.02
============
See accompanying notes to pro forma consolidated financial statements.
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LINCOLN LOGS LTD.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JANUARY 31, 2003
(All amounts in US Dollars)
Lincoln Logs
Consolidated Pro Forma Pro Forma
Hart & Son True-Craft Snake River 10K-SB Filing Adjustments Consolidated
NET SALES $2,400,919 $ 1,954 $1,481,197 $ 13,991,284 $( 204,211) $ 17,671,143
COST OF SALES 2,015,951 --- 1,129,842 7,385,771 ( 74,899) 10,456,665
---------- ---------- ---------- ------------ ------------ ------------
GROSS PROFIT 384,968 1,954 351,355 6,605,513 ( 129,312) 7,214,478
OPERATING EXPENSES:
Commissions 47,381 181 0 1,747,763 1,795,325
Selling, general and admin-
istrative 489,999 826 386,764 3,670,473 78,259 4,626,321
---------- ---------- ---------- ------------ ------------ ------------
Total operating expenses 537,380 1,007 386,764 5,418,236 78,259 6,421,646
---------- ---------- ---------- ------------ ------------ ------------
INCOME FROM OPERATIONS ( 152,412) 947 ( 35,409) 1,187,277 ( 207,571) 792,832
OTHER INCOME (EXPENSE):
Interest income 966 24,941 25,907
Interest expense ( 4,466) ( 57,966) ( 3,247) ( 65,679)
Other ( 1,043) 238 44,175 69,901 113,271
---------- ---------- ---------- ------------ ------------ ------------
Total other income (expense) ( 1,043) 238 40,675 36,876 ( 3,247) 73,499
---------- ---------- ---------- ------------ ------------ ------------
INCOME BEFORE INCOME TAXES ( 153,455) 1,185 5,266 1,224,153 ( 210,818) 866,331
INCOME TAXES / (BENEFIT) ( 25,478) --- 0 24,000 ( 67,315) ( 68,793)
---------- ---------- ---------- ------------ ------------ ------------
NET INCOME $( 127,977) $ 1,185 $ 5,266 $ 1,200,153 $( 143,503) $ 935,124
========== ========== ========== ============ ============ ============
PER SHARE DATA:
Basic earnings per share $ 0.12
============
Dilutive earnings per share $ 0.11
============
See accompanying notes to pro forma consolidated financial statements.
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LINCOLN LOGS LTD.
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL STATEMENTS
Pro Forma Adjustments
a.) Balance Sheet:
i.) Upon consummation of the transaction, the purchase price paid to the
members of Snake River Logs Homes, LLC, including amounts paid for pre-
acquisition costs, consisted of $491,477 paid in cash, $832,041 of
promissory notes, on a discounted basis, payable over five years,
300,000 shares of common stock with certain restrictions valued at
$240,000, and assumption of $100,000 of debt.
ii.) The purchase price was allocated $500,000 to identifiable intangible
assets, and the balance of $1,021,125 to goodwill. The amount
allocated to identifiable intangible assets was based on preliminary
assessments of estimated usefulness, which valuation is subject to a
final assessment from an independent valuation consultant.
b.) Statement of Operations:
i.) The pro forma statements of operations have been adjusted to reflect
increases in expenses that would have been incurred, and decreases in
expenses that would have been eliminated had the acquisition taken place
at the beginning of the periods shown. Those expenses include
adjustments for such items as salaries, amortization, interest expense,
and the elimination of inter-company transactions.
ii.) The tax provision has been adjusted to reflect the combined impact of
the pro forma adjustments by incorporating the tax benefit for the net
income and losses of certain of the acquired companies with the income
tax provision of Lincoln Logs for the twelve-month period ended January
31, 2003 and the nine-month period ended October 31, 2003.
iii.) The weighted average number of shares outstanding has been adjusted
as if the shares issued as part of the consideration paid were issued
at the beginning of the respective periods shown. The weighted
average number of shares used to calculate basic earnings per share
for the nine-month period ended October 31, 2003 and the twelve-month
period ended January 31, 2003 was 8,579,967 and 7,842,559,
respectively. The weighted average number of shares used to calculate
diluted earnings per share for the nine-month period ended October
31, 2003 and the twelve-month period ended January 31, 2003 was
9,215,469 and 9,082,650, respectively.
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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.
LINCOLN LOGS LTD.
Dated: January 30, 2004 By: /s/ William J. Thyne
William J. Thyne
Chief Financial Officer
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