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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


 

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): October 16, 2012

 

PERNIX GROUP, INC.

(Exact Name of Registrant as Specified in Charter)

 

Delaware

333-92445

36-4025775

(State or Other Jurisdiction
of Incorporation)

(Commission File Number)

(I.R.S. Employer
Identification No.)

 

             151 E. 22nd Street

                 Lombard, Il.

                           60148

(Address of Principal Executive Offices)

                           (Zip Code)

(630) 620-4787

(Registrant’s telephone number, including area code)

 

(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 (see General Instruction A.2. below):

 

 

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))



 

Item 2.01Completion of Acquisition or Disposition of Assets.

 

On October 12, 2012, Pernix Group, Inc. sold its 100% equity interest in Telesource CNMI, Inc. (TCNMI) to Marianas Energy Technology, Inc. (the Buyer) for $1,000 in cash plus Buyer assumption of all third party liabilities. The sale price is consistent with the range of the fair market value of the equity interest as determined by an independent third party valuation firm. The cash proceeds were received on October 12, 2012.

 

For reporting purposes, the results of operations of TCNMI will be included as income from discontinued operations in the Company’s third quarter 2012 results.

 

Pro forma financial information with respect to the sale is provided in Item 9.01 of this Current Report on Form 8-K.

 

 

Item 9.01. Financial Statements and Exhibits.

 

(b) Pro Forma Financial Information.

 

PERNIX GROUP, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

 

The following unaudited consolidated pro forma financial information of Pernix Group, Inc. and its consolidated subsidiaries (Pernix or the Company) is based upon the historical statements of operations, as adjusted to reflect the disposition of its interest in TCNMI. The historical statements of operations presented in the pro forma financial information are for the six months ended June 30, 2012 as presented in the Form 10-Q filed on August 14, 2012, and for the year ended December 31, 2011 as presented in the Form 10-K filed on March 30, 2012. The 2011 historical financial statements as presented in the Form 10-K did not yet reflect the pro forma impact of the March 2012 disposition of TransRadio Sendersysteme Berlin, A.G., (TransRadio), therefore, the 2011 pro forma financial information included in this filing includes a column to reclassify the losses from operations of TransRadio to Loss from discontinued operations. The historical balance sheet presented in the pro forma financial information is as of June 30, 2012 as was presented in the Form 10-Q filed on August 14, 2012.

 

The following unaudited consolidated pro forma financial information of Pernix should be read in conjunction with the related notes and with the historical consolidated financial statements of Pernix and the related notes included in previous filings with the Securities and Exchange Commission. The unaudited pro forma consolidated balance sheet reflects the disposition of TCNMI as if it occurred on June 30, 2012 while the unaudited pro forma statements of consolidated income give effect to the disposition as if it occurred on January 1, 2011. The pro forma adjustments, described in the related notes, are based on the best available information and certain assumptions that Pernix management believes are reasonable.

 

The unaudited consolidated pro forma financial information is presented for illustrative purposes only and does not purport to be indicative of the operating results or financial position that would have occurred if the transaction described above had occurred as presented in such statements. In addition, future results may vary significantly from the results reflected in such statements. For example, this financial information does not reflect any potential earnings or other impacts from the use of the proceeds from the disposition or cost reductions of previously allocated corporate costs and potential subsequent restructuring charges.

 

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PERNIX GROUP, INC. AND SUBSIDIARIES

Unaudited Pro Forma Consolidated Balance Sheet as of June 30, 2012

 

Pernix Consolidated Historical

 

Pro Forma Adjustments TCNMI Disposition

 

Pernix Pro Forma Consolidated

Assets                  
Current assets:
    Cash and cash equivalents   $      8,765,139   $               (42,927) (a) $          8,723,212
                          -                       1,000 (b)    
    Accounts receivable less allowance for doubtful accounts of zero at June 30, 2012    17,446,664             (413,223) (a)        17,033,441
    Other receivables             271,096                   (27,171) (a)               293,925
                            50,000 (a)    
    Inventories      1,449,700                          -          1,449,700
    Deferred tax asset          1,588,953                 (474,606) (d)            1,114,347
    Prepaid expenses and other current assets           394,697                   (8,059) (a)               386,638
          Total current assets        29,916,249                 (914,986)            29,001,263
    Plant, and equipment, net of accumulated depreciation of $806,849
      at June 30, 2012         408,567                 (8,482) (a)             400,085
    Deferred tax asset, (net of valuation allowance of $22,103,132                  
      at June 30, 2012)          3,729,878                              - (c)            3,729,878
    Other assets           47,533                 (9,487) (a)               38,046
          Total assets   $    34,102,227   $             (932,955)   $        33,169,272
Liabilities and Stockholders’ Equity            
Current liabilities:                  
    Accounts payable      4,979,538             (439,157) (a)          4,540,381
    Accounts payable — related party               35,088                              -                   35,088
    Accounts Payable - Others           31,701                 33,883 (a)               65,584
    Accrued expenses        10,575,840              (1,202,241) (a)            9,373,599
    Interest payable — related party         452,412                          -             452,412
    Short term debt               17,292                              -                   17,292
    Short term debt - related party      1,000,000                          -          1,000,000
    Billings in excess of costs and estimated earnings          6,064,490                              -              6,064,490
    Dividends payable           103,109                            -               103,109
          Total current liabilities        23,259,470              (1,607,515)            21,651,955
    Long term debt           30,471                          -               30,471
    Long term debt - related party          1,274,301                              -              1,274,301
          Total liabilities      24,564,242            (1,607,515)          22,956,727
Equity:                  
    Pernix Group, Inc. and Subsidiaries Stockholders’ equity
    Convertible senior preferred stock, $0.01 par value. Authorized 50 million shares
      $170,000 involuntary liquidation preference, 170,000 shares issued and
      outstanding at June 30, 2012              1,700                          -                 1,700
    Common stock, $0.01 par value. Authorized 200,000,000 shares, 9,403,697 issued                                    -      
      at June 30, 2012               94,037                              -                   94,037
    Additional paid-in capital    76,844,750                          -        76,844,750
    Accumulated deficit       (69,840,310)                   674,560 (d)        (69,165,750)
    Accumulated comprehensive (loss)        (231,562)                          -           (231,562)
          Total Pernix Group, Inc. and Subsidiaries Stockholders’ equity          6,868,615                   674,560              7,543,175
    Noncontrolling interest   2,669,370                            -            2,669,370
          Total equity          9,537,985                   674,560            10,212,545
            Total liabilities and Stockholders’ equity $    34,102,227 $             (932,955) $        33,169,272

 

See accompanying notes to the unaudited pro forma consolidated financial statements.

  

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PERNIX GROUP, INC. AND SUBSIDIARIES

Unaudited Pro Forma Consolidated Statement of Operations for the Six Months Ending June 30, 2012

 

Pernix Consolidated Historical

 

Pro Forma Adjustments TCNMI Disposition (e)

 

Pernix Pro Forma Consolidated

Revenues:                  
    Construction revenues $      58,247,272  $                     -  $          58,247,272
    Service fees — power generation plant            3,077,683            809,350               2,268,333
          Gross revenues        61,324,955          809,350           60,515,605
Costs and expenses:                  
    Construction costs      54,000,353                    -         54,000,353
    Operation and maintenance costs - power generation plant            2,110,984            562,570               1,548,414
          Cost of revenues        56,111,337          562,570           55,548,767
          Gross profit            5,213,618            246,780               4,966,838
Operating expenses:
    Salaries and employee benefits            1,587,312              38,254               1,549,058
    Building rental and occupancy expense             35,632            2,951                32,681
    Occupancy - related party                 52,445                        -                    52,445
    General and administrative        1,729,387        530,467           1,198,920
          Total operating expenses            3,404,776            571,672               2,833,104
          Operating income (loss)          1,808,842        (324,892)             2,133,734
                   
Other income (expense):
    Interest (expense)/income, net               (11,756)                6,874                   (18,630)
    Interest (expense) - related party           (89,293)                    -               (89,293)
    Foreign currency exchange (loss)               (18,403)                        -                   (18,403)
    Other income / (loss), net           763,857            2,175              761,682
          Total other income (expense)               644,405                9,049                  635,356
          Consolidated income / (loss) before income taxes            2,453,247          (315,843)               2,769,090
    Income tax benefit / (expense)      (1,160,540)   (1,395,808)              235,268
          Consolidated income (loss) from continuing operations            1,292,707       (1,711,651)               3,004,358
Gain (loss) from discontinued operations:                  
     (Loss) from discontinued operations on the sales of TransRadio       (1,117,525)                    -          (1,117,525)
                   
          Consolidated net income (loss)             175,182     (1,711,651)             1,886,833
                   
Less: Net income/(loss) attributable to noncontrolling interest        1,860,180                    -           1,860,180
                   
          Consolidated net income/(loss) attributable to the stockholders            
            of Pernix Group, Inc. and Subsidiaries        (1,684,998)     (1,711,651)                  26,653
                   
Less: Preferred stock dividends             45,583                    -                45,583
                   
          Consolidated net income/(loss) attributable to the common            
            stockholders of Pernix Group Inc., and subsidiaries $      (1,730,581)  $    (1,711,651) $               (18,930)
                   
EPS attributable to the stockholders of Pernix Group, Inc. and Subsidiaries:                
    Basic net income / (loss) per share from continuing operations $ (0.07) $ (0.18) $ 0.12
    Diluted net income / (loss) per share from continuing operations   $ (0.07)   $ (0.18)   $ 0.12
    Basic net income / (loss) per share from discontinued operations  $ (0.12) N/A $ (0.12)
    Weighted average shares outstanding - basic     9,403,697     9,403,697     9,403,697
    Weighted average shares outstanding - diluted     9,403,697     9,403,697     9,566,210

 

See accompanying notes to the unaudited pro forma consolidated financial statements. 

 

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PERNIX GROUP, INC. AND SUBSIDIARIES

Unaudited Pro Forma Consolidated Statement of Operations for Year End December 31, 2011

Pernix Pro Forma Consolidated Historical

 

Pro Forma Adjustments TCNMI Disposition (e)

 

Pro Forma Reclass of TransRadio Disposition (f)

 

Pernix Pro Forma Consolidated

Revenues:                        
    Construction revenues $        51,841,103  $                     -  $                          -  $            51,841,103
    Transmitter design and installation             10,207,047                  10,207,047                                -
    Service fees — power generation plant          7,791,874     1,604,252                       -               6,187,622
    Service fees — related party                        826                        -                           -                             826
          Gross revenues          69,840,850       1,604,252          10,207,047             58,029,551
Costs and expenses:                        
    Construction costs        47,982,824                    -                       -             47,982,824
    Transmitter design and installation cost              7,373,347                        -              7,373,347                                -
    Operation and maintenance costs - power generation plant          5,018,011     1,155,797                       -               3,862,214
          Cost of revenues            60,374,182         1,155,797              7,373,347               51,845,038
          Gross profit            9,466,668          448,455            2,833,700               6,184,513
Operating expenses:                        
    Salaries and employee benefits          7,265,885          75,940          4,775,245             2,414,700
    Building rental and occupancy expense                 682,342                5,846                 596,582                      79,914
    Occupancy - related party             103,724          99,982                       -                      3,742
    Impairment of long-lived assets              1,698,899                        -              1,698,899                                -
    General and administrative          2,645,507                    -              (55,373)             2,700,880
          Total operating expenses     12,396,357       181,768.00              7,015,353     5,199,236
          Operating income (loss)          (2,929,689)     266,687.00           (4,181,653) 985,277
                         
Other income (expense):
    Interest (expense)/income, net               (172,823)                5,314                (172,965)                       (5,172)
    Interest (expense) - related party           (133,319)                    -              (16,910)               (116,409)
    Foreign currency exchange (loss)                 (50,742)                        -                             -                     (50,742)
    Other income / (loss), net             106,965            8,140              (55,648)                154,473
          Total other income (expense)               (249,919)              13,454                (245,523)                     (17,850)
          Consolidated income / (loss) before income taxes            (3,179,608)            280,141             (4,427,176)                    967,427
    Income tax benefit / (expense)          5,787,400     1,395,808             425,335             3,966,257
          Consolidated income (loss) from continuing operations              2,607,792         1,675,949             (4,001,841)                 4,933,684
Gain (loss) from discontinued operations:                        
    Reclassification of TransRadio loss to loss on Discontinued Operations                        -                    -          3,688,929            (3,688,929)
                         
          Consolidated net income (loss)            2,607,792       1,675,949              (312,912)               1,244,755
                         
Less: Net income/(loss) attributable to noncontrolling interest             658,317                    -            (384,163)             1,042,480
                         
          Consolidated net income/(loss) attributable to the stockholders of                
            Pernix Group, Inc. and Subsidiaries            1,949,475       1,675,949                 71,251                  202,275
                         
Less: Preferred stock dividends             126,497                    -               71,251                  55,246
                         
          Consolidated net income/(loss) attributable to the common                
            stockholders of Pernix Group Inc., and subsidiaries $          1,822,978  $      1,675,949  $                          - $                147,029
                         
EPS attributable to the stockholders of Pernix Group, Inc. and Subsidiaries:                      
    Basic net income / (loss) per share from continuing operations $ 0.19 $ 0.18 $ (0.39) $ 0.41
    Diluted net income / (loss) per share from continuing operations   $ 0.21   $ 0.18   $ (0.39)   $ 0.41
    Basic net income / (loss) per share from discontinued operations  $ 0.00 N/A N/A $ (0.39)
    Weighted average shares outstanding - basic     9,403,697     9,403,697     9,403,697     9,403,697
    Weighted average shares outstanding - diluted     9,429,647     9,429,647     9,403,697     9,429,647

See accompanying notes to the unaudited pro forma consolidated financial statements.

 

5



 

 

 

 

PERNIX GROUP, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

 

 

(a)     To reflect the removal or adjustment of TCNMI balance sheet accounts as set forth in the October 12, 2012 Securities Purchase Agreement.

 

(b)     To reflect cash Pernix Group, Inc. received for the sale of its interest in TCNMI.

 

(c)     As disclosed in the Pernix Group, Inc. Form 10-Q filed on August 14, 2012, TCNMI had deferred tax assets related to historical net operating losses of $15.2 million that were fully offset by a valuation allowance. Subsequent to the sale of TCNMI, these net operating loss deferred tax assets do not remain with the Company. However, the Company realized a tax loss for U.S. income tax purposes on the sale of TCNMI of $51.8 million, thereby generating new tax assets in the amount of $21.5 million, consisting of $3.8 million of state deferred tax assets and $17.7 million of federal deferred tax assets all of which are fully reserved for by a valuation allowance as of the sale date as the Company’s assessment at this time does not suggest that it is more likely than not that these assets will be realized.

 

(d)     To reflect estimated $0.7 million gain, net of tax expense of $0.4 million, related to the sale of TCNMI.

 

(e)     To reflect the removal of the operating results of TCNMI as if the transaction occurred on January 1, 2011.

 

(f)      In early 2012, the Company sold its interest in TransRadio SenderSysteme Berlin A.G. (TransRadio) as disclosed in the form 8-K filed on April 20, 2012. The purpose of these adjustments is to reclassify the TransRadio loss to Loss from Discontinued Operations for the year ended December 31, 2011.

 

 

 

 

Unaudited Pro forma financial statements are presented above.

 

 (d) Exhibits 

 

Exhibit Number Description
(101.INS)*** XBRL Instance Document
(101.SCH)*** XBRL Taxonomy Extension Schema Document
(101.CAL)*** XBRL Taxonomy Extension Calculation Linkbase Document
(101.LAB)*** XBRL Taxonomy Extension Label Linkbase Document
(101.PRE)*** XBRL Taxonomy Extension Presentation Linkbase Document
(101.DEF)*** XBRL Taxonomy Extension Definition Linkbase Document

 

 

 

 

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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.

 

PERNIX GROUP, INC.

By:

/s/ Nidal Zayed

Nidal Zayed

President and Chief Executive Officer

By:

/s/ Gregg D. Pollack

Gregg D. Pollack

V.P. — Administration and Chief Financial Officer

 

 

 

By:

/s/ Carol J. Groeber

Carol J. Groeber

Corporate Controller & Principal Accounting Officer

Dated: October 16, 2012

 

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