<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________________
FORM 8-K/A
AMENDMENT NO. 1
TO
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 7, 1996 (July 24, 1996)
AlphaNet Solutions, Inc.
(Exact Name of Registrant as Specified in Charter)
New Jersey 0-27042 22-2554535
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
7 Ridgedale Ave., Cedar Knolls, New Jersey 07927
(Address of Principal Executive Offices) (zip code)
(201) 267-0088
(Registrant's telephone number, including
area code)
(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
As reported in the Current Report on Form 8-K dated August 5, 1996
filed by AlphaNet Solutions, Inc. (the "Company"), on July 24, 1996, the
Company consummated the acquisition of certain assets of Lior, Inc. ("Lior"), a
MicroAge affiliate located in Paramus, New Jersey.
The Company hereby files this Amendment No.1 on Form 8-K/A to file the
financial statements and related pro forma financial statements required
pursuant to Item 7 of Form 8-K with respect to such transaction.
-2-
<PAGE> 3
(a) Financial Information of Business Acquired.
LIOR, INC.
FINANCIAL STATEMENTS
AS OF JUNE 30, 1996
TOGETHER WITH REPORT OF INDEPENDENT PUBLIC ACCOUNTS
-3-
<PAGE> 4
REPORT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTS
Board of Directors
LIOR, INC.
We have audited the accompanying balance sheet of LIOR, Inc. as of June 30,
1996 and the related statements of operations and accumulated deficit, and cash
flows for the eleven months 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 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 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 LIOR, Inc. as of June 30, 1996
and the results of its operations and its cash flows for the eleven months then
ended in conformity with generally accepted accounting principles.
Grant Thornton LLP
New York, New York
September 30, 1996
-4-
<PAGE> 5
LIOR, INC.
BALANCE SHEET
JUNE 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,060
Accounts receivable, net of allowance for doubtful accounts of $107 3,207
Inventory 1,235
Other current assets 21
------------
Total current assets 5,523
Property and equipment, net 300
Other assets 9
------------
Total assets $ 5,832
============
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Notes payable - finance company $ 2,718
Current portion of capital lease obligations 21
Accounts payable and accrued expenses 2,711
Due to affiliate 746
------------
Total current liabilities 6,196
------------
Long-term debt:
Note payable to shareholder 819
Capital lease obligations 81
------------
Total long-term debt 900
------------
Commitments and contingencies
Shareholder's equity:
Common stock, no par value; authorized 2,500 shares,
200 shares issued and outstanding 90
Accumulated deficit (1,354)
------------
Total shareholder's equity (1,264)
------------
Total liabilities and shareholder's equity $ 5,832
============
</TABLE>
See auditor's report and accompanying notes to financial statements.
-5-
<PAGE> 6
LIOR, INC.
STATEMENT OF OPERATIONS AND
ACCUMULATED DEFICIT
ELEVEN MONTHS ENDED JUNE 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
Net sales $ 26,078
Cost of sales 23,015
------------
Gross profit 3,063
------------
Operating Expenses:
Selling expenses 1,006
General and administrative expenses 2,404
------------
3,410
------------
Operating loss (347)
Other income (expense):
Interest income 25
Interest expense (437)
------------
(412)
------------
Loss before income taxes (759)
Income tax benefit (5)
------------
Net loss (754)
Retained earnings at July 31, 1995, as previously reported $ 210
Prior period adjustments (810)
------------
Accumulated deficit at July 31, 1995, as restated (600)
------------
Accumulated deficit at June 30, 1996 $ (1,354)
============
</TABLE>
See auditor's report and accompanying notes to financial statements.
-6-
<PAGE> 7
LIOR, INC.
STATEMENT OF CASH FLOWS
ELEVEN MONTHS ENDED JUNE 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss $ (754)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 132
Changes in operating assets and liabilities:
Accounts receivable (804)
Inventory (788)
Other current assets 1
Other assets 5
Accounts payable and accrued expenses 295
Due to affiliate 338
------------
Net cash used in operating activities (1,575)
------------
Cash flows from investing activities:
Property and equipment expenditures (82)
------------
Net cash used in investing activities (82)
------------
Cash flows from financing activities:
Repayment of capital lease obligations (19)
Repayment of note payable to Bank (6)
Net borrowings of note payable - finance company 2,718
------------
Net cash provided by financing activities 2,693
------------
Net increase in cash and cash equivalents 1,036
Cash and cash equivalents, beginning of period 24
------------
Cash and cash equivalents, end of period $ 1,060
============
</TABLE>
See auditor's report and accompanying notes to financial statements.
-7-
<PAGE> 8
LIOR, INC.
NOTES TO FINANCIAL STATEMENTS
ELEVEN MONTHS ENDED JUNE 30, 1996
(DOLLARS IN THOUSANDS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business:
LIOR, Inc. (the "Company") is a provider of computer hardware and
software products and related services, including product configuration,
testing and installation.
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.
Cash and Cash Equivalents:
The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
At June 30, 1996, the Company maintained all of its cash and cash
equivalents with one financial institution totaling $1,060, which balances are
insured by the Federal Deposit Insurance Corporation to a maximum of $100.
Inventory:
Inventory, consisting entirely of goods for resale and service parts,
are stated at the lower of cost or market, with cost determined on the weighted
average method or by specific identification.
Property and Equipment:
Property and equipment are stated at cost less accumulated
depreciation. Repairs and maintenance costs which do not extend the useful
lives of the assets are expensed as incurred. Leasehold improvements are
amortized on a straight-line basis over the shorter of the estimated useful
lives of the assets or the remaining term of the applicable lease.
Leases:
Leases which meet certain criteria evidencing substantive ownership by
the Company are capitalized and the related capital lease obligations are
included in current and long-term liabilities. Amortization and interest are
charged to expense, with rent payments being treated as payments of the capital
lease obligation. All other leases are accounted for as operating leases, with
rent payments being charged to expense as incurred.
-8-
<PAGE> 9
LIOR, INC.
NOTES TO FINANCIAL STATEMENTS
ELEVEN MONTHS ENDED JUNE 30, 1996
(DOLLARS IN THOUSANDS)
Revenue Recognition:
The Company recognizes revenue on the sale of products when the
products are shipped and service revenues are recognized when the applicable
services are rendered. The Company recognizes revenue on annual maintenance
contracts on a prorated basis over the life of the contracts. Deferred revenue
is included in accounts payable and accrued expenses and represents the
remaining portion of each contract's maintenance period as of the balance sheet
date. Service revenues comprised less than 10% of net sales for the eleven
months ended June 30, 1996.
Income Taxes:
The Company accounts for income taxes under the asset and liability
method. Under the asset and liability method, deferred tax assets and
liabilities are recognized based upon differences arising from the varying
amounts of the Company's assets and liabilities for tax and financial reporting
purposes using enacted tax rates in effect for the year in which the
differences are expected to reverse. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized as income in the period when
the change in tax rates is enacted.
Retirement Plan:
The Company adopted a 401(k) retirement plan in 1994. Employees of
the Company who have completed at least three months of service with the
Company and have attained the age of 21 are eligible to participate in the
plan. Employees can elect to contribute up to the maximum amount allowed by
Internal Revenue Service Code. The Company makes a 25% matching cash
contributions up to 1.25% of the salary of the participating individual
employee. Participants vest in the Company's contributions to the plan over a
six-year period based upon years of service. Participants are fully vested at
all times regarding employee contributions to the plan. The Company
contributed $12 to this plan during the eleven months ended June 30, 1996.
2. PRIOR PERIOD ADJUSTMENTS
The Company has recorded prior period adjustments reducing retained
earnings at July 31, 1995 by $810, primarily to adjust inventory and accrued
expenses.
-9-
<PAGE> 10
LIOR, INC.
NOTES TO FINANCIAL STATEMENTS
ELEVEN MONTHS ENDED JUNE 30, 1996
(DOLLARS IN THOUSANDS)
3. PROPERTY AND EQUIPMENT, NET
Property and equipment, as of June 30, 1996 consists of the following:
<TABLE>
<CAPTION>
Amount Life
-------- ------------
<S> <C> <C>
Furniture, fixtures and equipment . . . . . . . . . . . . $ 506 3 to 7 years
Transportation equipment . . . . . . . . . . . . . . . . 88 3 years
Leasehold improvements . . . . . . . . . . . . . . . . . 9 5 years
--------
603
Less: accumulated depreciation and amortization . . . . 303
--------
Property and equipment, net . . . . . . . . . . . . . . . $ 300
========
</TABLE>
At June 30, 1996, furniture, fixtures and equipment with a net book
value of $110 are recorded under capital leases.
4. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses as of June 30, 1996 consist of
the following:
<TABLE>
<S> <C>
Trade accounts payable $ 2,152
Payroll, taxes and employee benefits 343
Customer Deposits 79
Deferred revenue 55
Other 82
--------
$ 2,711
========
</TABLE>
5. DEBT AND CAPITAL LEASE OBLIGATIONS
Notes Payable - Finance Company:
The Company has entered into an accounts receivable credit facility
(the "Facility") with Deutsche Financial Services (the "DFS") whereby the
Company is permitted to borrow up to the greater of $4,000 or 85% of the
Company's eligible accounts receivable. The Facility bears interest at the
prime rate (8.25% at June 30, 1996) plus 1.0%. At June 30, 1996, the
outstanding loan balance was $2,718. Cash receipts are deposited directly with
DFS and applied against the outstanding loan balance; advances are made when
needed. The average interest rate on such loans was approximately 9.4% for the
eleven months ended June 30, 1996.
The Company is required to maintain certain financial covenants
pertaining to the Facility. At June 30, 1996 the company was not in compliance
with these covenants The Facility was repaid in full subsequent to June 30,
1996.
-10-
<PAGE> 11
LIOR, INC.
NOTES TO FINANCIAL STATEMENTS
ELEVEN MONTHS ENDED JUNE 30, 1996
(DOLLARS IN THOUSANDS)
The Facility is secured by substantially all of the assets of the
Company, personal guarantees of the shareholder, and cross guarantees of an
affiliate (see Note 10).
Capital Lease Obligations:
The Company has entered into three lease agreements for $129 of
furniture, fixtures and equipment. The leases provide for equipment to be
leased for five-year terms with transfer of ownership of the equipment to the
Company at the end of the applicable equipment lease term. At June 30, 1996,
capital lease obligations outstanding under these equipment leases, which
expire between 1999 and 2001, are payable as follows:
<TABLE>
<S> <C>
Year ended June 30, 1997 $ 33
Year ended June 30, 1998 34
Year ended June 30, 1999 34
Year ended June 30, 2000 22
Year ended June 30, 2001 8
--------
131
Less imputed interest 29
Less current portion 21
---------
Long-term portion $ 81
=========
</TABLE>
The leases are secured by the underlying leased assets, personal
guarantees of the shareholder, and co-signed by an affiliate (see Note 10).
Note Payable to Shareholder:
The note payable to shareholder is subordinated to the Facility and
bears interest at the prime rate plus 1%. Interest expense relating to the
note approximated $58 for the eleven months ended June 30, 1996.
6. COMMITMENTS AND CONTINGENCIES
The Company occupies its facility under an operating lease which
expires in December 1999 and calls for annual base rentals plus escalation.
The future minimum payments under this non-cancelable lease as of June 30, 1996
are as follows:
<TABLE>
<S> <C>
Year ended June 30, 1997 $ 132
Year ended June 30, 1998 132
Year ended June 30, 1999 132
Year ended June 30, 2000 66
--------
$ 462
========
</TABLE>
Rent expense for the eleven months ended June 30, 1996 was $113.
-11-
<PAGE> 12
LIOR, INC.
NOTES TO FINANCIAL STATEMENTS
ELEVEN MONTHS ENDED JUNE 30, 1996
(DOLLARS IN THOUSANDS)
The Company has obtained financing terms from Deutsche Financial
Services (formerly ITT Commercial Finance Corporation) and Finova Capital
Corporation (formerly Greyhound Financial Corporation) for the purchase of
inventory. In exchange for these terms, the payables are collateralized by
substantially all the assets of the Company. The balance included in accounts
payable at June 30, 1996 was $2,013.
The Company entered into an employment agreement with a key employee
which provides for three months severance in the event of termination of the
employee. The agreement provided for an annual salary of $124.
7. SUPPLEMENTARY CASH FLOW INFORMATION
Following is a summary of supplementary cash flow information for the
eleven months ended June 30, 1996:
<TABLE>
<S> <C>
Interest paid $ 416
Income taxes paid 16
Noncash investing and financing activities:
Equipment acquired under capital lease 59
</TABLE>
8. INCOME TAXES
The Company accounts for income taxes under the asset and liability
method which requires the recognition of deferred tax assets and liabilities
for the expected future tax consequences of differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases.
For the eleven months ended June 30, 1996, the credit for U.S. Federal
income taxes was $5. The following is a reconciliation of the credit for income
taxes and the credit for income taxes computed by applying the Federal
statutory rate (34%) to the loss before taxes:
<TABLE>
<S> <C>
Income tax benefit at the statutory rate $ (258)
State tax benefit, net of Federal taxes (45)
Net operating loss carryforward not
recorded due to uncertainty of utilization 298
----------
Total tax benefit $ (5)
==========
</TABLE>
The Company has recorded net deferred tax assets (primarily as the
result of accumulated net operating loss carryforwards) of $507 and has set up
a valuation allowance for the entire amount due to the uncertainty of
utilization in future periods.
-12-
<PAGE> 13
LIOR, INC.
NOTES TO FINANCIAL STATEMENTS
ELEVEN MONTHS ENDED JUNE 30, 1996
(DOLLARS IN THOUSANDS)
9. SIGNIFICANT CUSTOMERS AND VENDORS
During the eleven months ended June 30, 1996, one customer accounted
for approximately 47% of the Company's net sales during the period. Accounts
receivable for this customer approximated 43% of total accounts receivable at
June 30, 1996.
The Company purchases the majority of its products primarily from
three aggregators of computer hardware, software and peripherals. Agreements
with these vendors provide for, among other things, certain discount pricing
for meeting agreed-upon purchase levels and minimum purchase commitments.
Export sales, made primarily to customers located in Europe and the
Middle East, approximated $1,084 for the eleven months ended June 30, 1996 with
accounts receivable due from such customers approximating $210 at June 30,
1996.
10. RELATED PARTY TRANSACTIONS
Transactions with Affiliate:
The shareholder of the Company owns a majority interest in a software
company (the "Affiliate"). The Company is involved in several common payment
arrangements with this affiliate including the 401(k) Plan, health insurance,
building rental, capital leases, and telephone service and served as common
paymaster for certain wages through December 31, 1995.
The Company made sales of $167 to the Affiliate during the eleven
months ended June 30, 1996 resulting in a gross profit of $15.
During the eleven months ended June 30, 1996, the Affiliate advanced
funds, on an unsecured basis, to the Company for working capital purposes of
$500.
The net effect of these transactions resulted in a payable by the
Company to the Affiliate of $746 at June 30, 1996.
11. SUBSEQUENT EVENTS
On July 18, 1996, the Company entered into an agreement with the
principal shareholder of AlphaNet Solutions, Inc. ("ASI") for the sale of the
Company's customer list and certain other assets, with no book value, for an
aggregate purchase price of $900. These assets were subsequently sold to ASI
on July 24, 1996. In connection with the transaction, a substantial majority
of the Company's employees were offered employment by ASI. Additional
consideration of up to $100 may be received in January 1997, if certain
employees of the Company remain in the employ of ASI at that time.
-13-
<PAGE> 14
LIOR, INC.
NOTES TO FINANCIAL STATEMENTS
ELEVEN MONTHS ENDED JUNE 30, 1996
(DOLLARS IN THOUSANDS)
Between July 1, 1996 and September 30, 1996, the Company sold
approximately $931 of inventory to ASI. The amounts due to Deutsche Financial
Services for notes and accounts payable were settled subsequent to June 30,
1996. The management of the Company is collecting its accounts receivable and
plans to sell its property and equipment, at net book value, to the Affiliate.
The accompanying financial statements do not reflect any adjustments associated
with the events subsequent to June 30, 1996.
The Company also entered into agreements with four key sales people
("Key Employees") in which they agreed to accept employment with ASI and remain
in ASI's employ for a period of at least six months. In return, the Company
agreed, among other things, to pay all outstanding commissions which may be due
to the Key Employees and pay a bonus of $25 to each after a period of six
months of continuous employment with ASI.
-14-
<PAGE> 15
(b) Pro Forma Financial Information (unaudited).
PRO FORMA FINANCIAL INFORMATION
The following Pro Forma Financial Statements are based on the
historical financial statements of AlphaNet Solutions, Inc. (the "Company") and
Lior, Inc. ("Lior"), adjusted to give effect to the acquisition of certain
assets of Lior by the Company. The Pro Forma Balance Sheet assumes the
acquisition occurred as of the most recent balance sheet date prior to the
acquisition date of July 24, 1996. The Pro Forma Income Statements for the six
months ended June 30, 1996 and the twelve months ended December 31, 1995 assume
that the acquisition occurred as of the first day of the applicable period.
The pro forma financial information does not reflect certain
anticipated cost savings resulting from the operation of the Lior assets by the
Company. There can be no assurance that the Company will be able to realize
any anticipated cost savings. The pro forma statements should be read in
conjunction with the audited consolidated financial statements of the Company
and the related notes thereto which are included in the Company's Registration
Statement on Form S-1 (Registration No. 33-97922), the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1996, the Company's Current
Report on Form 8-K dated August 5, 1996 (each as filed with the Securities and
Exchange Commission) and the audited financial statements of Lior that are
filed herewith.
The pro forma financial information does not purport to present what
the Company's results of operations would actually have been if the acquisition
of the Lior assets had occurred on the assumed dates, as specified above, or to
project the Company's financial condition or results of operations for any
future period.
-15-
<PAGE> 16
ALPHANET SOLUTIONS, INC.
PRO FORMA CONDENSED BALANCE SHEET(1)
AS OF JUNE 30, 1996
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
COMPANY PRO FORMA PRO FORMA
ASSETS ACTUAL ADJUSTMENTS CONSOLIDATED
---------- ----------- ------------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 6,686 $ (961) (2) $ 5,725
Accounts receivable, net 16,809 -- 16,809
Inventories 1,886 -- 1,886
Prepaid expenses and other current assets 1,900 -- 1,900
---------- ---------- ----------
Total current assets 27,281 (961) 26,320
Property and equipment, net 1,929 -- 1,929
Goodwill and other assets 112 1,100 (3) 1,212
---------- ---------- ----------
$ 29,322 $ 139 $ 29,461
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of capital lease obligations $ 95 $ -- $ 95
Accounts payable and accrued expenses 12,617 139 (4) 12,756
---------- ---------- ----------
Total current liabilities 12,712 139 12,851
Capital lease obligations 90 -- 90
---------- ---------- ----------
Total liabilities 12,802 139 12,941
---------- ---------- ----------
Shareholders' equity:
Common stock 51 -- 51
Additional paid-in capital 15,878 -- 15,878
Retained earnings 591 -- 591
---------- ---------- ----------
Total shareholders' equity 16,520 -- 16,520
---------- ---------- ----------
$ 29,322 $ 139 $ 29,461
========== ========== ==========
</TABLE>
See accompanying notes to pro forma financial statements.
-16-
<PAGE> 17
ALPHANET SOLUTIONS, INC.
PRO FORMA CONDENSED STATEMENTS OF INCOME
SIX MONTHS ENDED JUNE 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMPANY LIOR PRO FORMA PRO FORMA
ACTUAL ACTUAL ADJUSTMENTS CONSOLIDATED
---------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . $ 43,541 $ 14,706 -- $ 58,247
Cost of sales . . . . . . . . . . . . . . . 38,037 13,232 -- 51,269
---------- ---------- --------- ------------
Gross profit . . . . . . . . . . . . . . . 5,504 1,474 -- 6,978
Operating expenses . . . . . . . . . . . . 3,740 1,615 (158) (5) 5,197
---------- ---------- ---------- ------------
Operating income (loss) . . . . . . . . . . 1,764 (141) 158 1,781
Other income (expense), net . . . . . . . . 65 (225) (35) (6) (195)
---------- ---------- --------- ------------
Income (loss) before
pro forma income taxes . . . . . . . . . . 1,829 (366) 123 1,586
Pro forma provision (benefit) (7)
for income taxes . . . . . . . . . . . . . 741 (5) (94) 642
---------- ---------- --------- ------------
Pro forma net income (loss) . . . . . . . . $ 1,088 $ (361) $ 217 $ 944
========== ========== ========= ============
Pro forma net income per share . . . . . . $ 0.24 $ 0.21
========== ============
Weighted average number of common
shares and common shares equivalent . . 4,558 4,558
========== ============
</TABLE>
See accompanying notes to pro forma financial statements.
-17-
<PAGE> 18
ALPHANET SOLUTIONS, INC.
PRO FORMA CONDENSED STATEMENTS OF INCOME
TWELVE MONTHS ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMPANY
ACTUAL LIOR PRO FORMA PRO FORMA
(AUDITED) ACTUAL ADJUSTMENTS CONSOLIDATED
---------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . $ 74,016 $ 21,438 $ -- $ 95,454
Cost of sales . . . . . . . . . . . . . . . 63,884 19,233 -- 83,117
---------- ---------- ----------- ------------
Gross profit . . . . . . . . . . . . . . . 10,132 2,205 -- 12,337
Operating expenses . . . . . . . . . . . . 5,957 2,645 (237) (5) 8,365
---------- ---------- ----------- ------------
Operating income (loss) . . . . . . . . . . 4,175 (440) 237 3,972
Other income (expense), net . . . . . . . . (86) (352) (85) (6) (523)
---------- ---------- ----------- ------------
Income (loss) before
pro forma income taxes . . . . . . . . . . 4,089 (792) 152 3,449
Pro forma provision (benefit) (7)
for income taxes . . . . . . . . . . . . . 1,650 -- (258) 1,392
---------- ---------- ----------- ------------
Pro forma net income (loss) . . . . . . . . $ 2,439 $ (792) $ 410 $ 2,057
========== ========== =========== ============
Pro forma net income per share . . . . . . $ 0.61 $ 0.52
========== ============
Weighted average number of common
shares and common shares equivalent . . 3,988 3,988
========== ============
</TABLE>
See accompanying notes to pro forma financial statements.
-18-
<PAGE> 19
ALPHANET SOLUTIONS, INC.
NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS
(IN THOUSANDS)
1. The pro forma balance sheet reflects the assets acquired from Lior. The
Company did not acquire the working capital of Lior. The Company expects
that it will need to fund the working capital requirements of the
acquired business. At June 30, 1996, the working capital of Lior
(defined as accounts receivable plus inventory, less accounts payable and
accrued expenses) was $1,731.
2. Adjustments to cash and cash equivalents:
Current cash portion of purchase
price of assets . . . . . . . . . . . $ 900
Estimated transaction cost . . . . . 100
Assumed service contracts . . . . . . (39)
----------
$ 961
==========
3. Adjustments to goodwill and other assets:
Aggregate purchase
price of assets . . . . . . . . . . . $ 1,000
Estimated transaction costs . . . . . 100
----------
$ 1,100
==========
4. Adjustments to accounts payable and accrued expenses:
Deferred portion of
purchase price of assets. . . . . . . $ 100
Deferred revenue . . . . . . . . . . 39
----------
$ 139
==========
5. Adjustments to operating expenses includes a reduction in salaries of Lior
principals, a reduction in professional fees and amortization of goodwill.
6. Adjustment to other income includes a reduction in net interest resulting
from a decrease in the Company's cash balances.
7. Adjustment to pro forma provision for income taxes includes an adjustment
to reflect the Company's pro forma tax rate of 40.5%.
-19-
<PAGE> 20
(c) Exhibits.
Exhibit No. Description of Exhibit
----------- ----------------------
10.1 Asset Purchase Agreement dated July 18, 1996 by and between
Stan Gang and Lior, Inc. (included as an exhibit to the
Current Report on Form 8-K of the Company dated August 5,
1996 and incorporated by reference herein).
10.2 Assignment of Asset Purchase Agreement dated July 24, 1996
by and between Stan Gang and the Company (included as an
exhibit to the Current Report on Form 8-K of the Company
dated August 5, 1996 and incorporated by reference herein).
-20-
<PAGE> 21
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.
AlphaNet Solutions, Inc.
By: /s/ Gary S. Finkel
--------------------------------------
Gary S. Finkel, Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
Date: October 7, 1996
-21-
