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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 2
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: June 24, 1998 Commission File No. 000-23453
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(Date of earliest event reported)
FLEXIINTERNATIONAL SOFTWARE, INC.
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(Exact name of Registrant as specified in its Charter)
DELAWARE 06-1309427
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
TWO ENTERPRISE DRIVE, SHELTON, CONNECTICUT 06484
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(Address of principal executive offices) (Zip Code)
(203) 925-3040
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(Registrant's telephone number, including area code)
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The undersigned Registrant hereby amends Item 7(b) of its Current Report on Form
8-K dated June 29, 1998 to read in its entirety as follows:
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
The following financial statements required by Item 7 with respect to the
Dodge acquisition are filed as part of this report:
RESTATED PRO FORMA FINANCIAL INFORMATION:
Unaudited Restated Pro Forma Condensed Consolidated Statements of
Operations for the Six Months Ended June 30, 1998 and for the Year Ended
December 31, 1997.
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(b) PRO FORMA FINANCIAL INFORMATION
On June 24, 1998, Flexi acquired Dodge through the merger of a
wholly-owned subsidiary of Flexi with and into Dodge. Pursuant to the terms of
the merger agreement, the outstanding shares of Series E Convertible Preferred
Stock of Dodge were converted into the right to receive an aggregate of 591,781
shares of Common Stock of Flexi. In addition, each outstanding share of capital
stock of Dodge other than the Series E Preferred Stock were converted into the
right to receive $0.00001. Each outstanding option (the "Dodge Options") to
purchase shares of Common Stock of Dodge under the 1991 Stock Option Plan of
Dodge were converted into an option to purchase the consideration that would
have been issuable with respect to the number of shares of Common Stock of Dodge
subject the unexercised portion of such Dodge Option. Flexi also granted options
under its 1997 Stock Incentive Plan to purchase (i) an aggregate of 150,000
shares of Common Stock to employees of Dodge pursuant to the merger agreement
and (ii) an additional 18,000 shares of Common Stock to employees of Dodge
following the merger. Following the merger and in accordance with the merger
agreement, Flexi paid in full an aggregate of $2,622,069.42 of principal and
interest on promissory notes of Dodge held by certain former stockholders of
Dodge by issuing an additional 271,719 shares of Common Stock and by paying
$754,000 in cash.
The following Restated Unaudited Pro Forma Condensed Consolidated
Statements of Operations ("Pro Forma Statements of Operations") for the six
months ended June 30, 1998 and the year ended December 31, 1997, give effect to
the acquisition of Dodge as if it had occurred on January 1, 1997. The Pro
Forma Statements of Operations are based on historical results of operations of
Flexi and Dodge for the six months ended June 30, 1998, and the year ended
December 31, 1997. The Pro Forma Statements of Operations and the accompanying
notes ("Pro Forma Financial Information") should be read in conjunction with
and are qualified by the historical financial statements and notes thereto of
Flexi and Dodge.
The Pro Forma Financial Information is intended for informational
purposes only and is not necessarily indicative of the combined results that
would have occurred had the acquisition taken place on January 1, 1997, nor is
it necessarily indicative of results that may occur in the future.
As a result of a review of its method used to value in-process R&D,
the Company has modified the method used to value the in-process R&D acquired
upon its acquisition of Dodge in June 1998. Initial calculations to value the
acquired in-process R&D were based upon a methodology that focused on the
after-tax cash flows attributable to the technology on an overall basis, without
regard to the stage of completion of individual projects, and the selection of
an appropriate rate of return to reflect the risk associated with the stage of
completion of the technology. Revised calculations were based upon the
methodology set forth in the SEC's September 1998 letter to the AICPA that
requires consideration of the stage of completion of the individual in-process
R&D projects at the date of acquisition. After applying the revised
calculations, the Company has restated its financial statements for the quarter
ended June 30, 1998 and has decreased the amount of the purchase price allocated
to acquired in-process R&D associated with the Dodge acquisition from $6,830,000
to $1,890,000 and increased goodwill by $4,940,000 resulting in a change in
goodwill amortization from $36,000 to $283,000 per quarter. Goodwill will be
amortized over a five year period.
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FLEXIINTERNATIONAL SOFTWARE, INC. AND SUBSIDIARIES
RESTATED UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Flexi Dodge Adjustments Pro Forma
-------- ------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues:
Software license $ 10,746 $ 1,110 $ - $ 11,856
Service and maintenance 6,013 3,336 - 9,349
-------- ------- ------- --------
Total revenues 16,759 4,446 - 21,205
Cost of revenues:
Software license 1,131 329 - 1,460
Service and maintenance 3,859 2,808 - 6,667
-------- ------- ------- --------
Total cost of revenues 4,990 3,137 - 8,127
Operating expenses:
Sales and marketing 4,748 680 - 5,428
Product development 4,326 627 - 4,953
General and administrative 1,417 2,021 782 (a) 4,220
Acquired in-process R&D 1,890 - (1,890) (b) -
-------- ------- ------- --------
Total operating expenses 12,381 3,328 (1,108) 14,601
Operating loss (612) (2,019) 1,108 (1,523)
Interest income 570 7 - 577
Interest expense (42) (39) - (81)
-------- ------- ------- --------
Loss before provision for income taxes (84) (2,051) 1,108 (1,027)
Provision for income taxes - - - -
-------- ------- ------- --------
Net loss $ (84) $(2,051) $ 1,108 $ (1,027)
======== ======= ======= ========
Net loss per share:
Basic and diluted $ (0.01) $ (0.06) (c)
Weighted average shares:
Basic and diluted 16,533 17,368
</TABLE>
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FLEXIINTERNATIONAL SOFTWARE, INC. AND SUBSIDIARIES
RESTATED UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FLEXI DODGE(d) ADJUSTMENTS PRO FORMA
-------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues:
Software license $ 13,901 $ 2,425 $ - $ 16,326
Service and maintenance 7,723 6,293 - 14,016
-------- -------- -------- --------
Total revenues 21,624 8,718 - 30,342
Cost of revenues:
Software license 828 869 - 1,697
Service and maintenance 5,450 4,949 - 10,399
-------- -------- -------- --------
Total cost of revenues 6,278 5,818 - 12,096
Operating expenses:
Sales and marketing 7,820 2,436 - 10,256
Product development 7,880 817 - 8,697
General and administrative 2,316 2,734 1,564(a) 6,614
Restructuring charges - (314) - (314)
-------- -------- -------- --------
Total operating expenses 18,016 5,673 1,564 25,253
Operating loss (2,670) (2,773) (1,564) (7,007)
Interest income 168 29 - 197
Interest expense (141) (78) - (219)
Other - (5) - (5)
-------- -------- -------- --------
Loss before provision for income taxes (2,643) (2,827) (1,564) (7,034)
Provision for income taxes - - - -
-------- -------- -------- --------
Net loss $ (2,643) $ (2,827) $ (1,564) $ (7,034)
======== ======== ======== ========
Net loss per share:
Basic and diluted $ (0.42) $ (0.98)(c)
Weighted average shares:
Basic and diluted 6,332 7,196
</TABLE>
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FLEXIINTERNATIONAL SOFTWARE, INC.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(a) The pro forma adjustments represent amortization of goodwill and other
identifiable intangible assets of $782,000 and $1,564,000 for the six
months ended June 30, 1998 and the year ended December 31, 1997
respectively, assuming the transaction had occurred on January 1, 1997.
(b) The pro forma adjustment represents $1,890,000 of acquired in-process
research and development expense. These costs are excluded from pro forma
results of operations, as they are not expected to have a continuing impact
on Flexi's results of operations.
(c) Pro forma basic and diluted net loss per share is computed by dividing the
pro forma net loss attributable to common shareholders by the pro forma
weighted average number of common shares outstanding.
(d) Dodge results have been reclassified to conform with historical Flexi
presentation.
The following table reconciles shares used to compute historical basic and
diluted net loss per share to shares used to compute pro forma basic and
diluted net loss per share:
Six Year
Months Ended Ended
June 30, December 31,
1998 1997
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(in thousands)
Shares used to compute historical basic
And diluted net loss per share 16,533 6,332
Impact of shares issued in acquisition -
Assumed outstanding from January 1, 1997 835 864
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Shares used to compute pro forma basic
and diluted net loss per share 17,368 7,196
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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.
Dated: January 28, 1999 FLEXIINTERNATIONAL SOFTWARE, INC.
/s/ Stefan R. Bothe
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Stefan R. Bothe
Chairman & CEO
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