U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): SEPTEMBER 25, 1997
NEOMEDIA TECHNOLOGIES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 0-21743 36-3680347
- --------------- ----------- -------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
2201 SECOND STREET, SUITE 600, FORT MYERS, FLORIDA 33901
- -------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
<PAGE>
A Form 8-K dated September 25, 1997, was filed by NeoMedia Technologies, Inc.
("NeoMedia") disclosing the acquisition of all of the stock of Allegiant Legacy
Solutions, Inc. ("Allegiant") from its two shareholders in accordance with a
Stock Purchase Agreement (the "Agreement") entered into between the parties (the
"Allegiant Merger"). At that time it was impracticable to provide the required
financial statements of Allegiant and the required pro forma financial
information, both of which are filed herwith as Item 7. Item 2 and Exhibits were
previously filed with Form 8-K.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired
The audited financial statements of Allegiant as of December 31, 1996
are attached hereto and filed herewith.
(b) Pro Forma Financial Information
The unaudited consolidated balance sheet of NeoMedia as of September
30, 1997 and the unaudited consolidated statement of operations for the nine
months ended September 30, 1997 are hereby incorporated by reference to
NeoMedia's Form 10-QSB for the three months ended September 30, 1997. This
unaudited consolidated financial information was prepared with the Allegiant
Merger being accounted for as a pooling of interests, and accordingly, this
financial information was prepared as if the entities were combined for all
prior periods.
The unaudited pro forma combined consolidated statements of operations
for the year ended December 31, 1996 for NeoMedia and Allegiant is attached
hereto and filed herewith.
The pro forma combined consolidated financial information is presented
for illustrative purposes only and is not necessarily indicative of the
operating results that would have occurred had the Allegiant Merger been
consummated at the beginning of the periods presented, nor is it necessarily
indicative of future operating results.
The pro forma combined consolidated financial information should be
read in conjunction with the audited historical consolidated financial
statements and the related notes thereto of NeoMedia previously filed and the
audited historical financial statements and related notes thereto of Allegiant
attached hereto.
2
<PAGE>
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.
NEOMEDIA TECHNOLOGIES, INC.
(Registrant)
Date: NOVEMBER 24, 1997 By: /s/ CHARLES T. JENSEN
---------------------------
Charles T. Jensen, Vice President,
Chief Financial Officer, Treasurer
and Director
3
<PAGE>
INDEX TO FINANCIAL STATEMENTS OF ALLEGIANT LEGACY SOLUTIONS, INC. AND PRO FORMA
FINANCIAL INFORMATION
Report of Independent Accountants ....................................... F-1
Balance Sheet as of December 31, 1996 ................................... F-2
Statement of Operations for the Period from Inception
on February 16, 1996 to December 31, 1996 ...................... F-3
Statement of Cash Flows for the Period from Inception
on February 16, 1996 to December 31, 1996 ...................... F-4
Statement of Shareholders' Equity for the Period from Inception
on February 16, 1996 to December 31, 1996 ...................... F-5
Notes to Financial Statements ........................................... F-6
NeoMedia Unaudited Pro Forma Combined Consolidated Statements of
Operations for the Year Ended December 31, 1996 ................ F-9
4
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
of Allegiant Legacy Solutions, Inc.:
We have audited the accompanying balance sheet of Allegiant Legacy Solutions,
Inc. ("Allegiant") as of December 31, 1996, and the related statements of
operations, shareholders' equity, and cash flows for the period from inception
on February 16, 1996 to December 31, 1996. These financial statements are the
responsibility of Allegiant'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 Allegiant as of December 31,
1996, and the related statements of operations, shareholders' equity, and cash
flows for the period from inception on February 16, 1996 to December 31, 1996 in
conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
- ----------------------------
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
October 24, 1997
F - 1
<PAGE>
<TABLE>
<CAPTION>
ALLEGIANT LEGACY SOLUTIONS, INC.
BALANCE SHEET AS OF DECEMBER 31, 1996
<S> <C>
ASSETS
Current assets:
Cash ............................................................ $ 49,909
Trade accounts receivable, net of allowance for doubtful accounts 57,861
Prepaid expenses and other ...................................... 64
---------
Total current assets ........................................ 107,834
Property and equipment, net of accumulated depreciation .............. 19,821
---------
Total assets .................................................... $ 127,655
=========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ................................................ $ 36,661
Accrued expenses ................................................ 12,869
Deferred revenue ................................................ 20,150
---------
Total current liabilities ................................... 69,680
---------
Shareholders' equity:
Common stock, without par value, 850 shares authorized,
200 shares issued and outstanding ........................... 200
Additional paid-in capital ...................................... 58,869
Accumulated deficit ............................................. (1,094)
---------
Total shareholders' equity .................................. 57,975
---------
Total liabilities and shareholders' equity ...................... $ 127,655
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F - 2
<PAGE>
ALLEGIANT LEGACY SOLUTIONS, INC.
STATEMENT OF OPERATIONS FOR THE PERIOD
FROM INCEPTION ON FEBRUARY 16, 1996 TO DECEMBER 31, 1996
NET SALES:
License fees ............................. $ 119,675
Software product resales ................. 142,073
Technology equipment resales ............. 175,587
Service fees ............................. 125,739
---------
Total net sales ...................... 563,074
---------
COST OF SALES:
License fees ............................. 32,596
Software product resales ................. 72,212
Technology equipment resales ............. 128,491
Service fees ............................. 62,592
---------
Total cost of sales .................. 295,891
---------
GROSS PROFIT .................................. 267,183
General and administrative expenses ........... 168,641
Sales and marketing expenses .................. 83,369
Research and development costs ................ 17,313
---------
Loss from operations .......................... (2,140)
Other income .................................. 1,046
---------
NET LOSS ...................................... $ (1,094)
=========
PER SHARE DATA:
Net loss per share ....................... $ (5.47)
=========
Weighted average common shares outstanding 200
=========
The accompanying notes are an integral part of these financial statements.
F - 3
<PAGE>
ALLEGIANT LEGACY SOLUTIONS, INC.
STATEMENT OF CASH FLOWS FOR THE PERIOD
FROM INCEPTION ON FEBRUARY 16, 1996 TO DECEMBER 31, 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ........................................................... $ (1,094)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Non-cash general and administrative expenses .................. 58,869
Provision for doubtful accounts ............................... 5,000
Depreciation .................................................. 1,721
Changes in current assets and liabilities:
Trade accounts receivable ................................. (62,861)
Other current assets ...................................... (64)
Accounts payable and accrued expenses ..................... 46,080
Deferred revenue .......................................... 20,150
--------
Net cash provided by operating activities ................. 67,801
--------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment .............................. (18,092)
--------
Net cash used in investing activities ..................... (18,092)
--------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock ......................... 200
--------
Net cash provided by financing activities ................. 200
--------
NET INCREASE IN CASH ............................................... 49,909
CASH, BEGINNING OF PERIOD .......................................... --
--------
CASH, END OF PERIOD ................................................ $ 49,909
========
SUPPLEMENTAL CASH FLOW INFORMATION:
Non-cash activities:
In 1996, Allegiant received services from an officer with a fair market
value of $58,869. Accordingly, general and administrative expense and additional
paid-in-capital have been increased by a corresponding amount.
As of December 31, 1996, Allegiant recorded accounts payable of $3,450
related to the acquisition of property and equipment.
The accompanying notes are an integral part of these financial statements.
F - 4
<PAGE>
ALLEGIANT LEGACY SOLUTIONS, INC.
STATEMENT OF SHAREHOLDERS' EQUITY FOR THE PERIOD
FROM INCEPTION ON FEBRUARY 16, 1996 TO DECEMBER 31, 1996
ADDITIONAL NUMBER
COMMON PAID-IN- ACCUMULATED OF
STOCK CAPITAL DEFICIT SHARES
------- ---------- ----------- -------
Issuance of common stock,
February 16, 1996 ... $ 200 $ -- $ -- 200
Contribution of services . -- 58,869 -- --
Net loss ................. -- -- (1,094) --
------- ------- ------- -------
Balance, December 31, 1996 $ 200 $58,869 $(1,094) 200
======= ======= ======= =======
The accompanying notes are an integral part of these financial statements.
F - 5
<PAGE>
ALLEGIANT LEGACY SOLUTIONS, INC.
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION AND NATURE OF BUSINESS OPERATIONS
BASIS OF PRESENTATION
Allegiant Legacy Solutions, Inc. ("Allegiant") was incorporated under the
laws of the state of Ohio on February 16, 1996. Allegiant is a Subchapter S
corporation owned equally by George G. Luntz and Gerald L. Willis.
NATURE OF BUSINESS OPERATIONS
Allegiant developed, owns and sells licenses for a set of comprehensive
software tools, including "ADAPT2000," that identifies, seeks and automatically
corrects date data that is stored in various formats across both program code
and specific data files. In addition to converting legacy systems written in
COBOL computer language to comply with the Year 2000 requirements, ADAPT2000
works to convert other restrictive source and application code, such as
telephone area codes and monetary systems such as the impending European
Economic Community's Eurodollar.
In addition, Allegiant assists clients to migrate software applications on
closed, proprietary ("legacy") systems to more cost effective and extendable
open systems platforms. Allegiant also provides strategic consulting, systems
development, systems engineering and support services. As part of these
services, Allegiant acts as a reseller of purchased hardware in connection with
open systems development and migrations. Allegiant maintains relationships with
a number of major companies under which Allegiant sells third party purchased
hardware and software products of those companies.
Allegiant has established several strategic alliances with third party
software and hardware vendors, leading consulting firms and major system
integrators. These alliances are integral to Allegiant's business operations.
Allegiant principally markets and distributes its products through
distributors in the United States, Europe, South Africa and Australia.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reported period. Actual results could differ from those
estimates.
REVENUE RECOGNITION
License fees represent revenue from the licensing of Allegiant's
proprietary software tools and applications products. Allegiant licenses its
development tools and application products pursuant to non-exclusive and
non-transferable license agreements. Software product and technology equipment
sales represent revenue from the resale of purchased third party hardware and
software products. Service fees represent revenue from consulting, education,
and post contract software support services.
Allegiant recognizes revenue in accordance with the American Institute of
Certified Public Accountants Statement of Position 91-1, "Software Revenue
Recognition." Software license fees are recognized upon shipment to the
F - 6
<PAGE>
customer to the extent that collection is probable and the remaining Company
obligations are insignificant. When all components necessary to run hardware
have been shipped and only insignificant post-delivery obligations remain,
revenue and costs are recognized at the time of shipment, based upon the sales
price and the cost of specific items shipped. Historically, product returns and
allowances have been insignificant.
Service revenues include maintenance fees for providing system updates for
software products, user documentation and technical support, and sales of
Allegiant's proprietary software which is not bundled with hardware or software
of third parties. Hardware maintenance is generally billed to the customers in
advance on a monthly, quarterly or annual basis and recognized as revenue
ratably over the term of the maintenance contract. Other service revenues,
including training and consulting, are recognized as the services are performed.
PROPERTY AND EQUIPMENT
Property and equipment are carried at cost less allowances for accumulated
depreciation. Repairs and maintenance are charged to expense as incurred.
Depreciation is generally computed using straight-line methods over the
estimated useful lives of the related assets. The estimated useful lives range
from three to five years for equipment and up to seven years for furniture and
fixtures. Upon retirement or sale, cost and accumulated depreciation are removed
from the accounts and any gain or loss is reflected in the statement of
operations.
INCOME TAXES
Allegiant, with the consent of its two shareholders, elected to be treated
as a small business corporation (S corporation under the Internal Revenue Code)
for income tax purposes. Accordingly, Allegiant's taxable income and related tax
credits were reportable by the two shareholders on their individual income tax
returns.
COMPUTATION OF INCOME PER SHARE
The computation of net income per share is based on the weighted average
number of common shares outstanding during the period. Allegiant had no stock
options or other common stock equivalents as of December 31, 1996.
CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject Allegiant to concentrations
of credit risk consist primarily of trade accounts receivable with customers.
Allegiant's customers are generally located throughout the United States,
Europe, South Africa and Australia. Allegiant extends credit to its customers as
determined on an individual basis and has included an allowance for doubtful
accounts of $5,000 in its December 31, 1996 balance sheet. During 1996,
Allegiant had net sales to three major customers totaling 73% of net sales with
sales to one of these three customers totaling 44% of net sales. As of December
31, 1996, there were no trade accounts receivable from these three major
customers.
3. PROPERTY AND EQUIPMENT
As of December 31, 1996, property and equipment consisted of the following:
Furniture and fixtures ...................................... $ 937
Equipment ................................................... 20,605
--------
Total .................................................. 21,542
Less accumulated depreciation ............................... (1,721)
--------
Total property and equipment, net of accumulated depreciation $ 19,821
========
F - 7
<PAGE>
4. TRANSACTIONS WITH RELATED PARTIES
During 1996, Allegiant reimbursed and shared expenses with Allegiant Data
Systems, Inc. ("ADS") and Allegiant Management Assistance, Inc. ("AMA"), both of
which are wholly-owned by Gerald L. Willis. During 1996, total expenses
reimbursed to ADS were $302,000. In addition, AMA assisted Allegiant with
certain consulting contracts, for which Allegiant paid to AMA $31,000 during
1996.
5. LEASES
Allegiant shares leases of certain office equipment with ADS under various
operating leases. These leases provide for minimum rents and generally include
options to renew for additional periods. During 1996, Allegiant's rent expense
was $3,000. On January 17, 1997, Allegiant entered into a three-year operating
lease agreement for office space with GEDA, a Limited Liability Company, which
is owned by Gerald L. Willis. Future minimum payments required by the lease will
be approximately $27,000 per year.
6. SUBSEQUENT EVENT
On September 25, 1997, George G. Luntz and Gerald L. Willis sold all of the
stock in Allegiant to NeoMedia Technologies, Inc. ("NeoMedia") in accordance
with a Stock Purchase Agreement entered into between the parties. Mr. Luntz and
Mr. Willis received an aggregate of 1,070,000 shares of authorized, but unissued
common stock of NeoMedia. The number of shares of NeoMedia's common stock
received by Mr. Luntz and Mr. Willis was determined through arms-length
negotiations between the parties. Mr. Luntz entered into an employment agreement
with NeoMedia, and Mr. Willis entered into a consulting agreement with NeoMedia.
This merger will be accounted for as a pooling of interests.
F - 8
<PAGE>
<TABLE>
<CAPTION>
NEOMEDIA TECHNOLOGIES, INC.
UNAUDITED PRO FORMA COMBINED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
HISTORICAL
--------------------------- PRO FORMA PRO FORMA
NEOMEDIA ALLEGIANT ADJUSTMENTS COMBINED
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET SALES:
License fees ................ $ 775 $ 120 $ -- $ 895
Software product resales .... 2,231 142 -- 2,373
Technology equipment resales 12,438 175 -- 12,613
Service fees ................ 2,074 126 -- 2,200
----------- ----------- ------ -----------
Total net sales ......... 17,518 563 -- 18,081
----------- ----------- ------ -----------
COST OF SALES:
License fees ................ 316 33 -- 349
Software product resales .... 1,406 72 -- 1,478
Technology equipment resales 10,665 128 -- 10,793
Service fees ................ 1,906 63 -- 1,969
Amortization of capitalized
software costs .......... 655 -- -- 655
----------- ----------- ------ -----------
Total cost of sales ..... 14,948 296 -- 15,244
----------- ----------- ------ -----------
GROSS PROFIT ..................... 2,570 267 -- 2,837
General and administrative expense 2,288 169 -- 2,457
Sales and marketing expenses ..... 2,326 83 -- 2,409
Research and development costs ... 335 17 -- 352
----------- ----------- ------ -----------
Loss from operations ............. (2,379) (2) -- (2,381)
Interest expense, net ............ 540 (1) -- 539
----------- ----------- ------ -----------
Loss before income taxes ......... (2,919) (1) -- (2,920)
Provision for income taxes ....... 156 -- -- 156
----------- ----------- ------ -----------
NET LOSS ......................... $ (3,075) $ (1) $ -- $ (3,076)
=========== =========== ====== ===========
PER SHARE DATA:
Net loss per share ............... $ (0.72) $ (5.47) $ (0.59)
=========== =========== ===========
Weighted average common and common
equivalent shares outstanding 4,266,753 200 5,203,003
=========== =========== ===========
</TABLE>
F - 9
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> DEC-31-1995
<PERIOD-END> DEC-31-1996
<CASH> 49,909
<SECURITIES> 0
<RECEIVABLES> 57,861
<ALLOWANCES> 5,000
<INVENTORY> 0
<CURRENT-ASSETS> 107,834
<PP&E> 21,542
<DEPRECIATION> 1,721
<TOTAL-ASSETS> 127,655
<CURRENT-LIABILITIES> 69,680
<BONDS> 0
0
0
<COMMON> 59,069
<OTHER-SE> (1,094)
<TOTAL-LIABILITY-AND-EQUITY> 57,975
<SALES> 563,074
<TOTAL-REVENUES> 563,074
<CGS> 295,891
<TOTAL-COSTS> 295,891
<OTHER-EXPENSES> 264,323
<LOSS-PROVISION> 5,000
<INTEREST-EXPENSE> (1,046)
<INCOME-PRETAX> (1,094)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,094)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,094)
<EPS-PRIMARY> (5.47)
<EPS-DILUTED> (5.47)
</TABLE>
