<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 8-K/A
AMENDMENT NO. 1
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 30, 1998
----------------------
THE INTERCEPT GROUP, INC.
-------------------------
(Exact Name of Registrant
as Specified in its Charter)
Georgia 01-14213 58-2237359
----------------- ----------- ------------------
(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
3150 Holcomb Bridge Road, Suite 200, Norcross, Georgia 30071
- -----------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (770) 248-9600
--------------
N/A
------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
The registrant hereby amends its report on Form 8-K filed on October 14,
1998 by deleting the text under Item 7 and replacing it with the following text.
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
Included as Exhibits 99.2 hereto and incorporated herein by reference.
(B) PRO FORMA FINANCIAL INFORMATION.
Included as Exhibit 99.3 hereto and incorporated herein by reference.
(C) EXHIBITS.
2.1 Asset Purchase Agreement dated September 30, 1998 by and between
ProVesa, Inc., a wholly owned subsidiary of The InterCept Group, Inc.
("InterCept"), Mercantile Corporation ("Mercantile"), and Dale May.*
99.1 Press Release dated September 30, 1998.*
99.2 The following audited financial statements of Advance Data together
with the report thereon by Arthur Andersen LLP:
Balance Sheets as of December 31, 1996 and 1997 and July 31, 1998
(unaudited).
Statements of Operations for the years ended December 31, 1996 and 1997 and
the seven months ended July 31, 1998 (unaudited).
Statements of Partners' Capital for the years ended December 31, 1996 and
1997 and the seven months ended July 31, 1998 (unaudited).
Statements of Cash Flows for the years ended December 31, 1996 and 1997 and
the seven months ended July 31, 1998 (unaudited).
Notes to Financial Statements.
<PAGE>
99.3 The following unaudited pro forma condensed consolidated financial
statements of InterCept and Advance Data:
Pro Forma Condensed Consolidated Statement of Operations for the year ended
December 31, 1997.
Pro Forma Condensed Consolidated Statement of Operations for the nine
months ended September 30, 1998.
Notes to Pro Forma Condensed Consolidated Financial Information.
- ---------
*Previously filed with the registrant's Current Report on Form 8-K filed
October 14, 1998.
<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.
THE INTERCEPT GROUP, INC.
By: /s/ Scott R. Meyerhoff
-----------------------------------------
Scott R. Meyerhoff
Chief Financial Officer
Dated: December 11, 1998
<PAGE>
EXHIBIT INDEX
Exhibit Page
- ------- ----
2.1 Asset Purchase Agreement dated September 30, 1998 by and between
Provesa,Inc., a wholly owned subsidiary of The InterCept
Group, Inc. ("InterCept") Mercantile Corporation ("Mercantile"),
and Dale May.*
99.1 Press Release dated September 30, 1998.*
99.2 The following audited financial statements of Advance Data
together with the report thereon by Arthur Andersen LLP:
Balance Sheets as of December 31, 1996 and 1997 and July 31, 1998
(unaudited).
Statements of Operations for the years ended December 31, 1996
and 1997 and the seven months ended July 31, 1998 (unaudited).
Statements of Partners' Capital for the years ended December 31,
1996 and 1997 and the seven months ended July 31, 1998 (unaudited).
Statements of Cash Flows for the years ended December 31, 1996
and 1997 and the seven months ended July 31, 1998 (unaudited).
Notes to Financial Statements.
99.3 The following unaudited pro forma condensed consolidated financial
statements of InterCept and Advance Data:
Pro Forma Condensed Consolidated Statement of Operations for the
year ended December 31, 1997.
Pro Forma Condensed Consolidated Statement of Operations for the nine
months ended September 30, 1998.
Notes to Pro Forma Condensed Consolidated Financial Information.
- ---------
*Previously filed with the registrant's Current Report on Form 8-K filed
October 14, 1998.
<PAGE>
EXHIBIT 99.2
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of Advance Data Partnership:
We have audited the accompanying balance sheets of ADVANCE DATA PARTNERSHIP (an
Arkansas general partnership) as of December 31, 1996 and 1997 and the related
statements of operations, partners' capital and cash flows for the years 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 audits.
We conducted our audits 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 audits provide 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 Advance Data Partnership as of
December 31, 1996 and 1997 and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
Atlanta, Georgia
November 20, 1998
<PAGE>
ADVANCE DATA PARTNERSHIP
BALANCE SHEETS
DECEMBER 31, 1996 AND 1997 AND JULY 31, 1998 (UNAUDITED)
ASSETS
1996 1997 1998
-------- -------- --------
(Unaudited)
CURRENT ASSETS:
Cash $116,697 $405,789 $244,672
Accounts receivable 122,005 137,488 142,835
Other current assets 12,140 10,324 28,533
-------- -------- --------
Total current assets 250,842 553,601 416,040
PROPERTY AND EQUIPMENT, NET 545,669 441,688 492,407
-------- -------- --------
$796,511 $995,289 $908,447
======== ======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Current maturities of long-term debt $175,000 $210,510 $ 0
Accounts payable 99,791 6,789 246,186
-------- -------- --------
Total current liabilities 274,791 217,299 246,186
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL 521,720 777,990 662,261
-------- -------- --------
$796,511 $995,289 $908,447
======== ======== ========
The accompanying notes are an integral part of these balance sheets.
<PAGE>
ADVANCE DATA PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997
AND THE SEVEN MONTHS ENDED JULY 31, 1998 (UNAUDITED)
1996 1997 1998
---------- ---------- --------
(Unaudited)
REVENUES $1,038,632 $1,224,020 $892,889
---------- ---------- --------
COSTS AND EXPENSES:
Cost of services 305,140 289,376 189,716
Selling, general, and administrative 499,503 537,948 474,764
Depreciation and amortization 95,552 126,809 74,577
---------- ---------- --------
OPERATING INCOME 138,437 269,887 153,832
OTHER (EXPENSE) INCOME, NET 1,456 (13,617) (2,236)
---------- ---------- --------
INCOME BEFORE PRO FORMA
INCOME TAX PROVISION 139,893 256,270 151,596
PRO FORMA INCOME TAX
PROVISION 53,159 97,384 57,606
---------- ---------- --------
NET INCOME $ 86,734 $ 158,886 $ 93,990
========== ========== ========
The accompanying notes are an integral part of these statements.
<PAGE>
ADVANCE DATA PARTNERSHIP
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997
AND THE SEVEN MONTHS ENDED JULY 31, 1998
BALANCE, DECEMBER 31, 1995 $ 381,827
Net income 86,734
Pro forma income tax provision 53,159
---------
BALANCE, DECEMBER 31, 1996 521,720
Net income 158,886
Pro forma income tax provision 97,384
---------
BALANCE, DECEMBER 31, 1997 777,990
Net income (unaudited) 93,990
Pro forma income tax provision (unaudited) 57,606
Partnership distribution (unaudited) (267,325)
---------
BALANCE, July 31, 1998 (unaudited) $ 662,261
=========
The accompanying notes are an integral part of these statements.
<PAGE>
ADVANCE DATA PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997
AND THE SEVEN MONTHS ENDED JULY 31, 1998
<TABLE>
<CAPTION>
1996 1997 1998
--------- -------- ---------
(Unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 86,734 $158,886 $ 93,990
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 95,552 126,809 74,577
Pro forma income tax provision 53,159 97,384 57,606
Changes in current assets and liabilities:
Accounts receivable (35,555) (15,483) (5,347)
Other current assets (5,734) 1,816 (18,209)
Accounts payable and accrued liabilities 93,356 (93,002) 239,397
--------- -------- ---------
Net cash provided by operating activities 287,512 276,410 442,014
--------- -------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (464,084) (22,828) (125,296)
--------- -------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Partnership distributions 0 0 (267,325)
Proceeds from long-term debt 320,678 70,000 0
Payments on long-term debt (145,678) (34,490) (210,510)
--------- -------- ---------
Net cash provided by (used in) financing
activities 175,000 35,510 (477,835)
--------- -------- ---------
NET (DECREASE) INCREASE IN CASH (1,572) 289,092 (161,117)
CASH, beginning of period 118,269 116,697 405,789
--------- -------- ---------
CASH, end of period $ 116,697 $405,789 $ 244,672
========= ======== =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest $ 4,226 $ 19,613 $ 5,408
========= ======== =========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
ADVANCE DATA PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1997 AND JULY 31, 1998 (UNAUDITED)
1. ORGANIZATION AND NATURE OF BUSINESS
Advance Data Partnership ("Advance Data" or the "Company") (an Arkansas
general partnership) was established for the purpose of providing core data
processing, check imaging, and item capture services to financial
institutions, primarily community banks. Certain assets and liabilities of
the data processing business are being acquired in a transaction accounted
for as a purchase by The InterCept Group, Inc. ("InterCept") (Note 11).
The partnership interests at inception were as follows:
Mercantile Corporation 48%
First Processing Services, Inc. 52%
The partnership agreement stipulated that all partnership income and losses
would be allocated directly in proportion to the ownership percentages. On
December 31, 1997, Mercantile Corporation purchased an additional 4% of the
partnership from First Processing Services, Inc. for total consideration of
$31,200.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
STATEMENTS OF CASH FLOWS
For the purposes of the statement of cash flows, short-term investments with
maturities of three months or less are considered to be cash equivalents.
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 amount of assets and liabilities and
disclosures 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.
The interim financial information is unaudited. However, in the opinion of
management, the interim financial data includes all adjustments, consisting
only of normal recurring adjustments, necessary for a fair statement of the
results for the interim periods.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost at the acquisition date. The
Company provides for depreciation using the straight-line method over the
estimated useful lives of the assets. Repair and
<PAGE>
maintenance costs are expensed, and major betterments are capitalized.
Property, plant, and equipment consisted of the following at December 31,
1996 and 1997 and July 31, 1998:
<TABLE>
<CAPTION>
Useful Life 1996 1997 1998
----------- ---------- ---------- ----------
(Unaudited)
<S> <C> <C> <C> <C>
Leasehold improvements Five years $ 99,154 $ 99,154 $ 99,154
Machinery and equipment Five years 726,375 743,048 864,351
Furniture and fixtures Five years 90,869 90,869 94,862
Software Five years 134,021 140,175 140,175
---------- ---------- ----------
1,050,419 1,073,246 1,198,542
Less accumulated depreciation (504,750) (631,558) (706,135)
---------- ---------- ----------
$ 545,669 $ 441,688 $ 492,407
========== ========== ==========
</TABLE>
COMPUTER SOFTWARE
Acquired software and licensing rights are capitalized and amortized using
the straight-line method over an estimated useful life of five years.
REVENUE RECOGNITION
Revenues are derived primarily from service fees and are recognized as
services are performed.
4. LONG-TERM DEBT
Long-term debt consisted of the following at December 31, 1996 and 1997 and
July 31, 1998:
<TABLE>
<CAPTION>
1996 1997 1998
--------- --------- -----
(Unaudited)
<S> <C> <C> <C>
Revolving note payable to First Bank of
Arkansas for borrowings of up to $245,000,
payable on demand, or if no demand is made,
interest payable at 9% in monthly principal
and interest payments of $6,111 through
April 10, 1999, paid in full subsequent to
December 31, 1997 $ 175,000 $ 210,510 $ 0
Less current portion (175,000) (210,510) 0
--------- --------- -----
Long-term debt, net of current portion $ 0 $ 0 $ 0
========= ========= =====
</TABLE>
5. INCOME TAXES
The Company is a partnership for federal and state income tax reporting
purposes. As such, taxable income and loss of the Company are included in
the partners' tax returns. The statements of operations reflect pro forma
income taxes of $53,159, $97,384, and $57,606 for the years ended December
31, 1996 and 1997 and the seven months ended July 31, 1998, respectively as
if the Company were subject to income tax. The difference between the pro
forma income tax
-2-
<PAGE>
provision and the amount computed by applying the statutory federal income
tax rate to the net income for the period is due to nondeductible expenses
incurred during each period.
The tax effects of temporary differences between the carrying amounts of
assets and liabilities in the financial statements and their respective tax
bases are not material.
6. EMPLOYEE BENEFITS
The Company has a defined contribution 401(k) benefit plan which covers
substantially all employees, subject to certain minimum age and service
requirements. The plan provides for voluntary contributions by employees and
matching contributions by the Company at its discretion. For the years ended
December 31, 1996 and 1997, the Company made no contributions to the plan.
7. COMMITMENTS
Advance Data leases certain equipment and facilities under operating leases.
Future minimum payments on these leases at December 31, 1997 are
approximately as follows:
1998 $ 44,000
1999 42,000
2000 42,000
2001 3,500
--------
$131,500
========
Rent expense for all operating leases was approximately $42,000 and $44,000
for the years ended December 31, 1996 and 1997, respectively.
8. CUSTOMER CONCENTRATION
Certain customers made up more than 10% of the Company's sales as of
December 31, 1996 and 1997, as follows:
1996 1997
---- ----
Customer A 37.8% 45.5%
Customer B 12.4 14.7
Customer C N/A 11.6
9. FAIR VALUE OF FINANCIAL INSTRUMENTS
Advance Data is required to disclose fair value information about financial
instruments, whether or not they are recognized on the balance sheet, for
which it is practicable to estimate that value. The assumptions used in the
estimation of the fair value of the Company's financial instruments are
detailed below. Where quoted prices are not available, fair values are based
on estimates using discounted cash flows and other valuation techniques. The
use of discounted cash flows can be significantly affected by the
assumptions used, including the discount rate and estimates of future
-3-
<PAGE>
cash flows. The following disclosures should not be considered a surrogate
of the liquidation value of the Company, but rather a good faith estimate of
the increase or decrease in value of financial instruments held by the
Company since purchase, organization, or issuance.
CASH AND CASH EQUIVALENTS
For cash, the carrying value amount is a reasonable estimate of fair value.
LONG-TERM DEBT
The carrying amount of the variable rate long-term debt approximates the
fair value.
LIMITATIONS
Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument. These
estimates do not reflect any premium or discount that could result from
offering for sale, at one time, the Company's entire holdings of a
particular financial instrument. Because no market exists for a significant
portion of the Company's financial instruments, fair value estimates are
based on many judgments. These estimates are subjective in nature and
involve uncertainties and matters of significant judgment and therefore
cannot be determined with precision. Changes in assumptions could
significantly affect the estimates.
Fair value estimates are based on existing on- and off-balance sheet
financial instruments without attempting to estimate the value of
anticipated future business and the value of assets and liabilities that are
not considered financial instruments. Significant assets and liabilities
that are not considered financial instruments include deferred income taxes
and property and equipment. In addition, the tax ramifications related to
the realization of the unrealized gains and losses can have a significant
effect on fair value estimates and have not been considered in the
estimates.
10. RELATED-PARTY TRANSACTIONS
Revenues of $392,280, $556,911, and $358,626 for the years ended December
31, 1996 and 1997 and the seven-month period ended July 31, 1998,
respectively, were received from First Bank of Arkansas-Jonesboro, an entity
affiliated with First Processing Services, Inc. through common ownership.
Accounts receivable as of December 31, 1996 and 1997, and July 31, 1998
included $43,616, $52,982, and $50,004, respectively, due from First Bank of
Arkansas-Jonesboro.
Management and administrative services were performed for the Company by the
sole shareholder of Mercantile Corporation for a salary of $62,200, $77,692,
and $58,200 for the years ended December 31, 1996 and 1997 and the seven-
month period ended July 31, 1998, respectively.
11. SUBSEQUENT EVENT
On September 30, 1998, InterCept entered into an asset purchase agreement
with Mercantile Corporation to purchase certain of the assets for a purchase
price of approximately $1,100,000. In connection with this transaction,
First Processing Services, Inc. conveyed its remaining 48% interest in the
Company to Mercantile Corporation as consideration for the cancellation of a
contract requiring it to use the Company's services. The acquired assets
consisted primarily of accounts receivable, computer equipment, and various
other assets.
-4-
<PAGE>
EXHIBIT 99.3
The InterCept Group, Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
(a) (b)
Historical Advance Data Pro Forma Pro Forma
Consolidated Partnership Eliminations Consolidated
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $23,260,082 $1,224,020 $ 0 $24,484,102
Cost of services 10,222,651 289,376 0 10,512,027
Selling, general and administrative expense 10,105,317 537,948 0 10,643,265
Depreciation and amortization 1,323,771 126,809 28,800 (c) 1,479,380
Loss on impairment of intangibles 727,500 0 0 727,500
Writeoff of purchased research and
development cost 0 0 0 0
----------- ---------- -------- -----------
Total operating expense 22,379,239 954,133 28,800 23,362,172
----------- ---------- -------- -----------
Operating Income 880,843 269,887 (28,800) 1,121,930
Interest expense (770,175) (13,617) 0 (783,792)
Interest and other income, net 121,535 0 (55,000) (d) 66,535
----------- ---------- -------- -----------
Income before provision for income taxes
and minority interest 232,203 256,270 (83,800) 404,673
Provision for income taxes 666,125 97,384 0 763,509
Minority interest 38,564 0 0 38,564
----------- ---------- -------- -----------
Net loss before preferred dividends (395,358) 158,886 (83,800) (320,272)
Preferred dividends (32,000) 0 0 (32,000)
----------- ---------- -------- -----------
Net loss attributable to common shareholders $ (427,358) $ 158,886 $(83,800) $ (352,272)
=========== ========== ======== ===========
Pro Forma net loss attributable to common
shareholders $ (0.06) $ (0.05)
=========== ============
Pro forma weighted average common and common
equivalent shares outstanding 6,750,114 6,750,114
=========== ============
</TABLE>
- --------------
(a) Represents the historical consolidated statement of operations of InterCept
for the year ended December 31, 1997 contained in the Company's Registration
Statement on Form S-1 (Registration No. 333-47197) as declared effective by
the Securities and Exchange Commission on June 9, 1998.
(b) Represents the historical statement of operations of Advance Data
Partnership ("Advance Data") for the year ended December 31, 1997 included
herein.
(c) Reflects the amortization of intangibles related to the acquisition of
Advance Data as if it had occurred on January 1, 1997.
(d) Reflects the reduction in interest income related to the acquisition of
Advance Data as if it had occurred on January 1, 1997 due to the use of cash
to fund the acquisition.
<PAGE>
The InterCept Group, Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Nine Months Ended September 30, 1998
<TABLE>
<CAPTION>
(a) (b)
Historical Advance Data Pro Forma Pro Forma
Consolidated Partnership Eliminations Consolidated
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $20,483,133 $892,889 $ 0 $21,376,022
Cost of services 8,635,678 189,716 0 8,825,394
Selling, general and administrative expense 7,896,546 474,764 0 8,371,310
Depreciation and amortization 961,551 74,577 16,800 (c) 1,052,928
Loss on impairment of intangibles 0 0 0 0
Writeoff of purchased research and
development costs 0 0 0 0
----------- -------- -------- -----------
Total operating expense 17,493,775 739,057 16,800 18,249,632
----------- -------- -------- -----------
0
Operating Income 2,989,358 153,832 (16,800) 3,126,390
Interest expense (329,080) (2,236) 0 (331,316)
Interest and other income, net 118,844 0 (32,000) (d) 86,844
----------- -------- -------- -----------
Income before provision for income taxes
and minority interest 2,779,122 151,596 (48,800) 2,881,918
Provision for income taxes 1,076,315 57,606 0 1,133,921
Minority interest (79,886) 0 0 (79,886)
----------- -------- -------- -----------
Net loss before preferred dividends 1,622,921 93,990 (48,800) 1,668,111
Preferred dividends (16,000) 0 0 (16,000)
----------- -------- -------- -----------
Net loss attributable to common shareholders $ 1,606,921 $ 93,990 $(48,800) $ 1,652,111
=========== ======== ======== ===========
Pro Forma net loss attributable to common
shareholders $ 0.20 $ 0.21
=========== ===========
Pro forma weighted average common and common
equivalent shares outstanding 7,866,960 7,866,960
=========== ===========
</TABLE>
- --------------
(a) Represents the historical unaudited consolidated statement of operations of
InterCept for the nine months ended September 30, 1998 contained in the
Company's Quarterly Report on Form 10-Q for the quarter ended September 30,
1998.
(b) Represents the historical unaudited statement of operations of Advance Data
Partnership ("Advance Data") for the seven months ended July 31, 1998
included herein.
(c) Reflects the amortization of intangibles related to the acquisition of
Advance Data as if it had occurred on January 1, 1998.
(d) Reflects the reduction in interest income related to the acquisition of
Advance Data as if it had occurred on January 1, 1998 due to the use of cash
to fund the acquisition.