<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549\
AMENDMENT NO. 1 TO
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: November 15, 1999
(Date of earliest event reported: September 15, 1999)
NATIONAL INFORMATION CONSORTIUM, INC.
(Exact name of registrant as specified in its charter)
Colorado 000-26621 52-2077581
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
12 Corporate Woods, 10975 Benson Street, Suite 390, Overland Park, Kansas 66210
(Address of Principal Executive Offices) (Zip Code)
(877) 234-EGOV
(Registrant's telephone number, including area code)
Not applicable. (Former name or former address, if changed since last report)
<PAGE> 2
National Information Consortium, Inc. hereby amends the following
items, financial statements, exhibits or other portions of its Current Report on
Form 8-K, dated September 30, 1999, as set forth in the pages attached hereto:
"Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits" is hereby amended and restated to include historical and pro forma
financial information required in connection with the acquisition of the
business of eFed, a provider of Internet-based procurement solutions for the
government. eFed was a division of privately held Reston, Virginia-based
Electric Press, Inc.
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(c) Exhibits.
23.1 Consent of Independent Auditors
99.1 Financial Statements of Business Acquired
-----------------------------------------
Report of Independent Auditors
Balance Sheets as of December 31, 1998 and 1997
Statements of Operations for the Years Ended December 31, 1998
and 1997
Statements of Divisional Equity (Deficit) as of December 31,
1998 and 1997
Statements of Cash Flows for the Years Ended December 31, 1998
and 1997
Notes to Financial Statements for the Years Ended December 31,
1998 and 1997
Statements of Income for the Period from January 1, 1999 to
September 15, 1999 and for the Nine Months ended September 30, 1998 (unaudited)
Statements of Cash Flows for the Period from January 1, 1999 to
September 15, 1999 and for the Nine Months ended September 30, 1998 (unaudited)
Notes to Financial Statements for the Period from January 1, 1999
to September 15, 1999 and for the Nine Months ended September 30, 1998
(unaudited)
99.2 Unaudited Pro Forma Financial Information - National Information
Consortium Inc.
----------------------------------------------------------------
Pro Forma Consolidated Financial Information - Overview
Pro Forma Consolidated Statement of Operations for the Year
Ended December 31, 1998
Pro Forma Consolidated Statement of Operations for the Nine
Months Ended September 30, 1999
Notes to Pro Forma Consolidated Financial Information
<PAGE> 4
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.
NATIONAL INFORMATION CONSORTIUM, INC.
By: /s/ KEVIN C. CHILDRESS
-----------------------
Kevin C. Childress
Chief Financial Officer
Date: November 15, 1999
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 333-83171) of National Information Consortium, Inc. of
our report dated September 2, 1999, with respect to the financial statements of
eFed, a Division of Electric Press, Inc. for the two years ended December 31,
1998 included in this Form 8-K dated November 15, 1999 of National Information
Consortium, Inc.
/s/ Ernst & Young LLP
McLean, Virginia
November 15, 1999
<PAGE> 1
EXHIBIT 99.1
Financial Statements
eFed, a Division of Electric Press, Inc.
Years ended December 31, 1998 and 1997
with Report of Independent Auditors
<PAGE> 2
Report of Independent Auditors
Board of Directors
Electric Press, Inc.
We have audited the accompanying balance sheets of eFed, a Division of Electric
Press, Inc. as of December 31, 1998 and 1997, and the related statements of
operations, divisional equity (deficit), and cash flows for the years then
ended. These financial statements are the responsibility of the Division'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 eFed, a Division of Electric
Press, Inc. at December 31, 1998 and 1997, and the results of its operations and
its cash flows for the years then ended in conformity with generally accepted
accounting principles.
/s/ Ernst & Young LLP
September 2, 1999
1
<PAGE> 3
eFed, a Division of Electric Press, Inc.
Balance Sheets
DECEMBER 31,
1998 1997
-------- --------
ASSETS
Current assets:
Accounts receivable, net of allowance for doubtful
accounts of $22,235 and $0 at December 31,
1998 and 1997, respectively $305,657 $ 65,000
Prepaid expenses 23,017 -
-------- --------
Total current assets 328,674 65,000
Furniture, fixtures and equipment, at cost:
Computer equipment 77,593 77,593
Leasehold improvements 46,246 -
Office furniture 1,163 -
Computer software 6,359 6,359
-------- --------
131,361 83,592
Less: Accumulated depreciation 48,169 19,501
-------- --------
Net furniture, fixtures and equipment 83,192 64,451
Capitalized software, net of accumulated
amortization of $65,562 and $0 at December 31,
1998 and 1997, respectively 202,151 187,144
Other assets 10,813 -
-------- --------
Total assets $624,830 $316,595
======== ========
2
<PAGE> 4
<TABLE>
<CAPTION>
DECEMBER 31,
1998 1997
--------- ---------
<S> <C> <C>
LIABILITIES AND DIVISIONAL EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 63,975 $ 5,131
Accrued expenses 45,000 -
Line of credit 36,288 12,036
Current portion of long-term debt 10,040 10,040
Deferred revenue 33,075 -
Due to affiliate 268,885 399,065
--------- ---------
Total current liabilities 457,263 426,272
Long-term debt, net of current portion 3,078 13,105
Commitments (Note 4)
Divisional equity (deficit):
Retained earnings (deficit) 164,489 (122,782)
--------- ---------
Total divisional equity (deficit) 164,489 (122,782)
--------- ---------
Total liabilities and divisional equity (deficit) $ 624,830 $ 316,595
========= =========
</TABLE>
See accompanying notes.
3
<PAGE> 5
eFed, a Division of Electric Press, Inc.
Statements of Operations
YEARS ENDED
DECEMBER 31,
1998 1997
----------- -----------
Revenue $ 1,644,796 $ 92,975
Costs of revenue (389,730) (18,276)
Amortization of capitalized software (65,562) -
----------- -----------
Gross profit 1,189,504 74,699
Operating expenses:
Selling and marketing 353,017 97,801
General and administrative 508,443 16,891
Research and development 6,857 59,992
Depreciation 28,668 19,501
----------- -----------
Total operating expenses 896,985 194,185
----------- -----------
Operating income (loss) 292,519 (119,486)
Interest expense 5,248 3,296
----------- -----------
Net income (loss) $ 287,271 $ (122,782)
=========== ===========
See accompanying notes.
4
<PAGE> 6
eFed, a Division of Electric Press, Inc.
Statements of Divisional Equity (Deficit)
Retained
Earnings
(Deficit) Total
-------------------------
Balance at December 31, 1996 $ - $ -
Net loss for the period (122,782) (122,782)
--------- ---------
Balance at December 31, 1997 (122,782) (122,782)
Net income for the period 287,271 287,271
--------- ---------
Balance at December 31, 1998 $ 164,489 $ 164,489
========= =========
See accompanying notes.
5
<PAGE> 7
eFed, a Division of Electric Press, Inc.
Statements of Cash Flows
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
1998 1997
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 287,271 $(122,782)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation 28,668 19,501
Amortization of capitalized software 65,562 -
Provision for doubtful accounts 22,235 -
Changes in operating assets and liabilities:
Accounts receivable (262,892) (65,000)
Prepaid expenses (23,017) -
Other assets (10,813) -
Accounts payable 58,844 5,131
Accrued expenses 45,000 -
Deferred revenue 33,075 -
Due to affiliate (130,180) 398,705
--------- ---------
Net cash provided by operating activities 113,753 235,555
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of furniture, fixtures and equipment (47,409) (83,592)
Capitalized software (80,569) (187,144)
--------- ---------
Net cash used in investing activities (127,978) (270,736)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from line of credit, net 24,252 12,036
Proceeds on long-term debt - 40,162
Payments on long-term debt (10,027) (17,017)
--------- ---------
Net cash provided by financing activities 14,225 35,181
--------- ---------
Net change in cash - -
Cash at beginning of year - -
--------- ---------
Cash at end of year $ - $ -
========= =========
</TABLE>
See accompanying notes.
6
<PAGE> 8
eFed, a Division of Electric Press, Inc.
Notes to Financial Statements
December 31, 1998 and 1997
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND BASIS OF PRESENTATION
eFed, a Division of Electric Press, Inc. (the "Division") provides Internet
eCommerce business solutions for government procurement. The accompanying
financial statements have been prepared on a divisional basis, and accordingly,
certain allocations have been made regarding overhead expenses. In the opinion
of management, these allocations are reasonable and represent the overhead
expenses attributable to the Division for the periods presented. For the year
ended December 31, 1998, these allocations were made based on the amount of
direct labor costs incurred by the Division in relation to direct labor costs
incurred by Electric Press, Inc. For the year ended December 31, 1997, these
allocations were based on direct and indirect costs incurred by the Division in
relation to total direct and indirect costs incurred by Electric Press, Inc.
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 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.
FURNITURE, FIXTURES AND EQUIPMENT
Furniture, fixtures and equipment are stated at cost and are depreciated using
the straight-line method over three to ten years. Leasehold improvements are
recorded at cost and amortized using the straight-line method over the life of
the lease.
CAPITALIZED SOFTWARE
Capitalized software is stated at cost. Amortization of capitalized software is
computed on the straight-line basis over three years.
7
<PAGE> 9
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUE RECOGNITION
The Division recognizes revenue from sales of its products upon delivery and
passage of title to the customer. Revenue is recognized provided that no
significant obligations remain and that collection of the resulting receivable
is probable. Where agreements provide for evaluation or customer acceptance, the
Company recognizes revenue upon the completion of the evaluation process and
acceptance of the product by the customer.
DEFERRED REVENUE
Deferred revenue consists of amounts received from customers in advance of the
date services are rendered.
INCOME TAXES
The stockholders of Electric Press, Inc. have elected to be treated as an S
corporation under the Internal Revenue Code, whereby income and losses are
reported on the stockholders' individual tax returns. Accordingly, no provision
for income taxes is included in the accompanying financial statements of the
Division.
FINANCIAL INSTRUMENTS
The Division considers the recorded value of its financial assets and
liabilities to approximate the fair value of the respective assets and
liabilities at December 31, 1998 and 1997. For accounts receivable, the Division
performs ongoing credit evaluations of its customers' financial condition and
generally does not require collateral. The Division maintains reserves for
credit losses which, historically, have been within management's expectations.
2. LINE OF CREDIT
Electric Press, Inc. has a line of credit agreement with a bank. The total
amount available under the agreement was $750,000 in 1998 and $200,000 in 1997.
The line of credit is secured by a blanket lien on all of the Division's assets
and by deeds of trust on the personal residences of the majority stockholders of
Electric Press, Inc.The line of credit
<PAGE> 10
2. LINE OF CREDIT (CONTINUED)
is also guaranteed by the majority stockholders and their spouses of Electric
Press, Inc. Interest is payable monthly at prime plus 1.5% on the outstanding
balance. A commitment fee of 1% is due on any unused portion of the line of
credit. The entire balance is due upon demand. The outstanding balance related
to the Division at December 31, 1998 and 1997 was $36,288 and $12,036,
respectively.
3. LONG-TERM DEBT
Long-term debt consists on the following:
YEARS ENDED
DECEMBER 31,
1998 1997
---------------------------
Note payable to a bank, secured by a blanket lien
on the Division's assets and deeds of trust on the
Electric Press, Inc. majority stockholders'
personal residences, and personally guaranteed by
the Electric Press, Inc. majority stockholders and
their spouses. The note is payable in monthly
installments of $1,201, plus interest at prime
plus 1.5%, final payment due March 2000. $ 8,288 $ 14,918
Note payable to a bank, secured by a blanket lien
on all the Division's assets and deeds of trust on
the Electric Press, Inc. majority stockholders'
personal residences, and personally guaranteed by
the Electric Press, Inc. majority stockholders and
their spouses. The note is payable in monthly
installments of $917, plus interest at prime plus
1.5%, final payment due May 2000. 4,830 8,227
---------------------------
Total 13,118 23,145
Less current portion 10,040 10,040
---------------------------
$ 3,078 $ 13,105
===========================
<PAGE> 11
3. LONG-TERM DEBT (CONTINUED)
At December 31, 1998, the scheduled future principal maturities of long-term
debt is as follows:
Year Ending
December 31, Amount
------------ ---------------
1999 $10,040
2000 3,078
---------------
Total $13,118
===============
4. LEASES
Electric Press, Inc. is obligated, as lessee and sublessee, under noncancellable
operating leases for office space, which expire on various dates through May
2002. In addition, Electric Press, Inc. is obligated, on a pro rata basis, for
annual increases in operating expenses and real estate taxes incurred by the
landlord.
Electric Press, Inc. has entered into operating leases as lessee for office
furniture and equipment. The leases expire between March 1999 and May 2002.
The Division's share of rental expense under all operating leases for the years
ended December 31, 1998 and 1997 was $89,294 and $2,283, respectively.
At December 31, 1998, the future minimum lease payment required under operating
leases related to the Division are as follows:
Year Ending Office Furniture and
December 31, space equipment Total
------------ --------------------------------------------------
1999 $131,174 $124,816 $255,990
2000 134,580 68,034 202,614
2001 138,618 19,080 157,698
2002 58,610 15,900 74,510
--------------------------------------------------
Total $462,982 $227,830 $690,812
==================================================
<PAGE> 12
5. RETIREMENT PLAN
Effective January 1, 1997, Electric Press, Inc. adopted a 401(k) retirement plan
(the Plan) that is available to substantially all employees of the Company. The
Plan permits employee contributions based upon percentages of compensation that
may not exceed certain amounts as provided by the Internal Revenue Code. The
Plan permits the employer to make matching contributions (which are
discretionary) that are equal to a percentage of the amount each employee
contributes. The percentage is determined each year by the Company. Additional
discretionary contributions may be made annually. For the years ended December
31, 1998 and 1997, the matching contribution attributable to the Division was
$13,133 and $5,406, respectively, and was charged to expense.
6. RELATED PARTY TRANSACTIONS
As of December 31, 1998 and 1997, the Division had recorded a due to affiliate
of $268,885 and $399,065, respectively. This due to affiliate is payable to
Electric Press, Inc. and represents costs incurred by the Division and paid for
by Electric Press, Inc.
7. SUBSEQUENT EVENT
In August 1999, Electric Press, Inc. signed a letter of intent with National
Information Consortium (NIC), whereby NIC would acquire all assets of the
Division. As consideration, NIC shall deliver to Electric Press, Inc. $15
million in cash and 606,000 shares of NIC common stock. In addition, NIC will be
required to either issue additional shares of common stock or pay additional
equivalent cash during an earn-out period through March 31, 2004. The sale of
the Division is expected to close in September 1999.
8. YEAR 2000 (UNAUDITED)
The Division is aware of the implications associated with the "Year 2000" as it
relates to software information systems and other outside implications on the
Division's operations. The "Year 2000" is not expected to have a material impact
on the Division's current information systems because current software is either
already "Year 2000" compliant or required changes will be insignificant. Any
required changes and expenses are to be completed by September 30, 1999. As a
result, the Division does not anticipate that
<PAGE> 13
8. YEAR 2000 (UNAUDITED) (CONTINUED)
incremental expenditures to ensure that its information systems are "Year 2000"
compliant will be material to the Division's liquidity, financial position or
results of operations. Total costs incurred to date relative to the "Year 2000"
have aggregated $15,600 and have been expensed as incurred by Electric Press,
Inc. Future costs expected to be incurred are less than $10,500.
<PAGE> 14
Financial Information
eFed, a Division of Electric Press, Inc.
Period from January 1, 1999 to September 15, 1999 and
the nine months ended September 30, 1998
(Unaudited)
<PAGE> 15
eFed, a Division of Electric Press, Inc.
Statements of Income
(Unaudited)
PERIOD FROM
JANUARY 1, NINE MONTHS
1999 TO ENDED
SEPTEMBER 15, SEPTEMBER 30,
1999 1998
------------- -------------
Revenue $ 2,340,178 $ 1,244,221
Costs of revenue (540,630) (262,884)
Amortization of capitalized software (112,408) (44,348)
----------- -----------
Gross profit 1,687,140 936,989
Operating expenses:
Selling and marketing 518,553 161,432
General and administrative 919,802 260,874
Research and development 24,010 6,856
Depreciation 18,828 21,503
----------- -----------
Total operating expenses 1,481,193 450,665
----------- -----------
Operating income 205,947 486,324
Interest expense 10,688 4,995
----------- -----------
Net income $ 195,259 $ 481,329
=========== ===========
See accompanying notes.
1
<PAGE> 16
eFed, a division of Electric Press, Inc.
Statements of Cash Flows
(Unaudited)
PERIOD FROM
JANUARY 1, NINE MONTHS
1999 TO ENDED
SEPTEMBER 15, SEPTEMBER
1999 30, 1998
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 195,259 $ 481,329
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation 18,828 21,503
Amortization of capitalized software 112,408 44,348
Changes in operating assets and liabilities:
Accounts receivable (473,599) (405,206)
Unbilled receivables (125,295) -
Prepaid expenses 23,017 -
Accounts payable 209,919 1,765
Accrued expenses (5,000) 60,000
Due to affiliate 158,643 (107,332)
Deferred revenue (33,075) 9,000
--------- ---------
Net cash provided by operating activities 81,105 105,407
CASH FLOWS FROM INVESTING ACTIVITIES
Capitalized software (280,476) (38,445)
Purchase of equipment - (47,409)
--------- ---------
Net cash used in investing activities (280,476) (85,854)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds (payment) from (on) line of credit, net 212,489 (12,036)
Payments on long-term debt (13,118) (7,517)
--------- ---------
Net cash provided (used in) by financing activities 199,371 (19,553)
Net change in cash - -
Cash at beginning of period - -
--------- ---------
Cash at end of period $ - $ -
========= =========
See accompanying notes.
2
<PAGE> 17
eFed, a Division of Electric Press, Inc.
Notes to Financial Statements
Period from January 1, 1999 to September 15, 1999
and the nine months ended September 30,1998
1. ORGANIZATION AND BASIS OF PRESENTATION
eFed, a division of Electric Press, Inc. (the Division) provides Internet
eCommerce business solutions for government procurement. The accompanying
financial statements have been prepared on a divisional basis, and accordingly,
certain allocations have been made regarding overhead expenses. In the opinion
of management, these allocations are reasonable and represent the overhead
expenses attributable to the Division for the periods presented. These
allocations were made based primarily on the amount of direct and indirect labor
costs incurred by the Division in relation to direct and indirect costs incurred
by Electric Press, Inc.
2. UNAUDITED INTERIM FINANCIAL INFORMATION
The interim financial information of the Division for the period from January 1,
1999 to September 15, 1999 and the nine months ended September 30, 1998 has been
prepared by the management of Electric Press, Inc., without audit, pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles for
complete financial statements have been condensed or omitted pursuant to such
rules and regulations relating to interim financial statements. In the opinion
of management, the accompanying unaudited interim financial information reflects
all adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the results of its operations and its cash flows for the period
from January 1, 1999 to September 15, 1999 and the nine months ended September
30, 1998. Results of operations for the interim period ended September 15, 1999
are not necessarily indicative of the results expected for the full year.
3. SALE OF eFED
Effective September 15, 1999, National Information Consortium (NIC) acquired all
assets of the Division. As consideration, NIC delivered to Electric Press, Inc.
$15 million in cash and 606,000 shares of NIC common stock. In addition, NIC may
be required to either issue additional shares of common stock or pay additional
equivalent cash during an earn-out period through March 31, 2004.
<PAGE> 1
EXHIBIT 99.2
NATIONAL INFORMATION CONSORTIUM, INC.
PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
OVERVIEW
On September 15, 1999, National Information Consortium, Inc. ("NIC" or the
"Company") acquired the net assets of the business of eFed, a provider of
Internet-based procurement software and services for the government. eFed
designs, develops and manages online procurement software and services for
federal and state markets. eFed was a division of privately held Reston,
Virginia-based Electric Press, Inc. The acquisition was accounted for as a
purchase and the results of eFed's operations are included in the Company's
consolidated statements of operations from the date of acquisition. The total
purchase price for the business was approximately $29.5 million. Total
consideration included $15 million in cash from the proceeds of NIC's initial
public offering and the issuance of 606,000 shares of unregistered common stock
with a fair value of approximately $14.5 million. The fair value of the common
shares was determined based on the average closing market price of NIC's common
stock three days before and after the September 13, 1999 announcement date of
the acquisition. Additional consideration is also payable through the end of
calendar year 2003 if eFed's financial results exceed certain targeted levels,
which have been set substantially above the historical experience of eFed at the
time of acquisition.
The total purchase price of approximately $29.5 million was allocated to the
tangible and identifiable intangible assets acquired and liabilities assumed on
the basis of their fair values on the closing date. The fair value of net
tangible assets acquired, consisting primarily of accounts receivable, property
and equipment, accounts payable and other accrued expenses, totaled $816,000 and
approximated historical carrying amounts. The sole identifiable intangible asset
relates to eFed's Internet procurement software. This asset was valued at
approximately $21.8 million based on the net present value of projected future
net cash flows from licensing the software over its estimated three-year life.
The remainder of the cost was allocated to goodwill. The goodwill is being
amortized on a straight-line basis over three years. The Company determined a
three year life was appropriate after giving consideration to the rapid
technological changes occurring in the Internet industry, the potential for
increasing competition given the demand for electronic purchasing products and
services, and the intense competition which exists for qualified Internet
professionals.
The following unaudited pro forma consolidated statements of operations give
effect to the acquisition by NIC of eFed and are based on the individual
statements of operations of the Company for the nine months ended September 30,
1999 and the year ended December 31, 1998, and of eFed for the period from
January 1, 1999 to September 15, 1999, and the year ended December 31, 1998, as
if the transaction occurred on January 1, 1999 and 1998. These unaudited pro
forma consolidated statements of operations should be read in conjunction with
the historical financial statements and notes thereto of the Company (included
in the Company's Form S-1, which became effective July 15, 1999, and the
Company's most recent Form 10-Q, which was filed on November 15, 1999) and of
eFed (included elsewhere in this Form 8-K).
The unaudited pro forma consolidated statements of operations are not
necessarily indicative of the operating results that would have been achieved
had the transactions been in effect as of the beginning of the periods presented
and should not be construed as being representative of the future operating
results.
<PAGE> 2
NATIONAL INFORMATION CONSORTIUM, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
(a)
NIC EFED ADJUSTMENTS PRO FORMA
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 28,623,656 $ 1,644,796 $ - $ 30,268,452
Cost of revenues 21,210,632 389,730 - 21,600,362
------------ ------------ ------------ ------------
Gross profit 7,413,024 1,255,066 - 8,668,090
------------ ------------ ------------ ------------
Operating expenses:
Service development and operations 3,884,810 - - 3,884,810
Selling, general and administrative 4,241,780 868,317 - 5,110,097
Stock compensation 568,869 - - 568,869
Depreciation and amortization 5,922,396 94,230 9,576,168(b) 15,592,794
------------ ------------ ------------ ------------
Total operating expenses 14,617,855 962,547 9,576,168 25,156,570
------------ ------------ ------------ ------------
Operating income (loss) (7,204,831) 292,519 (9,576,168) (16,488,480)
------------ ------------ ------------ ------------
Other income (expense):
Interest expense (88,161) (5,248) - (93,409)
Other income, net 55,839 - - 55,839
------------ ------------ ------------ ------------
Total other income (expense) (32,322) (5,248) - (37,570)
------------ ------------ ------------ ------------
Income (loss) before income taxes (7,237,153) 287,271 (9,576,168) (16,526,050)
Income tax expense (benefit) 658,813 - (3,399,736) (d) (2,740,923)
------------ ------------ ------------ ------------
Net income (loss) $ (7,895,966) $ 287,271 $ (6,176,432) $(13,785,127)
============ ============ ============ ============
Net loss per share:
Basic and diluted $ (0.21) $ (0.35)
============ ============
Weighted average shares outstanding 37,242,423 1,969,636 (c) 39,212,059
============ ============ ============
</TABLE>
See accompanying Notes to Pro Forma Consolidated Financial Information.
<PAGE> 3
NATIONAL INFORMATION CONSORTIUM, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
(a)
NIC EFED ADJUSTMENTS PRO FORMA
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 40,457,100 $ 2,340,178 $ - $ 42,797,278
Cost of revenues 30,494,613 540,630 - 31,035,243
------------ ------------ ------------ ------------
Gross profit 9,962,487 1,799,548 - 11,762,035
------------ ------------ ------------ ------------
Operating expenses:
Service development and operations 4,009,427 - - 4,009,427
Selling, general and administrative 5,428,977 1,462,365 - 6,891,342
Stock compensation 2,734,710 - - 2,734,710
Depreciation and amortization 6,408,709 131,236 6,783,119 (b) 13,323,064
------------ ------------ ------------ ------------
Total operating expenses 18,581,823 1,593,601 6,783,119 26,958,543
------------ ------------ ------------ ------------
Operating income (loss) (8,619,336) 205,947 (6,783,119) (15,196,508)
------------ ------------ ------------ ------------
Other income (expense):
Interest expense (145,236) (10,688) - (155,924)
Other income, net 1,167,316 - - 1,167,316
------------ ------------ ------------ ------------
Total other income (expense) 1,022,080 (10,688) - 1,011,392
------------ ------------ ------------ ------------
Income before income taxes (7,597,256) 195,259 (6,783,119) (14,185,116)
Income tax expense (benefit) (353,194) - (2,411,157) (d) (2,764,351)
------------ ------------ ------------ ------------
Net income (loss) $ (7,244,062) $ 195,259 $ (4,371,962) $(11,420,765)
============ ============ ============ ============
Net loss per share:
Basic and diluted $ (0.16) $ (0.24)
============ ============
Weighted average shares outstanding 45,277,801 1,552,415 (c) 46,830,216
============ ============ ============
</TABLE>
See accompanying Notes to Pro Forma Consolidated Financial Information.
<PAGE> 4
NATIONAL INFORMATION CONSORTIUM, INC.
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following adjustments were applied to the Company's historical consolidated
statements of operations for the periods indicated to arrive at the pro forma
consolidated financial information.
a) For the nine months ended September 30, 1999, this column represents eFed's
results of operations for the period from January 1, 1999 to September 15,
1999. The Company's consolidated results of operations already include
eFed's results of operations for the period from the date of acquisition to
September 30, 1999. For the year ended December 31, 1998, this column
represents eFed's results of operations for the year ended December 31,
1998.
b) This adjustment represents amortization expense resulting from the
application of purchase accounting. For the nine months ended September 30,
1999, the adjustment represents amortization for the period from January 1,
1999 to September 15, 1999, as the Company's consolidated results of
operations reflect amortization for the period from the date of acquisition
to September 30, 1999. For the year ended December 31, 1998, the adjustment
represents a full year of amortization.
c) This adjustment represents the incremental shares needed to reflect the
common shares outstanding for the period based on the following stock
issuances as of the beginning of the period presented:
a. The actual issuance of 606,000 unregistered common shares as part
of the acquisition price.
b. The assumed issuance of 1,363,636 shares of common stock at $11 per
share, resulting in net proceeds of $15 million. The net proceeds
were used to pay the cash portion of the acquisition price. The $11
share price was based on the net proceeds per share received by the
Company's from its initial public offering of 10 million shares of
common stock on July 15, 1999. For the nine months ended September
30, 1999, the pro forma weighted average shares outstanding reflect
the 1,969,636 shares as outstanding for the nine months ended
September 30,1999, and also reflect the difference between the 10
million shares of common stock issued on July 15, 1999 and
1,363,636 shares noted above as outstanding from July 15, 1999 to
September 30, 1999.
d) For year ended December 31, 1998 and for the period from January 1, 1999 to
September 15, 1999, Electric Press, Inc. was an S corporation. Accordingly,
no provision for income taxes was included in eFed's results of operations
for the corresponding periods. For the nine months ended September 30,
1999, this adjustment represents eFed's pro forma tax provision (expense on
its results of operations) and the pro forma tax provision (benefit)
related to the amortization expense resulting from the application of
purchase accounting for the period from January 1, 1999 to September 15,
1999. The Company's consolidated results of operations already include
eFed's tax provision and the tax benefit relating to amortization for the
period from the date of acquisition to September 30, 1999. For the year
ended December 31, 1998, this adjustment represents eFed's pro forma tax
provision (expense on its results of operations) and the pro forma tax
provision (benefit) related to the amortization expense arising from the
application of purchase accounting. The pro forma provisions for income
taxes were calculated based on enacted tax laws and statutory tax rates
applicable to the periods presented.
