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) June 28, 2000
--------------------------------
GOAMERICA, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-29359 22-3693371
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(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
401 Hackensack Avenue
Hackensack, New Jersey 07601
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (201) 996-1717
------------------------------
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(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
As reported in the Current Report on Form 8-K filed July 12, 2000 by
GoAmerica, Inc. ("GoAmerica"), on June 28, 2000, GoAmerica consummated the
acquisition of all of the issued and outstanding capital stock of Wynd
Communications Corporation, a California corporation ("Wynd"). In the
acquisition, GoAmerica Acquisition I Corp., a Delaware corporation and
wholly-owned subsidiary of GoAmerica, merged with and into Wynd (the "Merger")
and Wynd became a wholly-owned subsidiary of GoAmerica.
In the Merger, the former shareholders of Wynd received an aggregate of
3,964,975 newly-issued shares of GoAmerica Common Stock, $0.01 par value (after
deducting fractional share amounts and paying the former Wynd shareholders cash
in lieu thereof), in exchange for all outstanding shares of Wynd capital stock.
As further consideration, GoAmerica assumed each issued and outstanding option
for the purchase of Common Stock of Wynd and converted such options into options
to acquire an aggregate of 477,722 shares of GoAmerica Common Stock under
GoAmerica's 1999 Stock Plan.
GoAmerica hereby files this Form 8-K/A to file the following financial
statements and related pro forma financial statements required pursuant to Item
7 of Form 8-K with respect to the Merger:
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
Audited Financial Statements of Wynd Communications Corporation as of
December 31, 1999 and 1998 and for the years ended December 31, 1999, 1998
and 1997
Independent Auditors' Report of KPMG LLP
Balance Sheets
Statements of Operations
Statements of Stockholders' Equity
Statements of Cash Flows
Notes to Financial Statements
Interim Unaudited Condensed Financial Statements of Wynd Communications
Corporation
Condensed Balance Sheet as of June 27, 2000
Condensed Statements of Operations for the period from January 1,
2000 to June 27, 2000 and the six month period ended June 30, 1999
Condensed Statements of Cash Flows for the period from January 1,
2000 to June 27, 2000 and the six month period ended June 30, 1999
Notes to Interim Unaudited Condensed Financial Statements
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<PAGE>
(b) PRO FORMA FINANCIAL INFORMATION
Unaudited Pro Forma Consolidated Financial Statements of GoAmerica, Inc.
Unaudited Pro Forma Consolidated Statement of Operations for the year
ended December 31, 1999.
Unaudited Pro Forma Consolidated Statement of Operations for the six
months ended June 30, 2000.
Notes to Unaudited Pro Forma Consolidated Financial Statements.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
WYND COMMUNICATIONS CORPORATION
Financial Statements
December 31, 1999, 1998 and 1997
(With Independent Auditors' Report Thereon)
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<PAGE>
Independent Auditors' Report
The Board of Directors of
Wynd Communications Corporation:
We have audited the accompanying balance sheets of Wynd Communications
Corporation as of December 31, 1999 and 1998 and the related statements of
operations, stockholders' equity and cash flows for each of the years in the
three-year period ended December 31, 1999. 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 Wynd Communications Corporation
as of December 31, 1999 and 1998 and the results of its operations and its cash
flows for each of the years in the three-year period ended December 31, 1999 in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in note 1 to the
financial statements, the Company's working capital and stockholders'
deficiencies raise substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are also described in
note 1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
KPMG LLP
March 17, 2000
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<PAGE>
<TABLE>
<CAPTION>
WYND COMMUNICATIONS CORPORATION
Balance Sheets
December 31, 1999 and 1998
Assets 1999 1998
----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents ...................................... $ 280,082 472,642
Accounts receivable, less allowance for doubtful accounts of
$100,195 and $38,667 as of December 31, 1999 and 1998,
respectively ................................................. 273,825 30,728
Inventory ...................................................... 71,267 38,728
Prepaid expenses and other current assets ...................... 51,967 53,812
----------- -----------
Total current assets ....................................... 677,141 595,910
Property and equipment, net ...................................... 253,464 146,522
Other assets ..................................................... 1,320 18,301
----------- -----------
$ 931,925 760,733
=========== ===========
Liabilities and Stockholders' Deficiency
Current liabilities:
Accounts payable ............................................... $ 876,301 333,926
Accrued expenses ............................................... 202,174 235,408
Current portion of capital lease obligation (note 4) ........... 42,294 78,808
----------- -----------
Total current liabilities ................................. 1,120,769 648,142
Capital lease obligation, less current portion (note 4) .......... 45,552 11,769
----------- -----------
Total liabilities ......................................... 1,166,321 659,911
----------- -----------
Redeemable Series C convertible preferred stock, no par value
Authorized 360,000 shares; issued and outstanding 250,000 and
110,000 shares as of December 31, 1999 and 1998, respectively,
liquidation value of $10.00 per share (note 6) ............... 2,720,993 1,044,705
Stockholders' deficiency:
Common stock, no par value. Authorized 2,000,000 and 5,000,000
shares; issued and outstanding 125,000 shares as of
December 31, 1999 and 1998 ................................... 6,716,070 6,830,551
Accumulated deficit ............................................ (9,671,459) (7,774,434)
----------- -----------
Total stockholders' deficiency ............................ (2,955,389) (943,883)
----------- -----------
$ 931,925 760,733
=========== =======
See accompanying notes to condensed financial statements.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
WYND COMMUNICATIONS CORPORATION
Statements of Operations
Years ended December 31, 1999, 1998 and 1997
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Service revenue .................................. $ 1,401,858 453,017 567,535
Product sales .................................... 785,007 457,517 50,320
----------- ----------- -----------
Total revenues ................................ 2,186,865 910,534 617,855
----------- ----------- -----------
Costs of revenues:
Cost of service .................................. 670,751 349,515 430,408
Cost of product sales ............................ 793,970 430,865 141,653
----------- ----------- -----------
Total costs of revenues ....................... 1,464,721 780,380 572,061
----------- ----------- -----------
Operating expenses:
Research and development ......................... 106,564 203,590 1,110,155
Selling, general and administrative .............. 2,576,007 1,360,561 2,102,992
----------- ----------- -----------
Total operating expenses ...................... 2,682,571 1,564,151 3,213,147
----------- ----------- -----------
Loss from operations .......................... (1,960,427) (1,433,997) (3,167,353)
----------- ----------- -----------
Other (expenses) income:
Interest expense, net of interest income ......... 17,202 (142,189) (22,339)
Other (expenses) income .......................... 47,000 172,414 (2,446)
----------- ----------- -----------
Total other (expenses) income ................. 64,202 30,225 (24,785)
----------- ----------- -----------
Loss before income taxes and extraordinary gain (1,896,225) (1,403,772) (3,192,138)
Income tax benefit (expense) ....................... (800) 56,300 (800)
----------- ----------- -----------
Loss before extraordinary gain ................ (1,897,025) (1,347,472) (3,192,938)
Extraordinary gain on extinguishment of debt ....... -- 85,623 --
----------- ----------- -----------
Net loss ...................................... $(1,897,025) (1,261,849) (3,192,938)
=========== =========== ===========
See accompanying notes to condensed financial statements.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
WYND COMMUNICATIONS CORPORATION
Statement of Stockholders' Equity
Years ended December 31, 1999, 1998
and 1997
Series A convertible
preferred stock Common stock Total
------------------------ -------------------------- Accumulated stockholders'
Shares Amount Shares Amount deficit equity
--------- ----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996 ............... 848,000 $ 16,524 1,282,600 $ 393,247 (3,319,647) (2,909,876)
Preferred dividends accrued -
$.38 per share .......................... -- -- -- -- (468,992) (468,992)
Detachable warrants issued in bridge
financing ................................ -- -- -- 24,194 -- 24,194
Stock option exercise ...................... -- -- 10,600 42 -- 42
Net loss ................................... -- -- -- -- (3,192,938) (3,192,938)
--------- ----------- ----------- ----------- ----------- -----------
Balance at December 31, 1997 ............... 848,000 16,524 1,293,200 417,483 (6,981,577) (6,547,570)
Preferred dividends accrued -
$.38 per share ........................... -- -- -- -- (400,320) (400,320)
Forgiveness of dividend payable in
conjunction with retirement .............. -- -- -- -- 869,312 869,312
Retirement of Series A & B redeemable
preferred stock and common stock ......... (848,000) (16,524) (1,293,200) 4,778,577 -- 4,762,053
Detachable warrants issued in
bridge financing.......................... -- -- -- 7,741 -- 7,741
Conversion of bridge loans to common stock . -- -- 125,000 1,636,547 -- 1,636,547
Accretion of Series C redeemable
preferred stock .......................... -- -- -- (9,797) -- (9,797)
Net loss ................................... -- -- -- -- (1,261,849) (1,261,849)
----------- ----------- ----------- ----------- -----------
Balance at December 31, 1998 ............... -- -- 125,000 6,830,551 (7,774,434) (943,883)
Accretion of Series C redeemable
preferred stock .......................... -- -- -- (114,481) -- (114,481)
Net loss ................................... -- -- -- -- (1,897,025) (1,897,025)
--------- ----------- ----------- ----------- ----------- -----------
Balance at December 31, 1999 ............... -- $ -- 125,000 $ 6,716,070 (9,671,459) (2,955,389)
========= =========== =========== =========== =========== ===========
See accompanying notes to condensed financial statements.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
WYND COMMUNICATIONS CORPORATION
Statements of Cash Flows
Years ended December 31, 1999, 1998 and 1997
1999 1998 1997
----------- ----------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss .................................................. $(1,897,025) (1,261,849) (3,192,938)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation ........................................ 125,376 154,764 210,337
Write-off of leased modems .......................... -- -- 62,320
Interest expense related to warrants issued
with notes payable ................................ -- 26,391 5,544
Bad debt expense and sales returns .................. 44,651 57,161 47,422
Gain on extinguishment of debt ...................... -- (142,723) --
Change in assets and liabilities:
Accounts receivable .............................. (287,748) (87,527) 21,347
Inventory ........................................ (32,539) (18,955) 58,955
Prepaid expenses and other current assets ........ 1,845 7,854 (13,853)
Other assets ..................................... 16,981 16,554 (17,024)
Accounts payable and accrued expenses ............ 509,141 112,893 (89,030)
----------- ----------- -----------
Net cash used in operating activities ...... (1,519,318) (1,135,437) (2,906,920)
----------- ----------- -----------
Cash flows used in investing activities - purchases of
property and equipment .................................... (156,241) (54,164) --
----------- ----------- -----------
Cash flows from financing activities:
Repayment of capital lease obligation ..................... (78,808) (85,864) (68,891)
Payment for retirement of common and preferred stock ...... -- (35) --
Proceeds from stock option exercise ....................... -- -- 42
Proceeds from issuance of convertible debt ................ -- 400,000 1,250,000
Proceeds from issuance of Series C preferred stock ........ 1,561,807 1,034,908 --
----------- ----------- -----------
Net cash provided by financing activities... 1,482,999 1,349,009 1,181,151
----------- ----------- -----------
Net increase (decrease) in cash ............ (192,560) 159,408 (1,725,769)
Cash at beginning of year ................................... 472,642 313,234 2,039,003
----------- ----------- -----------
Cash at end of year ......................................... $ 280,082 472,642 313,234
=========== =========== ===========
Supplemental disclosure of cash flow information:
Cash paid for:
Interest .................................................. $ 10,180 12,129 16,395
State income taxes ........................................ 800 800 800
=========== =========== ===========
Supplemental schedule of noncash activities:
Capital lease obligations incurred in purchasing equipment. $ 76,077 -- 120,107
Conversion of debt to common stock ........................ -- 1,250,000 --
Warrants issued with convertible debt ..................... -- 7,741 24,194
Preferred stock dividend issued ........................... -- -- 300,003
Forgiveness of dividend payable ........................... -- 869,312 --
Accretion of redeemable preferred stock ................... 114,481 9,797 --
Retirement of preferred stock ............................. -- 4,762,088 --
Preferred dividend payable ................................ -- 400,320 468,992
=========== =========== ===========
See accompanying notes to condensed financial statements.
</TABLE>
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<PAGE>
WYND COMMUNICATIONS CORPORATION
Notes to Financial Statements
December 31, 1999, 1998 and 1997
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Nature of Operations
--------------------------
The Company was incorporated in July 1994 in the state of California for
the purpose of providing wireless data communication services for the
portable and handheld computer market through the use of wireless modems.
The Company's primary service, WyndTell, enables persons who are deaf or
hard of hearing to communicate through the use of alphanumeric paging
technology. The Company's revenue is primarily generated through
subscription contracts. The Company also resells and leases the wireless
modems to support its communication services.
On October 29, 1998, the Company completed a recapitalization of its
equity. As a result, the Company issued Series C redeemable preferred
stock to new investors for a purchase price of $1,100,000. In conjunction
with the recapitalization, the Company was required to repurchase and
retire all the pre-existing outstanding common and preferred shares of the
Company and other related equity instruments for a nominal fee and convert
outstanding convertible debentures of $1,650,000 and accrued interest into
125,000 shares of common stock.
(b) Liquidity
---------------
The accompanying financial statements have been prepared on a
going-concern basis, which contemplates the realization of assets and
satisfaction of liabilities in the normal course of business. As shown in
the accompanying financial statements, the Company had an accumulated
deficit and negative working capital of $9,671,459 and $443,628,
respectively, as of December 31, 1999 and incurred a net loss of
$1,897,025, for the year ended December 31, 1999. The Company has
historically relied upon private placements of its stock and issuance of
debt to generate funds to meet its operating needs. As of December 31,
1999, the Company was in the midst of negotiations related to the
acquisition of the Company. However, there are no guarantees that a
planned merger will be consummated. Additionally, the Company has not
secured separate financing in the event that a merger is not consummated.
As such, substantial doubt exists as to whether the Company will continue
as a going concern.
(c) Cash Equivalents
----------------------
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments with original maturities of three months or
less to be cash equivalents.
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<PAGE>
WYND COMMUNICATIONS CORPORATION
Notes to Financial Statements
December 31, 1999, 1998 and 1997
(d) Inventory
---------------
Inventory consists primarily of wireless modems held for resale which are
stated at the lower of cost (first-in, first-out) or market.
(e) Revenue Recognition
-------------------------
Service revenues consist of subscriber fees from the WyndTell service and
are recognized ratably over the service period. Revenues from equipment
sales are recognized upon shipment.
(f) Property and Equipment
----------------------------
Property and equipment are stated at cost. Furniture and equipment under
capital lease are stated at the present value of the minimum lease
payments.
Depreciation and amortization of property and equipment is computed using
the straight-line method over the estimated useful lives of the related
assets as follows:
Leased modems.................... 2 years
Computers and office equipment... 3 years
Furniture and fixtures........... 5 years
Property and equipment held under capital lease are amortized
straight-line over the estimated useful life of the asset.
(g) Research and Development and Advertising
----------------------------------------------
Research and development and advertising costs are expensed as incurred.
Research and development costs amounted to $106,564, $203,590 and $
1,110,155 in 1999, 1998 and 1997, respectively. Advertising costs amount
to $109,713, $87,028 and $170,758 in 1999, 1998 and 1997, respectively.
(h) Computer Software Costs
-----------------------------
Pursuant to Statement of Financial Accounting Standards No. 86, Accounting
for the Costs of Computer Software to be Sold, Leased or Otherwise
Marketed, the Company is to capitalize certain software development costs
and production costs once technological feasibility has been achieved.
Software development costs incurred prior to achieving technological
feasibility are expensed as incurred. The Company is not able to
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<PAGE>
WYND COMMUNICATIONS CORPORATION
Notes to Financial Statements
December 31, 1999, 1998 and 1997
reasonably determine the point of technological feasibility of its
products, and accordingly, all software development costs have been
expensed as incurred.
(i) Income Taxes
------------------
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases and operating loss and tax credit carryforwards. Deferred tax
assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences
are expected to be recovered or settled. The effect on deferred tax assets
and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
(j) Stock Option Plan
-----------------------
Prior to January 1, 1996, the Company accounted for its stock option plan
in accordance with the provisions of Accounting Principles Board (APB)
Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations. As such, compensation expense would be recorded on the
date of grant only if the current market price of the underlying stock
exceeded the exercise price. On January 1, 1996, the Company adopted SFAS
No. 123, Accounting for Stock-Based Compensation, which permits entities
to recognize as expense over the vesting period the fair value of all
stock-based awards on the date of grant. Alternatively, SFAS No. 123 also
allows entities to continue to apply the provisions of APB Opinion No. 25
and provide pro forma net income disclosures for employee stock option
grants made in 1996 and future years as if the fair-value-based method
defined in SFAS No. 123 had been applied. The Company has elected to
continue to apply the provisions of APB Opinion No. 25 and provide the pro
forma disclosure provisions of SFAS No. 123.
(k) Business Segments and Related Information
-----------------------------------------------
The Company adopted the provisions of SFAS No. 131, Disclosures about
Segments of an Enterprise and Related Information (SFAS No. 131), on
January 1, 1998. SFAS No. 131 establishes standards for the way public
business enterprises are to report information about operating segments in
annual financial statements and requires enterprises to report selected
information about operating segments in interim financial reports issued
to stockholders. It also establishes standards for related disclosure
about
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<PAGE>
WYND COMMUNICATIONS CORPORATION
Notes to Financial Statements
December 31, 1999, 1998 and 1997
products and services, geographic areas and major customers. The
Company has only one operating segment.
(l) Use of Estimates
----------------------
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results
could differ from those estimates.
(2) FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying values of cash and cash equivalents, accounts receivable,
accounts payable, accrued expenses and short-term convertible debt at
December 31, 1999, 1998 and 1997 approximated their estimated fair values
because of the short maturity of these instruments. The fair value of a
financial instrument is the amount at which the instrument could be
exchanged in a current transaction between willing parties.
(3) PROPERTY AND EQUIPMENT
Property and equipment balances, recorded at cost, at December 31, 1999
and 1998 are summarized as follows:
1999 1998
--------------- ----------------
Leased modems....................... $ 160,626 $ 160,626
Computers and office equipment...... 520,620 314,078
Furniture and fixtures.............. 129,052 108,766
Leasehold improvements.............. 21,221 17,117
--------------- ----------------
831,519 600,587
Less accumulated depreciation and
amortization........................ (578,055) (454,065)
--------------- ----------------
$ 253,464 $ 146,522
=============== ================
At December 31, 1999, 1998 and 1997, the amount of furniture and equipment
under capital lease included in property and equipment was $215,699. The
related accumulated amortization of equipment under capital lease was
$130,859 and $163,030 at December 31, 1999 and 1998, respectively.
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<PAGE>
WYND COMMUNICATIONS CORPORATION
Notes to Financial Statements
December 31, 1999, 1998 and 1997
(4) CAPITAL LEASE OBLIGATIONS
Capital lease
obligations
---------------
Year ending December 31:
2000.............................................. $ 49,730
2001.............................................. 37,472
2002.............................................. 11,648
----------
Total maturities.................................. 98,850
Less amounts representing interest................ 11,004
----------
Present value of minimum lease payments........... 87,846
Less current installments of obligations under
capital leases.................................. 42,294
----------
Obligations under capital leases,
excluding current installments.................. 45,552
==========
(5) CONVERTIBLE DEBENTURES
During 1998 and 1997, the Company issued $1,650,000 of 8% convertible
debentures with principal and interest payable one year from the
anniversary date. If the Company obtained additional equity financing
prior to the maturity date, the principal and accrued interest are
automatically convertible into the class of securities issued to the
equity investors at the same price per share as paid by the equity
investors.
In October 1998, the principal of $1,650,000 and accrued interest were
converted into 125,000 shares of the Company's common stock in conjunction
with the recapitalization. A number of debt holders also held equity
interest in the Company. The Company treated the exchange of debt for
common stock as a capital transaction for these debt holders. For debt
holders who did not also own equity interests in the Company, the Company
treated the exchange as a troubled debt restructuring and recorded an
extraordinary gain of $85,623, net of taxes of $57,100, as the securities
accepted by the debt holders were different from the nature and amount
required by the original conversion terms.
In September 1998, the Company issued $200,001 of 8% convertible
debentures which are convertible into equity securities of the Company
prior to November 13, 1998. In October 1998, the debentures were converted
into 20,241 shares of redeemable Series C preferred stock pursuant to
their original conversion terms.
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<PAGE>
WYND COMMUNICATIONS CORPORATION
Notes to Financial Statements
December 31, 1999, 1998 and 1997
For the years ended December 31, 1998 and 1997, interest expense relating
to convertible debentures was $108,848 and $22,832, respectively.
(6) REDEEMABLE PREFERRED STOCK
As of December 31, 1999, the Company has 906,384 shares of no par value
preferred stock authorized, of which 516,384 have been designated as
Series C. As of December 31, 1998, the Company had 750,000 shares of no
par value preferred stock authorized, of which 360,000 have been
designated as Series C.
(a) Redeemable Series C Convertible Preferred Stock
-----------------------------------------------------
During 1999, the Company sold 140,000 shares of redeemable Series C
convertible preferred stock in exchange for cash of $1,397,967, net of
issuance costs of $2,033. In December 1999, the Company received deposits
of $163,840 related to the issuance of the 11,636 shares of redeemable
Series C convertible preferred stock at $20 per share. The deposits of
$163,840 were recorded as redeemable Series C convertible preferred stock
at December 31, 1999. In January 2000, the Company received an additional
$68,880 and issued 11,636 shares of redeemable Series C convertible
preferred stock. In addition, in January 2000, the Company received an
additional $567,040 in exchange for 28,352 shares of redeemable Series C
convertible preferred stock. In October 1998, the Company sold 110,000
shares of redeemable Series C convertible preferred stock for $1,044,705,
net of issuance costs of $55,295.
Each share of redeemable Series C convertible preferred stock is
convertible into one share of common stock at the option of the holder.
Additionally, each share of redeemable Series C convertible preferred
stock shall be automatically converted into one common share upon the
occurrence of a public offering of common shares at an offering price of
not less than $10.00 per share and net proceeds of not less than
$7,000,000. Upon liquidation, redeemable Series C convertible preferred
stockholders are entitled to receive a preferential amount equal to $10.00
per share plus any accrued but unpaid dividends before any distributions
may be made to common stockholders. As of December 31, 1999, no dividends
had been declared to the Series C preferred stockholders.
At any time after October 15, 2003, redeemable Series C convertible
preferred stockholders may request redemption of the Series C redeemable
preferred stock at 125% of the preferential amount ($10.00 plus accrued
and unpaid dividends) of the preferred stock, currently, $12.50 per share.
Thus, the Company has been periodically accreting
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<PAGE>
WYND COMMUNICATIONS CORPORATION
Notes to Financial Statements
December 31, 1999, 1998 and 1997
the security to its redemption amount using the interest method. As a
result, for the year ended December 31, 1999, the Company increased the
fair value of the Series C redeemable convertible preferred stock by
$114,481.
(b) Redeemable Series B Cumulative Convertible Preferred Stock
----------------------------------------------------------------
In conjunction with the recapitalization in October 1998, the Company
repurchased the outstanding Series A and Series B preferred stock in
exchange for a nominal fee and retired such securities. As a result, the
Company recorded a credit to common stock of $4,778,577.
Each share of Series B cumulative convertible preferred stock was
convertible into one share of common stock at the option of the holder.
Additionally, each share of Series B convertible preferred stock shall be
automatically converted into one common share upon the occurrence of any
of the following events:
o Public offering of common shares at an offering price of not
less than $11.40 per share and net proceeds of not less than
$12,000,000
o Merger whereby the Company is not the surviving entity and in
which each share of Series B convertible preferred stock
receives a consideration of not less than $11.40 per share
o Sale, lease or other conveyance of all or substantially all of
the property of the Company and in which each share of Series
B convertible preferred stock receives a consideration of not
less than $11.40 per share.
Should any of the above events not take place prior to May 1, 2002, the
Series B cumulative convertible preferred stock is redeemable in whole or
in part at the option of the holders of a majority of the outstanding
shares of Series B cumulative convertible preferred stock at a redemption
price of $.38 per share plus the accrued unpaid dividends.
Upon liquidation, Series B cumulative convertible preferred stockholders
are entitled to receive a preferential amount equal to $.38 per share plus
any accrued but unpaid dividends before any distributions may be made to
common stockholders. A sale or conveyance of all or substantially all of
the property of the Company, or a merger whereby the Company is not the
surviving entity, will be treated as a liquidation unless each share of
Series B cumulative convertible preferred stock receives a consideration
of not less than $11.40 per share.
- 14 -
<PAGE>
WYND COMMUNICATIONS CORPORATION
Notes to Financial Statements
December 31, 1999, 1998 and 1997
The Series B cumulative convertible preferred stock provides the
stockholders with cumulative dividends to be accrued at a rate of $.38 per
share per annum, payable in either cash or stock at the discretion of the
Company. Dividends are to be paid annually within five days of the
completion of the Company's annual audited financial statements for the
preceding fiscal year. At December 31, 1997, the Company had cumulative
dividends in arrears aggregating $468,992. During 1998, the Company
accrued dividends of $400,320. In October 1998, combined cumulative
dividend in arrears aggregating $869,312 was forgiven by the Series B
convertible preferred stockholders.
In conjunction with the recapitalization, the Company repurchased the
outstanding Series A and Series B preferred stock in exchange for a
nominal fee and retired such securities. As a result, the Company recorded
a credit to common stock of $4,778,577.
(7) WARRANTS
During 1998 and 1997, the Company issued convertible debentures with
detachable stock purchase warrants to acquire 65,131 shares of the
Company's equity securities at an exercise price of $.01 per share. The
warrants are exercisable within one year from the date of issuance. The
fair value of the warrants on the dates of issuance was estimated to be
$32,566 using the minimum value option-pricing model with the following
assumptions: expected dividend yield of 0%, risk-free interest rate of 5%
and an expected life of approximately five years. The proceeds of the
convertible debentures was allocated to the convertible debentures and
paid-in-capital based on the relative fair values resulting in a discount
of $31,935. The Company recorded interest expense of $26,391 and $5,544
for the years ended December 31, 1998 and 1997, respectively. These
warrants were subsequently canceled in October 1998 in conjunction with
the recapitalization of the Company.
(8) STOCK OPTIONS
In November 1996, the Board of Directors adopted the 1996 Stock Incentive
Plan (the 1996 Plan) which reserved 676,590 shares of the Company's common
stock for issuance to officers and key employees. The 1996 Plan expires in
November 2006. Options granted under the 1996 Plan shall be at amounts not
less than 85% of the fair market value of the Company's common stock at
the date of grant and become exercisable at periods determined by the
Board of Directors but not to exceed ten years.
During 1998 and 1997, 25,000 and 38,000 stock options were granted under
the 1996 Plan, respectively. At December 31, 1997, there were 263,740
additional shares available
- 15 -
<PAGE>
WYND COMMUNICATIONS CORPORATION
Notes to Financial Statements
December 31, 1999, 1998 and 1997
for grant under the 1996 Plan. At December 31, 1998, there were zero
shares available for grant as the 1996 Plan and related stock options were
canceled in conjunction with the recapitalization of the Company. The per
share fair value of stock options granted during 1998 and 1997 under the
1996 Plan was $.128 on the date of grant using the minimum value
option-pricing model with the following assumptions: expected dividend
yield of 0%, risk-free interest rate of 6% and an expected life of
approximately five years.
In October 1998, the Board of Directors adopted the 1998 Stock Incentive
Plan (the 1998 Plan) which reserved 42,500 shares of the Company's common
stock for issuance to officers, key employees and consultants. On December
31, 1998, 21,866 stock options were granted under the 1998 Plan at an
exercise price equal to the Company's stock on date of grant. At December
31, 1998, there were 20,634 additional shares available for grant under
the 1998 Plan. On December 31, 1999, 5,625 stock options were granted
under the 1998 Plan at an exercise price equal to the Company's stock on
date of grant. At December 31, 1999, there were 15,009 additional shares
available for grant under the 1998 Plan. The per share fair value of stock
options granted under the 1998 Plan was $2.38 on the date of grant using
the minimum value option-pricing model with the following assumptions:
expected dividend yield of 0%, risk-free interest rate of 5.5% and an
expected life of approximately five years.
The Company applies APB Opinion No. 25 in accounting for its Plans, and
accordingly, no compensation cost has been recognized for its stock
options in the financial statements. Had the Company determined
compensation cost based on the fair value at the grant date for its stock
options under SFAS No. 123, the Company's net loss would have been
increased to the pro forma amounts indicated below:
1999 1998 1997
--------------- --------------- --------------
Net loss - as reported.. $ (1,897,025) $ (1,261,849) $ (3,192,938)
Net loss - pro forma.... (1,910,035) (1,261,849) (3,205,103)
=============== =============== ==============
- 16 -
<PAGE>
WYND COMMUNICATIONS CORPORATION
Notes to Financial Statements
December 31, 1999, 1998 and 1997
The following is a summary of stock option activity:
Number of Weighted-average
shares exercise price
--------------- ---------------------
Balance at December 31, 1996... 406,650 $ .461
Granted........................ 38,000 .50
Exercised...................... (10,600) .004
--------------- ---------------------
Balance at December 31, 1997... 434,050 .476
Granted........................ 49,366 4.71
Cancelled...................... (461,550) .477
--------------- ---------------------
Balance at December 31, 1998... 21,866 10.00
Granted........................ 5,625 10.00
Cancelled...................... -- --
--------------- ---------------------
Balance at December 31, 1999... 27,491 10.00
=============== =====================
At December 31, 1999, the exercise price and average remaining contractual
life of outstanding options was $10 and 10 years, respectively.
At December 31, 1999, there were 5,402 options exercisable under the 1998
Plan.
(9) OPERATING LEASES
In December 1999, the Company extended the lease for its main office space
for one year through December 14, 2000 with a monthly payment of $5,124 or
$61,488 through the end of the lease. All other operating leases are
month-to-month.
Rent expense amounted to $61,001, $60,197 and $47,921 during the years
ended December 31, 1999, 1998 and 1997, respectively.
(10) INCOME TAXES
The provision for income tax expense (benefit) from continuing operations
for the years ended December 31, 1999, 1998 and 1997 are:
1999 1998 1997
---------- ---------- ----------
Current federal income taxes.... $ -- $(48,525) $ --
Current state income taxes.......... 800 (7,775) 800
---------- ---------- ----------
$ 800 $(56,300) $ 800
========== ========== ==========
- 17 -
<PAGE>
WYND COMMUNICATIONS CORPORATION
Notes to Financial Statements
December 31, 1999, 1998 and 1997
The provisions for income tax expense from extraordinary gain for the
years ended December 31, 1999, 1998 and 1997 are:
1999 1998 1997
---------- ---------- ----------
Current federal income taxes.... $ -- $ 48,525 $ --
Current state income taxes.......... -- 8,575 --
---------- ---------- ----------
$ -- $ 57,100 $ --
========== ========== ==========
Actual income tax expense attributable to the loss before extraordinary
gain differs from the "expected" tax expense (computed by applying the
U.S. federal corporate rate of 34% to the earnings before extraordinary
gain) as follows:
1999 1998 1997
------------ ----------- ------------
Computed "expected"
income tax benefit.... $ (644,717) $ (477,282) $ (1,060,326)
State income taxes,
net of federal
income tax expense.... 528 528 528
Nondeductible expenses.. 6,120 6,329 23,067
General business
credits............... (12,000) (12,336) (68,100)
Impact of conversion
of convertible debt
treated as an equity
transaction........... -- 138,216 --
Valuation allowance..... 650,869 288,245 1,105,631
Tax expense....... $ 800 $ (56,300) $ 800
============ =========== ============
- 18 -
<PAGE>
WYND COMMUNICATIONS CORPORATION
Notes to Financial Statements
December 31, 1999, 1998 and 1997
The tax effects of temporary differences that give rise to significant
portions of the deferred assets as of December 31, 1999, 1998 and 1997 are
as follows:
1999 1998 1997
----------- ------------ -------------
Deferred tax assets:
Net operating loss....... $ 3,172,132 $ 2,465,720 $ 2,143,799
General business credits. 125,104 113,189 131,523
Depreciation............. 65,863 62,202 59,212
Other.................... 68,189 77,267 84,580
----------- ------------ -------------
3,431,288 2,718,378 2,419,114
----------- ------------ -------------
Deferred tax liabilities... 29,622 22,217 14,811
Amortization............... 1,534 1,534 2,186
----------- ------------ -------------
31,156 23,751 16,997
----------- ------------ -------------
Net deferred tax
assets.............. 3,400,132 2,694,627 2,402,117
Valuation allowance........ (3,400,132) (2,694,627) (2,402,117)
----------- ------------ -------------
$ -- $ -- $ --
=========== ============ =============
Management has determined that it is more likely than not that any
potential benefit from these deferred taxes will not be realized through
anticipated profitable operations. Such potential benefits have been fully
reserved for in the accompanying balance sheet. As of December 31, 1999,
the Company has $8.2 million in federal net operating loss carryforwards
expiring 2009 through 2019, state net operating loss carryforwards of $4.0
million expiring 1999 through 2004 and federal and state business credits
in excess of $100,000 expiring 2001 through 2019.
- 19 -
<PAGE>
Wynd Communications Corporation
Condensed Balance Sheet
June 27, 2000
-------------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents................ $ 81,617
Accounts receivable, net................. 238,785
Merchandise inventories.................. 86,719
Prepaid expenses and other............... 51,286
------------
Total current assets....................... 458,407
Property, equipment and leasehold
improvements, net........................ 321,718
Other assets............................... 8,634
------------
$ 788,759
============
Liabilities and stockholders deficit
Current liabilities:
Accounts payable......................... $ 908,919
Accrued expenses......................... 428,243
Note payable to GoAmerica................ 518,116
Capital lease obligations................ 68,107
------------
Total current liabilities.................. 1,923,385
Other long term liabilities................ 126,127
Commitments and contingencies
Stockholders' equity:
Common stock, no par value, 2,000,000
shares authorized, and 414,988 shares
issued and outstanding at June 27, 2000.. 10,072,981
Accumulated deficit...................... (11,333,734)
------------
Total stockholders' deficit................ (1,260,753)
------------
$ 788,759
============
See accompanying notes to condensed financal statements.
- 20 -
<PAGE>
Wynd Communications Corporation
Condensed Statement of Operations
For the period Six Months
from January 1 to Ended June
to June 27, 2000 30, 1999
-------------- ------------
(Unaudited) (Unaudited)
Revenues:
Subscriber................................ $ 1,186,740 $ 568,172
Equipment................................. 500,757 395,800
Other..................................... 2,410 --
-------------- ------------
1,689,907 963,972
Costs and expenses:
Cost of subscriber revenue................ 540,357 255,155
Cost of equipment sales................... 647,887 377,837
Sales and marketing....................... 971,035 535,208
Research and development.................. 129,950 19,390
General and administrative................ 978,672 469,649
Depreciation and amortization............. 73,136 61,071
-------------- ------------
3,341,037 1,718,310
-------------- ------------
Loss from operations........................ (1,651,130) (754,338)
Other income/expenses:
Other expenses............................ (10,344) (28,824)
-------------- ------------
Total other income........................ (10,344) (28,824)
Loss before income taxes.................... (1,661,474) (783,162)
Income taxes................................ (800) --
-------------- ------------
Net income.................................. $ (1,662,274) $ (783,162)
See accompanying notes to condensed financial statements.
- 21 -
<PAGE>
<TABLE>
<CAPTION>
Wynd Communications Corporation
Condensed Statements of Cash Flows
For the Period Six Months
from January 1 Ended June 30,
to June 27, 1999
2000
-------------- -----------
(Unaudited) (Unaudited)
<S> <C> <C>
Operating activities
Net cash used in operating activities ............ $(1,317,497) $ (680,675)
Investing activities
Purchase of property,
equipment and leasehold improvements............ (3,018) (15,917)
----------- -----------
Net cash used in investing activities ............ (3,018) (15,917)
Financing activities
Proceeds from sale of preferred stock ............ 635,918 1,397,960
Proceeds from issuance of notes payable
to GoAmerica.................................... 518,116 --
Payments made on capital lease obligations ....... (31,984) (26,255)
----------- -----------
Net cash provided by financing activities ........ 1,122,050 1,371,705
----------- -----------
Increase in cash and cash equivalents ............ (198,465) 675,113
Cash and cash equivalents at beginning of period . 280,082 472,641
----------- -----------
Cash and cash equivalents at end of period ....... $ 81,617 $ 1,147,754
=========== ===========
See accompanying notes to condensed financial statements.
- 22 -
</TABLE>
<PAGE>
Wynd Communications Corporation
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 27, 2000
(Unaudited)
(1) BASIS OF PRESENTATION:
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and include the results of
Wynd Communications Corporation (the "Company"). Accordingly, certain
information and footnote disclosures required in financial statements
prepared in accordance with generally accepted accounting principles have
been condensed or omitted. In the opinion of the Company's management, the
accompanying unaudited financial statements contain all adjustments
(consisting only of normal recurring adjustments) which the Company
considers necessary for the fair presentation of the Company's financial
position as of June 27, 2000 and the results of its operations and its
cash flows for the period from January 1, 2000 to June 27, 2000 and the
six month period ended June 30, 1999. Results for the interim period are
not necessarily indicative of results that may be expected for the entire
year.
(2) REDEEMABLE SERIES C CONVERTIBLE PREFERRED STOCK:
In January 2000, the Company received $68,880 and issued 11,636 shares of
redeemable Series C convertible preferred stock. In addition, in January
2000, the Company received an additional $567,040 in exchange for 28,352
shares of redeemable Series C convertible preferred stock.
Each share of redeemable Series C convertible preferred stock was
convertible into one share of common stock at the option of the holder.
Additionally, each share of redeemable Series C convertible preferred
stock would have been automatically converted into one common share upon
the occurrence of a public offering of common shares at an offering price
of not less than $10.00 per share and net proceeds of not less than
$7,000,000. Upon liquidation, redeemable Series C convertible preferred
stockholders were entitled to receive a preferential amount equal to
$10.00 per share plus any accrued but unpaid dividends before any
distributions may be made to common stockholders. As of June 27, 2000, no
dividends had been declared to the stockholders and all of the 289,998
outstanding shares of redeemable Series C convertible preferred were
converted into common shares.
(3) SALE TO GOAMERICA, INC.:
On June 28, 2000, all of the issued and outstanding shares of the Company
were sold to GoAmerica, Inc. ("GoAmerica") in exchange for 3,964,975
shares of GoAmerica common stock.
- 23 -
<PAGE>
b) Pro Forma Financial Information (unaudited).
GoAmerica, Inc.
Introduction to the Unaudited
Pro Forma Consolidated Financial Statements
The following unaudited pro forma consolidated statements of operations
give effect to the acquisition by GoAmerica, Inc. (the "Company") of Wynd
Communications Corporation ("Wynd") on June 28, 2000. The December 31, 1999
financial statements presented below were derived from: (a) the audited
financial statements for the Company for the years ended December 31, 1999; (b)
the unaudited financial statements of the Company for the six month period ended
June 30, 2000; (c) the audited financial statements of Wynd for the years ended
December 31, 1999 and (d) the unaudited financial statements of Wynd for the
period from January 1, 2000 to June 27, 2000. The unaudited pro forma
consolidated financial statements give effect to the acquisition as if it
occurred on January 1, 1999.
The unaudited pro forma consolidated financial statements, including the
notes thereto, are qualified in their entirety by reference to, and should be
read in conjunction with the Company's audited financial statements for the
years ended December 31, 1999, which were included as part of the Company's
Registration Statement on Form S-1 (Registration No. 333-94801), as declared
effective by the Securities and Exchange Commission (the "Commission") on April
6, 2000 and the Company's unaudited financial statements as of and for the six
months ended June 30, 2000, which were included in the Company's Quarterly
Report on Form 10-Q filed with the Commission. None of the pro forma
consolidated financial statements included herein purport to be indicative of
the Company's results of operations that would have occurred had the transaction
been completed as of or at the beginning of the periods presented, nor do such
statements purport to indicate the Company's results of operations at any future
date or for any future period.
The pro forma adjustments are based upon a preliminary valuation of Wynd's
assets and liabilities. The final allocation of the purchase price will be
determined based upon a determination of the fair value of Wynd's tangible and
identifiable intangible assets acquired and liabilities assumed. The actual
results of operations will differ, perhaps significantly from the unaudited pro
forma amounts reflected because of a variety of factors, including access to
additional information and changes in value not currently identified.
- 24 -
<PAGE>
<TABLE>
<CAPTION>
GoAmerica, Inc.
Unaudited Pro Forma Consolidated Statements of Operations
For the year ended December 31, 1999
---------------------------
Historical
---------------------------
Pro Forma Pro Forma
Company Wynd Adjustments(2) Consolidated
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Revenues:
Subscriber ......................... $ 1,182,695 $ 1,401,858 $ -- $ 2,584,553
Equipment .......................... 1,341,356 785,007 -- 2,126,363
Other .............................. 206,496 -- -- 206,496
------------ ------------ ------------ ------------
2,730,547 2,186,865 -- 4,917,412
Costs and expenses:
Cost of subscriber revenue ......... 4,051,182 670,751 -- 4,721,933
Cost of equipment sales ............ 1,648,160 793,970 -- 2,442,130
Sales and marketing ................ 3,283,021 1,243,000 -- 4,526,021
General and administrative ......... 4,809,232 1,314,195 -- 6,123,427
Depreciation and amortization ...... 275,067 125,376 (16,667)(c) 383,776
Amortization of intangibles ........ -- -- 11,255,112(a) 11,255,112
Settlement costs ................... 297,310 -- -- 297,310
------------ ------------ ------------ ------------
14,363,972 4,147,292 11,238,445 29,749,709
------------ ------------ ------------ ------------
Loss from operations .................. (11,633,425) (1,960,427) (11,238,445) (24,832,297)
Other income (expense):
Interest income, net ............... 165,137 17,202 -- 182,339
Other income (expense) ............. -- 47,000 (50,000)(b) (3,000)
------------ ------------ ------------ ------------
Total other income (expense) .. 165,137 64,202 (50,000) 179,339
------------ ------------ ------------ ------------
Loss before income taxes and
extraordinary items ................ (11,468,288) (1,896,225) (11,288,445) (24,652,958)
Income tax (expense) benefit .. -- (800) -- (800)
------------ ------------ ------------ ------------
Net loss .............................. (11,468,288) $ (1,897,025) $(11,288,445) (24,653,758)
============ ============
Beneficial conversion feature and
accretion of redemption value of
mandatorily redeemable convertible
preferred stock .................... (10,463,472) (10,463,472)
------------ ------------
Net loss applicable to common
stockholders ....................... $(21,931,760) $(35,117,230)
============ ============
Earnings per common share
Basic .............................. $ (1.02) $ (1.40)
Diluted ............................ $ (1.02) $ (1.40)
Weighted average number of common shares
Basic .............................. 21,590,259 3,568,477(d) 25,158,736
Diluted ............................ 22,025,283 3,964,975(e) 25,990,258
- 25 -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GoAmerica, Inc.
Unaudited Pro Forma Consollidated Statements of Operations
For the six months ended June 30, 2000
---------------------------
Historical
---------------------------
Pro Forma Pro Forma
Company Wynd Adjustments(2) Consolidated
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Subscriber ......................... $ 2,118,324 $ 1,186,740 $ -- $ 3,305,064
Equipment .......................... 1,368,527 500,757 -- 1,869,284
Other .............................. 8,646 2,409 -- 11,055
------------ ------------ ------------ ------------
3,495,497 1,689,906 -- 5,185,403
Costs and expenses:
Cost of subscriber revenue ......... 2,466,398 540,357 -- 3,006,755
Cost of equipment sales ............ 1,893,195 647,887 -- 2,541,082
Sales and marketing ................ 13,331,886 971,035 -- 14,302,921
General and administrative ......... 14,910,606 1,108,622 -- 16,019,228
Depreciation and amortization ...... 235,284 73,136 (25,000)(c) 283,420
Amortization of intangibles ........ 87,528 -- 5,565,031(a) 5,652,559
------------ ------------ ------------ ------------
32,924,897 3,341,037 5,540,031 41,805,965
------------ ------------ ------------ ------------
Loss from operations .................. (29,429,400) (1,651,131) (5,540,031) (36,620,562)
Other income (expense):
Interest income, net ............... 2,511,039 -- -- 2,511,039
Other income (expense) ............. -- (10,344) -- (10,344)
------------ ------------ ------------ ------------
Total other income (expense) .. 2,511,039 (10,344) -- 2,500,695
------------ ------------ ------------ ------------
Loss before income taxes .............. (26,918,361) (1,661,475) (5,540,031) (34,119,867)
Income tax (expense) benefit .. -- (800) -- (800)
------------ ------------ ------------ ------------
Net loss .............................. (26,918,361) $ (1,662,275) $ (5,540,031) (34,120,667)
============ ============
Beneficial conversion feature and
accretion of redemption value of
mandatorily redeemable convertible
preferred stock .................... (30,783,931) (30,783,931)
------------ ------------
Net loss applicable to common
stockholders ....................... $(57,702,292) $(64,904,598)
============ ============
Earnings per common share
Basic .............................. $ (1.65) $ (1.69)
Diluted ............................ $ (1.65) $ (1.69)
Weighted average number of common shares
Basic .............................. 34,916,673 3,564,120(d) 38,480,793
Diluted ............................ 34,933,114 3,964,975(e) 38,898,089
- 26 -
</TABLE>
<PAGE>
GoAmerica, Inc.
Notes to Unaudited Pro Forma Consolidated Financial Statements
1. ACQUISITION
On June 28, 2000, GoAmerica, Inc. (the "Company") acquired Wynd
Communications Corporation ("Wynd"), a privately owned company. The total
purchase price of approximately $43 million included the fair value of the
3,964,975 shares of the Company's Common Stock issued to the Wynd shareholders
and the fair value of options to purchase 477,722 shares of the Company's Common
Stock issued upon conversion of options to acquire Wynd shares. Of the Common
Stock issued 396,498 shares will be held in escrow for a period of one year.
The acquisition has been accounted for by the purchase method of
accounting and, accordingly, the purchase price has been allocated, on a
preliminary basis, to the assets acquired and liabilities assumed based on
estimates of fair market values at the date of acquisition. The cost of the
acquisition exceeded the fair value of the acquired net assets by approximately
$45 million which has been recorded as goodwill and is being amortized on a
straight line basis over four years. The pro forma adjustments are based upon a
preliminary valuation of Wynd's assets and liabilities. The final allocation of
the purchase price will be determined based upon a determination of the fair
value of Wynd's tangible and identifiable intangible assets acquired and
liabilities assumed.
2. PRO FORMA ADJUSTMENTS
For purposes of determining the pro forma effect of the acquisition of
Wynd on the Company's statements of operations for the year ended December 31,
1999 and the six months ended June 30, 2000, the following adjustments have been
made:
(a) Reflects an increase in amortization expense attributable to
goodwill recorded as a result of the Wynd acquisition.
(b) Reflects the elimination of a gain recognized on the sale of certain
subscribers to the Company by Wynd.
(c) Reflects the elimination of amortization expense recorded by the
Company which relates to the transaction described in (b) above.
(d) Reflects an increase in weighted average shares outstanding that
were issued in connection with the Wynd acquisition, excluding
shares held in escrow.
(e) Reflects an increase in weighted average shares outstanding that
were issued in connection with the Wynd acquisition.
- 27 -
<PAGE>
GoAmerica, Inc.
Notes to Unaudited Pro Forma Consolidated Financial Statements
3. RECLASSIFICATIONS
Certain amounts related to Wynd's results of operations have been
reclassified to conform with pro forma presentation.
- 28 -
<PAGE>
(c) Exhibits.
2.1+ Merger Agreement and Plan of Reorganization, dated as of
June 13, 2000, by and among GoAmerica, Inc., GoAmerica
Acquisition I Corp., Wynd Communications Corporation and, as
to certain sections, the existing shareholders of Wynd
Communications Corporation.*
10.1+ Escrow Agreement, dated as of June 28, 2000, by and among
GoAmerica, Inc., the existing shareholders of Wynd
Communications Corporation and American Stock Transfer &
Trust Company.
10.2+ Registration Rights Agreement, dated as of June 28, 2000, by
and between GoAmerica, Inc. and the existing shareholders of
Wynd Communications Corporation.
99.1+ Press Release, dated June 13, 2000, regarding execution of
the Merger Agreement and Plan of Reorganization.
99.2+ Press Release, dated June 29, 2000, regarding the
consummation of the acquisition.
+ Previously filed.
* The schedules or exhibits to this document are not being filed herewith
because we believe that the information contained therein is not material. Upon
request therefor, we agree to furnish supplementally a copy of any schedule or
exhibit to the Securities and Exchange Commission.
- 29 -
<PAGE>
SIGNATURE
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.
GOAMERICA, INC.
By: /s/ Aaron Dobrinsky
-------------------------------
Name: Aaron Dobrinsky
Title: President and Chief Executive Officer
September 11, 2000
