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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
November 1, 1999
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Date of Report (Date of earliest event reported)
SEDONA CORPORATION
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(Exact name of registrant as specified in its charter)
Pennsylvania 000-15864 95-4091769
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(State or other (Commission (IRS Employer
jurisdiction of File No.) Identification
Incorporation No.)
649 North Lewis Road
Limerick, Pennsylvania 19468
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
610-495-3003
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Not applicable
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Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
As previously disclosed in a Current Report on Form 8-K filed October
4, 1999, pursuant to an Asset Purchase Agreement dated September 17, 1999, the
Registrant agreed to sell substantially all of the assets of its Tangent
Imaging Systems unit to Colortrac, Inc., a Maryland Corporation.
As a result of this transaction, as well as the previous sale of its
Technology Resource Centers, substantially all of the Registrant's hardware-
based imaging and scanner operations, as well as conversion services operation,
which together constituted substantially all of the Registrant's revenue
generating operations have been sold. These transactions will enable the
Registrant to focus its resources on the development of its Internet-based
business intelligence software according to its core growth strategy.
Attached as Item 7 (b) are the Pro Forma Consolidated Balance Sheets
as of June 30, 1999 and December 31, 1998, the Pro Forma Consolidated
Statements of operations for the six month period ended June 30, 1999 and the
year ended December 31, 1998 and, the Pro Forma Statements of Cash Flows for the
six month period ended June 30, 1999 and the year ended December 31, 1998 , and
the notes to the Pro Forma Consolidated Financial Statements, respectively.
For all periods presented, the proforma financial statements attached reflect
the operating results of the Tangent Imaging Systems and Technology Resource
Centers as discontinued operations.
(2)
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Pro Forma Financial Information
(i) Unaudited Pro Forma Consolidated Balance Sheets as of June 30,
30, 1999 and December 31, 1998.
(ii) Unaudited Pro Forma Consolidated Statements of Operations for
for the six months ended June 30, 1999 and the year ended
December 31, 1998
(iii) Unaudited Pro Forma Statements of Cash Flows for the six months
ended June 30, 1999 and the year ended December 31, 1998
(iv) Notes to the Pro Forma Consolidated Financial Statements
(c) Exhibits
2* Asset Purchase Agreement between Colortrac, Inc. and Sedona
Corporation, dated September 17, 1999
99.1* Press Release dated July 16, 1999
99.2* Press Release dated September 2, 1999
99.3* Press Release dated September 20, 1999
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* Previously filed as part of the Company's Current Report on Form 8-K, filed
on October 4, 1999 (File No.000-15864), and omitted pursuant to General
Instruction B.3 of Form 8-K.
(3)
<PAGE>
SEDONA CORPORATION AND SUBSIDIARIES
PROFORMA CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Per Share Data)
(Unaudited)
<TABLE>
<S> <C> <C>
June 30, December 31,
1999 1998
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Assets
Cash $1,011 $798
Accounts and notes receivable 2 5
Prepaid expenses and other current assets 130 139
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Total current assets 1,143 942
Property and equipment, net of accumulated depreciation
and amortization 367 454
Software development costs, net and other assets 465 325
Net assets of discontinued operations 1,773 2,715
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Total assets $3,748 $4,436
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Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued expenses $421 $432
Dividends payable 249 259
Deferred revenue 70 2
Current maturities of long-term debt 44 71
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Total current liabilities 784 764
Long-term debt, less current maturities 18 60
Deferred revenue and other 81 155
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Total long-term liabilities 99 215
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Total liabilities 883 979
Stockholders' equity
Class A convertible stock
Authorized Shares - 1,000,000
Series A, par value $2.00,
Issued and outstanding - 500,000 shares 1,000 1,000
Series B, par value $2.00,
Issued and outstanding - 1,000 and -0- 1,000 -
in 1999 and 1998, respectively
Series E, par value $1,000,
Issued and outstanding -0- and 4,347 2,268 4,347
in 1999 and 1998, respectively
Series F, par value $1,000,
Issued and outstanding - 1,000 and -0- 1,000 -
in 1999 and 1998, respectively
Common stock, par value $.001
Authorized Shares - 50,000,000
Issued and outstanding shares - 21,535,348 and 22 20
19,927,789 in 1999 and 1998, respectively
Additional paid-in-capital 27,878 25,396
Notes receivable, related parties (53) (53)
Accumulated deficit (30,250) (27,253)
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Total shareholders' equity 2,865 3,457
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Total liabilities and shareholders' equity $3,748 $4,436
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</TABLE>
(4)
<PAGE>
SEDONA CORPORATION AND SUBSIDIARIES
PROFORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Share and Per Share Data)
(Unaudited)
<TABLE>
<S> <C> <C>
Six Months Year
Ended Ended
June 30, December 31,
1999 1998
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Revenues:
Sales $198 $15
License and royalty fees - -
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Total revenues 198 15
Cost of goods sold 117 386
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Gross profit 81 (371)
Expenses
General and administrative 861 2,447
Sales and marketing 357 881
Research and development 135 239
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Total operating expenses 1,353 3,567
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(1,272) (3,938)
Other income (expense)
Interest income 34 122
Interest expense (21) (53)
Other - (9)
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Total other income (expense) 13 60
Loss from continuing operations, before (1,259) (3,878)
provision for income taxes
Income taxes - -
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Loss from continuing operations (1,259) (3,878)
Discontinued operations
Loss from operations of discontinued
Tangent Imaging Systems and
Technology Resource Centers,
less income taxes (1,538) (1,634)
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Net loss (2,797) (5,512)
Preferred stock dividends (200) (419)
Preferred stock issuance charges - (1,173)
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Net loss applicable to common stockholders ($2,997) ($7,104)
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Basic and diluted net loss from continuing $ (0.07) $ (0.28)
operations applicable to common shares
Basic and diluted net loss from discontinued
operations applicable to common shares $ (0.07) $ (0.08)
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$ (0.14) $ (0.36)
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Basic and diluted weighted average common
shares outstanding 20,827,515 19,497,493
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</TABLE>
(5)
<PAGE>
SEDONA CORPORATION AND SUBSIDIARIES
PROFORMA CONSOLDATED STATEMENTS OF CASH FLOW
(In Thousands, except share and per share data)
(Unaudited)
<TABLE>
<S> <C> <C>
Six Months Year
Ended Ended
June 30, December 31,
1999 1998
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Operating Activities
Net Loss ($1,259) ($3,878)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization 65 176
Increase inventory reserves - 297
Non-cash consulting expense - 149
Increase accounts receivable reserves - -
Losses on accounts receivable - 1
Disposition of property and equipment, net - 11
Changes in operating assets & liabilities
Accounts receivable 80 4
Inventories - (197)
Prepaid expenses and other current assets 9 127
Other non current assets 102 (2)
Accounts payable and accrued expenses (50) 139
Other 67 153
Discontinued operations (612) (2,215)
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Net cash used in operating activities (1,598) (5,235)
Investing activities
Increase in software development costs (224) (333)
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Net cash used in investing activities (224) (333)
Financing activities
Payment of preferred stock dividends (71) (135)
Repayments of notes receivable, related parties - 29
Changes in long-term obligations, net (161) (63)
Proceeds from issuance of preferred stock, net 1,925 5,000
Proceeds from exercise of common stock
warrants/options 341 225
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Net cash provided by financing activities 2,034 5,056
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Net increase (decrease) in cash and cash equivalents 213 (512)
Cash and cash equivalents, at beginning of year 798 1,310
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Cash and cash equivalents, at end of period $1,011 $798
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</TABLE>
(6)
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NOTE 1 NATURE OF THE BUSINESS
Sedona Corporation (the "Company") develops, markets and supports enterprise
scale knowledge management software which provides non-technical users with the
ability to intuitively access, query, visualize and analyze information critical
to making optimal business decisions.
During July, 1999, the Company's Board of Directors decided to sell the assets
of the remaining non strategic businesses of the Company and targeted for sale
the assets of its Tangent Imaging Systems. On September 17, 1999 the sale of
Tangent Imaging Systems to Colortrac, Inc. was completed. In addition, on July
15, 1999 the sale of substantially all the assets of Technology Resource Centers
division was completed.
With the completion of these two sales, the Company is now wholly focused on the
development of its Internet-based business intelligence software products.
NOTE 2 DISCONTINUED OPERATIONS
Revenues from the discontinued operations were $6.2 million for the year ended
December 31, 1998 and were $1.5 million for the six months ended June 30, 1999.
Revenues from discontinued operations represented substantially all of the
revenues of the Company. No tax benefit related to discontinued operations was
recognized for the year ended December 31, 1998 or for the six months ended June
30, 1999 as realization of such benefits is not assured. The Company received
$105,000 in cash and the assumption of $61,000 in liabilities by the buyer in
the sale of Tangent Imaging Systems. Also in connection with this transaction,
the Company estimates $954,000 in additional charges and reserves related to the
sale of Tangent Imaging Systems will be required. Further, the Company may
receive additional funds related to the future sales of products and technology
in connection with this transaction. The receipt of cash or estimates of
additional charges or revenues in connection with this transaction are not
included in the pro formas.
(7)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this Report to be signed on its behalf
by the undersigned thereuntoduly authorized.
SEDONA CORPORATION
Dated: November 1, 1999 By: /s/ WILLIAM K. WILLIAMS
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William K. Williams
Vice President and Chief
Financial and Accounting Officer
(8)
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