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Exhibit 99.1
SEDONA Corporation
UNUADITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial statements give
effect to the acquisition by SEDONA Corporation of certain assets and
liabilities of Acxiom Corporation's Customer Management Information Systems
business unit, in a transaction accounted for as a purchase business combination
under APB 16, "Business Combinations."
The pro forma combined condensed statements of operations of SEDONA Corporation
for the twelve months ended December 31, 1999 and for the three months ended
March 31, 2000 assume that the acquisition of Acxiom Corporation's Customer
Management Information Systems business unit (CIMS) took place as of the
beginning of the earliest period presented. The statements combine SEDONA's
statements of operations and CIMS statements of revenues and direct expenses for
the twelve months ended December 31, 1999 and for the three months ended March
31, 2000, respectively.
The pro forma combined condensed balance sheet as of March 31, 2000 combines
SEDONA's March 31, 2000 balance sheet with CIMS' March 31, 2000 statement of
assets acquired and liabilities assumed as if the acquisition had been
consummated on that date.
The unaudited pro forma combined condensed information is presented for
illustrative purposes only and is not necessarily indicative of the operating
results or financial position that would have actually occurred if the
acquisition had been consummated as of the dates indicated, nor is it
necessarily indicative of future operating results or financial position. The
pro forma adjustments are based on the information available at the date of this
filing and are subject to change based upon final purchase price allocation.
SEDONA's condensed financial information included in these pro forma financial
statements is derived from its December 31, 1999 audited and March 31, 2000
unaudited financial statements previously filed with the Securities and Exchange
Commission. CIMS' condensed statement of assets acquired and liabilities assumed
included in the accompanying pro forma unaudited combined condensed balance
sheet is derived from its unaudited historical statement of assets acquired and
liabilities assumed as of March 31, 2000 included elsewhere in this filing. The
results of operations of CIMS included in the unaudited pro forma condensed
combined statements of operations for the year ended December 31, 1999 and the
three months ended March 31, 2000 were derived from its statements of revenues
and direct expenses for the same periods included in this filing.
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SEDONA CORPORATION AND SUBSIDIARIES
PRO FORMA UNAUDITED COMBINED CONDENSED BALANCE SHEET
AS OF MARCH 31, 2000
(In thousands except for share and per share data)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
SEDONA CIMS ADJUSTMENTS COMBINED
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<S> <C> <C> <C> <C>
Assets
Cash $ 7,931 $ $ $ 7,931
Accounts receivable 8 724 (380)(C) 352
Unbilled revenues - 480 (480)(C) -
Prepaid expenses and other current assets 127 - - 127
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Total current assets 8,066 1,204 (860) 8,410
Property and equipment, net of accumulated
depreciation and amortization 359 291 - 650
Software development costs, net and other assets 1,002 2,032 (2,032)(A) 1,002
Goodwill, net - 917 (917)(A) -
Purchased software 2,003 (C) 2,003
Net assets of discontinued operations 38 - - 38
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Total assets $ 9,465 $4,444 $(1,806) $ 12,103
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Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued expenses $ 495 $ $ 70 (C) $565
Dividends payable 157 157
Deferred revenue 60 332 (264)(C) 128
Current maturities of long-term debt including
Capital lease obligations 36 36
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Total current liabilities 748 332 (194) 886
Long term obligations less current maturities 46 1,000 (B) 1,046
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Total liabilities $ 794 $ 332 $ 806 $ 1,932
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 shares 2 2
Series F, par value $2,00,
Issued and outstanding - 1,000 shares 2 2
Series G, par value $2.00,
Issued and outstanding - 3,000 shares 6 6
Series H, par value $2.00 - 3 (B) 3
Issued and outstanding - 1,500 shares
Common stock, par value $.001
Authorized Shares - 50,000,000
Issued and outstanding shares - 26,745,398 27 27
Additional paid-in-capital 42,235 4,112 (2,615)(B) 43,732
Accumulated deficit (34,601) (34,601)
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Total stockholders' equity 8,671 4,112 (2,612) 10,171
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Total liabilities and stockholders' equity $ 9,465 $4,444 $(1,806) $ 12,103
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</TABLE>
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SEDONA CORPORATION AND SUBSIDIARIES
PRO FORMA UNAUDITED COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTH PERIOD ENDED DECEMBER 31, 1999
(In thousands)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
SEDONA CIMS ADJUSTMENTS COMBINED
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<S> <C> <C> <C> <C>
Revenues:
Total revenues $ 244 $ 2,405 $ $ 2,649
Cost of goods sold 204 1,138 1,342
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Gross profit 40 1,267 1,307
Expenses:
General and administrative 2,084 1,745 (67)(E) 3,762
Sales and marketing 919 786 1,705
Research and development 346 346
Amortization of goodwill and intangibles - 668 (E) 668
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Total operating expenses 3,349 $ 2,531 $ 601 $ 6,481
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Other income(expense)
Interest income 80 80
Interest expense (35) (35)
Other -
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Total other income 45 45
Loss from continuing operations, before
provision for income taxes (3,264) (1,264) (601) (5,129)
Income taxes - - -
Loss from continuing operations (3,264) (1,264) (601) (5,129)
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Basic and diluted net loss
from continuing operations
applicable to common shares* $ (.18) (.26)
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Basic and diluted
weighted average common shares
outstanding 22,307,342 22,307,342
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</TABLE>
* Includes preferred stock dividends of $601.
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SEDONA CORPORATION AND SUBSIDIARIES
PRO FORMA UNAUDITED COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2000
(In thousands)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
SEDONA CIMS ADJUSTMENTS COMBINED
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<S> <C> <C> <C> <C>
Revenues:
Total revenues $ 718 $ 559 $ (443)(D) $ 834
Cost of goods sold 832 513 (269)(D) 1,076
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Gross profit(loss) (114) 46 (174) (242)
Expenses:
General and administrative 658 515 (496)(D) 677
Sales and marketing 766 150 (121)(D) 795
Research and development - -
Amortization of goodwill and intangibles 167 (E) 167
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Total operating expenses 1,424 665 (450) 1,639
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Other income(expense)
Interest income 43 43
Interest expense (6) (6)
Other (28) (28)
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Total other income 9 9
Loss from continuing operations, before
provision for income taxes (1,529) (619) 276 (1,872)
Income taxes - -
Loss from continuing operations (1,529) (619) 276 (1,872)
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Basic and diluted net loss
from continuing operations
applicable to common shares* (.06) (.08)
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Basic and diluted
weighted average common shares
outstanding 25,269,788 25,269,788
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</TABLE>
* Includes preferred stock dividends of $77.
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NOTES TO THE UNAUDITED PRO FORMA
COMBINED CONDENSED FINANCIAL INFORMATION
In April 2000, the Company consummated a transaction to purchase the CIMS
business unit for total potential consideration of $4.0 million, $1.5 million
paid in preferred stock, $1 million of which will be paid by the third
anniversary of the transaction, and the remainder of which will be paid
contingent on the future performance of the business unit acquired. In addition,
247,934 five-year warrants with an exercise price of $3.025 per share were
issued in connection with this transaction.
The total purchase price of the CIMS acquisition has been allocated to acquired
assets based on estimates of their fair values. The purchase price of
approximately $2.5 million has been assigned to the assets acquired as follows
(in thousands):
Tangible net assets acquired:
Accounts receivable (net of receivables retained
by Acxiom) $ 344
Property, plant, and equipment 291
Deferred revenue, net of excess profit margin
built in historical CIMS March 31, 2000
balance (68)
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Total fair value of net tangible assets acquired $ 567
Estimated direct costs associated with merger (70)
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Total preliminary allocation of purchase price 497
Value ascribed to purchase software 2003
-------
Total purchase price $ 2,500
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The pro forma financial information has been developed from SEDONA data as filed
with the Securities and Exchange Commission and financial statements from the
CIMS business unit on a basis described in Exhibit 99.2 contained herein.
The adjustments to the pro forma combined condensed balance sheet of March 31,
2000 are as follows (in thousands):
(A) To reflect the elimination of acquired intangible assets.
(B) To reflect the purchase price paid for CIMS, and the elimination of the
CIMS equity, related to the issuance of $1,500 of our preferred stock and
warrants and $1,000 of other long-term obligations totalling $2,500.
(C) To reflect purchase price allocation to assets acquired and liabilities
assumed as described above, and the elimination of that portion of the
billed receivables and the unbilled revenue, both of which were excluded
from the Purchase Agreement.
The adjustments to the pro forma combined condensed statements of operations for
the year ended December 31, 1999 and for the three months ended March 31, 2000
assume the acquisition occurred as of January 1, 1999 and are as follows (in
thousands):
(D) To reflect adjustments from an operating agreement with Acxiom Corporation
whereby SEDONA assumed the management of the CIMS business unit in February
2000. These adjustments eliminate intercompany revenue and expenses that
were included in the results of the CIMS business unit and SEDONA
operations.
(E) To reflect the amortization of approximately $2,003 of purchased software
acquired in the acquisition. The purchased software will be amortized
ratably over an estimated useful life of 3 years.
