<PAGE> 1
As filed with the Securities and Exchange Commission on September 9, 1996
REGISTRATION NO. 333-__________
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
----------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
UNICOMP, INC.
(Exact name of registrant as specified in charter)
COLORADO 87-1003745
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
1800 Sandy Plains Parkway, Suite 305
Marietta, Georgia 30066
(770) 424-3684
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
STEPHEN A. HAFER
Chairman, President and Chief Executive Officer
UNICOMP, INC.
1800 Sandy Plains Parkway, Suite 305
Marietta, Georgia 30066
(770) 424-3684
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
copy to:
DAVID F. EVANS
DAVID K. ARMSTRONG
SNELL & WILMER
111 East Broadway, Suite 900
Salt Lake City, Utah 84111
(801) 237-1900
----------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
--------------------
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================
Title of each Proposed Proposed
class of Amount maximum maximum Amount of
securities to be to be offering price aggregate registration
registered registered per unit(1) offering price(1) fee(1)
------------ ------------- ------------- ------------- -----------
<S> <C> <C> <C> <C>
Common Stock 125,000 $5.938 $742,250 $255.95
================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration
fee pursuant to Rule 457(c) under the Securities Act of 1933.
Calculated on the basis of the average of the high and low prices
of the Registrant's Common Stock on Nasdaq National Market System
as of a specified date within five (5) business days immediately
preceding the 6th day of September 1996.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to Section 8(a), may determine.
<PAGE> 3
PROSPECTUS
UNICOMP, INC.
1800 SANDY PLAINS PARKWAY, SUITE 305, MARIETTA, GEORGIA 30066
TELEPHONE: (770) 424-3684
125,000 SHARES OF COMMON STOCK
This Prospectus relates to the resale by certain Shareholders
(collectively, the "SELLING SHAREHOLDERS") of an aggregate of 125,000 shares
(the "SHARES") of common stock, par value $0.01 per share ("COMMON STOCK"), of
UniComp, Inc., a Colorado corporation (the "COMPANY"), previously acquired by
such Selling Shareholders. The Company's Common Stock is listed on the Nasdaq
National Market System ("NASDAQ") under the symbol "UCMP." All Shares are
being offered for sale from time to time by the Selling Shareholders (see
caption "Selling Shareholders") or by pledgees, donees, transferees, or other
successors of such Selling Shareholders, on Nasdaq or otherwise at market
prices then prevailing or at negotiated prices then obtainable. See "Plan of
Distribution."
The Company has agreed to pay certain of the expenses of the Selling
Shareholders pursuant to this Prospectus but will not receive any of the
proceeds from the sale of the Shares offered pursuant hereto by the Selling
Shareholders. For further information concerning offerings of the Shares from
time to time hereunder by the Selling Shareholders, see "Plan of Distribution."
The Selling Shareholders directly or through agents, dealers, or
underwriters designated from time to time may sell the Shares on terms to be
determined at the time of sale. To the extent required, the amount of the
Shares to be sold, the names of the Selling Shareholders, purchase price,
public offering price, the names of any such agent, dealer, or underwriter, and
any applicable commission or discount with respect to a particular offering of
the Shares will be set forth in an accompanying Prospectus Supplement. The
aggregate proceeds to the Selling Shareholders from the sale of the Shares
hereunder will be the purchase price thereof less the aggregate commissions and
discounts, if any, and other expenses of the distribution not borne by the
Company. See "Plan of Distribution."
THE PURCHASE OF THE SHARES INVOLVES A HIGH DEGREE OF RISK. PRIOR TO
PURCHASE EACH PROSPECTIVE INVESTOR SHOULD CONSIDER VERY CAREFULLY THE
INFORMATION PRESENTED UNDER THE CAPTION "RISK FACTORS" AS WELL AS THE OTHER
INFORMATION SET FORTH IN THIS PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, NOR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is September 9, 1996.
<PAGE> 4
THE REGISTRATION STATEMENT
UniComp, Inc. (the "COMPANY") has filed with the Securities and Exchange
Commission (the "COMMISSION") in Washington, D. C. a registration statement
(the "Registration Statement") under the Securities Act of 1933, as amended
(the "ACT") relating to this Prospectus. This Prospectus, which constitutes
part of the Registration Statement, does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the Rules and Regulations of the Commission. For further
information pertaining to the shares hereby offered and to the Company,
reference is made to the Registration Statement, including exhibits filed as
part thereof, copies of which may be obtained from the Public Reference Section
of the Commission, Washington, D.C. 20549 at prescribed rates.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, (the "EXCHANGE ACT") and in accordance
therewith files reports and other information with the Commission. Reports,
proxy and information statements and other information filed by the Company can
be obtained at prescribed rates from the Public Reference Section of the
Commission, or may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following regional offices of the Commission:
Northeast Regional Office, 7 World Trade Center, Suite 1300, New York, New York
10048, and Midwest Regional Office, Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661.
The Commission also maintains a site on the World Wide Web that contains
reports, proxy and information statements and other information regarding
registrants that file elctronically with the Commission. The address of such
site is http://www.ses.gov.
The Company's Common Stock is traded on the Nasdaq National Market
Reporting System. Reports, proxy and information statements, and other
information concerning the Company can be inspected at the offices of the
National Association of Securities Dealers, Inc., located at 1735 "K" Street,
N.W., Washington, D.C. 20006.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed by the Company with the
Commission (File No. 0-15671) are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal
year ended February 29, 1996.
(b) The Company's current report on Form 8-K dated April 16,
1996 and as amended on Form 8-K/A dated June 27, 1996.
(c) The Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended May 31, 1996 (the "MAY 31, 1996 REPORT").
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14,
and 15(d) of the Exchange Act after the filing date of the May 31, 1996 Report
and prior to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which de-registers all such
securities then remaining unsold, shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the time of filing of
such documents.
<PAGE> 5
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any other subsequently filed
documents which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or so
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus is delivered,
upon the written or oral request of such person, a copy of any or all of the
documents incorporated by reference in this Prospectus (other than exhibits to
such documents unless such exhibits are specifically incorporated by reference
into the documents that the Prospectus incorporates). Written or oral requests
for such copies should be directed to UniComp, Inc., Corporate Secretary, 1800
Sandy Plains Parkway, Suite 305, Marietta, Georgia 30066, telephone (770)
424-3684.
<PAGE> 6
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere or incorporated by reference in this
Prospectus.
RISK FACTORS
The purchase of the Shares involves a high degree of risk. Prior to
purchase each prospective investor should consider very carefully the
information presented under the caption "Risk Factors" as well as the other
information set forth in this Prospectus.
THE COMPANY
UniComp is a provider of information technologies for businesses across a
spectrum of industries. The Company's products and services are designed to
address a customers' need to respond to rapidly changing technology and the
movement toward open or portable platforms.
The estimated $38 billion information technology industry is characterized
by rapid change which tends to increase the cost of maintaining internal
information technology resources. The Company believes that businesses
striving to compete in the marketplace are required to upgrade information
systems and skill sets. As a result, more businesses will move toward
outsourcing their information requirements.
Rapidly changing technology has also led to increased market acceptance of
open systems and customer demand for information technology based on such
systems. The Company believes that decreasing prices, increasing functionality
in information technology products and the inherent constraints of IBM company
platforms have also supported the trend toward open systems. Changing to new
computing platforms often results in significant disruption of business
operations as users are retrained and software errors discovered and corrected.
Even more critical is the potential loss of data contained in existing
databases that may result from a change to new applications software.
In response to this evolving environment the Company offers services and
products in three primary areas: information technology services,
platform-migration software and payment-processing systems.
The Company was incorporated in Colorado in 1985. Its executive offices
are located at 1800 Sandy Plains Parkway, Suite 305, Marietta, Georgia 30066
and its telephone number is (770) 424-3684. Unless the context otherwise
indicates, references to "UniComp" or the "Company" include UniComp, Inc. and
its wholly-owned subsidiaries.
1
<PAGE> 7
SECURITIES OFFERED
<TABLE>
<S> <C>
Common Stock. . . . . . . . . . . . . . . . . . 125,000 shares
Common Stock Outstanding After
this Offering . . . . . . . . . . . . . . . . . . 5,590,245 shares
Use of Proceeds . . . . . . . . . . . . . . . . . The Company will not receive
any of the proceeds from the
sale of the Shares offered
pursuant to this Prospectus
by the Selling Shareholders.
Nasdaq Symbol. . . . . . . . . . . . . . . . . . UCMP
</TABLE>
2
<PAGE> 8
RISK FACTORS
THE FOLLOWING FACTORS, IN ADDITION TO THE INFORMATION CONTAINED ELSEWHERE
IN THIS PROSPECTUS, SHOULD BE CONSIDERED CAREFULLY IN EVALUATING THE COMPANY
AND ITS BUSINESS BEFORE PURCHASING THE SHARES.
HIGHLY COMPETITIVE INFORMATION TECHNOLOGY INDUSTRY
The information technology industry is intensely competitive and subject
to rapid change. The Company believes the principal competitive factors it
faces include reputation and quality of service, relative price and
performance, technical expertise and product availability. The Company's
competitors in the information technology services market include the
installation and service organizations within established computer language
manufacturers and regional systems integrators, software and hardware
distributors and systems consultants. Some of the Company's current and
potential competitors have longer operating histories and financial, sales,
marketing and technical resources that are substantially greater than those of
the Company. As a result, the Company's competitors may be able to adapt more
quickly to changes in customer needs or to devote greater resources than the
Company to sales, marketing and product development. As the markets in which
the Company competes have matured, product price competition has intensified
and is likely to continue to intensify. Such price competition could adversely
affect the Company's results of operations. There can be no assurance that the
Company will be able to continue to compete successfully with existing or new
competitors.
DEPENDENCE ON FOREIGN SALES
The Company's total revenues from international operations represented
83.7%, 84.7% and 78.4% of the Company's total revenues for fiscal years 1996,
1995 and 1994, respectively. The Company expects that its international
operations will continue to account for a significant percentage of its total
revenues. Certain risks are inherent in international operations, including
unexpected changes in regulatory requirements, currency exchange rate
fluctuations, changes in trade policy or tariff regulations, customs matters,
longer payment cycles, higher tax rates or additional withholding requirements,
difficulty in enforcing agreements, intellectual property protection
difficulties, foreign collection problems and military, political and
transportation obstacles. In addition, foreign operations involve
uncertainties arising from local business practices, cultural considerations
and international political and trade tensions. Most of the Company's revenues
are denominated in United States dollars or British pounds. Because of the
Company's United States and United Kingdom operations, the denomination of the
Company's revenue and expenses tend to be made in corresponding currencies. As
a result, to date, management of the Company has determined not to hedge
against foreign currency exchange rate risks. The Company may in the future
seek to implement hedging techniques with respect to foreign currency
transactions. There can be no assurance, however, that such hedging activities
would successfully protect against foreign currency exchange losses or against
other international sales risks such as exchange limitations, price controls or
other foreign currency restrictions.
3
<PAGE> 9
RAPID TECHNOLOGICAL CHANGE AND INTRODUCTION OF NEW PRODUCTS AND SERVICES
The information technology industry is characterized by rapid
technological advances, changes in customer requirements and frequent new
product introductions and enhancements, which could disrupt the Company's
services business and render the Company's products obsolete. The Company's
future success will depend in large part on its ability to anticipate and
respond to such advances, changes and new product introductions. Any failure
by the Company to do so could have a material adverse effect on the Company's
competitive position and results of operations. The market for the Company's
platform migration software is highly competitive. The Company believes that
the principal competitive factors in this business include product performance,
time to market for new product introductions, adherence to industry standards,
price and marketing and distribution resources. The market for the Company's
payment-processing systems is also highly competitive. The Company believes
that the principal competitive factors include the ability to provide a
comprehensive, integrated payment processing system, product performance, time
to market for new product introductions, adherence to industry standards,
price, marketing and distribution resources. In addition, the Company is
subject to the risks generally associated with new product introductions and
applications, including lack of market acceptance, delays in development or
failure of products to perform as expected. In February 1996 the Company
released version 1.05 of its UNIBOL400 product, which is the first version
offered for widespread commercial distribution. The UNIBOL400 product has yet
to achieve a substantial installed user base. There can be no assurance as to
when, if ever, the UNIBOL400 product will attract a substantial number of
users.
POTENTIAL FOR DELAYS IN PRODUCT INTRODUCTION
The Company has previously experienced significant delays in developing
and introducing new products, and there can be no assurance that it will be
able to introduce future products on a timely basis. Delays in product
development and introduction may have an adverse effect on the product's
success and the Company's reputation and operating results, and may allow
competitors to introduce products and gain market share during any such delays.
Any failure by the Company to timely develop and introduce new products and
product enhancements that are responsive to market conditions and customer
requirements may have an adverse effect on the Company's business, operating
results and financial condition. Furthermore, the complex software products
developed by the Company may contain undetected errors when first introduced or
when new versions are released. There can be no assurance that current or
future releases of Company products will not contain errors or that any such
errors will not result in loss or delay of market acceptance of such products.
MANAGEMENT OF OVERSEAS OPERATIONS
As of August 31, 1996, approximately 200 of the Company's 230 employees
work in the Company's Belfast, Northern Ireland facilities. This geographical
distance, as well as the time-zone differences, can isolate management from
operational issues, delay communications and require devotion of a significant
amount of time, effort and expense to international travel. There can be no
assurance that the Company will not face significant management demands
associated with its international operations in the future. Any significant
disruption in the management of the Company's international operations could
have a material adverse effect on the Company's business, operating results and
financial condition.
4
<PAGE> 10
OPERATIONS IN NORTHERN IRELAND
A substantial majority of the Company's personnel and operations are
located in Northern Ireland. In addition, approximately 83.7% of the Company's
fiscal year 1996 net revenues are attributable to operations in Northern
Ireland. Northern Ireland has historically experienced periods of religious,
civil and political unrest. There can be no assurance that further unrest in
Northern Ireland will not occur, which could disrupt the Company's product
development programs and have a material adverse effect on the Company's
operating results and financial condition. In fiscal years 1996, 1995 and
1994, the Company received grants of $389,000, $369,000 and $285,000,
respectively, from the government of Northern Ireland to fund the Company's
research and development programs. The Company's use of these funds is subject
to various rules and regulations, including the requirement that the Company
repay such funds in the event it removes certain operations from Northern
Ireland. There can be no assurance that the Company will continue to be
eligible for or will receive similar grants in the future or, if such grants
are received, whether additional restrictions will not apply to the Company's
use of such funds.
RISK OF ACQUISITION PROGRAM
A substantial portion of the Company's growth to date has been largely
attributable to its acquisition program which has primarily been driven by
opportunities that have presented themselves to the Company. Significant
administrative, operational and financial resources are required to
successfully integrate and manage the Company's diverse businesses. There are
numerous operational and financial risks involved in managing acquired
businesses, including difficulties in assimilating acquired operations,
diversion of management's attention to other business concerns, amortization of
acquired intangible assets, increases in administrative costs, additional costs
associated with debt or equity financing and potential loss of key employees or
customers of acquired operations. There can be no assurance that the Company
will be successful in integrating its current acquisitions or retaining and
motivating key personnel of acquired companies. Any failure to integrate the
Company's current and potential future businesses, maintain and expand the
acquired customer and technology base and retain and motivate key employees of
acquired companies could have an adverse effect on the Company's business,
operating results and financial condition.
COMPETITIVE MARKET FOR TECHNICAL PERSONNEL AND RETENTION OF KEY EMPLOYEES
The Company's success depends in part on its ability to attract, hire,
train and retain qualified managerial, technical and sales and marketing
personnel. Competition for such personnel is intense. There can be no
assurance that the Company will be successful in attracting and retaining the
technical personnel it requires to conduct and expand its operations
successfully. The Company's results of operations could be materially
adversely affected if the Company were unable to attract, hire, train and
retain qualified personnel.
The Company's success depends to a significant extent on the continued
service of Stephen A. Hafer, its President and Chief Executive Officer, and
other members of the Company's executive management, including J. Patrick
Henry, the loss of any one of whom could have a material adverse effect on the
Company's business, operating results and financial condition. None of the
Company's executive officers is party to a written employment agreement or
noncompete agreement with the Company. The Company has purchased $1 million
key-person life insurance policies on the lives of each of Messrs. Hafer and
Henry.
5
<PAGE> 11
UNCERTAINTY OF FUTURE RESULTS
Product revenues generated by the Company's software products are
difficult to forecast because of the evolving product lifecycle for the
UNIBOL36 product, the recent introduction of the UNIBOL400 product and the
recent acquisition of its payment-processing systems business. In addition,
although the Company's service revenues are more predictable than its product
revenues, unexpected variations in job pricing and complexity can have an
adverse effect on the profitability of customer service projects. The Company
bases its expense levels in significant part on its expectations of future
product revenues and service demands, which are therefore relatively fixed in
the short term. If demand for the Company's products and services is below
expectations, operating results would be adversely affected.
DEPENDENCE ON PROPRIETARY TECHNOLOGY
Much of the Company's future success depends on its ability to protect its
proprietary technology. The Company relies principally on trade secret,
copyright law, nondisclosure agreements and other contractual arrangements to
protect such proprietary technology. There can be no assurance that such
measures will be adequate to protect the Company from infringement by others of
its technologies or that the Company will be effective in preventing
misappropriation of its proprietary rights. In addition, the laws of some
foreign countries do not protect the Company's proprietary rights to the same
extent as do the laws of the United States.
CONTROL BY MANAGEMENT AND PRINCIPAL SHAREHOLDERS
As of August 31, 1996, the Company's executive officers and directors and
their affiliates beneficially hold an aggregate of approximately 28.5% of the
Company's outstanding shares of Common Stock. As a result, these shareholders,
acting together, may be able to significantly influence many matters requiring
approval by the shareholders of the Company, including the election of
directors.
VOLATILITY OF STOCK PRICE
The Common Stock is currently quoted on the Nasdaq National Market. The
market price of the Common Stock could be subject to significant fluctuations
in response to quarterly variations in the Company's operating results, changes
in earnings estimates by analysts, announcements of new products or services
offered by the Company or its competitors, loss of key customers, distributor
or vendor relationships, general conditions in the computer software industry,
or other events or factors, including events or factors that may be unrelated
to the Company. Furthermore, in recent years, the stock market in general, and
the market for shares of stock in technology companies in particular, has
experienced extreme price fluctuations. Such fluctuations could materially and
adversely affect the market price of the Common Stock in the future.
6
<PAGE> 12
SHARES ELIGIBLE FOR FUTURE SALE
Sales of a substantial number of shares of Common Stock in the public
market following this offering could adversely affect the market price of the
Common Stock. Upon completion of this offering, in addition to the 125,000
shares offered hereby, approximately 3,691,595 shares, will be immediately
eligible for resale in the public market without restriction under the
Securities Act of 1933, as amended (the "Securities Act"). Approximately
1,898,650 shares of Common Stock are eligible for sale in the public market,
subject to the provisions of Rule 144 under the Securities Act.
Based on registration rights of certain holders of Common Stock the
Company is required to use its best efforts to file registration statements in
April 1997 and April 1998 for the resale of 125,000 shares and 250,000 shares,
respectively, to the public.
As of August 31, 1996, there were stock options and warrants outstanding
to purchase an aggregate of 1,002,500 shares of Common Stock, 270,000 of which
were subject to then-exercisable options. The remainder of these options and
warrants become exercisable at various points over the nest four years. The
Company has filed a Registration Statement on Form S-8 to register an aggregate
1,200,000 shares of Common Stock reserved for issuance under the Company's LTI
Plan, thus permitting the resale of such shares in the public market without
restriction under the Securities Act upon the expiration of the lock-up
agreements described above and in accordance with Rule 144, if applicable.
ANTITAKEOVER EFFECT OF CERTAIN CHARTER PROVISIONS
The Company's Board of Directors has the authority to issue up to
5,000,000 shares of Preferred Stock and to determine the price, rights,
preferences, privileges and restrictions, including voting rights, of those
shares without any further vote or action by the shareholders. The rights of
the holders of Common Stock will be subject to, and may be adversely affected
by, the rights of the holders of any Preferred Stock that may be issued in the
future. The issuance of Preferred Stock may have the effect of delaying,
deferring or preventing a change in control of the Company without further
action by the shareholders and may adversely affect the voting and other rights
of the holders of Common Stock. The Company has no present plans to issue
shares of Preferred Stock. Furthermore, certain provisions of the Company's
charter documents, may have the effect of delaying or preventing changes in
control or management of the Company, which could have an adverse effect on the
market price of the Common Stock. See "Description of Capital Stock."
NO DIVIDENDS ON COMMON STOCK
The Company has not paid any cash dividends on Common Stock since its
inception and does not anticipate paying cash dividends on the Common Stock in
the foreseeable future.
7
<PAGE> 13
THE COMPANY
UniComp is a provider of information technologies for businesses across a
spectrum of industries. The Company's products and services are designed to
address a customers' need to respond to rapidly changing technology and the
movement toward open or portable platforms.
The estimated $38 billion information technology industry is characterized
by rapid change which tends to increase the cost of maintaining internal
information technology resources. The Company believes that businesses
striving to compete in the marketplace are required to upgrade information
systems and skill sets. As a result, more businesses will move toward
outsourcing their information requirements.
Rapidly changing technology has also led to increased market acceptance of
open systems and customer demand for information technology based on such
systems. The Company believes that decreasing prices, increasing functionality
in information technology products and the inherent constraints of IBM company
platforms have also supported the trend toward open systems. Changing to new
computing platforms often results in significant disruption of business
operations as users are retrained and software errors discovered and corrected.
Even more critical is the potential loss of data contained in existing
databases that may result from a change to new applications software.
In response to this evolving environment the Company offers services and
products in three primary areas: information technology services,
platform-migration software and payment-processing systems.
Information Technology Services
The Company provides a wide variety of information technology services
composed of maintenance and support services, installation and integration of
software and hardware systems and outsourcing of information technology
services and products. Maintenance and support services consist of all aspects
of system upkeep including computer system maintenance, technical support and
training. Installation and integration services include system consulting and
design, software installation and testing, custom software modification as
well as a broad range of systems configuration and integration services for
computer networks. The Company also seeks to provide all aspects of
information technology services on an outsourced basis to medium sized
businesses offering its customers an opportunity to reduce information
technology overhead while continuing to respond to technological change.
Outsourcing services include disaster recovery services, facilities management
services and related information technology support services. These services
are primarily performed in Northern Ireland where the Company is a leading
provider of such services.
8
<PAGE> 14
Platform-Migration Software
During the past several years, there has been a shift in the computer
industry from proprietary toward open and portable systems. In response to the
demand for applications software capable of running on multiple computing
platforms, UniComp has developed platform-migration software and development
tools that rehost existing code on an open computing platform. The Company
believes that its UNIBOL rehosting solution allows businesses and Independent
Software Vendors ("ISVs") to migrate their applications software to open
systems in a more cost-effective manner than competing methodologies.
Rehosting enables businesses to retain their investment in existing software
and databases. Rehosting also allows ISVs to expand their market opportunities
without replacing or rewriting applications, retraining or replacing software
developers or incurring the cost and disruption of re-engineering their
products.
Payment-Processing Systems
Payment processing refers to the sequence of activities that occur among a
customer, merchant and payment processor when goods or services are sold.
Payment processing for commercial businesses has grown rapidly in recent years
as a result of increased usage and a proliferation of the types of credit and
debit cards and wider acceptance of such cards among merchants. Advances in
payment processing and telecommunications technologies have been a key factor
contributing to such growth. The Company believes that the transition from
paper-based to electronic payment processing provides greater convenience to
merchants and consumers, reduces fees charged to merchants, and facilitates
faster, more accurate settlement of payments.
The Company designs, develops and markets payment-processing systems that
are designed to provide merchants a high degree of hardware independence by
supporting a variety of hardware platforms, including personal computers,
point-of-sale terminals and other peripheral devices. Payment processing
systems include the software and hardware combinations that allow electronic
settlement of payment transactions. The Company's strategy in the payment
processing market is to focus its sales and marketing efforts on the relatively
small number of large payment processors.
The Company's strategy for achieving future growth focuses on continuing
to provide high quality information technology services in the United Kingdom
and becoming the leading provider of platform-migration software and
hardware-independent payment-processing systems. Key elements of this strategy
include: (a) leverage complementary businesses; (b) expand within existing
geographic markets; (c) expand distribution channels; (d) invest in product
development; and (e) acquire strategic businesses and technologies.
USE OF PROCEEDS
The Shares are now being registered by the Company for the benefit of the
Selling Shareholders and will be sold from time to time pursuant to this
Prospectus by the Selling Shareholders. The Company will not receive any
proceeds from the sale of the Shares by the Selling Shareholders. See "Selling
Shareholders."
9
<PAGE> 15
SELLING SHAREHOLDERS
The 125,000 Shares offered hereunder are for the account of the Selling
Shareholders identified below. None of the Selling Shareholders had any
position, office or other material relationship with the Company or any of its
predecessors or affiliates during the three years prior to the issuance of the
Shares. The following table summarizes the Selling Shareholders' security
ownership prior to this offering, the number of securities being offered by the
Selling Shareholders and the number of securities owned by the Selling
Shareholders after giving effect to this offering:
<TABLE>
<CAPTION>
Number of Shares Number of Shares Number of Shares
Beneficially Owned Being Registered Owned After This
Name of Security Holder Prior to Offering for Resale Offering(1)
- ----------------------- -------------------- ----------------- ----------------
<S> <C> <C> <C>
George Gruber 231,375 57,844 173,531
B. Michael Wilson, as
Custodian for Mary
Elizabeth Wilson 4,628 1,157 3,471
B. Michael Wilson 226,747 56,687 170,060
Robert L. Mendenhall 2,500 625 1,875
Jeannine Cook 7,500 1,875 5,625
Jim and Michele McDuffie 2,500 625 1,875
W.J. Block 11,000 2,750 8,250
Thomas J. Taaffe 2,500 625 1,875
Allen and Holly Uhlik 11,250 2,812 8,438
------- ------- -------
500,000 125,000 375,000
</TABLE>
PLAN OF DISTRIBUTION
The securities offered hereby are to be offered solely through the selling
efforts of the individual Selling Shareholders or their own brokers or dealers
at market prices prevailing at the time of sale, or at negotiated prices. The
Company has no arrangement, agreement, or understanding with any such broker or
dealer with respect thereto. It is anticipated that customary brokerage
commissions will be paid by the Selling Shareholders upon such sales.
- ------------
(1) Assumes all shares being registered on behalf of the Selling Shareholders
will be offered and sold.
10
<PAGE> 16
DESCRIPTION OF SECURITIES TO BE REGISTERED
The shares offered pursuant to this Prospectus are shares of Common Stock.
The authorized capital stock of the Company consists of 30,000,000 shares,
consisting of 25,000,000 shares of Common Stock, par value $.01 per share, and
5,000,000 shares of Preferred Stock, par value $1.00 per share.
COMMON STOCK
As of August 31, 1996, 5,590,245 shares of Common Stock were issued and
outstanding. Holders of Common Stock are entitled to one vote per share on all
matters submitted to a vote of shareholders. Holders of Common Stock are
entitled to such dividends, if any, as may be declared by the Board of
Directors at its discretion out of funds legally available for that purpose,
and to participate pro rata in any distribution of the Company's assets upon
liquidation after the payment of all debts and payment to holders of Preferred
Stock. Holders of Common Stock have no preemptive or conversion rights, nor
are there any redemption or sinking fund rights with respect to the Common
Stock. There is no cumulative voting with respect to the election of
directors, which means that the holders of a majority of the shares can elect
all the directors if they choose to do so. All outstanding shares of Common
Stock are, and all shares of Common Stock offered hereby will be, validly
issued, fully paid and nonassessable.
PREFERRED STOCK
The Company currently has no shares of Preferred Stock outstanding and has
no current plans to issue any shares of Preferred Stock. The Board of
Directors has the authority to issue Preferred Stock from time to time in one
or more series and, without further approval of the shareholders, to fix the
dividend rights and terms, conversion rights, voting rights, redemption rights
and terms, liquidation preferences, sinking funds and any other rights,
preferences, privileges and restrictions applicable to each series of Preferred
Stock. The issuance of Preferred Stock, while providing flexibility in
connection with possible acquisitions and other corporate purposes, could,
among other things, adversely affect the rights of the holders of Common Stock.
The potential issuance of Preferred Stock may have the effect of delaying,
deterring or preventing a change in control of the Company, may discourage bids
for the Common Stock at a premium over the market price of the Common Stock and
may adversely affect the market price of, and the voting and other rights of
the holders of, the Common Stock.
REGISTRATION RIGHTS
In connection with the acquisition of the Company's payment processing
technology, the Company issued 500,000 shares of Common Stock to the
shareholders of Smoky Mountain (the "REGISTRABLE SHARES"). Such shareholders
are entitled to certain registration rights with regard to the Registrable
Shares. Subject to certain limitations, the Company must use its best efforts
to register for resale on Form S-3, under the Securities Act: (i) 25% of the
Registrable Shares which are being registered pursuant to this Prospectus, (ii)
an additional 25% of the Registrable Shares by April 16, 1997, and (iii) the
balance of the Registrable Shares by April 16, 1998. The Company has agreed to
use its best efforts to cause such registration, and to maintain the
effectiveness of registration statements covering the resale of the
Registrable Shares, until such time as the Registrable Shares are either sold,
otherwise transferred or become freely tradable.
11
<PAGE> 17
ANTITAKEOVER CONSIDERATIONS
The Company's Board of Directors has the authority, without shareholder
approval, to issue up to 5,000,000 shares of Preferred Stock and to fix the
rights and preferences thereof. This authority, together with certain
provisions of the Company's Bylaws, may discourage takeover attempts or tender
offers that could result in shareholders receiving a premium over the market
price for the Common Stock or that shareholders may otherwise consider to be in
their best interests.
INDEMNIFICATION OF OFFICERS AND DIRECTORS OF THE COMPANY
In accordance with Colorado Law, the Company's Bylaws provide that the
Company may indemnify any person who was or is made a party or is threatened to
be made a party to any threatened, pending or completed action, by reason of
being a director, officer, employee, fiduciary or agent of the Company or is or
was serving at the request of the Company as a director, officer, employee,
fiduciary or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him or
her in connection with such action, suit or proceeding if he or she acted in
good faith and in a manner reasonably believed to be in the best interests of
the Company and, with respect to any criminal action or proceeding, had no
reasonable cause to believe the conduct was unlawful.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is Corporate Stock
Transfer, Denver, Colorado.
EXPERTS
The consolidated financial statements of UniComp, Inc. and its
subsidiaries, included in the report on Form 10-K of the Company for the fiscal
year ended February 29, 1996 and the financial statements of Smoky Mountain
Technologies, Inc. included in the report on Form 8-K/A for the year ended
December 31, 1995 incorporated by reference in this registration statement have
been audited by Coopers & Lybrand L.L.P., independent accountants, as set forth
in their reports dated May 23, 1996 and May 2, 1996, respectively, accompanying
such financial statements, and are incorporated herein by reference in reliance
upon the reports of such firm, which reports are given upon their authority as
experts in accounting and auditing.
The supplemental consolidated financial statements of UniComp, Inc. and
its subsidiaries included in this registration statement have been audited by
Coopers & Lybrand L.L.P., independent accountants, as set forth in their report
dated August 23, 1996, accompanying such financial statements, and are included
herein in reliance upon the report of such firm, which report is given upon
their authority as experts in accounting and auditing.
LEGAL MATTERS
Certain legal matters relating to this Prospectus have been passed upon
for the Company by Snell & Wilmer L.L.P., special counsel to the Company.
12
<PAGE> 18
MATERIAL CHANGES
On April 16, 1996, the Company completed its acquisition of Smoky Mountain
Technologies, Inc. ("Smoky Mountain") a software and hardware developer of the
financial transaction industry. The Company issued 500,000 shares of its
common stock for all of the outstanding common stock of Smoky Mountain. This
transaction has been accounted for as a pooling-of-interests.
Prior to the acquisition, Smoky Mountain prepared its financial statements
based on a December 31 year end. Smoky Mountain's fiscal year end has been
changed to the last day of February to conform with the Company's year end.
Supplemental consolidated financial statements have been prepared to give
retroactive effect of the acquisition of Smoky Mountain. These financial
statements will become the historical consolidated financial statements of
UniComp, Inc. after annual financial statements covering the date of
acquisition are issued.
The supplemental consolidated financial statements and Report of
Independent Accountants thereon for the years ended February 29, 1996 and
February 28, 1995 and 1994 are attached hereto on pages F-1 through F - 23.
13
<PAGE> 19
UNICOMP, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED FEBRUARY 29, 1996, FEBRUARY 28, 1995 AND 1994
F-1
<PAGE> 20
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors
of UniComp, Inc. and Subsidiaries:
We have audited the supplemental consolidated balance sheets of UniComp, Inc.
and subsidiaries as of February 29, 1996 and February 28, 1995, the related
supplemental consolidated statements of operations, changes in stockholders'
equity and cash flows for each of the years in the three-year period ended
February 29, 1996. 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.
The supplemental financial statements give retroactive effect to the merger of
UniComp, Inc. and Smoky Mountain Technologies, Inc. on April 16, 1996, which
has been accounted for as a pooling of interests as described in notes 1 and 3
to the supplemental consolidated financial statements. Generally accepted
accounting principles proscribe giving effect to a consummated business
combination accounted for by the pooling of interests method in financial
statements that do not include the date of consummation. These financial
statements do not extend through the date of consummation; however, they will
become the historical consolidated financial statements of UniComp, Inc. and
subsidiaries after annual financial statements covering the date of
consummation of the business combination are issued.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated balance sheets of UniComp, Inc. and
subsidiaries at February 29, 1996 and February 28, 1995, and the consolidated
results of their operations and their cash flows for each of the years in the
three-year period ended February 29, 1996 in conformity with generally accepted
accounting principles applicable after financial statements are issued for a
period which includes the date of consummation of the business combination.
Coopers & Lybrand L.L.P.
Atlanta, Georgia
August 23, 1996
F-2
<PAGE> 21
UNICOMP, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONSOLIDATED BALANCE SHEETS
February 29, 1996 and February 28, 1995
<TABLE>
<CAPTION>
FEBRUARY 29, FEBRUARY 28,
1996 1995
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,261,153 $ 85,845
Accounts and other receivables:
Trade, net of allowance of $137,878 and $127,006 in
1996 and 1995, respectively 4,721,909 3,575,491
Receivables from related party 404,478 277,646
Other receivables 205,636 259,528
Inventories 715,944 531,888
Prepaid expenses 852,050 456,875
Other 171,396 9,391
----------- ----------
Total current assets 8,332,566 5,196,664
----------- ----------
Property and equipment, net 2,401,969 1,618,603
----------- ----------
Other assets:
Acquired and developed software, net of accumulated amortization
of $1,371,355 and $689,419 in 1996 and 1995, respectively 4,802,724 2,789,332
Goodwill, net of accumulated amortization of $57,345
and $0 in 1996 and 1995, respectively 694,489 332,829
Deferred tax asset 348,638 540,000
Valuation allowance - (540,000)
Other 91,667 20,683
----------- ----------
Total other assets 5,937,518 3,142,844
----------- ----------
Total assets $16,672,053 $9,958,111
=========== ==========
The accompanying notes are an integral part of these supplemental consolidated financial statements.
</TABLE>
F-3
<PAGE> 22
UNICOMP, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONSOLIDATED BALANCE SHEETS (CONTINUED)
February 29, 1996 and February 28, 1995
<TABLE>
<CAPTION>
FEBRUARY 29, FEBRUARY 28,
1996 1995
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,128,526 $ 1,308,059
Accrued expenses 1,195,896 1,016,267
Deferred revenues 1,662,864 2,298,826
Line of credit 1,078,933 661,750
Income taxes payable 148,015 198,500
Other accrued taxes 393,915 12,525
Current portion of notes payable 375,105 266,732
----------- -----------
Total current liabilities 6,983,254 5,762,659
----------- -----------
Long-term liabilities:
Notes payable 1,072,926 727,079
Convertible notes 1,980,000 -
Deferred income taxes 519,109 116,616
----------- -----------
Total long-term liabilities 3,572,035 843,695
----------- -----------
Total liabilities 10,555,289 6,606,354
----------- -----------
Commitments and contingencies (Note 10)
Stockholders' equity:
Common stock: $.01 par value, authorized 25,000,000 issued
and outstanding, 5,163,432 and 5,001,234 at
February 29, 1996 and February 28, 1995, respectively 51,634 50,012
Additional contributed capital 6,229,829 5,527,454
Retained earnings (deficit) 475,636 (1,583,874)
----------- -----------
6,757,099 3,993,592
Less treasury stock (460,554) (493,654)
Cumulative translation adjustment (179,781) (148,181)
----------- -----------
Total stockholders' equity 6,116,764 3,351,757
----------- -----------
Total liabilities and stockholders' equity $16,672,053 $ 9,958,111
=========== ===========
The accompanying notes are an integral part of these supplemental consolidated financial statements.
</TABLE>
F-4
<PAGE> 23
UNICOMP, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF OPERATIONS
for the years ended February 29, 1996 and February 28, 1995 and 1994
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Revenues:
Equipment and software $10,881,491 $ 8,911,948 $ 6,031,127
Maintenance and services 11,409,528 8,944,368 5,671,837
Sound systems - 468,268 503,392
----------- ----------- -----------
Total revenues 22,291,019 18,324,584 12,206,356
----------- ----------- -----------
Cost of sales:
Equipment and software 6,151,381 5,078,321 4,558,261
Maintenance and support 1,826,341 1,059,353 561,796
Sound systems - 304,570 286,612
----------- ----------- -----------
Total cost of sales 7,977,722 6,442,244 5,406,669
----------- ----------- -----------
Gross profit 14,313,297 11,882,340 6,799,687
----------- ----------- -----------
Selling, general and
administrative 11,048,431 9,014,043 4,598,053
Depreciation expense 709,858 651,551 597,424
----------- ----------- -----------
Total operating expenses 11,758,289 9,665,594 5,195,477
----------- ----------- -----------
Operating income 2,555,008 2,216,746 1,604,210
Other income (expense)
Other, net (41,701) 123,707 35,337
Interest (251,182) (224,034) (174,107)
----------- ----------- -----------
(292,883) (100,327) (138,770)
Income before provision for
income taxes 2,262,125 2,116,419 1,465,440
----------- ----------- -----------
Provision for income taxes (202,615) (494,741) (255,291)
----------- ----------- -----------
Net income $ 2,059,510 $ 1,621,678 $ 1,210,149
=========== =========== ===========
Net income per share $ 0.40 $ 0.34 $ 0.28
=========== =========== ===========
Weighted average number
of shares 5,188,092 4,710,228 4,343,501
The accompanying notes are an integral part of these supplemental consolidated financial statements.
</TABLE>
F-5
<PAGE> 24
UNICOMP, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
for the years ended February 29, 1996 and February 28, 1995 and 1994
<TABLE>
COMMON PREFERRED
STOCK STOCK
------------------ -------------------
NUMBER NUMBER ADDITIONAL RETAINED TOTAL
OF SHARES OF SHARES CONTRIBUTED EARNINGS STOCKHOLDERS'
ISSUED AMOUNT ISSUED AMOUNT CAPITAL (DEFICIT) EQUITY
<S> <C> <C> <C> <C> <C> <C> <C>
Balance February 28, 1993 3,560,767 $ 35,608 10,000 $ (190,000) $ 4,697,734 (4,337,285) $ (35,398)
Stock issued 680,667 6,806 925,993 932,799
Treasury stock purchased (350,000)
Conversion of preferred stock 100,000 1,000 (10,000) (10,000) 9,000 0
Subscription receivable 200,000 (200,000) 0
Shares issued to effect pooling of
interest with Smoky Mountain 500,000 5,000 (5,000) 0
Effect of shares issued by Smoky
Mountain 33,186 33,186
Net income 1,210,149 1,210,149
Distribution by Smoky Mountain (38,125) (38,125)
Change in cumulative translation
adjustment 98,147
--------- -------- ------- ---------- ----------- ---------- ----------
Balance February 28, 1994 4,841,434 48,414 - - 5,460,913 (3,165,261) 1,850,758
Stock issued 159,800 1,598 98,541 100,139
Treasury stock purchased (143,654)
Subscription receivable (82,000) (82,000)
Effect of shares issued by Smoky
Mountain 50,000 50,000
Net income 1,621,678 1,621,678
Distribution by Smoky Mountain (40,291) (40,291)
Change in cumulative translation
adjustment (4,873)
--------- -------- ------- ---------- ----------- ---------- ----------
Balance February 28, 1995 5,001,234 50,012 - - 5,527,454 (1,583,874) 3,351,757
Stock issued 162,198 1,622 603,375 604,997
Change in treasury stock 33,100
Effect of shares issued by Smoky
Mountain 99,000 99,000
Net income 2,059,510 2,059,510
Change in cumulative translation
adjustment (31,600)
--------- -------- ------- ---------- ----------- ---------- ----------
Balance February 29, 1996 5,163,432 $ 51,634 - $ - $ 6,229,829 $ 475,636 $6,116,764
========= ======== ======= ========== =========== ========== ==========
The accompanying notes are an integral part of these supplemental consolidated financial statements.
</TABLE>
F-6
<PAGE> 25
UNICOMP, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended February 29, 1996 and February 28, 1995 and 1994
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Net cash provided (used) by operating activities:
Net income $ 2,059,510 $ 1,621,678 $ 1,210,149
Adjustments to reconcile net income to net cash
provided by operations:
Depreciation and amortization 1,449,240 956,664 981,730
Loss on disposition of equipment 29,395 0 0
Allowance for doubtful accounts 10,872 60,812 7,000
Deferred income taxes 60,855 7,825 338,624
Changes in assets and liabilities:
Accounts and other receivables (1,241,638) (591,999) (88,258)
Inventories (184,056) (39,123) 273,355
Prepaid expenses (295,175) (212,152) 294,702
Accounts payable 820,467 19,459 (1,576,698)
Accrued expenses 313,847 318,719 0
Other accrued taxes 381,390 12,525 0
Deferred revenues (635,962) 738,925 1,285,341
Income taxes payable (50,485) 198,500 0
Pension liability 0 (265,000) 241,178
Other assets (232,989) (24,072) (5,200)
----------- ---------- ----------
Net cash provided by operating activities 2,485,271 2,802,761 2,961,923
----------- ---------- ----------
Cash flow from investing activities:
Capital expenditures (1,574,535) (924,800) (549,602)
Proceeds from disposal of property and equipment 51,916 0 0
Acquired and developed software (2,695,328) (1,067,783) (379,713)
Deferred acquisition costs 0 0 275,864
Business disposition 0 (154,208) 0
Business acquisition (422,083) (78,558) (2,208,198)
----------- ---------- ----------
Net cash used by investing activities (4,640,030) (2,225,349) (2,861,649)
----------- ---------- ----------
Cash flow from financing activities:
Proceeds from issuance of convertible notes, net 1,900,000 0 0
Payments on notes payable (228,291) (463,702) (1,245,017)
Proceeds from borrowing 1,099,693 159,430 0
Issuances of common stock, net 717,097 68,139 943,686
Smoky Mountain distributions 0 (40,291) (38,125)
Receivables from related party (126,832) (214,850) 345,394
Repurchase of treasury stock 0 (143,654) (350,000)
----------- ---------- ----------
Net cash provided (used) by financing activities 3,361,667 (634,928) (344,062)
----------- ---------- ----------
Net increase (decrease) in cash 1,206,908 (57,516) (243,788)
Effect of exchange rate changes on cash (31,600) (4,873) 98,147
Cash and cash equivalents at beginning of year 85,845 148,234 293,875
----------- ---------- ----------
Cash and cash equivalents at end of year $ 1,261,153 $ 85,845 $ 148,234
=========== ========== ==========
The accompanying notes are an integral part of these supplemental consolidated financial statements.
</TABLE>
F-7
<PAGE> 26
UNICOMP, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION
The supplemental consolidated financial statements have been prepared to
give retroactive effect of the acquisition of Smoky Mountain Technologies,
Inc. ("Smoky Mountain") as described in Note 3. Generally accepted
accounting principles proscribe giving effect to a consummated business
combination accounted for by the pooling-of-interests methods in financial
statements that do not include the date of consummation. These financial
statements reflect the financial position of the Company prior to the date
of consummation; however, they will become the historical consolidated
financial statements of UniComp, Inc. and subsidiaries after annual
financial statements covering the date of consummation of the business
combination are issued. The preparation of financial statements requires
management to make estimates and assumptions underlying the reported
amounts and disclosures. Amounts affected by these estimates include, but
are not limited to, the estimated useful lives, related amortization
expense and carrying values of the company's intangible assets and
capitalized software development costs. Changes in the status of certain
matters or facts or circumstances underlying these estimates could result
in material changes to these estimates, and actual results could differ
from these estimates.
The financial statements include the accounts of the Company and its
subsidiaries (the "Company") all of which are wholly owned. All material
intercompany balances and transactions have been eliminated in
consolidation. Certain amounts previously presented in the consolidated
financial statements have been reclassified to conform to current
presentation.
REVENUE RECOGNITION
The Company's revenues are generated primarily in the United Kingdom and
the United States from licensing software products, the sale of computer
equipment, and providing maintenance and support.
Revenues from the sale of hardware, the Company's computer software
products and the resale of third-party software are recognized upon
delivery, customer acceptance, fulfillment of significant vendor
obligations and determination that collectibility is probable. Revenue
related to sales which impose significant vendor obligations on the Company
are deferred until the obligations are satisfied. Revenues from consulting
services are recognized as services are provided. Contract revenues from
post-contract customer support are deferred and recognized over the life of
the contract.
F-8
<PAGE> 27
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS
All assets and liabilities in the balance sheet of a foreign subsidiary
whose functional currency is other than the United States dollar are
translated at the year-end exchange rate. Income statement items are
translated at the average currency exchange rate for the period.
Translation gains and losses are accumulated as a separate component of
stockholders' equity and are not included in determining net income.
Transaction gains and losses are included in the results of operations in
the period which they occur and are not significant in any period
presented.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes all cash balances and highly liquid
investments with an original maturity of three months or less. At times,
cash in bank deposits may exceed the federally insured limits. The Company
has not experienced and does not anticipate any losses from such accounts.
INVENTORIES
Inventories consist of equipment, services in process, computer hardware,
and software available for resale. Inventories are stated at the lower of
cost or market, cost being determined on a first-in first-out (FIFO) basis.
Components of inventories are as follows:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Services in process $ 7,222 $ 110,085
Computer hardware and software 708,722 421,803
--------- ---------
Total $ 715,944 $ 531,888
========= =========
</TABLE>
PROPERTY AND EQUIPMENT
Property and equipment, including certain equipment acquired under capital
leases, are stated at cost less accumulated depreciation. Depreciation is
provided on the straight-line method over the estimated useful lives of the
related assets, except for leasehold improvements and capital leases which
are amortized over the life of the related lease. When assets are retired
or otherwise disposed of, the cost and related accumulated depreciation are
removed from the accounts and any resulting gain or loss is recognized in
the results of operations.
F-9
<PAGE> 28
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
ACQUIRED AND DEVELOPED SOFTWARE
In accordance with Statement of Financial Accounting Standards No. 86,
"Accounting for the Costs of Computer Software to be Sold, Leased, or
Otherwise Marketed" (FAS 86), costs incurred to develop the Company's
software products which are to be licensed to its customers and costs of
purchased software are capitalized and amortized at the greater of the
amount computed using the ratio of current product revenues as compared to
the current and estimated future revenues of that product, or on a
straight-line basis over the estimated life of the products, generally
three to four years. All research and development costs incurred prior to
technological feasibility or subsequent to general availability have been
expensed in the period which they were incurred and totaled approximately
$610,000, $235,000 and $42,000 in 1996, 1995, and 1994, respectively.
Costs which are capitalized include direct and indirect costs associated
with payroll, benefits and computer usage, among others. The Company
capitalized software development costs of $2,695,328 (including $1,000,000
of purchased software), $1,067,783, and $379,713 during 1996, 1995, and
1994, respectively, with amortization of $681,936, $305,113, and $384,306
during the same periods. Capitalized software costs are net of amounts
reimbursed by United Kingdom government grants totaling approximately
$389,000, $369,000, and $285,000 in 1996, 1995, and 1994, respectively.
The amount by which unamortized software costs exceeds the net realizable
value, if any, is recognized as expense in the period it is determined.
GOODWILL
Goodwill is recorded upon acquisition and amortized on a straight-line
basis over its estimated period of future benefit, generally ten years.
The Company evaluates the recoverability of goodwill based upon a
comparison of estimated undiscounted future cash flows from the related
operations as compared with the carrying value of the respective assets.
The amount by which unamortized goodwill exceeds future estimated cash
flows, if any, is recognized as expense in the period it is determined.
HEDGING
The Company does not use hedging strategies to reduce the effects of
unfavorable price movements on profitability as a result of fluctuations in
foreign exchange rates.
F-10
<PAGE> 29
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
INCOME TAXES
Income taxes are provided on taxable income at the statutory rates
applicable to such income in the United States and the United Kingdom under
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes," (FAS 109). Under FAS 109, the deferred tax liabilities and assets
are determined based on temporary differences between the bases of certain
assets and liabilities for income tax and financial reporting purposes.
These differences are primarily attributable to differences in the
recognition of depreciation and amortization of property and equipment,
intangible assets, and capitalized software development costs. Deferred
income taxes of approximately $353,000 have not been provided on the
cumulative undistributed earnings of foreign subsidiaries in the amount of
$2,344,290 since such amounts are considered by management to be
permanently reinvested.
NET INCOME PER SHARE
Net income per common and common equivalent share is based upon the
weighted average of common and common equivalent shares outstanding during
the year. Primary and fully diluted net income per share are the same.
The weighted average number of shares outstanding for 1996 includes 294,656
common equivalent shares assuming the conversion of options and warrants
which are dilutive. The weighted average number of shares outstanding for
1995 and 1994 include no common equivalent shares since dilutive
securities do not reduce net income per share by at least 3%.
NEW ACCOUNTING STANDARDS
The American Institute of Certified Public Accountants has issued Statement
of Position 93-7 (SOP 93-7), "Reporting on Advertising Costs," which is
effective for fiscal years beginning after June 15, 1994. SOP 93-7
generally requires that advertising costs, with certain exceptions, be
expensed as incurred. As the Company has historically expensed advertising
costs as incurred, the effects of the Company's adoption of SOP 93-7 during
fiscal year 1996 did not have a material effect on the Company's
consolidated financial statements. Advertising expenses for 1996, 1995 and
1994 were approximately $200,000, $180,000 and $150,000, respectively.
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Assets to be Disposed Of" (FAS 121). The
Statement requires impairment losses to be recorded on long-lived assets
used in operations when indicators of impairment are present and the
expected future cash flows of those assets are less than the assets'
carrying amount. FAS 121 also addresses the accounting for long-lived
assets that are expected to be sold or discarded. The Company will adopt
FAS 121 in fiscal year 1997. The effect of adoption is not expected to be
material to the Company's financial position or results of operations.
F-11
<PAGE> 30
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (FAS 123). This Statement requires that companies with
stock-based compensation plans either recognize compensation expense based
on new fair value accounting methods or continue to apply the provisions of
Accounting Principles Board Opinion No. 25 and disclose pro forma net
income and earnings per share assuming the fair value method had been
applied. The Company will adopt the disclosure method in fiscal year 1997
and the adoption is not expected to have a material effect on the Company's
financial position or results of operations.
2. PROPERTY AND EQUIPMENT:
The components of property and equipment at February 29, 1996 and February
28, 1995 are as follows:
<TABLE>
<CAPTION>
ESTIMATED
USEFUL
LIFE
(YEARS) 1996 1995
<S> <C> <C> <C>
Buildings 20 $ 964,054 $ 161,501
Land N/A 58,737 57,066
Leasehold improvements 5-10 421,071 434,714
Computer equipment 3-5 1,720,167 1,872,739
Capitalized leases 2-5 312,649 335,033
Computer software 3 148,237 210,766
Furniture and fixtures 5 761,982 752,806
Vehicles 2-4 139,207 188,082
----------- -----------
4,526,104 4,012,707
Less accumulated depreciation (2,124,135) (2,394,104)
----------- -----------
$ 2,401,969 $ 1,618,603
=========== ===========
</TABLE>
F-12
<PAGE> 31
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
3. BUSINESS COMBINATIONS AND DISPOSAL:
ACQUISITION OF SMOKY MOUNTAIN TECHNOLOGIES, INC.
On April 16, 1996, the Company completed its acquisition of Smoky Mountain,
a software and hardware developer for the financial transaction industry.
The Company issued 500,000 shares of its common stock for all of the
outstanding common stock of Smoky Mountain. This transaction has been
accounted for as a pooling of interests, therefore, these financial
statements have been restated to reflect this merger.
Smoky Mountain prepared its financial statements on a December 31 year end.
Smoky Mountain's fiscal year end has been changed to the last day of
February to conform with the Company's year end.
The stockholders' equity accounts have been adjusted to reflect the 149
shares of Smoky Mountain preferred stock which were converted into 6,037
shares of Smoky Mountain common stock. Adjustments have also been made to
reflect the conversion of all Smoky Mountain common stock into 500,000
shares of the Company's common stock. No other adjustments were required
to reflect the consolidation of Smoky Mountain into the Company since the
accounting policies of Smoky Mountain prior to the transaction were
substantially the same as the Company's and prior to the date of the
acquisition there were no transactions between the companies.
Smoky Mountain's revenues and net income included in the Company's
consolidated statements of operation for the three years ended February 29,
1996 and February 28, 1995 and 1994 are summarized as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FEBRUARY 29, 1996
--------------------------------------
SMOKY
UNICOMP MOUNTAIN TOTAL
<S> <C> <C> <C>
Revenues $ 21,305,287 $ 985,732 $ 22,291,019
Net income (loss) 2,061,938 (2,428) 2,059,510
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FEBRUARY 28, 1995
--------------------------------------
SMOKY
UNICOMP MOUNTAIN TOTAL
<S> <C> <C> <C>
Revenues $ 17,798,566 $ 526,018 $ 18,324,584
Net income (loss) 1,637,715 (16,037) 1,621,678
</TABLE>
F-13
<PAGE> 32
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
3. BUSINESS COMBINATIONS AND DISPOSAL, CONTINUED:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FEBRUARY 28, 1994
--------------------------------------
SMOKY
UNICOMP MOUNTAIN TOTAL
<S> <C> <C> <C>
Revenues $ 12,157,833 $ 48,523 $ 12,206,356
Net income 1,186,124 24,025 1,210,149
</TABLE>
ADVEC LIMITED
On August 1, 1995, the Company acquired certain assets and liabilities of
Advec Limited in the United Kingdom under an asset purchase agreement for
approximately $418,000. The acquisition has been accounted for as a
purchase and accordingly, the purchase price has been allocated to the
assets acquired and the liabilities assumed based on the estimated fair
values at the date of acquisition. The results of operations have been
included from August 1, 1995. The excess consideration above the fair
value of net assets acquired of approximately $395,000 has been recorded as
goodwill. Supplemental pro forma information for the results of operations
is not presented since the amounts are not material to the Company's
consolidated financial position and results of operations.
DOMINION SOUND SYSTEMS, PLC.
On November 30, 1994, the Company sold the capital stock of Dominion in
exchange for the assumption of the net liabilities of Dominion in the
amount of $154,208. This amount was recognized in 1995 and is included in
other income.
CI COMPUTER SOFTWARE LIMITED
On September 18, 1994, the Company acquired the capital stock of CI
Computer Software Limited, a United Kingdom company, in exchange for $20,
assumption of net liabilities and forgiveness of a working capital advance
in the amount of approximately $200,000. The business combination was
accounted for as a purchase and accordingly, the purchase price has been
allocated to the assets acquired and the liabilities assumed based on the
estimated fair values at the date of acquisition. The results of
operations are included from September 18, 1994, the date of acquisition.
The excess consideration above the fair value of net assets acquired of
approximately $333,000 has been recorded as goodwill.
ICS COMPUTING GROUP LIMITED
On May 21, 1993, the Company acquired Questgold Technology Limited
("Questgold"), a United Kingdom company, for approximately $4.1 million.
The business combination was accounted for as a purchase and accordingly,
the purchase price has been allocated to the assets acquired and the
liabilities assumed based on the estimated fair values at the date of
acquisition. The results of operations are included from May 21, 1993, the
date of acquisition. On June 15, 1993, Questgold changed its name to ICS
Computing Group Limited.
F-14
<PAGE> 33
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
4. INCOME TAXES:
The significant components of income tax expense (benefit) are as follows
(all amounts are in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Current provision:
Federal $ 14 $ - $ -
State 43 11 -
Foreign 80 188 12
Deferred provision:
Federal (307) (14) -
State - - -
Foreign 373 310 243
----- ----- -----
$ 203 $ 495 $ 255
===== ===== =====
</TABLE>
A reconciliation of the provision for income taxes to the amount computed
by applying the statutory federal income tax rate to income before income
taxes is as follows (all amounts are in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Income tax at statutory rate $ 770 $ 716 $ 490
State income taxes (net of federal tax deduction) 29 7 0
Impact of foreign taxes (52) (126) (61)
Utilization of federal net operating losses (238) (112) (188)
Reduction of deferred tax asset valuation
allowance (302) - -
Other (4) 10 14
----- ----- -----
Tax expense $ 203 $ 495 $ 255
===== ===== =====
</TABLE>
F-15
<PAGE> 34
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
4. INCOME TAXES, CONTINUED:
The deferred tax asset was offset by a 100% valuation allowance for 1995
and 1994. Based upon the performance of the United States subsidiaries,
the Company determined that a valuation allowance related to the deferred
tax asset in the United States was not required as of February 29, 1996.
As a result, the Company reduced the valuation allowance by $238,000 for
current year utilization of the federal net operating loss and recorded a
credit of $302,000 to tax expense to reduce the valuation allowance to
zero. The deferred tax liability recorded is principally due to temporary
differences as a result of the timing of recognition of the capitalization
and amortization of internally developed software costs and the
amortization of goodwill. The components of the deferred tax asset are as
follows (all amounts are in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Cumulative U.S. NOL's at statutory rate $ 302 $ 540 $ 736
Cumulative U.K. NOL's at statutory rate 40 - -
Alternative minimum tax credit carryforward 7 - 1
----- ----- -----
Gross deferred tax asset $ 349 $ 540 $ 737
===== ===== =====
</TABLE>
As of February 29, 1996, the Company has net operating loss carryforwards,
subject to certain limitations under the provisions of Internal Revenue
Code Section 382, that expire February 28, 2003 through 2007, respectively,
of $54,653, $320,000, $44,371, $264,891, and $289,327.
5. RELATED PARTY TRANSACTIONS:
Accounts and other receivables from related parties at February 29, 1996
and February 28, 1995 are comprised of $404,478 and $277,646, respectively,
due from affiliated companies or officers which have borrowed funds from
the Company principally in the form of unsecured 10% notes which mature
within one year from February 29, 1996.
F-16
<PAGE> 35
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
6. LEASES:
The Company leases office space and automobiles under non-cancelable
operating leases. Rental expense for the years ended 1996, 1995 and 1994
were $1,033,006, $869,586 and $793,026, respectively. In addition, the
Company leases certain computers under capital leases.
Future minimum lease payments for operating leases and capital leases at
February 29, 1996 are as follows:
<TABLE>
<CAPTION>
OPERATING CAPITAL
LEASES LEASES
<S> <C> <C>
1997 $ 729,092 $ 55,197
1998 604,839 16,150
1999 379,156
2000 259,114
2001 28,182
Thereafter 28,182
----------- --------
$ 2,028,565 $ 71,347
=========== ========
</TABLE>
7. LINE OF CREDIT:
The Company maintains a line of credit in the United Kingdom which is
secured by certain accounts receivables. The line of credit is utilized
for short-term borrowing for general corporate use. Interest is charged
based on the average outstanding balance at a variable rate which was 8% as
of February 29, 1996. The outstanding balance on the line of credit was
$1,078,933 and $661,750 at February 29, 1996 and February 28, 1995,
respectively.
F-17
<PAGE> 36
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
8. LONG-TERM DEBT:
NOTES PAYABLE
Notes payable as of February 29, 1996 and February 28, 1995 are as follows:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Notes payable to a United Kingdom bank, interest at a variable rate,
currently 8%, collateralized by a building in the U.K., payable in
quarterly installments of $17,300 commencing October 1995 $ 654,075 $ 0
Notes payable to a United Kingdom bank, interest at a rate of 8.5%,
collateralized by accounts receivable and other assets of the
Company, payable in quarterly installments of $38,200
commencing March 1995 612,000 790,000
Other 181,956 203,811
----------- ---------
Total notes payable 1,448,031 993,811
Less: current portion 375,105 266,732
----------- ---------
$ 1,072,926 $ 727,079
=========== =========
</TABLE>
Maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
<S> <C>
1997 $ 375,105
1998 250,853
1999 222,000
2000 222,000
2001 70,000
Thereafter 308,073
-----------
$ 1,448,031
===========
</TABLE>
CONVERTIBLE NOTES
In December 1995, the Company issued $2,000,000 of two-year 7% convertible
notes. The notes are convertible at the holder's option as follows: 20%
of the principal and accrued interest are convertible 61 days after
issuance with an additional 20% convertible each subsequent 10 days into
shares of common stock at the lesser of $5.75 per share or 85% of the
market price of the common stock on the date of conversion. As of February
29, 1996, $20,000 in principal and the related accrued interest thereon had
been converted into 3,478 shares of common stock.
F-18
<PAGE> 37
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
9. STOCKHOLDERS' EQUITY:
The Company has an incentive plan under which options to purchase shares of
the Company's common stock have been granted to eligible employees. There
are 1,200,000 shares of common stock available for award under the plan
which is administered by the Compensation Committee of the Board of
Directors.
Option activity under the stock option plan is summarized as follows:
<TABLE>
<CAPTION>
FEBRUARY 29, FEBRUARY 28, FEBRUARY 28,
1996 1995 1994
<S> <C> <C> <C>
Shares under option at beginning of year 980,000 690,000 -
Granted 12,500 300,000 690,000
Exercised (162,500) - -
Forfeited (257,500) (10,000) -
-------- ------- -------
Shares under option at end of year 572,500 980,000 690,000
======== ======= =======
Shares under option exercisable at end of year 70,000 - -
======== ======= =======
Shares available for future grant 465,000 220,000 510,000
======== ======= =======
</TABLE>
The exercise price of options exercised under the plan, during 1996
were $3.31 to $4.41. The exercise prices of shares under option at
February 29, 1996 were $3.31 to $4.41.
All options granted have exercise prices of 100% of market value at
date of grant and are generally exercisable at the rate of 25% per year
beginning two years from date of grant. Options expire 10 years from the
date of grant.
In accordance with the issuance of the convertible notes, the Company
granted warrants to purchase 25,000 shares of the Company's stock at $6.90,
the fair value of the common stock at the date of grant. As of February
29, 1996, the warrants have not been exercised.
The Company granted 4,800, 9,800, and 1,000 shares of common stock to
outside directors during 1996, 1995 and 1994, respectively, and recognized
$24,000, $24,570, and $900 of expense related to these transactions during
the same periods. Additionally, in 1994, the Company issued 63,000 common
shares to holders of a bridge loan in accordance with the terms of the
subscription agreement. The Company recognized expense of $56,700
associated with this transaction.
F-19
<PAGE> 38
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
9. STOCKHOLDERS' EQUITY, CONTINUED:
The Company holds 133,400 shares of Common Stock at cost in treasury at
February 29, 1996. 100,000 shares were given to the Company during fiscal
year ended February 28, 1994 as payment for debt owed to the Company. In
November 1994, 40,000 shares were reacquired from a previous officer of
Dominion Sound Systems. Subsequently in 1995, 6,600 shares were issued to
a director for services for which the Company recognized $16,170 of
expense. Treasury stock is held at cost and presented as a reduction of
stockholders' equity.
10. COMMITMENTS AND CONTINGENCIES:
The Company is not presently a party to any material litigation, nor to the
knowledge of management is any material litigation threatened against the
Company. There are no significant pending legal proceedings, other than
routine litigation incidental to the Company's business.
11. SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest totaled $249,307, $245,682 and $215,607 in 1996,
1995 and 1994, respectively.
The Company paid income taxes of $262,559 and $12,684 in 1996 and 1995.
The Company paid no income taxes in 1994.
During 1996, convertible notes with principal amounts of $20,000 were
converted into 3,478 shares common stock.
12. SEGMENT INFORMATION:
The Company operates in a single industry segment of marketing of computer
hardware and software, software support services and software development
services.
A summary of operations by geographic area follows:
<TABLE>
<CAPTION>
U.S. U.K.
OPERATIONS OPERATIONS
FISCAL YEAR 1996
<S> <C> <C>
Revenues $ 3,632,543 $ 18,658,476
Cost of sales 1,044,433 6,933,289
Gross profit 2,588,110 11,725,187
SG&A expense 2,087,798 8,960,633
Depreciation 59,082 650,776
Operating income 441,230 2,113,778
Total assets $ 3,498,816 $ 13,173,237
</TABLE>
F-20
<PAGE> 39
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
12. SEGMENT INFORMATION, CONTINUED:
<TABLE>
<CAPTION>
U.S. U.K.
OPERATIONS OPERATIONS
FISCAL YEAR 1995
<S> <C> <C>
Revenues $ 2,796,697 $ 15,527,887
Cost of sales 905,517 5,536,727
Gross profit 1,891,180 9,991,160
SG&A expense 1,294,026 7,720,017
Depreciation 57,108 594,443
Operating income 291,510 1,925,236
Total assets $ 1,068,747 $ 8,889,364
FISCAL YEAR 1994
Revenues $ 2,636,215 $ 9,570,141
Cost of sales 1,308,040 4,098,629
Gross profit 1,328,175 5,471,512
SG&A expense 823,676 3,774,377
Depreciation and amortization 39,490 557,934
Operating income 618,984 985,226
Total assets $ 1,085,392 $ 6,224,991
</TABLE>
The Company sells its product and services to a variety of customers. No
individual customer accounted for more than 10% of Company revenues during
fiscal years 1996, 1995 and 1994.
13. PENSIONS:
The Company's U.K. subsidiaries operate a pension plan which is designed to
provide death and retirement benefits for eligible employees. The pension
costs are assessed in accordance with the advice of a qualified actuary.
Actuarial assumptions used at February 29, 1996 included a 9% long-term
rate of return on assets, a 8.5% discount rate and salary increase of 5.5%.
- All employees over 25 years of age are eligible for the scheme.
- Benefit formula: annual pension to be 1/60 of final pensionable salary
for each year of pensionable service subject to a maximum fraction of
2/3.
- Funding policy: the employer contributes to the fund at rates determined
by the actuary. Employees contribute in accordance with the plan.
- Assets held are fixed interest securities and deferred annuities
insurance policies.
F-21
<PAGE> 40
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
13. PENSIONS, CONTINUED:
Cost components for 1996 (in 000's):
<TABLE>
<S> <C>
Service cost $ 116
Interest cost 318
Return on assets (360)
Amortization and deferral of period service costs 11
-----
Net periodic pension cost $ 85
=====
</TABLE>
Reconciliation of funded status as of February 29, 1996 (in 000's):
<TABLE>
<S> <C>
Accrued benefits obligation $ 3,481
=======
Project benefit obligation $ 3,638
Assets at market value 3,820
-------
Funded status 182
Unrecognized transition asset (59)
Unrecognized loss 104
-------
Prepaid pension expense $ 227
=======
</TABLE>
14. FOURTH QUARTER ADJUSTMENTS:
During the fourth quarter of 1996, the Company recorded an income tax
provision principally in the United Kingdom in the amount of $258,000. The
effective tax rate used during the year reflected anticipated foreign tax
rates and tax planning alternatives during the quarterly periods and was
adjusted to the actual amounts in the fourth quarter. Additionally, in the
fourth quarter, the Company recognized a credit to tax expense of $302,000
related to recognition of the United States deferred tax asset when the
Company determined that it was more likely than not that the deferred tax
asset would be realized in future periods.
Also, during the fourth quarter of fiscal year 1996, the Company recorded a
$227,000 credit related to the defined benefit pension plan in the United
Kingdom based on the computation of its actuarial determination of net
periodic pension cost in the fourth quarter.
F-22
<PAGE> 41
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
15. SIGNIFICANT RISKS AND UNCERTAINTIES:
The Company's operating results and financial condition can be impacted by
a number of factors, including but not limited to any of the following
which could cause actual results to vary materially from current and
historical results or the Company's anticipated future results.
The Company's business is focused principally on developing and marketing
platform-migration software and development tools that enable users to
migrate applications written for proprietary IBM mid-range computer systems
to portable operating systems such as UNIX and Windows NT in the United
States and the United Kingdom. Product revenues to be received from the
Company's UNIBOL products are difficult to forecast because of the evolving
product lifecycle for the UNIBOL36 product and the recent introduction of
the UNIBOL 400 product. The Company's success will depend on the level of
market acceptance and enhancements to the market on a timely and cost
effective basis, and maintain a labor force sufficiently skilled to compete
in the current environment.
While management believes that the Company's financing needs for the
foreseeable future will be satisfied from cash flows from operations and
the Company's existing credit facilities, unforeseen events and adverse
economic or business trends may significantly increase cash demands beyond
those currently anticipated that affect the Company's ability to
generate/raise cash to satisfy financing needs.
The Company derives net revenues primarily from its operations in Northern
Ireland. It is reasonably possible that this concentration of revenues
makes the Company vulnerable to the risk of a near-term severe impact on
consolidated net revenues due to unforeseen political and economic forces
as well as exchange rate fluctuations.
As a result of the above and other factors, the Company's operations and
financial position can vary significantly from quarter-to-quarter and
year-to-year. These variations may contribute to volatility in the market
for the Company's common stock.
F-23
<PAGE> 42
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION
BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
____________________________
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
PROSPECTUS SUMMARY .................... 1
RISK FACTORS .......................... 3
THE COMPANY ........................... 8
USE OF PROCEEDS ....................... 9
SELLING SHAREHOLDERS .................. 10
PLAN OF DISTRIBUTION .................. 10
DESCRIPTION OF SECURITIES TO BE
REGISTERED .......................... 11
EXPERTS ............................... 12
LEGAL MATTERS ......................... 12
MATERIAL CHANGES ...................... 13
</TABLE>
UNICOMP, INC.
<PAGE> 43
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Securities and Exchange Commission initial registration fee $ 255.95
Legal, accounting and other expenses 15,000.00*
----------
Total $15,255.95
</TABLE>
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Colorado law permits extensive indemnification of present and former
directors, officers, employees or agents of a Colorado company, whether or not
authority for such indemnification is contained in the indemnifying company's
articles of incorporation or bylaws. Specific authority for indemnification of
present and former directors and officers, under certain circumstances, is
contained in paragraph 12 of the Registrant's Amended and Restated Bylaws (the
"Bylaws"). Under Colorado law, for a company to provide indemnification, a
disinterested majority of the company's board of directors, independent legal
counsel, a court or the shareholders must find that the director, officer,
employee or agent acted, or failed to act, in good faith and in a manner he or
she reasonably believed, in the case of conduct in his or her official capacity
with the company, was in the best interests of the company or, in all other
cases, was at least not opposed to the company's best interests, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his or her conduct was unlawful. Statutory indemnification is
permissive, except in the event of a successful defense, in which case, unless
limited by the articles of incorporation, a director, officer, employee or
agent must be indemnified against reasonable expenses incurred by him or her in
connection therewith. Indemnification is permitted with respect to expenses,
judgments, fines and amounts paid in settlement by such persons.
The Registrant's Bylaws provide that the Registrant may indemnify any
person who was or is made a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Registrant), by reason of the fact that he or she is or was a
director, officer, employee, fiduciary or agent of the Registrant or is or was
serving at the request of the Registrant as a director, officer, employee,
fiduciary or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him or
her in connection with such action, suit or proceeding if he or she acted in
good faith and in a manner he or she reasonably believed to be in, or not
opposed, to the best interests of the Registrant and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful.
The Registrant's Bylaws also provide that the Registrant may indemnify a
person who was or is made a party or is threatened to be made a party to any
proceeding by or in the right of the Registrant to procure a judgment in its
favor by reason of the fact that he or she is or was a director, officer,
employee or agent of the Registrant, or is or was serving at the request of the
Registrant as a director, officer, employee, fiduciary or agent of another
corporation or other enterprise against expenses (including attorneys' fees)
i
<PAGE> 44
actually and reasonably incurred by him or her in connection with the defense
or settlement of such action if he or she acted in good faith and in a manner
he or she reasonably believed to be in, or not opposed to, the best interests
of the Registrant. No indemnification shall be made in respect of any claim,
issue or matter as to which such person has been adjudged to be liable for
negligence or misconduct in the performance of his or her duty to the
Registrant unless and only to the extent that the court in which the action is
brought determines that in view of all the circumstances such person is fairly
and reasonably entitled to indemnification for expenses which the court deems
proper.
The Registrant's Bylaws also provide that to the extent that an authorized
representative of the Registrant who neither was nor is a director or officer
of the Registrant has been successful on the merits or otherwise in defense of
any action, suit or proceeding, he or she shall be indemnified by the
Registrant for and against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith. Such an authorized
representative may, at the discretion of the Registrant's Board of Directors,
be indemnified by the corporation in certain circumstances to the same extent
he or she would have been had he or she been a director of officer of the
Registrant.
A determination of whether indemnification is proper shall be made by the
Board of Directors by a majority vote of a quorum consisting of disinterested
directors or, if such a quorum is not obtainable or, even if obtainable, as a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, or by the Registrant's shareholders. The Registrant shall
advance expenses (including attorneys' fees) upon receipt of an undertaking by
or on behalf of the director to repay such amount unless it is determined that
he or she is entitled to be indemnified.
In order to induce qualified and essential persons to serve as members of
the Board of Directors or officers of the Company, the Company believes it is
advantageous to enter into indemnification agreements. As such, the Company
has entered into indemnification agreements with its officers and members of
the Board of Directors.
ITEM 16. LIST OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
----------- ----------------------------------
<S> <C>
5.1 Opinion of Snell & Wilmer
23.1 Consent of Independent Accountants
23.2 Consent of Snell & Wilmer (included in Opinion
filed as Exhibit No. 5.1)
24 Power of Attorney (see page II-4)
27 Financial Data Schedule (for SEC use only)
</TABLE>
ii
<PAGE> 45
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section
10(a)(3) of the Act;
(ii) to reflect in the prospectus any facts or
events arising after the effective date of the
Registration Statement (or the most recent
post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in
the information set forth in the Registration
Statement. Notwithstanding the foregoing, an increase
or decrease in volume of securities offered (if the
total dollar value of securities offered would not
exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule
424(b) (Section 230.424(b) of this chapter) if, in
the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective
registration statement;
(iii) to include any material information with
respect to the plan of distribution not previously
disclosed in the Registration Statement or any
material change to such information in the
Registration Statement; provided, however, that
paragraph (1)(i) and (1)(ii) do not apply if the
Registration Statement is on Form S-3, Form S-8, or
Form F-3 and the information required to be included
in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated
by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(4) That, for purposes of determining any liability under the Act,
each filing of the registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange
iii
<PAGE> 46
Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange
Act of 1934) that is incorporated by reference in the Registration
Statement shall be deemed to be a new registration statement relating to
the securities offered herein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification by the Company for liabilities arising under the Act
may be permitted to directors, officers, and controlling persons of the Company
pursuant to the foregoing provisions or otherwise, the Company has been advised
that, in the opinion of the Commission, such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director, officer, or
controlling person of the Company in the successful defense of any action,
suit, or proceeding) is asserted by such director, officer, or controlling
person in connection with the securities being registered, the Company will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
iv
<PAGE> 47
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Marietta, Georgia, on the 6th day of September, 1996.
UNICOMP, INC.
By: /s/ Stephen A. Hafer
-----------------------------------
Stephen A. Hafer
Chairman of the Board, President,
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated, including a majority of the Company's
Board of Directors. Each person whose signature appears below hereby
authorizes and appoints Stephen A. Hafer as attorney-in-fact, to sign in his
name and behalf, individually and in each capacity designated below, and to
file any amendments, including post-effective amendments, to this Registration
Statement.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Stephen A. Hafer Chairman of the Board, President 9/6/96
----------------------- and Chief Executive Officer
Stephen A. Hafer (Principal Executive Officer)
/s/ L. Allen Plunk Chief Financial Officer (Principal 9/6/96
----------------------- Accounting Officer)
L. Allen Plunk
/s/ John Patrick Henry Director 9/6/96
-----------------------
John Patrick Henry
/s/ Nelson J. Millar Director 9/6/96
-----------------------
Nelson J. Millar
/s/ Thomas Zimmerer Director 9/6/96
-----------------------
Thomas Zimmerer
</TABLE>
<PAGE> 1
EXHIBIT 5.1
OPINION OF SNELL & WILMER
September 6, 1996
UNICOMP, INC.
1800 Sandy Plains Parkway, Suite 305
Marietta, Georgia 30066
Ladies and Gentlemen:
Reference is made to your proposed registration and offering of up to
125,000 shares of Common Stock of UniComp, Inc., as contemplated by the
Prospectus contained in the Registration Statement (the "REGISTRATION
STATEMENT") on Form S-3 to be filed by you on September 6, 1996, with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended.
We have examined originals or copies, certified or otherwise identified to
our satisfaction, of such corporate records, agreements, and other instruments,
certificates, orders, opinions, correspondence with public officials,
certificates provided by your officers and representatives, and other
documents, as we have deemed necessary or advisable for the purposes of
rendering the opinions set forth herein.
Based on the foregoing, and without further inquiry, it is our opinion
that the 125,000 shares of Common Stock described in the Registration Statement
were validly issued, fully paid and non-assessable at the time of issuance.
Consent is hereby given to the use of this opinion as part of the
Registration Statement referred to above and to the use of our name wherever it
appears in said Registration Statement and the related Prospectus.
Very truly yours,
SNELL & WILMER L.L.P.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration
statement on Form S-3 of our report dated May 23, 1996, on our audits of the
consolidated financial statements and financial statement schedules of UniComp,
Inc. and our report dated May 2, 1996, on our audit of Smoky Mountain
Technologies, Inc. and to the inclusion in this registration statement on Form
S-3 of our report dated August 23, 1996, on our audits of the supplemental
consolidated financial statements of UniComp, Inc. We also consent to the
reference to our firm under the caption "Experts."
Coopers & Lybrand L.L.P.
Atlanta, Georgia
September 5, 1996
<PAGE> 1
EXHIBIT 23.2
CONSENT OF SNELL & WILMER
(INCLUDED IN OPINION FILED AS EXHIBIT 5.1)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL STATEMENTS OF THE COMPANY AS OF FEBRUARY 29, 1996 HAVE BEEN
RESTATED TO GIVE RETROACTIVE EFFECT OF THE ACQUISITION OF SMOKY MOUNTAIN
TECHNOLOGIES, INC. WHICH HAS BEEN ACCOUNTED FOR AS A POOLING-OF-INTERESTS.
THESE FINANCIAL STATEMENTS REFLECT THE FINANCIAL POSITION OF THE COMPANY PRIOR
TO THE DATE OF CONSUMMATION (APRIL 16, 1996); HOWEVER, THEY WILL BECOME THE
HISTORICAL CONSOLIDATED FINANCIAL STATEMENTS OF UNICOMP, INC.
</LEGEND>
<RESTATED>
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<EXCHANGE-RATE> 1
<CASH> 1,261,153
<SECURITIES> 0
<RECEIVABLES> 4,859,787
<ALLOWANCES> 137,878
<INVENTORY> 715,944
<CURRENT-ASSETS> 8,332,566
<PP&E> 4,526,104
<DEPRECIATION> 2,124,135
<TOTAL-ASSETS> 16,672,053
<CURRENT-LIABILITIES> 6,983,254
<BONDS> 3,052,926
0
0
<COMMON> 51,634
<OTHER-SE> 6,065,130
<TOTAL-LIABILITY-AND-EQUITY> 16,672,053
<SALES> 10,881,491
<TOTAL-REVENUES> 22,291,019
<CGS> 6,151,381
<TOTAL-COSTS> 7,977,722
<OTHER-EXPENSES> 11,758,289
<LOSS-PROVISION> 110,296
<INTEREST-EXPENSE> 251,182
<INCOME-PRETAX> 2,262,125
<INCOME-TAX> 202,615
<INCOME-CONTINUING> 2,059,510
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,059,510
<EPS-PRIMARY> 0.40
<EPS-DILUTED> 0.40
</TABLE>
