SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT No. 2
ON
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
February 15, 1995
LASERGATE SYSTEMS, INC.
(Exact Name of Registrant as Specified in Charter)
FLORIDA 0-15873 59-2543206
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File No.) Identification No.)
28050 U.S. 19 NORTH, SUITE 502, CLEARWATER, FLORIDA 34621
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (813) 725-0882
5588 RIO VISTA DRIVE, CLEARWATER, FLORIDA 34620
(Former Name or Former Address, if Changed Since Last Report)
-1-
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Audited financial statements of GIS Systems Limited Partnership
Financial statement information previously filed with Form 8-K
dated February 15, 1995
(b) Pro forma financial information
Unaudited Condensed Pro Forma Combined Balance Sheet as of
December 31, 1994
Unaudited Condensed Pro Forma Combined Statements of Operations
for the year ended December 31, 1994
-2-
<PAGE>
LASERGATE SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED PRO FORMA
COMBINED BALANCE SHEET
December 31, 1994
The following unaudited condensed pro forma combined balance sheet is based on
the individual audited balance sheet of Lasergate Systems, Inc. and Subsidiaries
(Lasergate) as of December 31, 1994 as contained in Form 10-KSB filed for the
year then ended and the audited balance sheet of GIS Systems Limited Partnership
as of December 31, 1994, and has been prepared to reflect the acquisition of GIS
by Lasergate after giving effect to the pro forma adjustments described in Note
2 as if the acquisition had occurred on December 31, 1994. In the opinion of
management, all adjustments have been made that are necessary to present fairly
the pro forma information. This statement should be read in conjunction with the
aforementioned Lasergate 10-KSB, as recently filed, and the GIS financial
statements and notes thereto, the latter included in the previously filed Form
8-K dated February 15, 1995.
<TABLE>
<CAPTION>
As of December 31, 1994
<S> <C> <C> <C> <C>
Historical Pro Forma (unaudited)
---------------------------- --------------------------------
Adjustments
Lasergate GIS (Note 2) Combined
--------- --- ------ --------
ASSETS
Current assets:
Cash $1,589,837 $ - $ (559,000)(d)(a) $1,030,837
Accounts receivable, net 152,529 243,671 (243,671)(b) 152,529
Other current assets 241,628 127,645 (21,211)(b) 348,062
---------- ---------- ----------- ----------
Total current assets 1,983,994 371,316 (823,882) 1,531,428
---------- ---------- ----------- ----------
Property and equipment, net 96,993 87,581 184,574
(1,191,122)(b)
Systems and software costs, net 529,558 1,191,122 1,200,000 (c) 1,729,558
Goodwill, net 536,919 - 2,083,113 (c) 2,620,032
300,000 (c)
Other assets, net 331,367 15,357 (15,357)(b) 631,367
---------- ---------- ----------- ----------
$3,478,831 $1,665,376 $1,552,752 $6,696,959
========== ========== =========== ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)/PARTNERS' CAPITAL
Current liabilities:
Notes payable $ - $ 175,960 $ (175,960)(b) -
82,744 (a)
Accounts payable, trade 530,260 433,905 (433,905)(b) 613,004
Accrued expenses 393,169 217,678 (217,678)(b) 393,169
(44,339)(b)
Other current liabilities 136,910 44,339 14,028 (a) 150,938
---------- ---------- ----------- ----------
Total current liabilities 1,060,339 871,882 (775,110) 1,157,111
---------- ---------- ----------- ----------
Notes payable, related party 200,000 - 200,000
Deferred revenue - 272,836 (272,836)(b) -
(30,353)(b)
Other long-term liabilities - 30,353 31,690 (a) 31,690
Obligations to issue common stock
and common stock options 450,000 - 450,000
Common stock subject to put options 210,000 - 210,000
Promissory notes payable (with
conversion features) - - 2,324,335 (a) 2,324,335
Stockholders' equity (deficit):
Preferred stock 1,091 - 3,354 (a) 4,445
Common stock 87,412 - 3,280 (a) 90,692
Additional paid-in capital 9,258,563 - 1,317,697 (a) 10,576,260
Less: Common stock subject to
put options (210,000) - (210,000)
Note receivable, stockholder - - (559,000)(d)(a) (559,000)
Accumulated deficit (7,578,574) - - (7,578,574)
---------- ---------- ----------- ----------
1,558,492 - 765,331 2,323,823
---------- ---------- ----------- ----------
Partners' capital - 490,305 (490,305)(b) -
---------- ---------- ----------- ----------
$3,478,831 $1,665,376 $1,552,752 $6,696,959
========== ========== =========== ==========
</TABLE>
PF-1
<PAGE>
LASERGATE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED PRO FORMA
COMBINED BALANCE SHEET
December 31, 1994
NOTE 1 - ACQUISITION
On February 15, 1995, Lasergate purchased substantially all of the assets of GIS
Systems Limited Partnership, a company previously engaged in the business of
design, integration, installation and sale of admission control and revenue
accounting computer systems and software for the entertainment industry. The
transaction was effective as of January 1, 1995 as control of the assets and
assumption of certain stated liabilities passed to the Company as of that date.
Additionally, there was no adjustment to the purchase price for activity
occurring subsequent to January 1, 1995. The Company paid GIS a management fee
for operation of the business on behalf of the Company for the period from
January 1, 1995 through February 15, 1995, the closing date of the transaction.
The purchase price for the acquisition is valued at $3,700,000 and was based
upon the Seller's expected revenues and the competitiveness of the Seller's
products. The purchase price consists of (a) 109,333 shares of the Registrant's
Common Stock, subject to an agreement whereby such shares may not be sold until
March 31, 1996, (b) 111,800 shares of the Registrant's Series B Preferred Stock
(which, although convertible into Common Stock, the Seller has agreed not to
convert while the Series B Preferred Stock is pledged to the registrant as
described below), (c) the Registrant's unsecured, non-interest bearing
promissory note in the principal amount of $591,000, which is payable at the
Registrant's option at or prior to March 31, 1996, in cash or by the issuance of
118,200 shares of the Registrant's Series B Preferred Stock, and (d) the
Registrant's unsecured, non-interest bearing promissory note in the principal
amount of $1,733,335, which shall be payable at the Registrant's option (i) in
cash at or prior to March 31, 1996, (ii) if on or before December 29, 1995, by
the issuance of 346,667 shares of the Registrant's Series C Preferred Stock
(which would be convertible into shares of Common Stock) or (iii) if on or after
December 30, 1995 but prior to March 31, 1996, by the issuance to the Seller, of
that number of shares of the Registrant's Common Stock which is equal to the
quotient of 1,733,335 divided by the market price of the Registrant's Common
Stock at the time of such issuance. In addition, the Registrant has agreed to
assume certain liabilities of the Seller and has loaned the Seller $559,000
which has been evidenced by Seller's promissory note due March 31, 1996 which is
secured by the pledge to the Registrant of the 111,800 shares of Series B
Preferred Stock referenced in item (b) above (see Note 2(d)). Provided the
Registrant has either repaid or purchased its promissory note in the principal
amount of $591,000, the Registrant has an assignable option any time prior to
March 31, 1996 to purchase from the Seller all of the 111,800 pledged shares of
Series B Preferred Stock at a price of $5.00 per share. The 109,333 shares of
Common Stock being issued to the Seller are also being pledged by the Seller to
the Registrant until March 31, 1996 to secure the seller's obligations to
indemnify the Registrant from any losses sustained as the result of any
misrepresentation made by the Seller or other obligations of the Seller in
connection with the transaction. The Registrant has agreed to certain
registration rights with respect to the Common Stock being issued or which may
be issued to the Seller in accordance with items (a) and (d) above.
The Company's Series B and Series C Preferred Stock have the same rights with
respect to dividends, voting, liquidation and redemption. The holders of Series
B or Series C Preferred Stock are entitled to receive dividends when, as and if
declared by the Board of Directors, out of legally available funds payable in
cash, stock or otherwise. The holders of the Company's Series A, B and C
Preferred Stock do not have voting rights as common shareholders and are only
entitled to vote separately as a series on matters submitted to common
shareholders on matters which require a separate class vote as mandated by
applicable law.
PF-2
<PAGE>
LASERGATE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED PRO FORMA
COMBINED BALANCE SHEET - Continued
December 31, 1994
In the event of any liquidation, dissolution or winding up of the affairs of the
Company, whether voluntary or involuntary, holders of Series B or Series C
Preferred Stock will be entitled to receive, prior to any distribution to the
holders of Common Stock, the sum of $5.00 per share plus an amount equal to any
accrued and unpaid dividends. If the net assets available for distribution to
the Company's shareholders is insufficient to permit the payment in full of the
liquidation preference owed to holders of Preferred Stock, the entire assets of
the Company shall be distributed ratably among the holders of Series A, Series B
and Series C Preferred Stock. In addition, if the Company initiates or approves
any event requiring approval of holders of the Series B or Series C Preferred
Stock where such approval is not obtained, such holder may require the Company
to redeem the shares for cash of Series B or Series C Preferred Stock owned by
such holder at a redemption price equal to the Liquidation Value. Holders of
Series B and Series C Preferred Stock have 30 days from receipt of notice from
the Company of the redemption option to deliver a request to the Company that
such shares of Series B or Series C Preferred Stock be redeemed within 10
business days. The only circumstance which allows for mandatory redemption of
Series B or Series C Preferred Stock, is the failure of the Company to obtain
written consent of such preferred stockholders prior to taking certain actions
which would materially impact their rights and, therefore, management believes
that these actions are solely within the control of the Company.
With respect to Conversion Rights and Transferability, Series B Preferred Stock
shall not be transferable except as a block to one transferee and shall be
convertible at the holder's option on or before March 31, 1996, and
automatically thereafter into one share of fully paid and non-assessable Common
Stock for each share of Preferred Stock. Series C Preferred Stock shall not be
transferable except as a block to one transferee and shall be convertible at the
holder's option on or before March 31, 1996, into one share of fully paid and
non-assessable Common Stock for each share of Preferred Stock, and after March
31, 1996, shall automatically convert to the number of shares of Common Stock
equal to the quotient of (i) $1,733,335 divided by the Current Market Price and
(ii) the total number of outstanding Series C Preferred Shares.
NOTE 2 - PRO FORMA ADJUSTMENTS
(a) A summary of the purchase price for the acquisition described in Note 1 is
as follows:
109,333 shares of common stock, par value $.03 per share $765,331
=======
111,800 shares of Series B Preferred Stock, par value
$.03 per share $559,000
=======
Promissory notes payable, unsecured, non-interest bearing: $591,000
1,733,335
---------
$2,324,335
=========
Liabilities assumed:
Current $14,028
Long-term 31,690
---------
$45,718
=========
Direct acquisition costs incurred (principally legal
and accounting) $82,744
=========
PF-3
<PAGE>
LASERGATE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED PRO FORMA
COMBINED BALANCE SHEET - Continued
December 31, 1994
(b) Reflects adjustment to eliminate assets and liabilities of GIS not acquired
by Lasergate and systems and software costs which will be recorded in (c)
as part of the acquisition, along with the balance in partners' capital
immediately prior to the acquisition.
(c) The total purchase price of GIS was allocated based on fair value of net
tangible assets acquired with the excess allocated to identifiable
intangible components based on their individual estimated fair values, and
the remainder was allocated to goodwill.
Net tangible assets acquired consist of:
Inventory $ 85,962
Prepaid expenses and
other current assets 20,472
Fixed assets 87,581
---------
$194,015
=========
Estimated Amortization
Intangible assets components consist of: useful life Method
----------- --------
Systems and software costs 1,200,000 6 years Straight line
Customer list and support contracts 300,000 6 years Straight line
Goodwill 2,083,113 20 years Straight line
---------
3,583,113
---------
$3,777,128
=========
(d) The loan of $559,000 to GIS evidenced by a promissory note is secured by
111,800 shares of Lasergate's Series B preferred stock and is due March 31,
1996. The sellers have the option of returning preferred stock if the
assignable call provision of $5.00 per share is not exercised. Accordingly,
the note receivable is presented as a reduction of stockholders' equity.
(e) For income tax purposes, the transaction is treated as taxable purchase of
a group of assets and liabilities constituting a trade or business.
Accordingly, the consideration paid for the assets is allocated based on
their fair market values pursuant to IRC Section 1060.
The book and tax bases of the net assets acquired resulted in no net
deferred taxes being recorded.
PF-4
<PAGE>
LASERGATE SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED PRO FORMA
COMBINED STATEMENT OF OPERATIONS
Year ended December 31, 1994
The following unaudited condensed combined pro forma statement of operations is
based on the individual audited statement of operations of Lasergate Systems,
Inc. and Subsidiaries (Lasergate) as contained in Form 10-KSB for the year ended
December 31, 1994 and the audited statement of income of GIS Systems Limited
Partnership (GIS) for the year ended December 31, 1994, after giving effect to
the pro forma adjustments described in Note 2 as if the acquisition had occurred
on January 1, 1994. In the opinion of management, all adjustments have been made
that are necessary to present fairly the pro forma information. This statement
should be read in conjunction with the aforementioned Lasergate 10-KSB, as
recently filed, and GIS financial statements and notes thereto, the latter
included in the previously filed Form 8-K dated February 15, 1995.
<TABLE>
<CAPTION>
Year ended December 31, 1994
<S> <C> <C> <C> <C>
Historical Pro Forma (unaudited)
-------------------- ---------------------
Lasergate GIS Adjustments
(Note 1) (Note 1) (Note 2) Combined
-------- -------- -------- --------
Revenues $1,066,470 $3,406,734 - $4,473,204
Costs and expenses:
Cost of revenues (excluding items
shown separately below) 914,838 1,800,674 (18,117)(b) 2,697,395
(487,961)(b)
Selling, general and 131,557(a)
administrative expenses 2,128,602 1,365,663 17,516(c) 3,313,377
158,000(e)
Systems and software development (128,003)(c)
costs including amortization 345,379 132,659 200,000(c) 550,035
Amortization of intangibles, excluding
software costs - - 154,156(c) 154,156
---------- ---------- ------- ----------
3,388,819 3,298,996 27,148 6,714,963
---------- ---------- ------- ----------
Operating income (loss) (2,322,349) 107,738 (27,148) (2,241,759)
Interest expense 80,035 39,900 (39,900)(d) 80,035
---------- ---------- ------- ----------
Income (loss) before taxes (2,402,384) 67,838 12,752 (2,321,794)
Income taxes - - - -
---------- ---------- ------- ----------
Net income (loss) $(2,402,384) $ 67,838 $ 12,752 $(2,321,794)
========== ========== ======= ==========
Net loss per common share $(1.62) N/A $(1.45)
======= ======
Weighted average common
shares outstanding 1,487,246 N/A 1,596,579
========= =========
</TABLE>
PF-5
<PAGE>
LASERGATE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED PRO FORMA COMBINED
STATEMENT OF OPERATIONS
Year ended December 31, 1994
NOTE 1 - Presentation of Lasergate historical statement of operations herein
separately reports systems and software development costs, principally
research and development, previously included in selling, general and
administrative expenses.
Certain reclassifications have been made to the GIS statement of
operations to conform to the Lasergate statement of operations,
consisting of:
- Revenues combined into one category
- Cost of equipment sales and installation, cost of license, royalty
and maintenance revenues and cost of rental revenues combined into one
category and presented as cost of revenues (net of systems and
software amortization).
- Research and development presented as systems and software development
costs.
- Other combined into selling, general and administrative.
- Interest expense presented separately (reduction of selling, general
and administrative).
NOTE 2 - Reflects adjustments for the consummation of the acquisition as if it
had occurred at January 1, 1994, as follows:
(a) Consulting agreements entered into between Lasergate and two (2)
former GIS employees, effective February 1, 1995. One former GIS
employee is to receive $11,051 per month for the period from
February 1, 1995 through January 31, 1996 and the other former
GIS employee is to receive $1,666 per month for the period from
February 1, 1995 through August 1, 1995. Salaries and benefits
previously paid to these individuals has been eliminated in (b).
(b) Reduction in GIS selling, general and administrative expenses,
related to a management fee allocation by a related entity which
is not part of the acquisition. The reduction consists
principally of the following expense categories:
Payroll and related (i) $381,890
Other (including $48,285 of depreciation expense see (c)) 106,071
--------
$487,961
========
(i) Relates to payroll and related expenses principally for
accounting and management personnel allocated by the
management company. The accounting personnel remained with
the management company and were not part of the acquisition.
The two management personnel entered into employment
contracts as discussed at (a) above. The existing Lasergate
structure sufficiently absorbs the responsibilities
associated with such accounting personnel (i.e., no
incremental expense). The remaining GIS employees were
transferred over to Lasergate.
PF-6
<PAGE>
LASERGATE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED PRO FORMA COMBINED
STATEMENT OF OPERATIONS - Continued
Year ended December 31, 1994
(c) Depreciation is based on the fair value of tangible assets acquired,
using Lasergate's estimated useful life, as follows:
Estimated
Allocation Useful Life Depreciation
----------- ----------- ------------
Fixed assets $ 87,581 5 years $ 17,516
=========== ========
Depreciation expense of $48,285 previously recorded by GIS has been
eliminated.
Amortization is based on the allocation of the purchase price to
identifiable intangible components and using Lasergate's useful lives:
Estimated
Allocation Useful Life Depreciation
----------- ----------- ------------
Systems and software costs $1,200,000 6 years $200,000
========= =======
Customer list and support
contracts 300,000 6 years 50,000
Goodwill 2,083,113 20 years 104,156
--------- -------
$2,383,113 $154,156
========= =======
Amortization expense of $128,003 previously recorded by GIS has been
eliminated.
(d) Elimination of interest expense related to debt which was not assumed.
(e) Incremental costs of the Company associated with the acquisition are
as follows:
Payroll & related (i) $128,000
Relocation costs (ii) 30,000
--------
$158,000
========
(i) Principally related to training and integration of products and
customers from GIS into the Company. Also includes an estimate of
$10,000 for severance costs.
PF-7
<PAGE>
LASERGATE SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED PRO FORMA COMBINED
STATEMENT OF OPERATIONS - Continued
Year ended December 31, 1994
(ii) Costs associated with the Company's plan to relocate its office
and headquarters subsequent to the acquisition.
(f) For income tax purposes, the transaction is treated as a taxable
purchase of a group of assets and liabilities constituting a trade or
business. Accordingly, the consideration paid for the assets is
allocated based on their fair market values pursuant of IRC Section
1060.
The book and tax bases of the net assets acquired resulted in no net deferred
taxes being recorded.
At December 31, 1994, Lasergate has a net operating loss (NOL) carryforward of
approximately $6,100,000 for income tax purposes. A net deferred tax benefit has
been determined, based on the difference between the financial reporting and
income tax bases of assets and liabilities (including the acquired assets and
liabilities discussed above) as measured by the enacted tax rate which will be
in effect when these differences are realized. Lasergate cannot reasonably
predict when it can utilize the NOL carryforward and, therefore, has recognized
an equivalent valuation allowance against the deferred tax benefit (i.e., no
income tax asset or liability presented).
PF-8
<PAGE>
(c) Exhibits
Exhibit Number Description
- -------------- ---------------
2.1* ** Asset Purchase Agreement by and between the Registrant and
GIS Systems Limited Partnership effective as of January 1,
1995
4.1* Articles of Amendment of Articles of Incorporation of the
Registrant with respect to the Series B and Series C
Preferred Stock
99.1* Series B Promissory Note dated January 1, 1995 made by the
Registrant payable to GIS Systems Limited Partnership
99.2* Series C Promissory Note dated January 1, 1995 made by the
Registrant payable to GIS Systems Limited Partnership
99.3* Promissory Note dated January 1, 1995 made by GIS Systems
Limited Partnership payable to the Registrant
99.4* The Series B Preferred Stock Pledge and Call Agreement
dated January 1, 1995 by and among the Registrant, GIS
Systems Limited Partnership and Nationsbank of Florida,
N.A.
99.5* Consulting Agreement dated January 1, 1995 by and between
the Registrant and Fred Maglione
99.6* Consulting Agreement dated January 1, 1995 by and between
the Registrant and Nicholas Flaskay
- --------------------------
* Previously filed.
** The schedules to Exhibit 2.1 have been omitted and the Registrant
undertakes to provide them to the Securities and Exchange Commission
upon request.
-3-
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LASERGATE SYSTEMS, INC.
Dated: November 16, 1995 By: /S/ JACQUELINE E. SOECHTIG
----------------------------
Jacqueline E. Soechtig
President and Chief Executive Officer
<PAGE>
(c) Exhibit
Sequentially
Exhibit Numbered
Number Description Pages
- ------- ----------- ------------
2.1** Asset Purchase Agreement by and between the Registrant and
GIS Systems Limited Partnership effective as of January 1,
1995
4.1 Articles of Amendment of Articles of Incorporation of the
Registrant with respect to the Series B and Series C
Preferred Stock
99.1 Series B Promissory Note dated January 1, 1995 made by the
Registrant payable to GIS Systems Limited Partnership
99.2 Series C Promissory Note dated January 1, 1995 made by the
Registrant payable to GIS Systems Limited Partnership
99.3 Promissory Note dated January 1, 1995 made by the GIS
Systems Limited Partnership payable to the Registrant
99.4 The Series B Preferred Stock Pledge and Call Agreement
dated January 1, 1995 by and among the Registrant, GIS
Systems Limited Partnership and Nationsbank of Florida, N.A.
99.5 Consulting Agreement dated January 1, 1995 by and between
the Registrant and Fred Maglione
99.6 Consulting Agreement dated January 1, 1995 by and between
the Registrant and Nicholas Flaskay
- -------------------------
** The schedules to Exhibit 2.1 have been omitted and the Registrant
undertakes to provide them to the Securities and Exchange Commission
upon request.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000797324
<NAME> Lasergate Systems, Inc.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 1,030,837
<SECURITIES> 0
<RECEIVABLES> 169,529
<ALLOWANCES> 17,000
<INVENTORY> 0
<CURRENT-ASSETS> 1,531,428
<PP&E> 314,324
<DEPRECIATION> 129,750
<TOTAL-ASSETS> 6,696,959
<CURRENT-LIABILITIES> 1,157,111
<BONDS> 0
<COMMON> 9,702,397
0
200,000
<OTHER-SE> (7,578,574)
<TOTAL-LIABILITY-AND-EQUITY> 6,696,959
<SALES> 4,473,204
<TOTAL-REVENUES> 4,473,204
<CGS> 2,697,395
<TOTAL-COSTS> 6,560,807
<OTHER-EXPENSES> 154,156
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 80,035
<INCOME-PRETAX> (2,321,794)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,321,794)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,321,794)
<EPS-PRIMARY> (1.45)
<EPS-DILUTED> 0
</TABLE>
