<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended September 30, 1996.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the transition period from to .
--------- ----------
Commission file number 0-19817
---------------
INTRANET SOLUTIONS, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Chapter)
Minnesota 41-1652566
- ----------------------------------- ---------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
9625 West 76th Street, Suite 150, Eden Prairie, Minnesota 55344
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices)
(612) 903-2000
- --------------------------------------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
- --------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, If Changed
Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes No X
-------- --------
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: At November 12, 1996
there were 7,440,606 shares of common stock, $0.01 par value outstanding.
Page 1 of 13
<PAGE> 2
INTRANET SOLUTIONS, INC.
Form 10-QSB Index
September 30, 1996
<TABLE>
<S> <C> <C>
Part I Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets -
September 30,1996 and March 31,1996 3
Consolidated Statements of Operations -
for the three and six months ended
September 30, 1996 and 1995 4
Consolidated Statements of Cash Flows -
for the three and six months ended
September 30, 1996 and 1995 5
Notes to Consolidated 6
Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7
Part II: Other Information
Item 4: Submission of Matters to a Vote of Security Holders 11
Item 6: Exhibits and Reports on Form 8-K 12
</TABLE>
Page 2 of 13
<PAGE> 3
INTRANET SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
September 30, March 31,
1996 1996
--------------- ---------------
<S> <C> <C>
Current assets:
Cash $10,150 $37,513
Accounts receivable, net 2,969,945 3,102,394
Note receivable 1,759,935 0
Income taxes receivable 573,579 70,000
Inventories 320,123 324,523
Prepaid expenses and other current assets 342,850 348,438
--------------- ---------------
Total current assets 5,976,582 3,882,868
PROPERTY AND EQUIPMENT, NET 1,774,093 1,539,318
INTANGIBLE ASSETS, NET 255,369 290,680
--------------- ---------------
$8,006,044 $5,712,866
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Revolving credit facility $1,196,185 $1,108,098
Convertible promissory notes 0 550,000
Current portion of long-term debt 339,580 127,496
Current portion of capital lease obligations 161,185 148,045
Current portion of stock redemption payable 9,500 9,500
Accounts payable 2,887,698 2,701,244
Sales tax payable 64,503 68,147
Accrued expenses 164,623 247,105
--------------- ---------------
Total current liabilities 4,823,274 4,959,635
DEFERRED INCOME TAXES 38,000 38,000
STOCK REDEMPTION PAYABLE 21,208 30,008
LONG-TERM DEBT, NET OF CURRENT PORTION 367,770 108,341
CAPITAL LEASE OBLIGATIONS, NET OF CURRENT PORTION 499,716 598,065
--------------- ---------------
Total liabilities 5,749,968 5,734,049
--------------- ---------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIENCY):
Common stock, $.01 par value, 12,500,000 shares authorized,
7,440,606 and 10,000,000 issued and outstanding, respectively 74,406 10,000
Additional paid-in capital 3,134,889 7,289
Retained earnings (deficit) (939,454) (22,265)
Unearned compensation (13,765) (16,207)
--------------- ---------------
Total stockholders' equity (deficiency) 2,256,076 (21,183)
--------------- ---------------
$8,006,044 $5,712,866
=============== ===============
</TABLE>
Page 3 of 13
<PAGE> 4
INTRANET SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
---------------------------------- -----------------------------------
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
REVENUES:
Hardware integration $2,248,025 $1,705,337 $4,639,787 $3,132,220
Software, technical services and support 1,135,624 1,144,803 2,238,581 2,286,946
Distribution services 690,149 311,367 1,376,364 593,583
---------------- ---------------- ---------------- ----------------
Total revenues 4,073,798 3,161,507 8,254,732 6,012,749
---------------- ---------------- ---------------- ----------------
COST OF REVENUES:
Hardware integration 1,858,218 1,381,362 3,858,879 2,568,725
Software, technical services and support 700,265 728,874 1,448,733 1,404,048
Distribution services 549,150 193,432 1,064,026 391,216
---------------- ---------------- ---------------- ----------------
Total cost of revenues 3,107,633 2,303,668 6,371,638 4,363,989
---------------- ---------------- ---------------- ----------------
Gross profit 966,165 857,839 1,883,094 1,648,760
---------------- ---------------- ---------------- ----------------
OPERATING EXPENSES:
Sales and marketing 666,617 368,821 1,248,966 723,122
General and administrative 907,923 301,130 1,315,988 590,404
Research and development 273,907 122,558 531,987 240,292
Depreciation and amortization 64,648 39,666 120,758 71,302
---------------- ---------------- ---------------- ----------------
Total operating expenses 1,913,095 832,175 3,217,699 1,625,120
---------------- ---------------- ---------------- ----------------
Income (loss) from operations (946,930) 25,664 (1,334,605) 23,640
Interest (income) expense, net 15,344 58,664 63,517 86,401
---------------- ---------------- ---------------- ----------------
LOSS BEFORE INCOME TAXES (962,274) (33,000) (1,398,122) (62,761)
Provision for (benefit of) income taxes (330,933) 0 (480,933) 0
---------------- ---------------- ---------------- ----------------
NET LOSS ($631,341) ($33,000) ($917,189) ($62,761)
================ ================ ================ ================
NET LOSS PER COMMON SHARE ($0.08) ($0.00) ($0.12) ($0.01)
================ ================ ================ ================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 7,440,606 7,440,606 7,440,606 7,440,606
================ ================ ================ ================
</TABLE>
Page 4 of 13
<PAGE> 5
INTRANET SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
---------------------------------- -----------------------------------
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($631,341) ($33,000) ($917,189) ($62,761)
Adjustments to reconcile net income to
cash flows from operating activities -
Depreciation and amortization 122,852 76,776 229,883 145,321
Stock option compensation earned 1,221 0 2,442 0
Gain on sale of fixed assets 3,056 0 3,056 0
Changes in operating assets and liabilities (867,085) (17,168) (684,157) (327,611)
---------------- ---------------- ---------------- ----------------
Cash flows from operating activities (1,371,297) 26,608 (1,365,965) (245,051)
---------------- ---------------- ---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from note receivable 159,167 0 159,167 0
Purchases of fixed assets (176,958) (41,645) (410,892) (130,040)
Acquisition of covenant-not-to-compete 0 (200,000) 0 (200,000)
---------------- ---------------- ---------------- ----------------
Cash flows from investing activities (17,791) (241,645) (251,725) (330,040)
---------------- ---------------- ---------------- ----------------
CASH FLOWS FROM FINANCING ACITIVITES:
Net advances from line of credit (292,459) 410,703 88,087 818,708
Proceeds from long-term debt 500,000 0 500,000 0
Payments on long-term debt (24,999) (24,999) (49,998) (41,665)
Payments on capital leases (37,911) (29,825) (85,209) (55,073)
Repurchase of treasury stock (10,000) (150,000) (10,000) (150,000)
Sale of common stock, net 0 0 29,247 0
Proceeds from reverse merger (Note 3) 1,118,200 0 1,118,200 0
---------------- ---------------- ---------------- ----------------
Cash flows from financing activities 1,252,831 205,879 1,590,327 571,970
---------------- ---------------- ---------------- ----------------
NET DECREASE IN CASH (136,257) (9,158) (27,363) (3,121)
CASH, BEGINNING OF PERIOD 146,407 15,276 37,513 9,239
CASH, END OF PERIOD $10,150 $6,118 $10,150 $6,118
================ ================ ================ ================
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash paid for interest $54,566 $58,664 $140,611 $109,031
Cash paid for income taxes $0 $11,230 $0 $11,980
DETAIL OF CHANGES IN OPERATING ASSETS AND LIABILITIES:
Accounts receivable ($36,388) ($298,844) $132,449 ($254,304)
Income taxes receivable (503,579) 0 (503,579) 0
Inventories 189,956 (51,381) 4,400 30,619
Other current assets (181,912) (54,665) (417,755) (35,752)
Accounts payable (335,805) 403,809 186,454 33,113
Accrued expenses 643 (16,087) (86,126) (101,287)
---------------- ---------------- ---------------- ----------------
Net changes in operating assets and liabilities ($867,085) ($17,168) ($684,157) ($327,611)
================ ================ ================ ================
</TABLE>
Page 5 of 13
<PAGE> 6
INTRANET SOLUTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
(1) BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
by the Company pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. Although management believes that the disclosures are adequate to
make the information presented not misleading, it is suggested that these
interim consolidated financial statements be read in conjunction with the
Company's most recent audited consolidated financial statements and notes
thereto included in the Company's proxy statement dated July 5, 1996 issued in
connection with a special meeting of the shareholders of the company (formerly
known as MacGregor Sports and Fitness Inc.) for the year ended March 31, 1996.
The financial statements presented are those of the surviving entity from the
reverse merger (see note 3). In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary for a fair
presentation of the financial position, results of operations and cash flows
for the interim period presented have been made. Operating results for the six
months ended September 30, 1996 are not necessarily indicative of the results
that may be expected for the year ending March 31, 1997.
(2) LOSS PER COMMON SHARE
Primary and fully diluted loss per common share are determined by dividing net
loss by the weighted average number of common shares and common share
equivalents outstanding during each period. Common share equivalents include the
dilutive effects of options and warrants which are assumed to be exercised or
converted into common shares at the beginning of the period. Common stock
equivalents have not been included in the calculation of loss per common share
because the effects would have been anti-dilutive. Primary and fully diluted
loss per share are the same for the periods presented. The effects of reverse
merger (see note 3) and stock-splits (see note 5) have been retroactively
applied.
(3) REVERSE MERGER
On July 31, 1996, the Company closed on a tax-free reorganization pursuant to
an agreement and plan of merger with MacGregor Sports and Fitness, Inc. (MSF).
MSF was a publicly traded non-operating entity. At closing, the Company's
stockholders received approximately 60% of the then outstanding common stock of
MSF in exchange for their common stock. The Company recorded this transaction
and the total consideration of approximately $3,000,000 ($1,000,000 in cash and
$2,000,000 in the form of a 12 month promissory note) as an acquisition and
recapitalization. Accordingly, historical financial information is that of the
Company as the surviving entity of the reverse merger.
(4) CONVERSION OF PROMISSORY NOTES
On July 31, 1996, $550,000 of 10% unsecured Convertible Promissory Notes were
converted into 158,345 shares of common stock, after giving effect to the
reverse stock split (see note 5).
(5) STOCK SPLITS
On June 2, 1995, the Company declared a 900-for-1 stock split. On November 6,
1995, the Company declared a 21.22-for-1 stock split. On October 15, 1996, the
Company declared a 1-for-4 reverse stock split. The stock splits have been
retroactively reflected in the accompanying consolidated financial statements.
Page 6 of 13
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
IntraNet Solutions, Inc. (the "Company") is a Minneapolis-based technology
company focused on assisting large companies in designing and implementing open,
integrated solutions for managing and distributing business-critical information
across and outside their enterprises. The Company is divided into three
distinct business groups, including: (i) IntraNet Integration Group, which
provides open client-server products to assist companies in managing their
intellectual capital, including hardware and software products, as well as
system installation, support and training; (ii) IntraNet Distribution Group,
which offers customers various services for off-site electronic document
warehousing, electronic demand publishing and multiple methods of digital
distribution of information and (iii) IntraNet Professional Services Group,
which is involved in product development, project management and customized
software applications.
On July 31, 1996, the Company's predecessor, MacGregor Sports and Fitness,
Inc. ("MSF") and IntraNet Integration Group, Inc., a Minnesota corporation
("IntraNet", formerly known as Technical Publishing Solutions, Inc. ("TPSI"))
closed on a tax-free reorganization pursuant to which IntraNet became a
wholly-owned subsidiary of the Company, and MSF changed its name to IntraNet
Solutions, Inc.. The transaction was accomplished through a tax-free reverse
subsidiary merger whereby IntraNet merged with and into a wholly owned
subsidiary of MSF, with IntraNet as the surviving corporation (the "Merger").
Accordingly, historical financial statements presented are those of the
Company.
Except for the historical information contained herein, certain matters
discussed in this prospectus are forward-looking statements which involve risks
and uncertainties, including, but not limited to, economic, competitive,
governmental and technological factors affecting the Company's operations,
markets, products, services and prices and other factors discussed in the
Company's filing with the Securities and Exchange Commission. Therefore, if,
for any reason, the Company's planned operation requires more capital than
anticipated, revenues do not increase as planned, or operating income is less
than planned, the Company may need additional financing in order to maintain
its operations. There can be no assurances that the Company would be able to
obtain any such required financing, if and when needed, or that such financing,
if obtained, would be on terms and conditions favorable or acceptable, to the
Company.
Page 7 of 13
<PAGE> 8
RESULTS OF OPERATIONS FOR THE QUARTER ENDED SEPTEMBER 30, 1995
COMPARED TO THE QUARTER ENDED SEPTEMBER 30, 1996
REVENUES. Total revenues increased to $4.1 million in 1996 from $3.2
million in 1995, or $900,000 (28.9%). This increase related primarily to
increases in hardware integration of $500,000 ($1.7 million in 1995 compared to
$2.2 million in 1996) and distribution services $400,000 ($300,000 in 1995 and
$700,000 in 1996). The Company's software, technical and support revenues
declined slightly, primarily due to the Company's continued shift in focus to
development of proprietary software products.
COST OF REVENUES. Cost of hardware integration revenues was $1.4 million
in 1995 and $1.9 million in 1996. Cost of hardware integration revenues as a
percent of hardware integration revenues was 81.0% in 1995 compared to 82.7% in
1996.
Cost of software, technical services, and support revenues was $700,000 in
1995 and 1996. Cost of software, technical services, and support revenues as a
percent of software, technical services, and support revenue was 63.7% in 1995
compared to 61.7% in 1996.
Cost of distribution services revenue was $200,000 in 1995 compared to
$500,000 in 1996. Cost of distribution services revenues as a percent
of distribution services revenue was 62.1% in 1995 compared to 79.6% in 1996.
Lower margins on distribution services were primarily due to costs associated
with additional high speed laser and other printing devices and having lower
than optimal capacity utilization. During the quarter ended September 30,
1996, in anticipation of growth opportunities, the Company added high speed
output and other printing devices which created approximately 130% more
production capacity. Although no assurances can be made, the Company believes
that revenues created through additional utilization of the expanded capacity
will result in increased profit margins.
OPERATING EXPENSES:
SALES AND MARKETING. Sales and marketing expenses were $400,000 in 1995
compared to $700,000 in 1996. Sales and marketing expenses as a percent of
total revenues were 11.7% in 1995 compared to 16.4% in 1996. Sales and
marketing expenses increased as a percent of revenues primarily due to
increases in staffing and marketing programs.
GENERAL AND ADMINISTRATIVE. General and administrative expenses were
$300,000 in 1995 compared to $900,000 in 1996. General and administrative
expenses as a percent of total revenue were 9.5% in 1995 compared to 22.3% in
1996. General and administrative expenses increased primarily due to increases
in staffing, expenses related to the relocation of corporate headquarters, and
other related new facility and initial start-up costs.
RESEARCH AND DEVELOPMENT. Research and development expenses were $100,000
in 1995 compared to $300,000 in 1996. Research and development expenses as a
percent of total revenue were 3.9% in 1995 and 6.7% in 1996. Total research
and development expenses increased $200,000 in 1996 compared to 1995 due to a
focus on development of proprietary software products.
Page 8 of 13
<PAGE> 9
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1995
COMPARED TO THE SIX MONTHS ENDED SEPTEMBER 30, 1996
REVENUES. Total revenues increased to $8.3 million in 1996 from $6.0
million in 1995, or $2.3 million (37.3%). This increase related primarily to
increases in hardware integration of $1.5 million ($3.1 million in 1995 compared
to $4.6 million in 1996) and distribution services $800,000 ($600,000 in 1995
and $1.4 million in 1996). The Company's software, technical and support
revenues declined slightly, primarily due to the Company's continued shift in
focus to development of proprietary software products.
COST OF REVENUES. Cost of hardware integration revenues was $2.6 million
in 1995 and $3.9 million in 1996. Cost of hardware integration revenues as a
percent of hardware integration revenues was 82.0% in 1995 compared to 83.2% in
1996.
Cost of software, technical services, and support revenues was $1.4
million in 1995 and 1996. Cost of software, technical services, and support
revenues as a percent of software, technical services, and support revenue was
61.4% in 1995 compared to 64.7% in 1996. Lower margins on software, technical
services and support were primarily due to competitive pricing on non-custom
software products and lower technical service billings.
Cost of distribution services revenue was $400,000 in 1995 compared to
$1.1 million in 1996. Cost of distribution services revenues as a percent of
distribution services revenue was 65.9% in 1995 compared to 77.3% in 1996.
Lower margins on distribution services were primarily due to costs associated
with additional high speed laser and other printing devices and having lower
than optimal capacity utilization. Although no assurances can be made, the
Company believes that revenues created through additional utilization of the
expanded capacity will result in increased profit margins.
OPERATING EXPENSES:
SALES AND MARKETING. Sales and marketing expenses were $700,000 in 1995
compared to $1.2 million in 1996. Sales and marketing expenses as a percent of
total revenues were 12.0% in 1995 compared to 15.1% in 1996. Sales and
marketing expenses increased as a percent of revenues primarily due to
increases in staffing and marketing programs.
GENERAL AND ADMINISTRATIVE. General and administrative expenses were
$600,000 in 1995 compared to $1.3 million in 1996. General and administrative
expenses as a percent of total revenue were 9.8% in 1995 compared to 15.9% in
1996. General and administrative expenses increased primarily due to increases
in staffing, expenses related to the relocation of corporate headquarters, and
other related new facility and initial start-up costs.
RESEARCH AND DEVELOPMENT. Research and development expenses were $200,000
in 1995 compared to $500,000 in 1996. Research and development expenses as a
percent of total revenue were 4.0% in 1995 and 6.4% in 1996. Total research
and development expenses increased $300,000 in 1996 compared to 1995 due to a
focus on development of proprietary software products.
Page 9 of 13
<PAGE> 10
LIQUIDITY AND CAPITAL RESOURCES. Since its inception and prior to the
Merger, the Company has funded its operations primarily through revolving
working capital and term loans through banking institutions and capital and
operating equipment leases. In December 1995, the company issued $550,000 of
unsecured convertible promissory notes to a limited number of accredited
investors. The unsecured notes accrued interest rate of 10%, and were converted
into common stock immediately prior to the Merger at a rate of $3.47 per share.
As of September 30, 1996 the Company had cash and cash equivalents of
$10,150. Net cash used in operating activities for the six months ended
September 30, 1995 was $245,000 compared to net cash used in operations for the
six months ended September 30, 1996 of $1.4 million. Capital expenditures for
the six months ended September 30, 1995 and 1996, including equipment financed
with capital lease obligations, were $130,000 and $411,000 respectively.
The Company's revolving working capital line of credit allows for
borrowings of up to $2.25 million based on available collateral at the bank's
base lending rate plus 2.5%. At September 30, 1996, the Company had advances
of $1.2 million, which are due on demand. At September 30, 1996, the Company
also had term loans outstanding in the amount of $679,850. The term loans
require monthly principal payments of $29,166 plus interest at the bank's base
lending rate plus 2.5%. At September 30, 1996 the Company also had a demand
note payable to its majority stockholder in the amount of $27,500 which accrues
interest at a rate of 12%.
The Company acquired a substantial portion of its distribution services
production equipment with capital lease obligations. These leases require total
monthly payments of $19,556 and carry interest rates between 14.6% and 16.6%. In
addition, the Company has also entered into certain operating leases for
facilities and equipment. These leases require total monthly payments of
$35,000 for facilities and $33,000 for production and office equipment. The
Company also has a long-term consulting agreement with a former stockholder that
requires monthly payments of $10,300 through July 2000.
The Company believes that the approximately $3.0 million in gross proceeds
derived from the Merger with MSF, along with its existing line of credit, will
meet only its immediate anticipated needs for working capital and capital
expenditures. The Company plans to expand its distribution group concept to
regional centers throughout the United States over the next three years. The
Company also plans to evaluate several potential acquisitions, primarily in
complimentary software development and distribution services areas, which it
believes are necessary to expand its presence in the document management
marketplace.
Recently, on October 16, 1996, the Company signed a letter of intent to
acquire substantially all the assets of an established, privately-held custom
printing and graphic communications business located in the southwestern United
States, which had revenues of approximately $3.0 million in its most recent
fiscal year and a history of operating profits. The Company believes this
potential strategic acquisition will give it the opportunity to expand its
web-based document distribution market and its on-demand printing network with
an established operation in the southwest. The acquisition, valued at
approximately $1.8 million, is expected to consist of cash, IntraNet Solutions
common stock and the assumption of certain liabilities. The Company and the
sellers are currently negotiating a definitive agreement, however, there can be
no assurance that such agreement shall ever be entered into, be on the terms
set forth above, or that if entered into, will ever close.
Future financings, if needed to pursue such short-term objectives, may
result in dilution to holders of Common Stock. It is anticipated that funds
required for future acquisitions and expansion will be provided from operating
cash flow, the proceeds expected from future debt or equity financings and
proceeds from future borrowings. However, there can be no assurance that
suitable acquisitions candidates will be identified by the Company in the
future, that suitable financing for any such acquisitions or expansion can be
obtained by the Company or that any such acquisitions or expansions will occur.
Page 10 of 13
<PAGE> 11
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is not a party to any material pending legal proceedings and,
to the best of its knowledge, its properties are not the subject of any such
proceedings.
ITEM 2. CHANGES IN SECURITIES.
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
On July 30, 1996, the Company held a special Meeting of Shareholders to
consider and vote upon the Merger and five other proposals. The tabulation of
the votes in favor, against and abstaining with regard to the six (6) proposals
is set forth below:
<TABLE>
<CAPTION>
PROPOSAL IN FAVOR AGAINST ABSTAIN
-------- -------- ------- -------
<S> <C> <C> <C>
1. Sale of Registrant's Assets to Hutch Sports
U.S.A. Inc., (a subsidiary of Roadmaster
Industries, Inc.) 5,241,578 9,900 1,297,852
2. Approval of Merger with IntraNet
Integration Group, Inc. 6,539,530 2,500 7,300
3. Amendment and Restatement of Registrant's
Articles of Incorporation 6,711,605 42,400 20,350
4. Election of Registrant's Directors 6,873,131 7,700 0
5. Adoption of New Registrant Stock Option
Plan and Reservation of 2,500,000 Common
Shares Pursuant to such Plan 6,345,763 134,967 68,600
6. Appointment of Lund Koehler Cox & Co.,
PLLP, as Independent Auditors to Registrant 8,761,288 77,416 54,295
</TABLE>
ITEM 5. OTHER INFORMATION.
None
Page 11 of 13
<PAGE> 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
None
(b) The Company filed a Report on Form 8-K on July 31, 1996
concerning the merger between the Company's predecessor, MacGregor
Sports and Fitness, Inc. ("MSF") and IntraNet Integration Group,
Inc., a Minnesota corporation ("IntraNet", formerly known as
Technical Publishing Soltuions, Inc. ("TPSI")) The transaction was
accomplished through a tax-free reverse subsidiary merger whereby
IntraNet merged with and into a wholly owned subsidiary of MSF,
with IntraNet as the surviving corporation.
Page 12 of 13
<PAGE> 13
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant has
duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
INTRANET SOLUTIONS, INC.
(the "Registrant" or "Company")
Dated November 14, 1996 By: /s/ Robert F. Olson
-------------------
Robert F. Olson
Its: Chief Executive Officer
-----------------------
(Principal Executive Officer)
Dated November 14, 1996 By: /s/ Jeffrey J. Sjobeck
----------------------
Jeffrey J. Sjobeck
Its: Chief Financial Officer
-----------------------
(Principal Financial Officer)
Page 13 of 13
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> SEP-30-1996
<CASH> 10,150
<SECURITIES> 0
<RECEIVABLES> 2,969,945
<ALLOWANCES> 0
<INVENTORY> 320,123
<CURRENT-ASSETS> 5,976,582
<PP&E> 1,774,093
<DEPRECIATION> 0
<TOTAL-ASSETS> 8,006,044
<CURRENT-LIABILITIES> 4,823,274
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0
0
<COMMON> 74,406
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<TOTAL-LIABILITY-AND-EQUITY> 8,006,044
<SALES> 8,254,732
<TOTAL-REVENUES> 8,254,732
<CGS> 6,371,638
<TOTAL-COSTS> 6,371,638
<OTHER-EXPENSES> 3,217,699
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 63,517
<INCOME-PRETAX> (1,398,122)
<INCOME-TAX> (480,933)
<INCOME-CONTINUING> (917,189)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (917,189)
<EPS-PRIMARY> (0.12)
<EPS-DILUTED> (0.12)
</TABLE>
