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<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 26, 1997
INTRANET SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
Minnesota 0-19817 41-1652566
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
8091 Wallace Road, Eden Prairie, MN 55344
(Address of principal executive offices) (Zip Code)
(Former Name or Former Address, if changed Since Last Report)
Registrant's telephone number, including area code: (612) 903-2000
1
<PAGE> 2
Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
On September 26, 1997, IntraNet Solutions Inc. (the "Company") formally
adopted a plan of disposition for its on-demand publishing distribution
business. The plan of disposal specifically targets a sale of substantially all
the assets of the on-demand publishing distribution business to an established
on-demand publishing provider.
Attached as Exhibits A, B, C and D are the proforma condensed
consolidated balance sheets as of September 30, 1997 and March 31, 1997, the
proforma condensed consolidated statements of operations for the year ended
March 31, 1997 and six month periods ended September 30, 1997 and 1996, the
proforma condensed consolidated statements of cash flows for the year ended
March 31, 1997 and six month periods ended September 30, 1997 and 1996, and the
notes to the proforma condensed consolidated financial statements, respectively.
For all periods presented, the proforma financial statements attached reflect
the operating results of the on-demand publishing distribution business as a
discontinued operation.
SIGNATURE
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 thereunto duly authorized.
Date: March 3, 1999
INTRANET SOLUTIONS, INC.
By: /s/ Jeffrey J. Sjobeck
-----------------------------------
Name: Jeffrey J. Sjobeck
Title: Chief Financial Officer
2
<PAGE> 3
EXHIBIT A TO FORM 8-K
INTRANET SOLUTIONS, INC.
PROFORMA CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS September 30, March 31,
1997 1997
------------ ---------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 1,172,744 $ 121,798
Accounts receivable, net 5,165,676 2,779,849
Note receivable 570,604 801,993
Inventories 348,095 313,160
Prepaid expenses and other current assets 454,407 371,817
------------ ------------
Total current assets 7,711,526 4.388,617
PROPERTY AND EQUIPMENT, NET 579,080 564,924
INTANGIBLE ASSETS, NET 113,338 133,338
NET ASSETS OF DISCONTINUED OPERATIONS 2,040,224 2,015,903
------------ ------------
$ 10,444,168 $ 7,102,782
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Revolving credit facility $ 2,451,649 $ 1,809,086
Promissory notes payable, net of discount 1,082,638 808,932
Current portion of long-term debt 546,387 996,314
Accounts payable 3,145,079 2,089,926
Deferred revenues 202,602 210,351
Accrued expenses 527,301 433,583
------------ ------------
Total current liabilities 7,955,656 6,348,192
LONG-TERM DEBT, NET OF CURRENT PORTION 240,997 628,064
OTHER 80,827 199,887
------------ ------------
Total liabilities 8,277,480 7,176,143
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT):
Series A Preferred stock, $.01 par value, $5.00 stated value, 1,000,000 shares authorized
800,000 and 0 shares issued and outstanding, respectively 2,980,046 --
Common stock, $.01 par value. 24,000,000 shares authorized,
7,693,790 and 7,523,603 issued and outstanding, respectively 76,938 75,236
Additional paid-in capital 5,861,512 3,827,356
Accumulated deficit (6,554,945) (3,744,833)
Unearned compensation (196,863) (231,120)
------------ ------------
Total stockholders' equity (deficit) 2,166,688 (73,361)
------------ ------------
$ 10,444,168 $ 7,102,782
============ ============
</TABLE>
<PAGE> 4
EXHIBIT B TO FORM 8-K
INTRANET SOLUTIONS, INC
PROFORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED ----------------
MARCH 31, SEPTEMBER 30, SEPTEMBER 30,
1997 1997 1996
----------- ------------ -------------
<S> <C> <C> <C>
REVENUES:
Hardware integration $ 10,476,702 $ 6,556,839 $ 4,639,787
Software, technical services and support 5,713,874 3,000,018 2,238,581
------------ ------------ ------------
Total revenues 16,190,576 9,556,857 6,878,368
------------ ------------ ------------
COST OF REVENUES:
Hardware integration 8,792,240 5,523,812 3,858,879
Software, technical services and support 3,345,764 1,566,501 1,448,733
------------ ------------ ------------
Total cost of revenues 12,138,004 7,090,313 5,307,612
------------ ------------ ------------
Gross profit 4,052,572 2,466,544 1,570,756
------------ ------------ ------------
OPERATING EXPENSE:
Sales and marketing 2,014,160 1,338,305 851,245
General and Administrative 1,983,591 1,174,873 781,097
Research and development 1,115,782 636,971 531,987
------------ ------------ ------------
Total operating expenses 5,113,533 3,150,149 2,164,329
------------ ------------ ------------
Loss from operations (1,060,961) (683,605) (593,573)
INTEREST EXPENSE, NET 127,747 196,143 48,761
------------ ------------ ------------
LOSS BEFORE INCOME TAXES (1,188,708) (879,748) (642,334)
Income tax benefit - - (221,049)
------------ ------------ ------------
LOSS FROM CONTINUING OPERATIONS (1,188,708) (879,748) (421,285)
DISCONTINUED OPERATIONS
Loss from operations of discontinued
distribution group (net of applicable taxes) (2,559,756) (950,364) (495,904)
------------ ------------ ------------
NET LOSS (3,748,464) (1,830,112) (917,189)
PREFERRED STOCK ACCRETION -- 980,000 --
------------ ------------ ------------
LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS ($ 3,748,464) ($ 2,810,112) ($ 917,189)
============ ============ ============
LOSS FROM CONTINUING OPERATIONS PER COMMON SHARE ($ 0.19) ($ 0.12) ($ 0.06)
NET LOSS PER COMMON SHARE ($ 0.58) ($ 0.24) ($ 0.12)
LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS PER COMMON SHARE ($ 0.58) ($ 0.37) ($ 0.12)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 6,418,111 7,591,377 7,440,606
========= ========= =========
</TABLE>
<PAGE> 5
EXHIBIT C TO FORM 8-K
INTRANET SOLUTIONS, INC.
PROFORMA CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
Year Ended -------------------------------
March 31, September 30, September 30,
1997 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($3,748,464) ($1,830,112) ($917,189)
Adjustments to reconcile net loss
to cash flows from operating activities -
Depreciation and amortization 231,157 127,644 103,999
Loss on sale of fixed assets 1,609 -- --
Stock option compensation earned 26,309 34,257 2,442
Discount amortization 17,527 53,952 --
Non-cash special charges 219,361 -- --
Discontinued operations (867,555) (24,321) (338,152)
Changes in operating assets and liabilities (750,395) (1,526,041) (494,624)
----------- ----------- -----------
Cash flows from operating activities (4,870,451) (3,164,621) (1,643,524)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from note receivable 1,114,169 248,222 159,167
Proceeds from sale of fixed assets 6,570 -- --
Purchases of fixed assets (285,103) (121,800) (212,407)
----------- ----------- -----------
Cash flows from investing activities 835,636 126,422 (53,240)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net advances from revolving credit facility 700,988 642,563 88,087
Proceeds from long-term debt 2,433,313 -- 500,000
Payments on long-term debt (183,196) (213,050) (49,998)
Payments on capital leases (8,624) (4,190) (4,606)
Payments on other long-term liabilities -- (72,260) --
Repurchase of treasury stock (8,800) (8,800) (10,000)
Issuance of preferred stock 3,529,024 --
Issuance of common stock -- -- 29,247
Proceeds from reverse merger 1,118,200 -- 1,118,200
Proceeds from stock options and warrants 67,219 215,858 --
----------- ----------- -----------
Cash flows from financing activities 4,119,100 4,089,145 1,670,930
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH 84,285 1,050,946 (25,834)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 37,513 121,798 35,984
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 121,798 $1,172,744 $ 10,150
=========== =========== ===========
NON-CASH TRANSACTIONS:
Equipment acquired with capital lease obligation $ 328,460 -- --
Conversion of debt to common stock -- $ 250,000 --
Conversion of debt to preferred stock -- $ 150,000 --
Common stock issued on purchase of business $ 350,000 -- --
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION
Cash paid for interest $ 351,955 $160,016 $ 69,475
Cash paid for income taxes $ 600 $3,531 --
DETAIL OF CHANGES IN OPERATING ASSETS AND LIABILITIES:
Accounts receivable ($ 102,883) ($2,385,827) $303,476
Income taxes receivable -- -- (243,696)
Inventories (62,888) (34,935) 37,463
Prepaid expenses and other current assets (492,640) (208,401) (381,099)
Accounts payable (365,621) 1,055,153 (129,992)
Accrued expenses and other current liabilities 273,637 47,969 (80,776)
----------- ----------- -----------
Net changes in operating assets and liabilities ($ 750,395) ($1,526,041) ($494,624)
=========== =========== ===========
</TABLE>
<PAGE> 6
EXHIBIT D TO FORM 8-K
NOTES TO PROFORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
NOTE 1 NATURE OF THE BUSINESS
IntraNet Solutions Inc. (the "Company") develops and implements proprietary
software solutions for the management and distribution of critical business
information.
On September 26, 1997, Company formally adopted a plan of disposition for its
on-demand publishing distribution business. The plan of disposal specifically
targets a sale of substantially all the assets of the on-demand publishing
distribution business to an established on-demand publishing provider.
NOTE 2 DISCONTINUED OPERATIONS
The proforma condensed consolidated balance sheets as of September 30, 1997 and
March 31, 1997, proforma condensed consolidated statements of operations for the
year ended March 31, 1997 and six month periods ended September 30, 1997 and
1996, and the proforma condensed consolidated statements of cash flows for the
year ended March 31, 1997 and six month periods ended September 30, 1997 and
1996, for all periods presented, reflect the operating results of the on-demand
publishing distribution business as a discontinued operation.
Revenues from discontinued operations were $3.8 million for the year ended
March 31, 1997. Revenues from discontinued operations were $2.5 million
and $1.4 million for the six months ended September 30, 1997 and 1996,
respectively. No tax provision or benefit related to discontinued operations was
recognized during the year ended March 31, 1997. Tax benefits of zero and
$260,000 related to discontinued operations were recognized for the six months
ended September 30, 1997 and 1996, respectively.
Interest expense allocated to discontinued operations includes interest expense
directly attributable or related to the discontinued operations. For the year
ended March 31, 1997, interest expense allocated to discontinued operations was
$183,000. For the six months ended September 30, 1997 and 1996, interest expense
allocated to discontinued operations was $122,000 and $76,000, respectively.
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