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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported): December 31, 1997
NETWORK IMAGING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-22970 54-1590649
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification Number)
500 Huntmar Park Drive, Herndon, Virginia 20170
(Address of principal executive offices) (Zip code)
(703) 478-2260
(Registrant's telephone number, including area code)
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<PAGE>
Item 2 and 5. DISPOSITION OF ASSETS AND OTHER EVENTS.
The Company filed today with Nasdaq pro forma financial statements
evidencing the Company's compliance with the net tangible assets the Nasdaq
Hearings Panel required the Company to have achieved by December 31, 1997 and
the sale of the Company's French subsidiary, Dorotech S.A. ("Dorotech").
Accordingly, the Company anticipates that its Common Stock will continue to be
listed on the Nasdaq National Market. A copy of the Pro Forma Financial
Statements is attached as Exhibits 99.1 and 99.2 to this Form 8-K and are
incorporated herein by this reference.
On October 30, 1997, the Company was given a temporary exception from
the Nasdaq National Market listing requirements, conditioned on the Company's
ability to file a pro forma balance sheet as of December 31, 1997, indicating
net tangible assets of at least $6 million. The pro forma balance sheet
evidences approximately $8.5 million in net tangible assets. As described in
greater detail in the pro forma balance sheet, the Company's net tangible assets
increased primarily as a result of (i) the closing of the private sale of the
Series L Convertible Preferred Stock from which the Company received net
proceeds of $2.99 million; (ii) the sale of Dorotech, S.A., a wholly owned
subsidiary of the Company, for which the Company expects to realize a gain of
$266,000; (iii) the conversion of $4 million under a line of credit with Fred E.
Kassner to equity in the form of a Series M Preferred Stock; and (iv) the
approval of the Series A Preferred Stockholders and the Common Stockholders to
amend the terms of the Series A Preferred Stock, thereby enabling the Company to
reclassify accrued dividends of $1.35 million as equity.
The pro forma balance sheet is unaudited and includes a preliminary
estimate of accumulated deficit at December 31, 1997, as required by Nasdaq in
order for the Company to maintain its listing on the Nasdaq National Market.
There can be no assurance that the Company's audited consolidated balance sheet
as of December 31, 1997, and in particular its accumulated deficit following an
audit of the Company's consolidated statements of operations, will not be
materially different from the information presented in the pro forma balance
sheet.
The pro forma income statement is also unaudited and gives effect to
the sale of Dorotech as if the sale had occurred January 1, 1997.
This information is provided solely for the purpose of complying with
the requirements delineated by Nasdaq pursuant to the exception recently granted
to the Company. This information is not intended to be used by the investing
public.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c ) Exhibits
Exhibit Number Description
99.1 Pro Forma Condensed Balance Sheet of the Company as of
December 31, 1997.
99.2 Pro Forma Condensed Statement of Operations for the
Twelve Months Ended December 31, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Network
Imaging Corporation has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
NETWORK IMAGING CORPORATION
Date: December 31, 1997 By: /s/ Jorge R. Forgues
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Jorge R. Forgues
Vice President of Finance and
Administration, Chief Financial
Officer and Treasurer
<PAGE>
Network Imaging Corporation
Pro Forma Condensed Financial Statements
The unaudited pro forma financial statements are supplemental to the Company's
historical financial statements, and give affect to the sale of the Company's
Dorotech subsidiary, issuance of preferred stock, conversion of a line of credit
to preferred stock, Series A Preferred Stock amendment and preliminary estimated
loss for the fourth quarter fiscal 1997. The financial position for the Company
at December 31, 1997 is unaudited and includes a preliminary estimate of
retained earnings at December 31, 1997. The NASDAQ informed the Company that in
order to prevent delisting, the Company would need to file by December 31, 1997,
a pro forma balance sheet with the Securities and Exchange Commission
demonstrating a minimum of $6,000,000 in net tangible assets. There can be no
assurance that the Company's audited consolidated balance sheet as of December
31, 1997, and in particular its retained earnings following an audit of the
Company's consolidated statement of operations, will not be materially different
from the information presented in the pro forma balance sheet.
For the Balance Sheet
1. The Company entered into an agreement during December 1997 for the sale of
the Company's Dorotech subsidiary. The pro forma entry includes estimates
of selling costs and the sale is expected to result in a gain of
approximately $266,000.
2. The Company entered into an agreement during December 1997 to convert
$4,000,000 of the Company's $5,000,000 line of credit into a Series M
Preferred Stock. The remaining $1,000,000 on the line of credit is due
April 1, 1999.
3. During December 1997, the Company issued 3,250 shares of Series L Prefer-
red Stock for which it received net proceeds of $2,900,000.
4. The estimated preliminary results for Q4 represents the change in balance
sheet accounts which resulted from an expected $2,000,000 loss.
5. The Series A Preferred Stock amendment resulted in the reversal of all
unpaid dividends previously accrued through September 30, totaling
$1,338,000.
For the Income Statement
6. Income and expenses related to the Dorotech operations were unconsolidated
from the Company's balances.
<TABLE>
NETWORK IMAGING CORPORATION
PRO FORMA CONDENSED BALANCE SHEET
DECEMBER 31, 1997
(Unaudited & In Thousands)
<CAPTION>
(1) (2) (3) (4) (5)
Q4 Pro Forma
Preliminary as of
NIC US Dorotech Line of Credit Series L Estimated Series A December
September Sale Conversion Issuance Results Amendment 31, 1997
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets
Current assets $ 12,443 $ 7,000 $ $ 2,900 $ (2,097) $ $ 20,246
Intangible assets
(excluding goodwill) 2,372 24 2,396
Goodwill 540 (41) 499
Other long-term assets 9,953 (6,333) (213) 3,407
--------- --------- --------- --------- --------- --------- ---------
Total assets $ 25,308 $ 667 $ 0 $ 2,900 $ (2,327) $ 0 $ 26,548
Liabilities
Current liabilities $ 9,271 $ 441 $ $ $ (280) $ (1,338) $ 8,094
Long-term liabilities 7,102 (4,000) (47) 3,055
--------- --------- --------- --------- --------- --------- ---------
Total liabilities 16,373 441 (4,000) 0 (327) (1,338) 11,149
Redeemable Series F
Preferred Stock 6,357 6,357
Stockholders' equity:
Preferred stock -- --
Common Stock 3 3
Additional paid-in-capital 124,808 4,000 2,900 1,338 133,046
Accumulated deficit (113,933) (113,933)
Current Year Loss (8,300) 226 (2,000) (10,074)
--------- --------- --------- --------- --------- --------- ---------
Total stockholders' equity 2,578 226 4,000 2,900 (2,000) 1,338 9,042
--------- --------- --------- --------- --------- --------- ---------
Total liabilities and
stockholder's equity $ 25,308 $ 667 $ 0 $ 2,900 $ (2,327) $ 0 $ 26,548
========= ========= ========= ========= ========= ========= =========
</TABLE>
THE COMPANY AND DOROTECH S.A. DIVESTITURE
PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1997
(Unaudited & In Thousands)
The See
Company Adjustments Note 6 Pro Forma
------------ ------------ ------------
(In thousands, except share amounts)
Revenues:
Net sales $ 35,806 $ (11,320) $ 24,486
Costs and expenses:
Cost of sales 22,008 (8,400) 13,608
Product development 4,428 (572) 3,856
Selling, general
and administrative 20,263 (3,563) 16,700
Sale of subsidiaries
and other, net 160 267 427
------------ ------------ ------------
46,859 (12,268) 34,591
Loss before interest
income and incone taxes (11,053) 948 (10,105)
Interest expense, net (286) (26) (312)
------------ ------------ ------------
Loss before taxes (11,339) 922 (10,417)
Income tax benefit 0 87 87
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Net loss $ (11,339) $ 835 $ (10,504)
============ ============ ============
Preferred stock preferences
Accrued dividends (1,435) (1,435)
Imputed dividends (1,536) (1,536)
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Net loss applicable to
common shares $ (14,310) $ (13,475)
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Basic net loss per common
share $ (0.57) $ (0.53)
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Weighted average shares
outstanding 25,205,854 25,205,854
Net loss per common share -
assuming dilution $ (0.57) $ (0.53)
============ ============
Weighted average shares
outstanding - Primary 25,205,854 25,205,854
