<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment No. 1 to
CURRENT REPORT
Pursuant To Section 13 Or 15(d) Of the Securities Exchange Act Of 1934
Date of Report (Date of earliest event reported) January 14, 1999
----------------
VISTA Information Solutions, Inc.
--------------------------------------------------
(Exact name of registrant as specified in charter)
Delaware 0-20312 41-1293754
- ---------------------------- ------------------------ -------------------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
5060 Shoreham Place, #300, San Diego, Ca 92122
- ---------------------------------------------- ------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (619) 450-6100
--------------
Not Applicable
-------------------------------------------------------------
(Former name or former address, if changed since last report)
The undersigned Registrant hereby amends its Current Report on Form 8-K by the
addition of financial statements and exhibits as follows:
<PAGE>
ITEM 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired
GEOSURE, L.P.. Financial Statements for the Years Ended December 31, 1998, 1997
and 1996.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Partners of GeoSure, L.P.:
We have audited the accompanying consolidated balance sheet of GeoSure,
L.P. as of December 31, 1998, and the related statements of operations,
partners' equity (deficit) and cash flows for the year ended December 31,
1998. 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 audit.
We conducted our audit 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 audit provides a
reasonable basis for our opinion.
In our opinion, such 1998 consolidated financial statements present
fairly, in all material respects, the financial position of GeoSure, L.P. as
of December 31, 1998, and the results of its operations and its cash flows
for the year ended December 31, 1998 in conformity with generally accepted
accounting principles.
March 19, 1999
<PAGE>
GEOSURE, L.P.
CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
CURRENT ASSETS:
<S> <C>
Cash and cash equivalents $ 18,695
Accounts receivable, net of allowance of $81,140 917,856
Other current assets 74,682
-------------
Total current assets 1,011,233
PROPERTY AND PURCHASED SOFTWARE, net of accumulated depreciation
and amortization of $2,276,179 951,307
OTHER ASSETS, net of accumulated amortization of $35,173 54,339
GOODWILL, net of accumulated amortization of $457,443 1,324,945
-------------
TOTAL $ 3,341,824
-------------
-------------
LIABILITIES AND PARTNERS' DEFICIT
CURRENT LIABILITIES:
Current maturities of long-term obligations $ 2,605,238
Line of credit 400,000
Accounts payable and accrued liabilities 667,786
Notes payable - related party 50,000
-------------
Total current liabilities 3,723,024
COMMITMENTS (Note 7)
PARTNERS' DEFICIT (381,200)
-------------
TOTAL $ 3,341,824
-------------
-------------
</TABLE>
See notes to consolidated financial statements.
<PAGE>
GEOSURE, L.P.
CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
REVENUES $ 8,903,658
COST OF REVENUES 3,743,058
-----------
Gross Margin 5,160,600
-----------
OPERATING EXPENSES:
Sales and marketing 1,755,830
General and administrative 2,967,531
Depreciation and amortization 882,489
-----------
Total operating expenses 5,605,850
-----------
LOSS FROM OPERATIONS (445,250)
OTHER EXPENSES:
Interest expense 340,821
Other expense 118,029
-----------
Total other expenses 458,850
-----------
NET LOSS $ (904,100)
-----------
-----------
</TABLE>
See notes to consolidated financial statements.
<PAGE>
GEOSURE, L.P.
CONSOLIDATED STATEMENT OF PARTNERS' EQUITY (DEFICIT)
YEAR ENDED DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CHADWYCK- SIR
HEALEY CHARLES LRB ENVIO
VENTURES, CHADWYCK- ENTERPRISES, TOTAL
INC. HEALEY INC. UNTERBERG PARTNERS'
(general partner) (limited partner) (general partner) HARRIS* EQUITY (DEFICIT)
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1998
$ 82,652 $ (7,537) $416,167 $ 31,618 $ 522,900
Net loss (229,009) (72,328) (452,050) (150,713) (904,100)
---------- --------- --------- --------- ----------
Balance, December 31, 1998 $(146,357) $(79,865) $(35,883) $(119,095) $(381,200)
---------- --------- --------- --------- ----------
---------- --------- --------- --------- ----------
</TABLE>
*Unterberg Harris interest held on behalf of 27 limited partners.
See notes to consolidated financial statements.
<PAGE>
GEOSURE, L.P.
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
OPERATING CTIVITIES:
Net loss $ (904,100)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 882,489
Changes in assets and liabilities:
Accounts receivable 259,773
Other current assets 15,704
Other assets 56,486
Accounts payable and accrued liabilities (231,901)
-----------
Net cash provided by operating activities 78,451
-----------
INVESTING ACTIVITIES:
Purchases of property (73,709)
Capitalization of purchased software and database (122,962)
-----------
Net cash used in investing activities (196,671)
-----------
FINANCING ACTIVITIES:
Capital lease obligations (68,501)
Repayment of notes payable (8,212)
Proceeds from term loan and line of credit 300,000
Repayment of term loan and line of credit (300,000)
Proceeds from notes payable 50,000
--------
Net cash used in financing activities (26,713)
-----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (144,933)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 163,628
-----------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 18,695
-----------
-----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 354,714
----------
----------
</TABLE>
See notes to consolidated financial statements.
<PAGE>
GEOSURE, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1998
- --------------------------------------------------------------------------------
1. ORGANIZATION AND BASIS OF PRESENTATION
GeoSure, L.P. (formerly Environmental Risk Information & Imaging
Services, L.P.) ("GeoSure"), was formed on December 1, 1989. GeoSure
offers a service that draws upon federal, state, county and local
sources to provide comprehensive environmental data reports of land and
real property for investors and consumers. The partnership agreement
specifies among other things, the terms of the partnership, the rights
and powers of the partners, capital contributions, cash distribution
criteria and profit and loss allocations.
During 1997, GeoSure formed NRC Acquisition, L.L.C. to acquire the
assets of National Research Corporation ("NRC"), a flood determination
business located in North Carolina. Included in the purchase was NRC's
two-thirds interest in the outstanding shares in NRC Insurance
Services, Inc. ("NIS"), a North Carolina Corporation engaged in selling
Flood Insurance. GeoSure, NRC and NIS are collectively referred to
herein as the "Partnership".
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following summary of the Partnership's significant accounting policies
is presented as an integral part of the accompanying financial statements.
ALLOCATION OF PROFIT AND LOSSES - The partnership agreement provides
for the allocation of profits and losses to the general and limited
partners. As reflected on the accompanying consolidated statement of
partners' equity (deficit), all partners, including limited partners,
have been allocated losses which exceed thier basis in the partnership.
Management believes this treatment is appropriate as the overall
partnership interests were contemplated in the merger which took place
in January 1999. (See Note 10).
BASIS OF PRESENTATION - The accompanying consolidated financial
statements include the accounts of GeoSure, NRC and NIS. All intercompany
balances have been eliminated.
USE OF ESTIMATES - The preparation of financial statements in accordance
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
CASH AND CASH EQUIVALENTS - All bank money market accounts and other
investments that can be liquidated on demand or with an original
maturity of less than 90 days are considered to be cash equivalents.
CONCENTRATION OF CREDIT RISK - The Partnership maintains substantially all
of its cash balances in two financial institutions. The balances are
insured by the Federal Deposit Insurance Corporation up to $100,000 at
each institution. At various times throughout the year, the Partnership's
cash balance exceeded this limit. The Partnership has not experienced any
losses in such accounts and believes it is not exposed to any significant
credit risk on such cash and cash equivalents.
Concentrations of credit risk with respect to trade accounts receivable
are generally diversified due to the large number of entities
comprising GeoSure's customer base and their dispersion across many
geographic regions. The customer base associated with NRC are
concentrated primarily in the banking and insurance industries.
<PAGE>
IMPAIRMENT OF LONG-LIVED ASSETS - Management reviews long lived assets
for impairment periodically in accordance with Statement of Financial
Accounting Standards No. 121, "Accounting for Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of" (SFAS 121) to
determine potential impairment by comparing the carrying value of the
assets with estimated future cash flows expected to result from the use
of the assets, including cash flows from disposition. Should the sum
of the expected future net cash flows be less than the carrying value,
the Partnership would determine whether an impairment loss should be
recognized. An impairment loss would be measured by comparing the
amount by which the carrying value exceeds the fair value of the asset
being evaluated for impairment.
During 1998, management revised the estimated remaining life of the
goodwill and determined that it should be 5 years. Such change was
effective as of January 1, 1998.
FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS - Furniture, equipment
and leasehold improvements are carried at cost, net of accumulated
depreciation. Depreciation is computed using the straight-line and
accelerated methods over the estimated useful life of the assets,
ranging from 5 to 7. Leasehold improvements are amortized over the
lesser of their useful lives or the term of the lease. Maintenance and
repair costs are expensed as incurred.
PURCHASED SOFTWARE AND DATABASE - Purchased software and database costs
are stated at cost. Amortization is provided over the assets' useful
lives of 3 years.
GOODWILL - Goodwill represents the excess of the NRC acquisition cost over
the estimated fair value of net assets acquired and is being amortized
over 5 years.
INCOME TAXES - GeoSure and NRC are not tax paying entities for income
tax purposes. Income from GeoSure's and NRC's operations are included
in the determination of taxable income of the respective partners or
members, pursuant to the terms of the partnership agreement and
operating agreement. NIS, a corporation, will be taxed on its income
after utilization of its existing net operating loss carryforwards.
NIS' provision for income taxes and deferred tax balances are not
material
REVENUE RECOGNITION - Revenues are recognized when environmental data
and flood determination reports are delivered to customers.
3. PROPERTY AND PURCHASED SOFTWARE - NET
Property and purchased software consists of the following at
December 31, 1998:
<TABLE>
<CAPTION>
<S> <C>
Office and computer equipment $1,450,799
Furniture and fixtures 295,735
Leasehold improvements 175,713
Purchased software and database 1,305,239
----------
3,227,486
Less accumulated depreciation and amortization (2,276,179)
----------
Property and purchased software - net $ 951,307
----------
----------
</TABLE>
<PAGE>
4. OTHER ASSETS
Other assets consist of the following at December 31, 1998:
<TABLE>
<CAPTION>
AMORTIZATION
PERIOD
1998 IN YEARS
<S> <C> <C>
Organization costs $ 36,307 5
Deposits - office lease 21,621 -
Other 31,584 5-7
--------
89,512
Less accumulated amortization (35,173)
--------
$ 54,339
--------
--------
</TABLE>
5. PARTNERS' TAX DISTRIBUTIONS PAYABLE
The partnership agreement provides for tax distributions to enable the
partners to pay their tax liabilities resulting from GeoSure's net income.
Management does not intend to make tax distributions relating to 1998 as
there was a net loss for the year.
6. BANK LOANS
On May 12, 1997, the Partnership entered into an Agreement with a bank
under which the bank would provide a term loan (the "Loan") in the
amount of $3,000,000 and a revolving credit facility (the "Revolver")
in the amount of $500,000. The proceeds were for business acquisitions,
repayment of notes payable and for general working capital requirements:
The Loan in the amount of $3,000,000 was originally payable in 20
quarterly installments beginning on the last day of September
1997. The Loan provided for quarterly payments ranging from
$125,000 to $175,000 with remaining outstanding principal of
$175,000 plus accrued interest due on June 20, 2002. On March 11,
1998, an amendment was executed whereby payment of the second and
third installments due December 31, 1997 and March 31, 1998 were
deferred and combined with the installments due December 31, 1999
and December 31, 2000. On July 7, 1998, GeoSure and the bank
executed the Second Amendment to the Loan, whereby the fourth
installment due June 30, 1998 was deferred and combined with the
installment payment at June 30, 2002. The balance of the Loan
was $2,575,000 as of December 31, 1998.
The Revolver was due on May 31, 1998. An amendment was made which
extended the date to December 31, 1998. There are $400,000 of
advances outstanding at December 31, 1998 (See Note 10.)
<PAGE>
Interest on both the Loan and the Revolver is at prime plus 1% (9.75%
at December 31, 1998) and is payable monthly. The Loan and the Revolver
are collateralized by a security interest in the Partnership's assets
and a pledge of each partner's interest in GeoSure. In addition,
GeoSure's membership interest in NRC and its common stock holdings of NIS
have been pledged to the bank as collateral, along with a promissory note
issued by NRC payable to GeoSure.
Under the terms of the Agreement, the Partnership has agreed to maintain
certain financial covenants, as defined. The Agreement also contains other
restrictive covenants relating to various business and financial
transactions. The Partnership was not in compliance with, or had not
received waivers for all covenants for the year ended December 31, 1998
and therefore, the entire balance of outstanding debt at December 31, 1998
has been classified as a current liability. (See Note 10)
The annual principal maturities for the Loan are as follows:
<TABLE>
<CAPTION>
<S> <C>
1999 $ 725,000
2000 725,000
2001 650,000
2002 475,000
----------
$2,575,000
----------
----------
</TABLE>
7. COMMITMENTS
CAPITAL LEASE OBLIGATIONS - Leases that meet the criteria for
capitalization are recorded in the accompanying financial statements as
assets, and the related obligations are recorded at the present value of
the future minimum lease payments. Interest rates on these capital leases
vary from 5% to 22%.
At December 31, 1998, aggregate minimum lease payments due under capital
leases, all of which are due in 1999, total $20,526:
Included in furniture, equipment and leasehold improvements is a telephone
system, computers and copiers leased with a net value of approximately
$76,205 at December 31, 1998.
LEASING ARRANGEMENTS - The Partnership rents office space in Herndon,
Virginia pursuant to a seven year lease agreement dated October 14, 1994.
Other leases which are accounted for as operating leases include various
building and equipment leases.
<PAGE>
The minimum annual rental commitments under such leases (exclusive of
escalations and other charges) are as follows:
<TABLE>
<CAPTION>
BUILDING EQUIPMENT
<S> <C> <C>
1999 $288,000 $ 10,800
2000 267,000 3,000
2001 252,000 --
2002 21,000 --
-------- --------
$828,000 $ 13,800
-------- --------
-------- --------
</TABLE>
Aggregate rent expense, including escalation and other lease related
charges, for the year ended December 31, 1998 amounted to approximately
$338,000.
EMPLOYMENT AGREEMENTS - The Partnership has employment agreements with
a number of its officers. All of the agreements specify minimum salaries
and certain of the agreements provide for incentive compensation based on
sales or other performance objectives. One agreement provided for an
option to purchase 10% of GeoSure for $160,000.
Minimum annual payments under such agreements are as follows:
<TABLE>
<CAPTION>
<S> <C>
1999 $ 927,800
2000 410,000
------------
$ 1,337,800
------------
------------
</TABLE>
Employment contract related expenses, including incentives, totaled
approximately $969,000 during 1998.
<PAGE>
ROYALTIES - Pursuant to an agreement dated August 1, 1991, the Partnership
obtained the non-exclusive right to distribute certain environmental maps
of the Sanborn Mapping and Geographic Information Service ("Sanborn"). In
consideration of the rights granted by Sanborn, the Partnership is
committed to remit royalties to Sanborn, as defined in the agreement,
calculated at various percentages, as defined, of Sanborn's
prevailing prices multiplied by the number of units distributed, with a
minimum royalty of at least 85% of the last three years' royalty payments.
Royalties are payable quarterly within 60 days after the end of such
quarter. The agreement continues for 99 years with cancellation by
Sanborn possible only with a material breach of contract by the
Partnership as provided for in the agreement. Royalty expense for 1998
totaled approximately $427,000.
8. 401(k) PLAN AND TRUST
The Partnership has a 401(k) plan which covers all full time employees
who have worked at least 6 months and are at least 21 years old.
Participants can elect to defer up to 15% of compensation. The
Partnership may elect to match up to 10% of the employees' compensation
and may elect to provide an additional discretionary contribution. For
the year ended December 31, 1998, the Partnership accrued contributions
to the plan of approximately $36,376.
9. RELATED PARTIES
The minority interest shareholder of NIS, who is also an employee of NIS,
has ownership interest in a major customer of NIS. Sales to this
customer totaled approximately $58,000 in 1998.
10. SUBSEQUENT EVENTS
On January 14, 1999, the Partnership was merged with VISTA Information
Solutions, Inc. ("VISTA") in exchange for approximately 2,590,000
shares of VISTA's common stock. This transaction is intended to be
accounted for as a pooling-of-interests.
<PAGE>
The Loan and Revolver described in Note 6 were assumed by the combined
entity effective as of the date of the merger, under an agreement which
provided for the obligations' retirement on or before February 28,
1999, for a prepayment penalty of approximately $100,000. The combined
entity had not retired these debts by February 28, 1999 and is
currently negotiating an additional extension with the bank.
* * * * * *
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Partners
GeoSure, L.P. (formerly Environmental Risk
Information & Imaging Services, L.P.)
We have audited the accompanying consolidated balance sheets of GeoSure, L.P. (a
Limited Partnership) at December 31, 1997 and 1996 and the related consolidated
statements of operations, partners' equity, and cash flows for the years then
ended. These financial statements are the responsibility of the Partnership'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.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of GeoSure, L.P. at December 31,
1997 and 1996 and the results of its operations and its cash flows for the years
then ended in conformity with generally accepted accounting principles.
February 20, 1998, except for Note 10,
the date of which is March 11, 1998 and
May 15, 1998
<PAGE>
GEOSURE, L.P.
(formerly Environmental Risk
Information & Imaging Services, L.P.)
(A Limited Partnership)
CONSOLIDATED BALANCE SHEETS
December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
---- ----
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 163,628 $ 534,606
Accounts receivable, less allowance for doubtful
accounts of $72,431 in 1997 and $59,537 in 1996 1,177,630 974,228
Prepaid expenses and other current assets 90,386 97,460
----------- -----------
Total current assets 1,431,644 1,606,294
Furniture, equipment and leasehold
improvements, net 949,863 622,100
Database and software, net 296,160 308,807
Other assets, net 115,721 53,563
Goodwill, less accumulated amortization of $46,122 1,736,267 --
----------- -----------
$4,529,655 $2,590,764
----------- -----------
----------- -----------
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Term loan - current portion $ 425,000 $ 82,000
Line of credit 100,000 --
Accounts payable and accrued liabilities 899,687 483,940
Partners' tax distributions payable -- 253,840
Note payable - leasehold improvements 8,212 8,212
Capital lease obligations 79,009 45,945
----------- -----------
Total current liabilities 1,511,908 873,937
Term loan 2,450,000 368,000
Note payable -- 559,455
Note payable - leasehold improvements 8,718 16,929
Capital lease obligations 11,012 --
Negative goodwill, net 25,117 27,169
Commitments (Note 11)
Partners' equity 522,900 745,274
----------- -----------
$4,529,655 $2,590,764
----------- -----------
----------- -----------
</TABLE>
<PAGE>
GEOSURE, L.P.
(formerly Environmental Risk
Information & Imaging Services, L.P.)
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Revenues $9,057,457 $6,903,228
----------- -----------
Costs and expenses:
Production and mapping 3,329,344 2,293,384
Sales and marketing 2,614,998 2,005,838
General and administrative 2,367,153 1,306,485
----------- -----------
Total costs and expenses 8,311,495 5,605,707
----------- -----------
Income from operations 745,962 1,297,521
Other (income) expenses:
Depreciation and amortization 510,718 387,512
Interest - net 249,180 113,794
AIC 206,475 232,125
Property taxes 26,289
Minority interest in net loss of NIS (42,764) -
----------- -----------
Total other expenses 949,898 733,431
----------- -----------
Net income (loss) $ (203,936) $ 564,090
----------- -----------
----------- -----------
</TABLE>
<PAGE>
GEOSURE, L.P.
(formerly Environmental Risk
Information & Imaging Services, L.P.)
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
Years Ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
Chadwyck- Healey Sir Charles
Ventures, Inc. Chadwyck-Healey LRB Envio Unterberg Harris* Total Partners'
Enterprises, Inc. Equity
Balance - January 1,
<S> <C> <C> <C> <C> <C>
1996 $60,394 $(14,567) $372,227 $16,970 $435,024
Net income - 1996
142,884 45,127 282,045 94,034 564,090
Partners' tax
distributions (64,298) (20,307) (126,920) (42,315) (253,840)
--------- --------- ---------- --------- ----------
Balance - December
31, 1996
138,980 10,253 527,352 68,689 745,274
Net loss - 1997 (51,657) (16,315) (101,966) (33,998) (203,936)
Assumption of NIS
deficit at acquisition
(4,671) (1,475) (9,219) (3,073) (18,438)
--------- --------- ---------- --------- ----------
Balance - December
31, 1997
$ 82,652 $ (7,537) $416,167 $31,618 $522,900
--------- --------- ---------- --------- ----------
--------- --------- ---------- --------- ----------
</TABLE>
* Unterberg Harris interest held on behalf of 27 limited partners.
See accompanying notes.
<PAGE>
GEOSURE, L.P.
(formerly Environmental Risk
Information & Imaging Services, L.P.)
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (203,936) $ 564,090
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 512,770 387,512
Amortization of negative goodwill (2,052) (2,052)
Decrease (increase) in:
Accounts receivable 113,388 (50,634)
Prepaid expenses and other current assets 41,145 (19,411)
Other assets (42,912) (2,253)
Increase (decrease) in:
Accounts payable and accrued liabilities 105,825 (38,148)
----------- -----------
Net cash provided by operating activities 524,228 839,104
----------- -----------
Cash flows from investing activities:
Acquisition of furniture, leasehold improvements
and equipment (336,412) (187,168)
Capitalization of database and software (168,759) (215,193)
Acquisition of NRC/NIS (2,000,000) -
Organization and other costs - (13,949)
----------- -----------
Net cash (used) by investing activities (2,505,171) (416,310)
----------- -----------
Cash flows from financing activities:
Capital lease obligations (93,528) (51,916)
Repayment of note payable (559,455) (207,315)
Increase in term loan and line of credit 3,100,000 50,860
Repayment of bank debt and term loan (575,000) -
Payment of partners' tax distributions (253,840) -
Repayment of note payable - leasehold improvements (8,212) 25,141
----------- -----------
Net cash provided (used) by financing activities 1,609,965 (183,230)
----------- -----------
Increase (decrease) in cash and cash equivalents (370,978) 239,564
Cash and cash equivalents - beginning of year 534,606 295,042
----------- -----------
Cash and cash equivalents - end of year $ 163,628 $ 534,606
----------- -----------
----------- -----------
</TABLE>
See accompanying notes.
<PAGE>
GEOSURE, L.P.
(formerly Environmental Risk
Information & Imaging Services, L.P.)
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 1997 and 1996
(Continued)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Supplemental schedule of cash flows:
Cash paid during the year for:
Interest $ 204,280 $ 100,907
--------------- ------------
Income taxes $ -- $ --
--------------- ------------
--------------- ------------
Acquisition of NRC/NIS:
Assets:
Accounts receivable $ 316,791 $ --
Prepaid assets 34,071
Other assets 25,892
Fixed assets 269,946
Goodwill, including related acquisition costs 1,782,388
Liabilities and deficit:
Accounts payable (309,931)
Capital lease obligations (137,607)
Deficit 18,450 --
--------------- ------------
Net assets acquired $2,000,000 $ --
--------------- ------------
--------------- ------------
Supplemental schedule of non-cash financing activities:
Partners' tax distributions payable $ -- $253,840
--------------- ------------
--------------- ------------
</TABLE>
See accompanying notes.
<PAGE>
GEOSURE, L.P.
(formerly Environmental Risk
Information & Imaging Services, L.P.)
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997 and 1996
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
GeoSure, L.P. (formerly Environmental Risk Information & Imaging Services, L.P.)
(the "Partnership"), was formed on December 1, 1989. The Partnership offers a
service that draws upon federal, state, county and local sources to provide
comprehensive environmental data reports of land and real property for investors
and consumers. The Partnership Agreement specifies among other things, the term
of the Partnership, the rights and powers of the partners, capital
contributions, cash distribution criteria and profit and loss allocations.
Effective May 21, 1997, the Partnership formed NRC Acquisition, L.L.C. to
acquire the assets of National Research Corporation ("NRC"), a flood
determination business located in North Carolina. Included in the purchase was
NRC's two thirds interest in the outstanding shares in NRC Insurance Services,
Inc.("NIS"), a North Carolina Corporation engaged in selling Flood Insurance
(See Notes 10 and 12).
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following summary of the Partnership's significant accounting policies is
presented as an integral part of the accompanying financial statements.
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of the
Partnership and its majority owned subsidiaries. All intercompany balances have
been eliminated.
USE OF ESTIMATES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
The Partnership considers all bank money market accounts and other investments
that can be liquidated on demand or with an original maturity of less than 90
days to be cash equivalents.
<PAGE>
GEOSURE, L.P.
(formerly Environmental Risk
Information & Imaging Services, L.P.)
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997 and 1996
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CONCENTRATIONS OF CREDIT RISK
The Partnership maintains substantially all of its cash balances in two
financial institutions. The balances are insured by the Federal Deposit
Insurance Corporation up to $100,000 at each institution. At various times
throughout the year, the Partnership's cash balance exceeded this limit. The
Partnership has not experienced any losses in such accounts and believes it is
not exposed to any significant credit risk on such cash and cash equivalents.
Concentrations of credit risk with respect to trade accounts receivable are
generally diversified due to the large number of entities comprising the
Partnership's customer base and their dispersion across many geographic regions.
The customer base associated with NRC are concentrated primarily in the banking
and insurance industries. The Partnership maintains reserves for credit losses
and such losses have been within management's expectations.
FURNITURE, EQUIPMENT, LEASEHOLD IMPROVEMENTS AND DEPRECIATION
Furniture, equipment and leasehold improvements are stated at cost. Depreciation
is provided over estimated useful lives of the related assets using the straight
line and accelerated methods. Additions and major improvements are capitalized
whereas the cost of maintenance and repairs are charged to operations as
incurred.
DATABASE, SOFTWARE AND AMORTIZATION
Database and software costs are stated at cost. Amortization is provided over
the assets useful lives which are estimated to be approximately three years.
GOODWILL
Goodwill represents the excess of the NRC acquisition cost over the estimated
fair value of net assets acquired and is being amortized over 30 years. Deferred
acquisition costs are being amortized over 5 years. Negative goodwill, which
represents the excess of the estimated fair value of net assets acquired over
the acquisition cost from the AIC acquisition, is being amortized over 5 years.
INCOME TAXES
The Partnership and NRC are not tax paying entities for income tax purposes.
Income from the Partnership's and NRC's operations are included in the
determination of taxable income of the respective partners or members, pursuant
to the terms of the Partnership Agreement and Operating Agreement. NIS, a
corporation, will be taxed on its income after utilization of its existing net
operating loss carry forwards.
<PAGE>
GEOSURE, L.P.
(formerly Environmental Risk
Information & Imaging Services, L.P.)
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997 and 1996
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUE RECOGNITION
Revenue from the sale of environmental data reports and flood determination
reports are reflected when the reports are delivered to the customer.
RECLASSIFICATION
Certain amounts previously reported in the financial statements for 1996 have
been reclassified to conform with the 1997 presentation.
NOTE 3 - FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Furniture, equipment and leasehold improvements consists of the following:
<TABLE>
<CAPTION>
Depreciation
period
1997 1996 In years
---- ---- --------------
<S> <C> <C> <C>
Furniture and fixtures $ 274,566 $ 245,185 7
Office equipment 1,259,295 792,862 5
Leasehold improvements 125,541 59,163 Lease term
---------- ----------
1,659,402 1,097,210
Less: accumulated depreciation (709,539) (475,110)
---------- ----------
$ 949,863 $ 622,100
---------- ----------
---------- ----------
</TABLE>
NOTE 4 - DATABASE AND SOFTWARE
Database and software consists of the following:
<TABLE>
<CAPTION>
Amortization
period
1997 1996 in years
---- ---- ---------------
<S> <C> <C> <C>
Database and software $ 1,183,357 $1,000,995 3
Less: accumulated amortization (887,197) (692,188)
----------- ----------
$ 296,160 $ 308,807
----------- ----------
----------- ----------
</TABLE>
<PAGE>
GEOSURE, L.P.
(formerly Environmental Risk
Information & Imaging Services, L.P.)
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997 and 1996
NOTE 5 - OTHER ASSETS
Other assets consists of the following:
<TABLE>
<CAPTION>
Amortization
period
1997 1996 In Years
---- ---- ---------------
<S> <C> <C> <C>
Organization costs $ 36,307 $36,307 5
Deposits-office lease 26,167 24,346 -
New lease costs 16,584 16,584 7
Deferred financing costs (1) 15,000 - 5
Due from minority interest (2) 51,983 - -
-------- -------
146,041 77,237
Less: accumulated amortization (30,320) (23,674)
-------- -------
$115,721 $53,563
-------- -------
-------- -------
</TABLE>
(1) Represents financing costs associated with NRC acquisition. (2) Relates
to one-third interest in NIS by unrelated third party.
NOTE 6 - GOODWILL
Goodwill consists of the following:
<TABLE>
<CAPTION>
Amortization
period
1997 1996 In Years
---- ---- ---------------
<S> <C> <C> <C>
Goodwill $1,671,634 $ - 30
Deferred acquisition costs 110,755 - 5
----------- ---------
1,782,389 -
Less: accumulated amortization 46,122 -
----------- ---------
$1,736,267 $ -
----------- ---------
----------- ---------
</TABLE>
<PAGE>
GEOSURE, L.P.
(formerly Environmental Risk
Information & Imaging Services, L.P.)
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997 and 1996
NOTE 7 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities consist of the following:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Accounts payable and accrued liabilities $656,701 $370,164
Royalties payable 138,206 101,061
Accrued interest payable 24,780 12,715
Customer deposits 80,000 -
-------- --------
$899,687 $483,940
-------- --------
-------- --------
</TABLE>
NOTE 8 - NOTE PAYABLE - LEASEHOLD IMPROVEMENTS
As part of the new office lease agreement, the landlord paid for various costs
including leasehold improvements. However, costs in excess of the tenant
improvement allowance in the amount of $33,337 are to be repaid to the Landlord
without interest over 48 months, commencing January 1, 1996 at the rate of $683
per month.
NOTE 9 - PARTNERS' TAX DISTRIBUTIONS PAYABLE
The Partnership agreed to make tax distributions to enable the partners to pay
their tax liabilities resulting from the Partnership's net income. Accordingly,
45% of the Partnership's 1996 net income has been distributed to the Partners.
In 1997, there is a net loss and no distribution will be made.
NOTE 10 - BANK LOANS
On May 12, 1997, the Partnership entered into an Agreement with State Street
Bank and Trust under which the Bank would provide a term loan (the "Loan") in
the amount of $3,000,000 and a revolving credit facility ("Advances") in the
amount of $500,000. The purpose of the bank loans were for the acquisition of
the assets of NRC and the stock of NIS, repayment of notes payable and for
general working capital requirements:
a) TERM LOAN
The Loan in the amount of $3,000,000 was originally payable in 20
quarterly installments beginning on the last day of September, 1997. The
Loan provided for the first four payments to be at $125,000, the next 12
at $150,000, the next three to be at $175,000 and the final payment for
the remaining outstanding principal of $175,000 plus accrued interest
due on June 20, 2002. On March 11, 1998, GeoSure and State Street
executed an amendment to the Bank
<PAGE>
GEOSURE, L.P.
(formerly Environmental Risk
Information & Imaging Services, L.P.)
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997 and 1996
NOTE 10 - BANK LOANS (CONTINUED)
a) TERM LOAN (CONTINUED)
Agreement, whereby payment of the second and the third installments due
December 31, 1997 and March 31, 1998 were deferred and combined with the
installments due December 31, 1999 and December 31, 2000.
b) LINE OF CREDIT
Under the line of credit, the Bank's commitment to make Advances
terminates on May 31, 1998 with the principal outstanding to be paid in
full on that date. There is $100,000 of advances outstanding at December
31, 1997. As of the date of this report, an additional $300,000 has been
borrowed for total advances outstanding of $400,000.
The interest rate on both the term loan and line of credit is at the prime rate
plus 1% (9 1/2% at December 31, 1997) is payable monthly and is collateralized
by a security interest in the Partnership's assets and a pledge of each
partner's interest in the Partnership. In addition, the Partnership's membership
interest in NRC and common stock holdings of NRC Insurance Services, Inc. have
been pledged to the Bank as collateral along with a promissory note issued by
NRC payable to the Partnership.
Under the terms of the Agreement, the Partnership has agreed to maintain certain
financial covenants, as defined. The Agreement also contains other restrictive
covenants including, but not limited to, limitations on indebtedness, the
disposition of assets and distributions to partners, except for tax
distributions. The Partnership has complied with or received waivers for all
covenants for the year ended December 31, 1997.
Previously, the Partnership had a Revolving Credit Agreement with the Bank under
which the Bank had committed up to $1.5 million of financing for the acquisition
of Agency Information Consultants, Inc. ("AIC") and for general working capital
requirements. The Bank's commitment to make such loans was converted into the
previously discussed term loan and line of credit on May 12, 1997. Borrowings
under the prior Agreement bore interest at a fluctuating rate equal to 1 1/2%
above the Bank's prime rate (9.75% at December 31, 1996), payable monthly in
arrears, and were collateralized by a security interest in the Partnership's
assets and by a pledge of each partner's interest in the Partnership. During
1996, the Partnership voluntarily prepaid $207,315 of outstanding bank debt.
<PAGE>
GEOSURE, L.P.
(formerly Environmental Risk
Information & Imaging Services, L.P.)
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997 and 1996
NOTE 10 - BANK LOANS (CONTINUED)
The annual principal maturities for the Term loan are as follows:
December 31,
------------
<TABLE>
<CAPTION>
<S> <C>
1998 $ 425,000
1999 725,000
2000 725,000
2001 650,000
2002 350,000
-----------
$ 2,875,000
-----------
-----------
</TABLE>
NOTE 11 - COMMITMENTS
CAPITAL LEASE OBLIGATIONS
Leases that meet the criteria for capitalization are recorded in the
accompanying financial statements as assets, and the related obligations are
recorded at the present value of the future minimum rental payments. Interest
rates on these capital leases vary from 5% to 22%.
At December 31, 1997, aggregate minimum rental payments due under capital leases
are as follows:
<TABLE>
<CAPTION>
<S> <C>
1998 $79,009
1999 11,012
--------
$90,021
--------
</TABLE>
Included in furniture, equipment and leasehold improvements is a telephone
system, computers and copiers leased with a net value of approximately $134,000
and $67,000 at December 31, 1997 and 1996, respectively.
<PAGE>
GEOSURE, L.P.
(formerly Environmental Risk
Information & Imaging Services, L.P.)
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997 and 1996
NOTE 11 - COMMITMENTS (CONTINUED)
LEASING ARRANGEMENTS
The Partnership rents office space in Herndon, Virginia pursuant to a seven year
lease agreement dated October 14, 1994. Other leases which are accounted for as
operating leases include various office and equipment leases.
The lease for office space of NRC/NIS expires September 30, 1998.
The minimum annual rental commitments under such leases (exclusive of
escalations and other charges) approximate the following:
<TABLE>
<CAPTION>
December 31, Office Equipment
------------ ------ ---------
<S> <C> <C>
1998 $ 281,000 $6,003
1999 253,000 --
2000 260,000 --
2001 268,000 --
----------- ----------
$1,062,000 $6,003
----------- ----------
----------- ----------
</TABLE>
Aggregate rent expense, including escalation and other lease related charges,
for the years ended December 31, 1997 and 1996 amounted to approximately
$306,000 and $267,000, respectively.
EMPLOYMENT AND OPTION AGREEMENTS
The Partnership entered into an Employment and Option Agreement with an officer
in November 1993 for a five year period expiring December 31, 1998 with
extensions for each succeeding two years thereafter. The officer's salary
amounted to $200,000 and $175,000 for 1997 and 1996, plus a discretionary annual
bonus as determined by the Partnership's management committee. The Option
Agreement granted the officer the option to acquire a 10% equity interest in the
Partnership in the form of a general partnership interest for $160,000. The
option may be exercised at any time while the officer is employed by the
Partnership and under certain conditions up to 90 days after employment.
<PAGE>
GEOSURE, L.P.
(formerly Environmental Risk
Information & Imaging Services, L.P.)
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997 and 1996
NOTE 11 - COMMITMENTS (CONTINUED)
EMPLOYMENT AND OPTION AGREEMENTS (CONTINUED)
The Partnership entered into another Employment Agreement, effective January 1,
1997, with its Vice President and General Manager for two years ending December
31, 1998. The Officer's salary was $95,000 for 1997. The Agreement provides for
additional compensation of 37.5% and 50% of base salary for 1997 and 1998 if the
Partnership achieves all of its performance objectives.
The Partnership entered into employment agreements with the previous owners of
NRC/NIS at an annual salary of $120,000 for both owners that expire on December
31, 2002. In addition, both have an opportunity to earn a bonus equal to 2.5% of
the excess sales (as defined) above $2,000,000, as long as there is no decline
in sales from the previous year. Both employees have simultaneously agreed to
seven-year non-compete agreements.
The Partnership has employment agreements with most of its remaining principal
officers. These agreements, including the agreements discussed above, provide
for future compensation as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------
<S> <C>
1998 $895,000
1999 490,000
2000 345,000
2001 240,000
2002 240,000
</TABLE>
The agreements generally provide for additional compensation in the event the
Partnership meets certain performance objectives. For 1997, the Partnership fell
short of its performance objectives, however, the Partnership's management
committee approved reduced discretionary bonuses of approximately $188,000.
ROYALTIES
Pursuant to an agreement dated August 1, 1991, the Partnership obtained the
non-exclusive right to distribute certain environmental maps of the Sanborn
Mapping and Geographic Information Service ("Sanborn"). In consideration of the
rights granted by Sanborn, the Partnership is committed to remit royalties to
Sanborn as defined in the agreement. Royalties, for the most part, are payable
quarterly within 60 days after the end of such quarter. The agreement continues
for 99 years with cancellation by Sanborn possible only with a material breech
of contract by the Partnership as provided for in the agreement.
<PAGE>
GEOSURE, L.P.
(formerly Environmental Risk
Information & Imaging Services, L.P.)
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997 and 1996
NOTE 12 - ACQUISITIONS
On May 21, 1997, the Partnership acquired all the assets and assumed certain
liabilities used by NRC and acquired two thirds of all the outstanding stock of
NIS for $2,000,000. The assets acquired and liabilities assumed were as follows:
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Accounts receivable $ 316,791
Prepaid assets 34,071
Other assets 25,892
Fixed assets 269,946
Goodwill, including related acquisition costs 1,782,388
-----------
Total assets 2,429,088
-----------
-----------
LIABILITIES AND DEFICIT:
Accounts payable and accrued liabilities $ 309,931
Capital lease obligations 137,607
Deficit (18,450)
-----------
Net assets acquired $ 2,000,000
-----------
-----------
</TABLE>
NOTE 13 - 401(k) PLAN AND TRUST
The Partnership adopted a 401(k) Plan and Trust effective January 1, 1997
covering all full time employees who have worked at least 6 months and are at
least 21 years old. Participants can elect to defer up to 15% of compensation.
The Partnership may elect to match up to 10% of the employees compensation and
may elect to provide an additional discretionary contribution. Employees of both
NRC and NIS will be covered effective January 1, 1998. For the year ended
December 31, 1997, the Partnership accrued contributions to the plan of
approximately $28,860.
NOTE 14 - RELATED PARTIES
The minority interest shareholder of NIS, who is also an employee of NIS, has
ownership interest in a major customer of NIS.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
ON SUPPLEMENTARY INFORMATION
To the Board of Directors
GeoSure, L.P. (formerly Environmental Risk
Information & Imaging Services, L.P.)
Our report on our audits of the basic financial statements of GeoSure, L.P.
(formerly Environmental Risk Information & Imaging Services, L.P.) for the years
ended December 31, 1997 and 1996 appears on page 1. These audits were made for
the purpose of forming an opinion on the basic financial statements taken as a
whole. The supplementary information contained on pages 18 through 19 is
presented for purposes of additional analysis and is not a required part of the
basic financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
February 20, 1998, except for Note 10,
the date of which is March 11, 1998 and
May 15, 1998
<PAGE>
GEOSURE, L.P.
(Formerly Environmental Risk Information
& Imaging Services, L.P.)
(A Limited Partnership)
CONSOLIDATING BALANCE SHEET
December 31, 1997
<TABLE>
<CAPTION>
GeoSure NRC NIS
ASSETS L.P. L.L.C. Inc. Eliminations Total
- ------ ---- ------ ---- ------------ -----
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 136,397 $ 24,393 $ 2,838 $ -- $ 163,628
Accounts receivable, less allowance for doubtful
accounts of $72,431 931,175 236,713 9,742 -- 1,177,630
Prepaid expenses and other current assets 76,356 14,330 -- (300) 90,386
---------- ---------- ------- ------------ ----------
Total current assets 1,143,928 275,436 12,580 (300) 1,431,644
Intercompany receivable 713,514 162,984 -- (876,498) --
Notes receivable 2,000,000 -- -- (2,000,000) --
Furniture, equipment and leasehold improvements, net 695,778 254,085 -- -- 949,863
Database and software, net 267,782 28,378 -- -- 296,160
Other assets, net 47,821 15,917 51,983 -- 115,721
Goodwill, net -- 1,736,267 -- -- 1,736,267
---------- ---------- ------- ------------ ----------
$4,868,823 $2,473,067 $64,563 $(2,876,798) $4,529,655
---------- ---------- ------- ------------ ----------
---------- ---------- ------- ------------ ----------
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Term loan - current portion $ 425,000 $ -- $ -- $ -- $ 425,000
Line of credit 100,000 -- -- -- 100,000
Accounts payable and accrued liabilities 682,093 212,218 5,376 -- 899,687
Note payable - leasehold improvements 8,212 -- -- -- 8,212
Capital lease obligations 8,153 70,856 -- -- 79,009
---------- ---------- ------- ------------ ----------
Total current liabilities 1,223,458 283,074 5,376 -- 1,511,908
Intercompany payable -- 713,514 162,984 (876,498) --
Term loan 2,450,000 -- -- -- 2,450,000
Note payable -- 2,000,000 -- (2,000,000) --
Note payable - leasehold improvements 8,718 -- -- -- 8,718
Capital lease obligations -- 11,012 -- -- 11,012
Negative goodwill, net 25,117 -- -- -- 25,117
Commitments (Note 11)
Common stock -- 300 (300) -
Partners'/members' equity (deficit) 1,161,530 (534,533) (104,097) - 522,900
---------- ---------- ------- ------------ ----------
$4,868,823 $2,473,067 $ 64,563 $(2,876,798) $4,529,655
---------- ---------- ------- ------------ ----------
---------- ---------- ------- ------------ ----------
</TABLE>
<PAGE>
GEOSURE, L.P.
(Formerly Environmental Risk Information
& Imaging Services, L.P.)
(A Limited Partnership)
CONSOLIDATING STATEMENT OF OPERATIONS
December 31, 1997
<TABLE>
<CAPTION>
GeoSure NRC NIS
L.P. L.L.C. Inc. Eliminations Total
---------- ---------- -------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Revenues $7,712,316 $1,330,168 $ 14,973 $ -- $9,057,457
---------- ---------- -------- ------------- ----------
Costs and expenses:
Production and mapping 2,570,808 758,536 -- -- 3,329,344
Sales and marketing 2,035,428 579,570 -- -- 2,614,998
General and administrative 1,959,346 268,612 139,195 -- 2,367,153
---------- ---------- -------- ------------- ----------
Total costs and expenses 6,565,582 1,606,718 139,195 -- 8,311,495
---------- ---------- -------- ------------- ----------
Income from operations 1,146,734 (276,550) (124,222) -- 745,962
Other (income) expenses:
Depreciation and amortization 407,730 102,988 -- -- 510,718
Interest - net 89,986 154,994 4,200 -- 249,180
AIC 206,474 1 -- -- 206,475
Property tax 26,289 -- -- -- 26,289
Minority interest in net loss of NIS -- (42,764) -- (42,764)
---------- ---------- -------- ------------- ----------
--
Total other (income) expenses 730,479 257,983 (38,564) -- 949,898
---------- ---------- -------- ------------- ----------
Net income(loss) $ 416,255 $ (534,533) $ ( 85,658) $ -- $ (203,936)
---------- ---------- -------- ------------- ----------
---------- ---------- -------- ------------- ----------
</TABLE>
<PAGE>
(b) PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated statements of
operations for the years ended December 31, 1998 and 1997 give effect as if
the merger with GeoSure occurred as of January 1, 1998 and 1997,
respectively. The condensed consolidated balance sheet as of December 31,
1998 gives effect to the acquisition as if such transaction occurred on
December 31, 1998.
The accompanying pro forma condensed consolidated financial statements have
been prepared by management based on the historical financial statements of
VISTA and of GeoSure and the merger with GeoSure using the pooling-of-interests
method of accounting. Assumptions and adjustments are discussed in the
accompanying notes to the pro forma condensed consolidated financial
statements. In the opinion of the management of VISTA, all pro forma
adjustments necessary to state fairly such pro forma financial information
have been made. The unaudited pro forma condensed consolidated financial
statements are not necessarily indicative of what actual results of
operations would have been for the periods or dates presented had the
transaction occurred on the dates indicated. In addition, such financial
statements do not purport to indicate the results of future operations or
financial position of VISTA from the acquisition date forward.
<PAGE>
<TABLE>
<CAPTION>
VISTA GEOSURE ADJUSTMENTS TOTALS
<S> <C> <C> <C> <C>
REVENUES $ 15,068 8,904 $ 23,972
COST OF REVENUES 3,342 3,743 7,085
--------------- ----------- ----------- --------------
GROSS PROFIT 11,726 5,161 16,887
OPERATING EXPENSES 14,047 5,606 19,653
--------------- ----------- ----------- --------------
OPERATING LOSS (2,321) (445) (2,766)
OTHER EXPENSE (299) (459) (758)
--------------- ----------- ----------- --------------
LOSS BEFORE
MINORITY INTEREST (2,620) (904) (3,524)
MINORITY INTEREST 69 69
--------------- ----------- ----------- --------------
NET LOSS $ (2,551) (904) $ (3,455)
PREFERRED STOCK
DIVIDENDS DECLARED (600) - (600)
ACCRETION OF
CONVERTIBLE PREFERRED
STOCK DIVIDENDS (500) - (500)
--------------- ----------- ----------- --------------
NET LOSS
ATTRIBUTABLE TO
COMMON STOCKHOLDERS $ (3,651) (904) $ (4,555)
--------------- ----------- ----------- --------------
--------------- ----------- ----------- --------------
BASIC AND DILUTED LOSS
PER COMMON SHARE $ (.35) N/A $ (.35)
--------------- ----------- ----------- --------------
--------------- ----------- ----------- --------------
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING 10,394,671 N/A (1) 12,984,671
--------------- ----------- ----------- --------------
--------------- ----------- ----------- --------------
</TABLE>
<PAGE>
Notes to pro forma condensed consolidated statement of operations for the
year ended December 31, 1998:
The following entry is made to adjust the condensed consolidated statement of
operations for the year ended December 31, 1998 to give effect to the merger
with GeoSure as if it has occurred on January 1, 1998.
1) The weighted average number of shares has been recomputed to include the
shares issued in relation to the GeoSure merger as if they had been
outstanding since January 1, 1998. The resulting weighted average number of
shares is 12,984,671.
<PAGE>
VISTA INFORMATION SOLUTIONS, INC.
PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(IN 000'S, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
VISTA GEOSURE ADJUSTMENTS TOTALS
<S> <C> <C> <C> <C>
REVENUES $ 10,391 9,057 $ 19,448
COST OF REVENUES 2,318 3,329 5,647
------------- ------------ ------------ ---------------
GROSS PROFIT 8,073 5,728 13,801
OPERATING EXPENSES 12,183 5,519 17,702
------------- ------------ ------------ ---------------
INCOME (LOSS) FROM
OPERATIONS (4,110) 209 (3,901)
OTHER INCOME (EXPENSE) (1,486) (413) (1,899)
------------- ------------ ------------ ---------------
NET INCOME (LOSS) $ (5,596) (204) $ (5,800)
PREFERRED STOCK
DIVIDENDS DECLARED (200) -- (200)
ACCRETION OF
CONVERTIBLE PREFERRED
STOCK DIVIDENDS (561) -- (561)
------------- ------------ ------------ ---------------
NET (LOSS) ATTRIBUTABLE
TO COMMON
STOCKHOLDERS $ (6,357) (204) $ (6,561)
------------- ------------ ------------ ---------------
------------- ------------ ------------ ---------------
BASIC AND DILUTED (LOSS)
PER COMMON SHARE $ (.87) N/A $ (.66)
------------- ------------ ------------ ---------------
------------- ------------ ------------ ---------------
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING 7,328,363 N/A (1) 9,918,363
------------- ------------ ------------ ---------------
------------- ------------ ------------ ---------------
</TABLE>
<PAGE>
Notes to pro forma condensed consolidated statement of operations for the
year ended December 31, 1997:
The following entry is made to adjust the condensed consolidated statement of
operations for the year ended December 31, 1997 to give effect to the merger
with GeoSure as if it had occurred on January 1, 1997.
1) The weighted average number of shares has been recomputed to include the
shares issued in relation to the GeoSure merger as if they had been outstanding
since January 1, 1997. The resulting weighted average number of shares is
9,918,363.
<PAGE>
VISTA INFORMATION SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998
(IN 000'S)
<TABLE>
<CAPTION>
VISTA GEOSURE ADJUSTMENTS TOTALS
ASSETS
<S> <C> <C> <C> <C>
Cash 387 19 406
Accounts receivable, net 3,979 918 4,897
Note receivable 2,500 -- 2,500
Other current assets 529 75 604
---------- --------- -------- ---------------
Total Current Assets 7,395 1,012 8,407
Equipment, Furniture and Software 2,777 951 3,728
Goodwill -- 1,325 1,325
Acquired Technology and Environmental
Databases 7,127 -- 7,127
Other Assets 286 54 340
---------- --------- -------- ---------------
Total Assets 17,585 3,342 20,927
---------- --------- -------- ---------------
---------- --------- -------- ---------------
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current portion of long-term obligations 1,732 3,055 4,787
Accounts payable and accrued expenses 1,826 668 286 (1) 2,780
Other current liabilities 1,284 -- 1,284
---------- --------- -------- ---------------
Total Current Liabilities 4,842 3,723 286 8,851
Long-term obligations 581 -- 581
Preferred stock 1 -- 1
Common stock 12 -- 12
Additional paid-in capital 49,846 -- 49,846
Accumulated deficit (37,697) -- (286) (1) (37,983)
Partners' deficit -- (381) (381)
---------- --------- -------- ---------------
Total Stockholders' Equity (Deficit) 12,162 (381) (286) 11,495
---------- --------- -------- ---------------
Total Liabilities and Stockholders'
Equity 17,585 3,342 -- 20,927
---------- --------- -------- ---------------
---------- --------- -------- ---------------
</TABLE>
<PAGE>
Notes to pro forma condensed consolidated balance sheet as of December 31, 1998:
1) To reflect the accrual of direct incremental expenses incurred with the
merger with GeoSure, accounted for using the pooling-of-interests method of
accounting, as if the merger had occurred on December 31, 1998
Dr. Accumulated deficit 286
Cr. Accrued expenses 286
<PAGE>
(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
2.0 Partnership Interest Purchase Agreement made and
entered into as of January 5, 1999 by and among
VISTA Information Solutions, Inc., VISTA
Environmental Information, Inc., GeoSure, L.P. and
the partners of GeoSure. Schedules, exhibits and
similar attachments to this Exhibit have not been
filed; upon request, VISTA will furnish
supplementally to the Commission a copy of any
omitted schedule................................ Previously filed.
23.1 Consent of Deloitte & Touche, LLP Filed herewith.
23.2 Consent of Leslie Sufrin & Company, P.C. Filed herewith.
</TABLE>
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.
VISTA INFORMATION SOLUTIONS, INC.
Date: March 30, 1999 By:
------------------------------------
E. S. Hamilton
Chief Financial Officer
<PAGE>
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C> <C>
2.0 Partnership Interest Purchase Agreement made and
entered into as of January 5, 1999 by and among
VISTA Information Solutions, Inc., VISTA
Environmental Information, Inc., GeoSure, L.P. and
the partners of GeoSure. Schedules, exhibits and
similar attachments to this Exhibit have not been
filed; upon request, VISTA will furnish
supplementally to the Commission a copy of any
omitted schedule................................ Previously filed.
23.1 Consent of Deloitte & Touche, LLP Filed herewith.
23.2 Consent of Leslie Sufrin & Company, P.C. Filed herewith.
</TABLE>
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement Nos.
333-09415 and 333-41279 on Form S-3 and Registration Statement No. 333-09417
on Form S-8 of Vista Information Solutions, Inc. of our report dated March 19,
1999 relating to the consolidated financial statements of GeoSure, L.P. as of
and for the year ended December 31, 1998, appearing in this Form 8-K/A of
Vista Information Solutions, Inc. to be filed on or about March 30, 1999.
Deloitte & Touche LLP
San Diego, CA
March 29, 1999
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement Nos.
333-09415 and 333-41279 on Form S-3 and Registration Statement No. 333-09417
on Form S-8 of Vista Information Solutions, Inc. of our report dated
February 20, 1998 (except for Note 10, the date of which was March 11, 1998
and May 15, 1998) relating to the consolidated financial statements of
GeoSure, L.P. as of and for the year ended December 31, 1997 and 1996,
appearing in this Form 8-K/A of Vista Information Solutions, Inc. to be filed
on or about March 30, 1999.
Leslie Sufrin & Co.
New York, NY
March 29, 1999
