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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 2 TO CURRENT REPORT ON FORM 8-K
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
DATE OF REPORT: JANUARY 31, 2000
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AQUIS COMMUNICATIONS GROUP, INC.
(Exact name of registrant as specified in charter)
DELAWARE 1-13002 22-3281446
(State or other (Commission (IRS Employer
jurisdiction of File Number) identification no.)
incorporation)
1719A ROUTE 10
SUITE 300
PARSIPPANY, NJ 07054
(Address of principal executive offices)
(973) 560-8000
(Registrant's telephone number, including area code)
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GENERAL EXPLANATION
The purpose of this Report is to amend the Current Report on Form 8-K
of Aquis Communications Group, Inc. (the "Company") dated January 31, 2000,
as amended by Amendment No. 1 to Current Report filed with the Commission on
April 17, 2000, to amend information provided under Item 7(b).
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro Forma Financial Information
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AQUIS COMMUNICATIONS GROUP, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying Unaudited Pro forma Condensed Consolidated Statement of
Operations (the "Pro Forma Statement of Operations") for the year ended December
31, 1999 gives effect to the purchase of certain assets of SourceOne Wireless as
if this transaction took place on January 1, 1999, accounted for a a purchase
business combination. The Pro Forma Statement of Operations is based on the
historical results of operations Aquis Communications Group, Inc. ("Aquis") and
Source One Wireless ("SourceOne") for the year ended December 31, 1999.
The Unaudited Pro Forma Condensed Consolidated Balance Sheet (the "Pro Forma
Balance Sheet") gives effect to the purchase of the assets of SourceOne Wireless
as if the acquisition had occurred on December 31, 1999. The Pro Forma Statement
of Operations and Pro Forma Balance Sheet and accompanying notes (the "Pro Forma
Financial Information") should be read in conjunction with, and are qualified
by, the historical financial statements of Aquis and SourceOne and notes thereto
as of and for the year ended December 31, 1999.
The Pro Forma Financial Information is intended for informational purposes only
and is not necessarily indicative of the future financial position or future
results of operations that would have occurred had the transactions been
consummated on the transaction dates implicit in the Pro Forma Financial
Information.
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AQUIS COMMUNICATIONS GROUP, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL NET ASSETS
AQUIS SOURCEONE NOT ACQUIRED ADJUSTMENTS
------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 973 $ 119 $ - $ 12 (B)
Accounts receivable, net of allowance 4,933 758 -
Inventory 228 36 -
Acquisition escrow deposits 200 - - (200)(B)
Prepaid expenses and other current assets 1,072 205 - (205)(B)
----------------------------- --------------- ---------------
Total current assets 7,406 1,118 - (393)
Property and equipment, net 10,461 3,602 (20) 974 (A)
Intangible assets, net 20,092 459 - 53 (A)
Deferred charges and other assets 1,365 - - 140 (A)
(501)(A)
----------------------------- --------------- ---------------
TOTAL ASSETS $ 39,324 $ 5,179 $ (20) $ 273
============================= =============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long term debt $ 508 $ - $ - $ 25 (A)
Accounts payable and accrued expenses 9,285 1,477 (350) (60)(A)
87 (A)
(393)(B)
Deferred revenue 930 721 -
Customer deposits 577 - -
----------------------------- --------------- ---------------
Total current liabilities 11,300 2,198 (350) (341)
Liabilities subject to compromise - 2,981 (2,981)
Long term debt 25,963 - - 2,425 (A)
----------------------------- --------------- ---------------
TOTAL LIABILITIES 37,263 5,179 (3,331) 2,084
----------------------------- --------------- ---------------
Preferred Stock 1,500 (A)
113 (C)
STOCKHOLDERS' EQUITY:
Common stock 166 5,330 (5,330)
Additional paid-in capital 13,195 - 3,311 (3,311)(A)
(113)(C)
Accumulated deficit (11,175) (5,330) 5,330
Note receivable from stockholder (125) - -
----------------------------- --------------- ---------------
TOTAL STOCKOLDERS' EQUITY 2,061 - 3,311 (3,424)
----------------------------- --------------- ---------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 39,324 $ 5,179 $ (20) $ 273
============================= =============== ===============
Book value per share $ 2.38
===============
Shares outstanding 16,551,000
===============
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA
CONSOLIDATED
-------------
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,104
Accounts receivable, net of allowance 5,691
Inventory 264
Acquisition escrow deposits -
Prepaid expenses and other current assets 1,072
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Total current assets 8,131
Property and equipment, net 15,017
Intangible assets, net 20,604
Deferred charges and other assets 1,004
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TOTAL ASSETS $ 44,756
===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long term debt $ 533
Accounts payable and accrued expenses 10,046
Deferred revenue 1,651
Customer deposits 577
---------------
Total current liabilities 12,807
Liabilities subject to compromise -
Long term debt 28,388
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TOTAL LIABILITIES 41,195
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Preferred Stock 1,613
STOCKHOLDERS' EQUITY:
Common stock 166
Additional paid-in capital 13,082
Accumulated deficit (11,175)
Note receivable from stockholder (125)
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TOTAL STOCKOLDERS' EQUITY 1,948
---------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 44,756
===============
Book value per share $ 2.70
===============
Shares outstanding 16,551,000
===============
</TABLE>
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AQUIS COMMUNICATIONS GROUP, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL
AQUIS SOURCEONE ADJUSTMENTS
------------- ------------- --------------
<S> <C> <C> <C>
REVENUES
Paging services $ 30,368 $ 7,203 $ (70)(D)
Equipment sales 791 1,182
--------------- --------------- ----------------
Total revenues 31,159 8,385 (70)
--------------- --------------- ----------------
OPERATING EXPENSES
Paging services and technical expenses 13,070 4,717
Cost of equipment sold 947 1,311
Selling and marketing 3,881 1,156
General and administrative 7,676 6,175
Depreciation and amortization 10,878 83 690 (F)
Provision for doubtful accounts 919 643 (7)(D)
Costs of abandoned acquisitions 1,692 -
--------------- --------------- ----------------
Total operating expenses 39,063 14,085 683
--------------- --------------- ----------------
Operating (loss) income (7,904) (5,700) (753)
Interest expense, net (3,004) (7,567) 7,567 (E)
(354)(G)
Gain on sales of equipment 29
Other income (expense) (897) 897 (E)
Adjust liabilities to estimated settlement amounts - 78,612 (78,612)(E)
--------------- --------------- ----------------
(Loss) income before income taxes (10,879) 64,448 (71,255)
(Provision for) benefit from income taxes - - -
--------------- --------------- ----------------
NET (LOSS) INCOME (10,879) 64,448 (71,255)
=============== =============== ================
Shares outstanding 16,551,000
===============
Basic and dilutive net loss per common share $ (0.66)
===============
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA
CONSOLIDATED
---------------
<S> <C>
REVENUES
Paging services $ 37,501
Equipment sales 1,973
------------------
Total revenues 39,474
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OPERATING EXPENSES
Paging services and technical expenses 17,787
Cost of equipment sold 2,258
Selling and marketing 5,037
General and administrative 13,851
Depreciation and amortization 11,651
Provision for doubtful accounts 1,555
Costs of abandoned acquisitions 1,692
------------------
Total operating expenses 53,831
------------------
Operating (loss) income (14,357)
Interest expense, net (3,358)
Gain on sales of equipment 29
Other income (expense) -
Adjust liabilities to estimated settlement amounts -
------------------
(Loss) income before income taxes (17,686)
(Provision for) benefit from income taxes -
------------------
NET (LOSS) INCOME (17,686)
==================
Shares outstanding 16,551,000
==================
Basic and dilutive net loss per common share $ (1.07)(C)
==================
</TABLE>
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AQUIS COMMUNICATIONS GROUP, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
The acquisition of certain paging assets from SourceOne Wireless ("SourceOne")
is being accounted for under the principles of purchase accounting. Accordingly,
the related acquired assets and assumed liabilities have been adjusted to
estimated fair value in connection with this transaction.
Pro forma adjustments to the consolidated condensed balance sheet are as
follows:
(A) The following represents the preliminary allocation of the purchase price
over the historical net book values of the acquired assets and assumed
liabilities of SourceOne at December 31, 1999, and is for illustrative pro
forma purposes only. Actual fair values will be based on financial
information as of January 31, 2000, the actual acquisition date. Assuming
the transaction had occurred on December 31, 1999, the preliminary
allocation would have been as follows:
Assets acquired:
<TABLE>
<S> <C>
Cash $ 119
Accounts receivable, net 758
Inventory 36
Prepaid and other current assets 205
Property and equipment 4,556
Intangible assets 512
------
6,186
Liabilities assumed (1,848)
-------
Purchase price $ 4,338
-------
-------
</TABLE>
The purchase price includes 15,000 shares of Aquis 7.5% redeemable
preferred stock valued at $1,500 and cash paid to the sellers of $2,250.
Aquis borrowed $2,450 from its lender to provide for the cash payment to
the sellers and for payment of certain related legal and loan acquisition
costs totaling $60 and $140, respectively. Also included in the cost to
purchase these net assets are various professional fees and other costs to
acquire these assets in accordance with purchase business acquisition
accounting. The historical balance sheet of SourceOne at December 31, 1999
has been reduced to estimated realizable value at that date in accordance
with the value received by the sellers in conjunction with the related
sales of these assets.
This allocation is preliminary and may be subject to change upon the
completion of the fair valuation of assets and liabilities acquired from
SourceOne as of January 31, 2000, the actual acquisition date.
(B) Following the closing of this purchase transaction, the escrow deposit of
$200 paid by Aquis along with $205 held by certain senior creditors and
SourceOne's available cash balances of $119 were used to make payments
totaling $393 to various vendors of SourceOne, with remaining cash balances
totaling $131 returned to Aquis.
(C) Dividends on Aquis' 7.5% Redeemable Preferred Stock have been reflected in
the accompanying Pro Forma Balance Sheet as a reduction of additional paid
in capital. This cost has been reflected as an increase in the pro forma
net loss attributed to common stockholders in computing the basic and
dilutive net loss per common share in the Pro Forma Statement of
Operations.
(D) Certain revenues and related collection allowances earned or incurred by
SourceOne during the year ended December 31, 1999 were attributable to
assets not acquired by Aquis in this transaction and are accordingly
eliminated for pro forma purposes.
4
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AQUIS COMMUNICATIONS GROUP, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(E) Various expenses incurred by SourceOne during the year ended December 31,
1999 were related to their operations and administration following the
filing of their Chapter 11 Bankruptcy petition on April 29, 1999. Certain
other costs and expenses were related to operations not acquired by Aquis.
These items included operations in certain geographical paging regions
outside SourceOne's core operations centered in the Midwestern U.S. Also
included were interest and other costs of SourceOne's outstanding debt
which was not assumed by Aquis and which totaled $7,567. In addition,
eliminated costs included those related to SourceOne's administration
during the Bankruptcy period that totaled $897. Finally, the restatement of
SoucreOne's outstanding liabilities to estimated net settlement amounts has
been adjusted for pro forma purposes. These amounts were written-down to
amounts expected to be paid to creditors from the sales of SourceOne's
assets. The write-down totaled $78,612 in 1999, and is reflected in
SourceOne's results of operations for 1999.
(F) Depreciation and amortization in the amount of $690 attributable to the
paging network assets and FCC licenses acquired in this transaction has
been provided, based on their estimated lives of 7 and 10 years,
respectively, as well as their cost as based upon their estimated fair
values as reflected herein.
(G) In connection with the borrowings associated with this purchase, interest
has been reflected for the year in the amount of $320 at a rate of 13%
pursuant the terms of Aquis' senior loan facility. In addition,
amortization of the deferred loan acquisition costs in the amount of $34
has been provided for the year presented.
(H) Other operating expenses included in the historical totals but not adjusted
in the Pro Forma Statement of Operations include:
o Employment costs related to officers, managers and other staff
terminated before the acquisition date,
o Certain SourceOne customer billing costs arising from software
licensing that will be eliminated with the integration of this
process into that of Aquis,
o Costs related to the operation and maintenance of certain
administrative, distribution center and sales office facilities
that were closed during 1999, and
o Banking and insurance costs in excess of those anticipated as a
result of integration of those operations with those of Aquis,
primarily related to the reduced scope of services required from
SourceOne's principal bank as the cash collections are folded into
existing processes.
Had adjustments of these costs been made to the Pro Forma Statement of
Operations for the year ended 1999, total expenses would have been reduced
by $1,927, reducing the basic and dilutive net loss per common share by
$0.12 to $0.95.
5
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this amendment to be signed on its behalf by the
undersigned hereunto duly authorized.
AQUIS COMMUNICATIONS GROUP, INC.
By: /s/ D. Brian Plunkett
-----------------------------
D. Brian Plunkett
Chief Financial Officer
Date: April 18, 2000
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