SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A No. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): FEBRUARY 15, 2000
VIZACOM INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-14076 22-3270045
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification Number)
GLENPOINTE CENTER EAST
300 FRANK W. BURR BOULEVARD
TEANECK, NEW JERSEY 07666
(Address of principal executive offices) (Zip Code)
(201) 928-1001
(Registrant's telephone number, including area code)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On February 15, 2000, we, Vizacom Inc., acquired Renaissance Computer Art
Center, Inc, d/b/a Renaissance Multimedia, a New York City-based digital
communication company focused on designing, implementing and supporting Internet
web sites and digital businesses through the use of new media. We acquired
Renaissance Multimedia through a merger of Renaissance Computer Art Center, Inc.
with and into RCAC Acquisition Corp., a wholly-owned subsidiary which we formed
for this specific transaction. RCAC changed its name to Renaissance Multimedia
Inc. following the merger and we intend to operate it as a wholly-owned
subsidiary.
The merger was completed pursuant to the terms of an Agreement and Plan of
Merger, dated February 15, 2000. Pursuant to the merger agreement, we issued an
aggregate of 449,870 shares of our common stock and paid an aggregate of
$250,000 to the stockholders of Renaissance Multimedia at the effective time of
the merger. We valued the shares of our common stock that we issued at $3.89 and
determined the number of shares based upon the market price of our common stock
for the twenty trading days preceding the fourth day prior to the closing.
One-half of the shares issued are subject to an escrow agreement to protect
against any inaccuracy in any of the representations and warranties of
Renaissance Computer Art Center, Inc. and its stockholders contained in the
Merger Agreement. In addition, under a lock-up agreement entered into at the
time of the merger, each party who received any of the shares of our common
stock we issued in the merger agreed to limit sales of these shares to 10% of
the total shares each received during the period from six to nine months
following the merger, and an additional 10% during the following three months.
These 449,870 shares of our common stock were issued in reliance upon an
exemption from registration under the Securities Act of 1933 pursuant to Section
4(2) thereof. As a result, these shares are subject to restrictions on transfer
under the applicable provisions of the Securities Act. In accordance with the
merger agreement, we entered into a registration rights agreement in which we
granted the parties who received these shares customary piggy back registration
rights in connection with future registration statements which we may file under
the Securities Act.
We also have entered into a three year employment agreement with Andrew
Edwards, the president of Renaissance Computer Art Center, Inc. at the time of
the merger. Under this agreement, Mr. Andrew will serve as one of our vice
presidents and president of Renaissance Multimedia, Inc. This agreement also
contains restrictions on Mr. Edwards engaging in competition with us for the
term of the agreement and for one year thereafter and provisions protecting our
proprietary rights and information.
Item 5. Other Events.
On February 17, 2000, we borrowed $1 million pursuant to a line of credit
facility in the maximum principal amount of $1 million with Churchill Consulting
that was entered into effective January 8, 2000. The interest rate on the line
of credit is 8% per year, compounded
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monthly, on the outstanding principal amount. All amounts borrowed under
the line of credit facility are due upon the earlier of (a) 60 days after the
first draw down on the line of credit facility or (b) our receipt of gross
proceeds from any offering of our equity securities of at least $2 million. We
also issued to Churchill warrants exercisable for seven years to purchase
250,000 shares of our common stock at $3.00 per share upon our draw down under
the line of credit facility in accordance with the terms of the line of credit
facility.
Item 7. Financial Statements and Exhibits.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
The required financial statements of Renaissance Multimedia have been
included in our Annual Report on Form 10-KSB for the year ended December 31,
1999, commencing on page F-28, and are incorporated in this Form 8-K/A No. 1 by
reference to such Form 10-KSB.
(b) PRO FORMA FINANCIAL INFORMATION.
The required pro forma financial information is set forth below:
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated financial
information gives effect to the Renaissance Multimedia merger, Junction 15
acquisition and PWR Systems merger, using the purchase method of accounting, and
the effect of the recent sales of our common stock necessary to complete these
acquisitions, after giving effect to the pro forma adjustments described in the
accompanying notes. We are providing this pro forma financial information to aid
you in your analysis of the financial condition of Vizacom following these
mergers, acquisition and financings. We derived this pro forma financial
information from the audited financial statements of Vizacom, Renaissance
Multimedia, Junction 15 and PWR Systems, each for the year ended December 31,
1999. The unaudited pro forma condensed consolidated financial information
should be read in conjunction with the audited historical financial statements
and related notes of Vizacom, Renaissance Multimedia, Junction 15 and PWR
Systems, which are each included in this Annual Report on Form 10-KSB. The
unaudited pro forma condensed consolidated balance sheet gives effect to these
mergers, acquisition and financings as if they had each occurred on December 31,
1999 and combines the unaudited condensed consolidated historical balance sheets
of Vizacom, Renaissance Multimedia, Junction 15 and PWR Systems as of December
31, 1999. The unaudited pro forma condensed consolidated statements of income
for the year ended December 31, 1999 assume these mergers, acquisition and
financings were each effected on January 1, 1999. The unaudited pro forma
condensed consolidated financial information is presented for illustrative
purposes only and does not purport to be indicative of the operating results or
financial position that would have actually occurred if these mergers,
acquisition and financings had each been effected on the dates indicated, nor is
it indicative of our future operating results or financial position. The pro
forma adjustments are based on the information and assumptions available as of
March 31, 2000.
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<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
December 31, 1999
<TABLE>
<CAPTION>
Historical
---------------------------------------------------- Pro Forma Pro Forma
Vizacom Renaissance Junction 15 PWR Adjustments Consolidated
------- ----------- ----------- --- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents $ 1,730,495 $ 131,316 $ 40 $ 457,850 $ 2,885,175 (A) $ 5,204,876
Marketable securities 2,746,678 -- -- -- (1,992,519)(B) 754,159
Receivables, net 733,410 245,270 231,862 3,692,224 -- 4,902,766
Inventories 1,457,604 -- 5,363 567,836 -- 2,030,803
Prepaid expenses and
other current assets 526,552 19,854 -- 3,426 -- 549,832
------------ ------------ ------------- ----------- ------------ --------------
Total current assets 7,194,739 396,440 237,265 4,721,336 892,656 13,442,436
Property and equipment,
net 828,108 81,677 39,009 6,189 -- 954,983
Goodwill and other
intangibles, net 118,665 -- -- -- 13,022,923 (F) 13,141,588
Restricted cash 259,838 -- -- -- -- 259,838
Deferred consulting costs 1,269,859 -- -- -- -- 1,269,859
Other assets, net 803,762 14,424 -- 18,904 -- 837,090
------------ ------------ ------------- ----------- ------------ --------------
Total assets $10,474,971 $ 492,541 $ 276,274 $4,746,429 $13,915,579 $ 29,905,794
============ ============ ============= =========== ============ ==============
Revolving lines of credit $ -- $ -- $ -- $1,748,131 $ -- $ 1,748,131
Notes payable -- 13,663 -- 850,000 1,281,015 (C) 2,144,678
Accounts payable 4,111,748 57,451 38,859 1,340,160 -- 5,548,218
Accrued and other
liabilities 1,816,744 158,352 100,137 46,288 -- 2,121,521
Value-added taxes payable 393,927 -- 62,290 -- -- 456,217
Due to shareholder -- 19,475 -- -- (19,475)(D) --
Current portion of capital
lease obligations 63,792 6,793 -- -- -- 70,585
Current portion of long-
term debt 155,554 -- 66,151 -- (66,151)(A) 155,554
------------ ------------ ------------- ----------- ------------ --------------
Total current liabilities 6,541,765 255,734 267,437 3,984,579 1,195,389 12,244,904
Capital lease obligation,
long term 98,265 1,803 -- -- -- 100,068
Long-term debt, less
current maturities 100,410 39,381 19,194 -- (19,194) (A) 139,791
------------ ------------ ------------- ----------- ------------ --------------
Total liabilities 6,740,440 296,918 286,631 3,984,579 1,176,195 12,484,763
------------ ------------ ------------- ----------- ------------ --------------
Common stock, $.001
par value 7,236 1,000 6,935 13 (4,198)(E) 10,986
Additional paid-in capital 49,851,699 119,577 26,534 17,107 13,519,532 (E) 63,534,449
(Accumulated deficit)
retained earnings (47,864,635) 75,046 (43,826) 781,015 (812,235)(E) (47,864,635)
Treasury stock (10,395) -- -- (36,285) 36,285 (E) (10,395)
Other comprehensive
income (loss) 1,750,626 -- -- -- -- 1,750,626
------------ ------------ ------------- ----------- ------------ -------------
Total stockholders'
equity 3,734,531 195,623 (10,357) 761,850 12,739,384 17,421,031
------------ ------------ ------------- ----------- ------------ -------------
Total liabilities and
stockholders' equity $10,474,971 $ 492,541 $ 276,274 $4,746,429 $13,915,579 $ 29,905,794
============ ============ ============= =========== ============ =============
</TABLE>
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
PRO FORMA ADJUSTMENTS
December 31, 1999
NOTE A CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
Renaissance Junction 15 PWR Financing Total
<S> <C> <C> <C> <C> <C>
Cash portion of purchase price $ (250,000) $ (250,000) $(1,000,000) $ -- $(1,500,000)
Legal and accounting fees for
acquisitions (175,000) (85,000) (200,000) -- (460,000)
Finder's fees paid in cash -- (69,480) -- -- (69,480)
Funds raised as a requirement
of PWR acquisition -- -- -- 5,000,000 5,000,000
------------ ------------- ------------ ----------- ------------
(425,000) (404,480) (1,200,000) 5,000,000 2,970,520
Repayment of loans concurrent
with purchase -- (85,345) -- -- (85,345)
------------ ------------- ------------ ----------- ------------
Net impact of acquisitions
and financing on cash $ (425,000) $ (489,825) $(1,200,000) $5,000,000 $ 2,885,175
============ ============= ============ =========== ============
</TABLE>
NOTE B MARKETABLE SECURITIES
In an August 10, 1999 agreement, the Company agreed to pay a finder a 10% fee,
payable in shares of Xceed, Inc. in connection with acquisitions at that date's
market value of $13.375. The fees were calculated as follows:
<TABLE>
<CAPTION>
Renaissance PWR Total
<S> <C> <C> <C>
Gross purchase price . . . . . . $ 2,000,000 $ 6,000,000
10% fee. . . . . . . . . . . . . 200,000 600,000
Conversion price per agreement . 13.375 13.375
Shares due to finder under the
agreement . . . . . . . . . 14,953 44,860
Market value of Xceed shares
at closing date . . . . . . 39.875 31.125
------------- -------------
Finder's fee paid in Xceed
shares. . . . . . . . . . . $ 596,251 $ 1,396,268 $ 1,992,519
============= ============= =============
Realized gain on disposition
of Xceed shares . . . . . . $ (127,061) $ (381,279) $ (508,340)
============= ============= =============
</TABLE>
NOTE C NOTES PAYABLE
<TABLE>
<CAPTION>
PWR Total
<S> <C> <C>
Note payable for retained earnings at closing $ 781,015 $ 781,015
Convertible note . . . . . . . . . . . . . 500,000 500,000
------------ -----------
Note payable resulting from PWR acquisition . $ 1,281,015 $1,281,015
============ ===========
</TABLE>
NOTE D DUE TO SHAREHOLDER
<TABLE>
<CAPTION>
Renaissance Total
<S> <C> <C>
Debt forgiven by shareholder on acquisition
closing. . . . . . . . . . . . . . . . . $ 19,475 $ 19,475
============ ===========
</TABLE>
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NOTE E STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Renaissance Junction 15 PWR Financing Total
<S> <C> <C> <C> <C>
Common shares issued in
acquisitions and financing $ 449,870 $ 681,818 $ 1,500,000 $ 1,117,739 $ 3,749,427
============= ============ ============ ============= ============
Market price per share $ 3.89 $ 3.30 $ 3.00 $ 4.47
Common stock, $.001 par value 450 682 1,500 1,118 3,750
Elimination of acquired
companies' common stock (1,000) (6,935) (13) -- (7,948)
----------- ------------ ------------ ------------ ------------
Effect on common stock account $ (550) $ (6,253) $ 1,487 $ 1,118 $ (4,198)
============ ============ ============ ============ ============
Paid-in capital $ 1,749,550 $ 2,249,318 $ 4,498,500 $ 4,998,882 $13,496,250
Elimination of acquired
companies' paid-in capital (119,577) (26,534) (17,107) -- (163,218)
Value of 50,000 options issued
to PWR consultants -- -- 186,500 -- 186,500
------------ ------------ ------------ ------------ ------------
Elimination of acquired companies:
Effect on additional paid-in
capital $ 1,629,973 $ 2,222,784 $ 4,667,893 $ 4,998,882 $13,519,532
============ ============ ============ ============ ============
(Accumulated deficit) retained
earnings $ 75,046 $ (43,826) $ 781,015 $ -- $ (812,235)
============ ============ ============ ============ ============
Treasury stock $ -- $ -- $ (36,285) $ -- $ 36,285
============ ============ ============ ============ ============
</TABLE>
NOTE F GOODWILL AND OTHER INTANGIBLES
Goodwill arose from the preliminary assignment of fair values to the assets
and liabilities acquired. The amount may increase or decrease as a result of the
contingent consideration on the PWR acquisition. Additionally, further
assessment of fair values and completion of any appraisals may result in changes
in either valuation or allocation of the excess purchase price over fair value.
For the above pro forma goodwill was determined as follows:
<TABLE>
<CAPTION>
Renaissance Junction 15 PWR Total
<S> <C> <C> <C> <C>
Cash paid as indicated in Note A $ 425,000 $ 404,480 $ 1,200,000 $ 2,029,480
Stock issued as indicated in Note E 1,750,000 2,250,000 4,500,000 8,500,000
Notes issued as indicated in Note C -- -- 1,281,015 1,281,015
Marketable securities issued as indicated in Note B 596,251 -- 1,396,268 1,992,519
Forgiveness of shareholder debt upon acquisition (19,475) -- -- (19,475)
Consultant options indicated in Note E -- -- 186,500 186,500
------------ ------------ ----------- ------------
Total consideration paid 2,751,776 2,654,480 8,563,783 13,970,039
Less: Fair value of acquired net assets (liabilities)
based on preliminary assessment 195,623 (10,357) 761,850 947,116
------------ ------------ ----------- ------------
Goodwill and other intangibles $ 2,556,153 $ 2,664,837 $ 7,801,933 $13,022,923
============ ============ ============ ============
</TABLE>
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1999
<TABLE>
<CAPTION>
Historical
---------------------------------------------------- Pro Forma Pro Forma
Vizacom Renaissance Junction 15 PWR Adjustments Consolidated
------- ----------- ----------- --- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net sales $19,891,357 $1,531,400 $ 717,804 $15,928,205 -- $38,068,766
Cost of goods sold 6,371,106 546,490 303,840 13,094,364 -- 20,315,800
------------ ----------- ----------- ------------ ------------- ------------
Gross profit 13,520,251 984,910 413,964 2,833,841 -- 17,752,966
Expenses:
Selling, general and
administrative expenses 17,175,520 925,276 392,939 2,371,756 $ 179,000 (G) 21,044,491
Product development 1,027,447 -- -- -- -- 1,027,447
Amortization of goodwill
and other intangibles 2,219,363 -- -- -- 1,860,418 (I) 4,079,781
Unrealized holding gain (322,652) -- -- -- -- (322,652)
Realized gain (642,444) -- -- -- (508,340)(B) (1,150,784)
Other (income) expense,
net (59,503) (1,668) -- 83,031 47,871 (H) 69,731
------------ ----------- ----------- ------------ ------------- ------------
19,397,731 923,608 392,939 2,454,787 1,578,949 24,748,014
------------ ----------- ----------- ------------ ------------- ------------
(Loss) income before
income taxes (5,877,480) 61,302 21,025 379,054 (1,578,949) (6,995,048)
Income tax (benefit)
expense (250,978) 23,000 -- 12,541 -- (215,437)
------------ ----------- ----------- ------------ ------------- ------------
Net (loss) income (5,626,502) 38,302 21,025 366,513 (1,578,949) (6,779,611)
Dividends on Series A
and Series C
preferred stock (56,641) -- -- -- -- (56,641)
------------ ----------- ----------- ------------ ------------- ------------
Net (loss) income
attributable to
common stockholders $(5,683,143) $ 38,302 $ 21,025 $ 366,513 $ (1,578,949) $ (6,836,252)
============ =========== =========== ============ ============= =============
Pro forma loss per share -
Basic and diluted:
Net loss per share $ (0.95) $ (0.70)
============ =============
Weighted average
number of shares 5,996,507 9,745,934
============ =============
</TABLE>
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<PAGE>
NOTES TO UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
PRO FORMA ADJUSTMENTS
For the Year Ended December 31, 1999
NOTE G EMPLOYMENT AGREEMENTS
Represents the additional cost relating to PWR of $61,000 and Junction 15 of
$118,000 for compensation expense as a result of the employment agreements.
NOTE H INTEREST EXPENSE
Represents interest at 6.3% for the PWR retained earnings note and convertible
note, assuming no conversion (described in Note C), as well as the repayment of
Junction 15 indebtedness.
NOTE I AMORTIZATION OF GOODWILL AND OTHER INTANGIBLES
To record amortization based on a seven-year life.
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<PAGE>
(c) EXHIBITS.
Listed below are all exhibits to this Current Report on Form
8-K/A No. 1.
Exhibit
Number Description
- ------ -----------
10.1 Agreement and Plan of Merger, dated as of February 15, 2000, among
Vizacom Inc., RCAC Acquisition Corp., Renaissance Computer Art
Center, Inc. and the former stockholders of Renaissance Computer Art
Center, Inc.*
10.2 Escrow Agreement, dated as of February 15, 2000, among Vizacom
Inc., Renaissance Computer Art Center Inc., the former stockholders
of Renaissance Computer Art Center, Inc., Andrew Edwards and Kaufman
& Moomjian, LLC, as escrow agent.*
10.3 Form of Lock-Up Agreement.*
10.4 Registration Rights Agreement, dated as of February 15, 2000,
among Vizacom Inc., and each of the former stockholders of
Renaissance Computer Art Center, Inc.*
10.5 Employment Agreement, dated as of February 15, 2000, by and between
Vizacom Inc. and Andrew Edwards.*
10.6 Line of Credit Facility Agreement, dated January 8, 2000, between
Vizacom Inc. and Churchill Consulting.*
10.7 Line of Credit Note, dated January 8, 2000, in the principal
amount of $1,000,000 and payable to Churchill Consulting.*
10.8 Warrant Certificate, dated February 17, 2000, registered in the name
of Churchill Consulting.*
99.1 Press Release, dated February 15, 2000.*
- ------------------------
* Previously filed with Form 8-K on February 22, 2000.
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<PAGE>
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.
Dated: April 17, 2000
VIZACOM INC.
By: /s/ Alan W. Schoenbart
------------------------------------
Alan W. Schoenbart
Vice President - Finance and
Chief Financial Officer
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