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| INS > SEC Filings for INS > Form 8-K/A on 27-Jun-2008 | All Recent SEC Filings |
27-Jun-2008
Completion of Acquisition or Disposition of Assets, Financial Statemen
Sale of VISaer Business - Effective April 16, 2008, the Company and VISaer completed the sale of substantially all the assets related to VISaer's business pursuant to the terms of an asset purchase agreement (the "Asset Purchase Agreement") between IBS Technics, Inc. ("IBS Technics") and the Company and VISaer. IBS Technics is a subsidiary of IBS Software Services, Inc. ("IBS"), a software services company that had previously provided certain software development services to VISaer as an independent third party contractor.
The purchase price consisted of $3,025,000 paid in cash at closing plus future earn-out and contingent payments to be paid over four years based on certain performance metrics of the VISaer business following the sale, with guaranteed minimum payments aggregating $1,500,000 (discounted to $1,261,000), payable in cash in three equal installments in 2010, 2011 and 2012. In addition, IBS Technics assumed liabilities of VISaer of approximately $250,000 related to employee vacation benefits and $437,000 owed to IBS for prior software development services. IBS hired the VISaer employees as of the effective date of the transaction and assumed all customer contracts, including the ongoing liabilities and obligations associated with performance of such contracts. VISaer retained the remainder of the liabilities of the VISaer business along with cash and accounts receivable aggregating approximately $450,000 as of the closing date. The Company will classify the VISaer operation as discontinued operations in all future reporting periods.
(b) Unaudited Pro Forma Financial Information
The following unaudited pro forma financial statements give effect to the sale of the VISaer business in accordance with Article 11 of Regulation S-X and are based upon currently available information and certain assumptions management considered reasonable under the circumstances. Based on the carrying value of the assets and liabilities involved in the VISaer sale on the closing date and the estimated costs and expenses incurred in connection with the sale, the Company anticipates that it will record a net gain of $3.1 million on the VISaer sale. The unaudited pro forma statements of operations presented herein exclude this anticipated gain.
The unaudited pro forma condensed balance sheet assumes the VISaer sale occurred as of March 31, 2008. Such pro forma information is based on the consolidated historical unaudited balance sheet data of the Company and VISaer as of March 31, 2008. The unaudited pro forma balance sheet is not necessarily indicative of the results that would have been reported had the VISaer sale actually occurred on that date, nor is it necessarily indicative of the Company's future financial position. The unaudited pro forma condensed statement of operations for the three months ended March 31, 2008 gives effect to the VISaer sale as if the sale had occurred on January 1, 2008. The unaudited pro forma condensed statement of operations for the year ended December 31, 2007 gives effect to the VISaer sale as if the sale had occurred on January 1, 2007. The unaudited pro forma financial statements provided herein do not include any amounts related to potential contingency payments (which are in excess of the guaranteed future payments) which may be paid to the Company in future periods since the amount of such payments, if any, is not determinable at this time.
The unaudited pro forma financial statements are based on and should be read in conjunction with, and are qualified in their entirety by, the historical consolidated financial statements and notes thereto of the Company.
PRO FORMA CONSOLIDATED BALANCE SHEET
(unaudited, in thousands except for per share amounts)
Disposition
As of March 31, 2008 As Reported Adjustments Pro Forma
ASSETS
Current assets:
Cash $ 703 $ 3,025 a $ 3,728
Accounts receivable, net 2,556 - 2,556
Note and interest receivable, current portion 550 - 550
Inventories 1,469 - 1,469
Other current assets 2,607 (784 ) b 1,823
Total current assets 7,885 2,241 10,126
Long-term investments 1,153 - 1,153
Long-term note receivable, net of current
portion 221 1,261 a 1,482
Property and equipment, at cost less
accumulated depreciation 1,910 (16 ) b 1,894
Goodwill, net 2,047 (1,653 ) b 394
Other intangibles, net 302 - 302
Other assets, net 17 (17 ) b -
Total assets $ 13,535 $ 1,816 $ 15,351
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LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Line of credit $ 1,817 $ - $ 1,817 Note payable, current portion 93 - 93 Accounts payable 1,646 (437 ) b 1,209 Deferred revenue 2,763 (640 ) b 2,123 Accrued payroll 1,047 (250 ) b 797 Accrued expenses and other current liabilities, net 1,901 75 b, c 1,976 Total current liabilities 9,267 (1,252 ) 8,015 Long-term liabilities 229 - 229 Minority interest 1,516 - 1,516 Stockholders' equity: Common stock, $0.01 par value 45 - 45 Paid-in capital 18,440 - 18,440 Accumulated other comprehensive loss (132 ) - (132 ) Accumulated deficit (15,830 ) 3,068 d (12,762 ) Total stockholders' equity 2,523 3,068 5,591 Total liabilities and stockholders' equity $ 13,535 $ 1,816 $ 15,351 |
The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 2008
(unaudited; in thousands, except share and per share amounts)
Disposition
As Reported Adjustments Pro Forma
Revenue
Products $ 4,021 $ (40 ) e $ 3,981
Services 683 (587 ) e 96
Total revenue 4,704 (627 ) 4,077
Cost of sales
Products 2,117 (2 ) e 2,115
Services 564 (363 ) e 201
Total cost of sales 2,681 (365 ) 2,316
Expenses
Marketing 843 (74 ) e 769
General & administrative 1,471 (154 ) e 1,317
Research & development 1,202 (393 ) e 809
Loss from continuing operations (1,493 ) 359 (1,134 )
Other income
Interest income (expense), net (5 ) 20 f 15
Equity in earnings of affiliate companies 25 - 25
Other expense, net (2 ) 2 e -
Loss from continuing operations before income
tax (1,475 ) 381 (1,094 )
Income tax 12 12
Net loss from continuing operations $ (1,487 ) $ 381 $ (1,106 )
Basic and diluted loss per share from
continuing operations $ (0.33 ) $ 0.08 $ (0.25 )
Basic and diluted weighted average shares
outstanding 4,478,971 4,478,971
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The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2007
(unaudited; in thousands, except share and per share amounts)
Disposition
As Reported Adjustments Pro Forma
Revenue
Products $ 14,555 $ (28 ) e $ 14,527
Services 4,450 (3,566 ) e 884
Total revenue 19,005 (3,594 ) 15,411
Cost of sales
Products 7,748 (3 ) e 7,745
Services 2,655 (1,813 ) e 842
Total cost of sales 10,403 (1,816 ) 8,587
Expenses
Marketing 3,075 (363 ) e 2,712
General & administrative 4,358 (425 ) e 3,933
Research & development 5,032 (1,721 ) e 3,311
Loss from operations (3,863 ) 731 (3,132 )
Other income (expense)
Interest income, net 136 108 e, f 244
Investment income, net 82 - 82
Equity in income (loss) of affiliate
companies, net (13 ) - (13 )
Other expense, net (49 ) 12 e (37 )
Loss from continuing operations before income
tax provision (3,707 ) 851 (2,856 )
Income tax 17 (7 ) e 10
Loss from continuing operations $ (3,724 ) 858 $ (2,866 )
Gain on sale of discontinued operations, no
tax effect 1,300 - 1,300
Net loss $ (2,424 ) $ 858 $ (1,566 )
Basic and diluted loss per share, continuing
operations $ (0.83 ) $ 0.19 $ (0.64 )
Basic and diluted income per share,
discontinued operations $ 0.29 - $ 0.29
Basic and diluted loss per share $ (0.54 ) $ 0.19 $ (0.35 )
Basic and diluted weighted average shares
outstanding 4,478,971 4,478,971
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The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements.
Notes to Unaudited Pro Forma Financial Statements
1. Basis of Presentation: The historical financial information for the Company
as of March 31, 2008 presented herein has been derived from the unaudited
consolidated financial statements included in the Company's Form 10-QSB for the
quarter ended March 31, 2008. The historical financial information for the
Company for the year ended December 31, 2007 presented herein has been derived
from the audited historical consolidated financial statements included in the
Company's Form 10-KSB for the year ended December 31, 2007.
The unaudited pro forma financial statements are based on and should be read in
conjunction with, and are qualified in their entirety by, the historical
consolidated financial statements and notes thereto of the Company.
2. Dispostion Adjustments:
a. To record proceeds received in the VISaer sale consisting of $3,025,000 cash
and a guaranteed payment by IBS Technics in the principal amount of
$1,500,000 (discounted to $1,261,000 net present value), which is classified
as Long-term Note Receivable. The amounts are payable in 3 equal installments
of $500,000 in 2010, 2011 and 2012.
b. To record assets and liabilities of VISaer transferred to IBS Technics.
c. To record actual and accrued transaction related expenses consisting of legal, accounting and other anticipated expenses aggregating approximately $75,000. Such amounts are based on management's current information and reasonable judgment. Actual expenses could be more or less than estimated.
d. To record the pro forma gain on the VISaer sale. Actual gain on the sale may differ from the pro forma gain shown due to differences in the carrying values of the assets and liabilities at March 31, 2008 compared to the carrying values on the actual transaction date.
e. To record adjustments to eliminate the historical consolidated results of operations of VISaer.
f. To record estimated interest income related to the discounted guaranteed payments by IBS Technics which would have been earned by the Company had the sale transaction been effective as of the first day of the respective period.
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