-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KXYdScKn1OnV7RaCxVgQaXokMz42cwh2DrovV+TU6VqNRKND132L0RAzrna/3zD7 uCvWPFrgCxPQwX2EwO5VkA== 0000931763-98-002690.txt : 19981020 0000931763-98-002690.hdr.sgml : 19981020 ACCESSION NUMBER: 0000931763-98-002690 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980804 ITEM INFORMATION: FILED AS OF DATE: 19981019 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERCEPT GROUP INC CENTRAL INDEX KEY: 0001054930 STANDARD INDUSTRIAL CLASSIFICATION: FUNCTIONS RELATED TO DEPOSITORY BANKING, NEC [6099] IRS NUMBER: 582237359 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-14213 FILM NUMBER: 98727628 BUSINESS ADDRESS: STREET 1: 3150 HOLCOMB BRIDGE ROAD SUITE 200 CITY: NORTCROSS STATE: GA ZIP: 30071 BUSINESS PHONE: 7702489600 MAIL ADDRESS: STREET 1: 3150 HOLCOMB BRIDGE ROAD SUITE 200 CITY: NORTCROSS STATE: GA ZIP: 30071 8-K/A 1 AMENDMENT 1 TO FORM 8-K DATED AUGUST 4, 1998 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------- FORM 8-K/A AMENDMENT 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): August 4, 1998 ------------------- THE INTERCEPT GROUP, INC. ------------------------- (Exact Name of Registrant as Specified in its Charter) Georgia 001-14213 58-2237359 - -------------------------------------------------------------------------------- (State or Other (Commission (I.R.S. Employer Jurisdiction of File Number) Identification No.) Incorporation) 3150 Holcomb Bridge Road, Suite 200, Norcross, Georgia 30071 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (770) 248-9600 -------------- N/A ----------------------------- (Former Name or Former Address, if Changed Since Last Report) ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. The registrant hereby amends its report on Form 8-K filed on August 19, 1998 by deleting the text under Item 7 and replacing it with the following text. (A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. Included as Exhibits 99.2 and incorporated herein by reference. (B) PRO FORMA FINANCIAL INFORMATION. Included as Exhibit 99.3 hereto and incorporated herein by reference. (C) EXHIBITS. 2.1 Asset Purchase Agreement dated August 4, 1998 by and between The InterCept Group, Inc., Nova Financial Corporation and BroadNet, Inc.* 99.1 Press Release dated August 5, 1998.* 99.2 The following financial statements of Nova Financial Corporation Data Processing Business: Balance Sheets as of December 31, 1996 and 1997 and June 30, 1998 (unaudited). Statements of Operations for the years ended December 31, 1996 and 1997 and the six months ended June 30, 1998 (unaudited). Statements of Accumulated Deficit for the years ended December 31, 1996 and 1997 and the six months ended June 30, 1998 (unaudited). Statements of Cash Flows for the years ended December 31, 1996 and 1997 and the six months ended June 30, 1998 (unaudited). Notes to Financial Statements. 99.3 The following unaudited pro forma condensed consolidated financial statements of The InterCept Group, Inc. and Nova Financial Corporation Data Processing Business: Pro Forma Condensed Consolidated Balance Sheet as of June 30, 1998. Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 1997. Pro Forma Condensed Consolidated Statement of Operations for the six months ended June 30, 1998. Notes to Pro Forma Condensed Consolidated Financial Information. - ---------------------------------- *Previously filed with the registrant's Current Report on Form 8-K filed August 19, 1998. 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. THE INTERCEPT GROUP, INC. By: /s/ Scott R. Meyerhoff ----------------------------------------- Scott R. Meyerhoff Chief Financial Officer Dated: October 19, 1998 EX-99.2 2 FINANCIAL STATEMENTS EXHIBIT 99.2 NOVA FINANCIAL CORPORATION DATA PROCESSING BUSINESS FINANCIAL STATEMENTS AS OF DECEMBER 31, 1996 AND 1997 AND JUNE 30, 1998 (UNAUDITED) TOGETHER WITH AUDITORS' REPORT REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Nova Financial Corporation: We have audited the accompanying balance sheets of NOVA FINANCIAL CORPORATION DATA PROCESSING BUSINESS (a division of Nova Financial Corporation) as of December 31, 1996 and 1997 and the related statements of operations, accumulated deficit, and cash flows for the years ended December 31, 1996 and 1997. These financial statements are the responsibility of Nova Financial Corporation Data Processing Businesses' 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 Nova Financial Corporation Data Processing Business as of December 31, 1996 and 1997 and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. Arthur Andersen LLP Atlanta, Georgia October 16, 1998 NOVA FINANCIAL CORPORATION DATA PROCESSING BUSINESS BALANCE SHEETS ASSETS
Predecessor Successor -------------- ------------------------------- December 31, December 31, June 30, 1996 1997 1998 ------------- ------------------------------- (UNAUDITED) CURRENT ASSETS: Cash $ 0 $ 0 $ 477 Accounts receivable 84,830 203,558 142,677 Other current assets 0 20,800 17,890 ----------- ---------- ---------- Total current assets 84,830 224,358 161,044 PROPERTY AND EQUIPMENT, NET 405,116 417,875 373,493 GOODWILL, NET OF ACCUMULATED AMORTIZATION OF $11,337 AT JUNE 30, 1998 0 906,901 895,564 DUE FROM PARENT COMPANY 0 0 75,779 OTHER ASSETS, NET 600 600 600 ----------- ---------- ---------- $ 490,546 $1,549,734 $1,506,480 =========== ========== ========== LIABILITIES AND PARENT COMPANY INVESTMENT AND ACCUMULATED DEFICIT CURRENT LIABILITIES: Current maturities of long-term debt $ 293,332 $ 616,668 $ 631,082 Accounts payable 251,912 381,729 305,577 Related party accounts payable 6,432 188,492 680,639 Accrued liabilities 5,800 144,418 120,379 ----------- ---------- ---------- Total current liabilities 557,476 1,331,307 1,737,677 LONG-TERM LIABILITIES: Long-term debt, net of current obligations 338,556 0 0 Due to Parent Company 482,781 218,427 0 ----------- ---------- ---------- Total liabilities 821,337 218,427 0 ----------- ---------- ---------- COMMITMENTS AND CONTINGENCIES (NOTE 8) ACCUMULATED DEFICIT (888,267) 0 (231,197) ----------- ---------- ---------- $ 490,546 $1,549,734 $1,506,480 =========== ========== ==========
The accompanying notes are an integral part of these balance sheets. NOVA FINANCIAL CORPORATION DATA PROCESSING BUSINESS STATEMENTS OF OPERATIONS
Predecessor Successor ------------------------- ------------------ Years Ended SIX MONTHS December 31, ENDED JUNE 30, ------------------------- 1996 1997 1998 ----------- ---------- ------------------ (UNAUDITED) REVENUES $ 825,899 $1,596,942 $ 661,134 ----------- ----------- ----------- COSTS AND EXPENSES: Cost of services 827,606 1,008,468 567,218 Selling, general, and administrative 484,293 724,368 175,674 Depreciation and amortization 54,744 113,832 71,939 ----------- ----------- ----------- OPERATING LOSS (540,744) (249,726) (153,697) OTHER EXPENSE, NET 88,095 118,908 77,500 ----------- ----------- ----------- LOSS BEFORE INCOME TAX BENEFIT (628,839) (368,634) (231,197) INCOME TAX BENEFIT 0 0 0 ----------- ----------- ----------- NET LOSS $(628,839) $ (368,634) $(231,197) =========== =========== ===========
The accompanying notes are an integral part of these statements. NOVA FINANCIAL CORPORATION DATA PROCESSING BUSINESS STATEMENTS OF ACCUMULATED DEFICIT
ACCUMULATED DEFICIT -------------------- BALANCE, DECEMBER 31, 1995 $ (259,428) Net loss (628,839) -------------------- BALANCE, DECEMBER 31, 1996 (888,267) Net loss (368,634) Effect of acquisition of Nova Financial Corporation 1,256,901 -------------------- BALANCE, DECEMBER 31, 1997 $ 0 -------------------- Net loss (unaudited) (231,197) -------------------- BALANCE, JULY 31, 1998 (unaudited) $ (231,197) --------------------
The accompanying notes are an integral part of these statements. NOVA FINANCIAL CORPORATION DATA PROCESSING BUSINESS STATEMENTS OF CASH FLOWS
Predecessor Successor ----------------- ------------------ Years Ended SIX MONTHS December 31 ENDED JUNE 30, ----------------- 1996 1997 1998 ------- ------- ------------------ (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(628,839) $(368,634) $(231,197) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 54,744 113,832 71,939 Changes in current assets and liabilities: Accounts receivable (84,830) (118,728) 60,881 Other current assets 4,326 (20,800) 2,910 Accounts payable 204,179 129,817 (76,152) Related party accounts payable 6,432 182,060 492,147 Accrued liabilities (11,179) 138,618 (24,039) ---------- --------- ----------- Net cash provided by operating activities (455,167) 56,165 296,489 ---------- --------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment, net (245,373) (126,591) (16,220) ---------- --------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Advances from (to) Parent Company, net 127,381 (264,354) (294,206) Proceeds from long-term debt, net 573,159 334,780 14,414 ---------- --------- ----------- Net cash used in financing activities 700,540 70,426 (279,792) ---------- --------- ----------- NET INCREASE IN CASH 0 0 477 CASH, BEGINNING OF PERIOD 0 0 0 ---------- --------- ----------- CASH, END OF PERIOD $ 0 $ 0 $ 477 ---------- --------- ----------- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest $ 83,200 $ 114,300 $ 71,400 ---------- --------- -----------
The accompanying notes are an integral part of these statements. NOVA FINANCIAL CORPORATION DATA PROCESSING BUSINESS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1996 AND 1997 AND JUNE 30, 1998 (UNAUDITED) 1. ORGANIZATION AND NATURE OF BUSINESS Nova Financial Corporation (a Georgia Corporation) ("Nova" or "Parent Company") was incorporated for the purpose of providing information technology, data processing, and consulting services to financial institutions, primarily community banks. The financial statements and related footnotes contained herein reflect the operations of Nova Financial Corporation Data Processing Business ("Nova Data Processing Business" or the "Company"). On December 31, 1997, Nova was acquired by BroadNet, Inc. in a stock for stock transaction accounted for as a purchase. The portion of the purchase price related to the Nova Data Processing Business was "pushed-down" in the accompanying balance sheet. As the acquisition was accounted for as a purchase, such accounting generally results in increased amortization and depreciation in future periods. Accordingly, the accompanying financial statements of the predecessor and Nova Data Processing Business are not comparable in all material respects since those financials statements report financial position, results of operations, and cash flows of these separate entities. Substantially all assets and liabilities of the Nova Data Processing Business are being acquired in a transaction accounted for as a purchase by The InterCept Group, Inc. ("InterCept"). 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The Company is not a separate subsidiary of Nova nor has it been operated as a separate division of Nova. The financial statements of the data processing division have been derived from the consolidated financial statements of Nova and have been prepared to present its financial position, results of operations, and cash flows on a stand-alone basis. Accordingly, the accompanying financial statements include certain costs and expenses which have been allocated to the data processing division. These costs have been allocated based on specific identification where possible. Such allocated expenses may not be indicative of what such expenses would have been had the data processing business been operated as a separate entity. The interim financial information as of and for the period ended June 30, 1998 is unaudited. However, in the opinion of management, the interim financial data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim period. USE OF ESTIMATES The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosures 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. PROPERTY AND EQUIPMENT Property and equipment are recorded at cost or fair market value at the acquisition (Note 1). The Company provides for depreciation using the straight-line method over the estimated useful lives of the assets. Repairs and maintenance costs are expensed and major betterments are capitalized. Property, plant, and equipment consisted of the following at December 31, 1996 and 1997 and June 30, 1998:
Predecessor Successor ------------- --------------------------------- December 31, December 31, June 30, USEFUL LIFE 1996 1997 1998 ------------- -------------- --------------- --------------- (UNAUDITED) Leasehold improvements FIVE YEARS $ 18,360 $ 11,765 $ 11,765 Machinery and equipment FIVE YEARS 410,324 319,969 322,733 Furniture and fixtures FIVE YEARS 24,275 17,352 17,352 Software FIVE YEARS 42,910 68,809 82,894 -------------- --------------- --------------- 495,869 417,875 434,744 Less accumulated depreciation (90,753) 0 (61,251) -------------- --------------- --------------- $405,116 $417,875 $373,493 -------------- --------------- ---------------
COMPUTER SOFTWARE Acquired software and licensing rights are capitalized and amortized using the straight-line method over an estimated useful life of five years. GOODWILL Goodwill results from the pushdown of goodwill to Nova Data Processing Business from the acquisition of Nova on December 31, 1997 by Broadnet, Inc. Goodwill is being amortized over 40 years. Amortization expense for the six months ended June 30, 1998 was $11,337. INCOME TAXES The income tax returns of Nova include the operations of the data processing business. For purposes of the accompanying financial statements, income taxes related to the data processing business have been computed and recorded on a separate basis based on the statutory rates in effect (Note 5). Deferred income taxes are recorded using enacted tax laws and rates for the years in which the taxes are expected to be paid. Deferred income taxes are provided for items when there is a temporary difference in recording such items for financial reporting and income tax reporting. REVENUE RECOGNITION Revenues are recognized as the services are provided. -3- 3. DUE TO FROM PARENT COMPANY Nova either advances funds to or borrows funds from the data processing business. Funds advanced to the data processing business are primarily used to cover working capital requirements. The advances and borrowings are netted and are reflected in Due to or Due from Parent Company in the accompanying balance sheets. 4. LONG-TERM DEBT Nova has entered into borrowing facilities with a bank for the acquisition of equipment. While the data processing business does not specifically enter into debt arrangements, the debt reflected in the accompanying table relates to borrowings associated with equipment of the Company's data processing center. Long term debt at December 31, 1996 and 1997 and June 30, 1998 consisted of the following:
Predecessor Successor ------------ ----------------------------- December 31, December 31, June 30, 1996 1997 1998 ------------ ------------ ---------- (UNAUDITED) Notes payable to Mountain National, paid in full on August 4, 1998 $ 631,888 $ 616,668 $ 586,525 Other 0 0 44,557 ----------- ----------- ---------- 631,888 616,688 631,082 Less current portion 293,332 616,668 631,082 ----------- ----------- ---------- Long-term debt, net of current portion $ 338,556 $ 0 $ 0 =========== =========== ==========
-4- 5. INCOME TAXES The differences between the income tax benefit and the amount computed by applying the statutory federal income tax rate to the net loss for the years ended December 31, 1996 and 1997 is due to a valuation allowance against net operating loss carryforwards. The tax effects of temporary differences between the carrying amounts of assets and liabilities in the financial statements and their respective tax basis, which give rise to deferred tax assets and liabilities, as of December 31, 1996 and 1997 are as follows:
Predecessor Successor ------------ --------------- December 31, December 31, 1996 1997 ------------ --------------- Current deferred tax asset: Deferred tax asset: Accrued vacation pay $ 3,800 $ 3,800 Net operating loss carryforwards 588,341 728,422 --------- --------- Deferred tax assets 592,141 732,222 Less valuation allowance (592,141) (732,222) --------- --------- Net deferred tax assets $ 0 $ 0 --------- ---------
6. RELATED PARTY. The Company resells software to their financial institution customers from Sonata Systems, Inc. and BroadNet, Inc. which are related parties through common ownership. The Company recorded approximately $6,000 and $189,000 in 1996 and 1997, respectively which has been reflected in selling, general and administrative expense in the accompanying statement of operations. The Company recorded related party payables of approximately $6,000 and $189,000 at December 31, 1996 and 1997, respectively, related to payments owed to Sonata Systems, Inc. and BroadNet, Inc. for software sold to the Company's customers. 7. EMPLOYEE BENEFITS The Company has a defined contribution 401(k) benefit plan which covers substantially all employees, subject to certain minimum age and service requirements. The plan provides for voluntary contributions by employees and matching contributions by the Company at its discretion. For the years ended December 31, 1996 and 1997, the Company made no matching contributions to the plan. -5- 8. COMMITMENTS Nova leases certain equipment and facilities under operating leases. The leases referred to in the accompanying table refer specifically to leases associated with the operation of the data processing function and the building lease. Future minimum payments on these leases at December 31, 1997 are summarized as follows: 1998 $ 77,000 1999 83,000 2000 85,000 2001 1,000 -------- $246,000 -------- Rent expense for the data processing function operating leases was approximately $77,000 and $97,000 for the years ended December 31, 1996 and 1997, respectively. 9. CUSTOMER CONCENTRATION Certain customers made up greater than 10% of the Company's sales for the years ended December 31, 1996 and 1997 as follows: 1996 1997 ---- ---- Customer A 33.3% 19.5% Customer B 10.5% 10.2% 10. FAIR VALUE OF FINANCIAL INSTRUMENTS Nova Financial Corporation Data Processing Business is required to disclose fair value information about financial instruments, whether or not recognized on the face of the balance sheet, for which it is practicable to estimate that value. The assumptions used in the estimation of the fair value of the Company's financial instruments are detailed below. Where quoted prices are not available, fair values are based on estimates using discounted cash flows and other valuation techniques. The use of discounted cash flows can be significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. The following disclosures should not be considered a surrogate of the liquidation value of the Company, but rather a good faith estimate of the increase or decrease in value of financial instruments held by the Company since purchase, organization, or issuance. CASH For cash, the carrying value amount is a reasonable estimate of fair value. LONG-TERM DEBT The carrying amount of the variable rate long-term debt approximates the fair value. LIMITATIONS Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company's financial instruments, fair value estimates are based on many judgments. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Fair value estimates are based on existing on and off balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Significant assets and liabilities that are not considered financial instruments include deferred income taxes and property and equipment. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates. 11. SUBSEQUENT EVENT On August 4, 1998, InterCept entered into an asset purchase agreement with Nova for the purchase of the data processing business for a maximum purchase price of approximately $1,082,000. The acquired assets consisted primarily of accounts receivable, computer equipment, and various other assets. InterCept paid Nova $880,000 in cash at the closing of the transaction. InterCept will pay Nova the remaining portion of the purchase price, if any, six months following the closing date if a certain number of the Company's customers enter into contracts with InterCept. EX-99.3 3 UNAUDITED PRO FORMA FINANCIALS
EXHIBIT 99.3 Unaudited Pro Forma Balance Sheet As of June 30, 1998 (a) (b) Historical Nova Financial Corporation Pro Forma Pro Forma Assets Consolidated Data Processing Business Eliminations Consolidated ------ ------------ -------------------------- ------------ ------------ Cash and cash equivalents $ 6,943,316 $ 477 (880,000)(c) $ 6,063,793 Accounts receivable, net of allowance for uncollectible accounts 2,592,122 142,677 -- 2,734,799 Inventory, prepaid expenses and other 493,825 17,890 -- 511,715 Property and equipment, net 4,509,054 373,493 (220,000)(h) 4,662,547 Deferred tax assets 663,875 -- -- 663,875 Notes receivable 39,988 -- -- 39,988 Intangible assets, net 2,115,471 895,564 (895,564)(e) 2,865,413 749,942 (d) Other noncurrent assets -- 76,379 (75,779)(h) 600 ----------- ---------- ----------- ----------- Total assets $17,357,651 $1,506,480 $(1,321,401) $17,542,730 =========== ========== =========== =========== Liabilities and Shareholders' Equity - ------------------------------------ Current maturities of notes payable $ 90,835 $ 631,082 (631,082)(g) $ 90,835 Accounts payable and accrued liabilities 2,031,794 1,106,595 (921,516)(g) 2,216,873 Accrued income taxes 400,394 -- -- 400,394 Deferred revenue 1,440,118 -- -- 1,440,118 Notes payable, less current portion 260,007 -- -- 260,007 Deferred compensation -- -- -- -- Minority interest 50,220 50,220 Preferred stock -- -- -- -- Common stock 15,780,033 -- -- 15,780,033 Accumulated deficit (2,695,750) (231,197) 231,197 (f) (2,695,750) ----------- ---------- ----------- ----------- Total liabilities and shareholders' deficit $17,357,651 $1,506,480 $(1,321,401) $17,542,730 =========== ========== =========== ===========
(a) Represents the historical unaudited consolidated balance sheet of the Company as of June 30, 1998 contained in the Company's Quarterly Report on Form 10-Q for the Quarter ended June 30, 1998. (b) Represents the historical unaudited balance sheet of Nova Financial Corporation Data Processing Business ("Nova") as of June 30, 1998 included herein. (c) Represents cash paid at closing by the Company for certain assets of Nova. (d) Represents the excess of the purchase price paid by the Company over the net fair market value of assets acquired and liabilities assumed. (e) Represents the elimination of historical goodwill. (f) Represents the elimination of historical accumulated deficit. (g) Represents the elimination of certain liabilities not assumed. (h) Represents the write off of assets to be disposed of by The Intercept Group, Inc.
Unaudited Pro Forma Statement of Operations For the Year Ended December 31, 1997 (a) (b) Historical Nova Financial Corporation Pro Forma Pro Forma Consolidated Data Processing Division Eliminations Consolidated ------------ -------------------------- ------------ ------------ Revenues $23,260,082 $1,596,942 -- $24,857,024 Cost of services 10,222,651 1,008,468 -- 11,231,119 Selling, general and administrative expense 10,105,317 724,368 -- 10,829,658 Depreciation and amortization 1,323,771 113,832 (22,000)(e) 1,415,603 Loss on impairment of intangibles 727,500 -- -- 727,500 Writeoff of purchased research and development cost -- -- -- -- ----------- ---------- ------- ----------- Total operating expense 22,379,239 1,846,668 (22,000) 24,203,907 ----------- ---------- ------- ----------- Operating income 880,843 (249,726) 22,000 653,117 Interest expense (770,175) (118,908) 118,908 (c) (770,175) Interest and other income, net 121,535 -- (50,600)(d) 70,935 ----------- ---------- ------- ----------- Income before provision for income taxes and minority interest 232,203 (368,634) 90,308 (46,123) Provision for income taxes 666,125 -- -- 666,125 Minority interest 38,564 -- -- 38,564 ----------- ---------- ------- ----------- Net loss before preferred dividends (395,358) (368,634) 90,308 (673,684) Preferred dividends (32,000) -- -- (32,000) ----------- ---------- ------- ----------- Net loss attributable to common shareholders $ (427,358) $ (368,634) 90,308 (705,684) =========== ========== ======= =========== Pro Forma net loss attributable to common shareholders $ (0.06) $ (0.10) =========== =========== Pro Forma weighted average common and common equivalent shares outstanding 6,750,114 6,750,114 =========== ===========
(a) Represents the historical consolidated statement of operations of the Company for the year ended December 31, 1997 contained in the Company's (b) Represents the historical statement of operations of Nova Financial Corporation Data Processing Business ("Nova") as of June 30, 1998 included herein. (c) Reflects the reduction of interest expense related to Nova as the debt was not assumed by the Company. (d) Reflects the reduction in interest income related to the acquisition of Nova. (e) Reflects the adjustment of depreciation of fixed assets and amortization of intangibles related to the acquisition of Nova as if it had occurred on January 1, 1997.
Unaudited Pro Forma Statement of Operations For the Six Months Ended June 30, 1998 (a) (b) Historical Nova Financial Corporation Pro Forma Pro Forma Consolidated Data Processing Division Eliminations Consolidated ------------ -------------------------- ------------ ------------ Revenues $12,905,860 $ 661,134 $ -- $13,566,994 Cost of services 5,374,554 567,218 -- 5,941,772 Selling, general and administrative expense 5,106,898 175,674 -- 5,282,572 Depreciation and amortization 598,853 98,088 (22,000)(e) 674,941 Loss on impairment of intangibles -- -- -- -- Writeoff of purchased research and development cost -- -- -- -- ----------- --------- -------- ----------- Total operating expense 11,080,305 840,980 (22,000) 11,899,285 ----------- --------- -------- ----------- Operating income 1,825,555 (179,846) 22,000 1,667,709 Interest expense (320,838) (77,500) 77,500 (c) (320,838) Interest and other income, net 29,157 -- (25,300)(d) 3,857 ----------- --------- -------- ----------- Income before provision for income and minority interest 1,533,874 (257,346) 74,200 1,350,728 Provision for income taxes 606,944 -- -- 606,944 Minority interest (50,220) -- -- (50,220) ----------- --------- -------- ----------- Net loss before preferred dividends 876,710 (257,346) 74,200 693,564 Preferred dividends (16,000) -- -- (16,000) ----------- --------- -------- ----------- Net loss attributable to common shareholders $ 860,710 $(257,346) 74,200 677,564 =========== ========= ======== =========== Pro Forma net loss attributable to common shareholders $ (0.12) $ 0.10 =========== =========== Pro Forma weighted average common and common equivalent shares outstanding 7,119,343 7,119,343 =========== ===========
(a) Represents the historical unaudited consolidated statement of operations of the Company for the six months ended June 30, 1998 contained in the Company's Quarterly Report on Form 10-Q for the Quarter ended June 30, 1998. (b) Represents the historical unaudited statement of operations of Nova Financial Corporation Data Processing Business ("Nova") as of June 30, 1998 included herein. (c) Reflects the reduction of interest expense related to Nova as the debt was not assumed by the Company. (d) Reflects the reduction in interest income related to the acquisition of Nova. (e) Reflects the adjustment of depreciation of fixed assets and amortization of intangibles related to the acquisition of Nova as if it had occurred on January 1, 1998. -----END PRIVACY-ENHANCED MESSAGE-----