-----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, RPsYxA6CCQh1zRAUVKeQfUTaz07+D0VGVhtgdkLiIvaDeIWOpIz4ApyYkPRW234O C7iY1chZXeDNlfjjAQ/Sgg== 0001015357-98-000101.txt : 19981118 0001015357-98-000101.hdr.sgml : 19981118 ACCESSION NUMBER: 0001015357-98-000101 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981116 ITEM INFORMATION: FILED AS OF DATE: 19981116 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNIDIGITAL INC CENTRAL INDEX KEY: 0001003934 STANDARD INDUSTRIAL CLASSIFICATION: SERVICE INDUSTRIES FOR THE PRINTING TRADE [2790] IRS NUMBER: 133856672 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-27664 FILM NUMBER: 98752060 BUSINESS ADDRESS: STREET 1: 229 WEST 28TH STREET CITY: NEW YORK STATE: NY ZIP: 10001 BUSINESS PHONE: 2122447820 MAIL ADDRESS: STREET 1: 229 WEST 28TH STREET CITY: NEW YORK STATE: NY ZIP: 10001 8-K/A 1 UNIDITIGAL INC. 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) November 16, 1998 (September 2, 1998) ----------------- Unidigital Inc. -------------------------------------------------- (Exact Name of Registrant as Specified in Charter) Delaware 0-27664 13-3856672 - -------------------------------------------------------------------------------- (State or Other (Commission File Number) (IRS Employer Jurisdiction of Identification No.) Incorporation) 229 West 28th Street, New York, New York 10001 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (zip code) (212) 244-7820 ------------------------------- (Registrant's telephone number, including area code) ------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. As reported in the Current Report on Form 8-K dated September 14, 1998 filed by Unidigital Inc. (the "Company"), on September 2, 1998, the Company consummated the acquisition of all of the issued and outstanding capital stock of Mega Art Corp. ("Mega Art") located in New York City. As a result of the acquisition, Mega Art became a wholly-owned subsidiary of the Company. The Company hereby files this Amendment No. 1 on Form 8-K/A to file the financial statements and related pro forma financial statements required pursuant to Item 7 of Form 8-K with respect to such transaction. (a) Financial Information of Business Acquired. MEGA ART CORP. FINANCIAL STATEMENTS For the Years Ended July 31, 1998, 1997 and 1996 (With Independent Auditors' Report) MEGA ART CORP. TABLE OF CONTENTS For the Years Ended July 31, 1998, 1997 and 1996 Page ---- Independent Auditors' Report............................................1 Financial Statements Balance Sheets.......................................................2 Statements of Operations.............................................3 Statements of Stockholders' Equity...................................4 Statements of Cash Flows.............................................5 Notes to Financial Statements........................................7 Supplementary Information Schedules of Selling, General and Administrative Expenses...........................................12 Independent Auditors' Report To the Stockholders Mega Art Corp.: We have audited the accompanying balance sheets of Mega Art Corp. as of July 31, 1998, 1997 and 1996, and the related statements of operations, stockholders' equity and cash flows for the years then ended. 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 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 Mega Art Corp. as of July 31, 1998, 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. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary schedules of selling, general and administrative expenses for the years ended July 31, 1998, 1997 and 1996 are presented for purposes of additional analysis and are 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. August 25, 1998, except for the years ended July 1997 and 1996 as to which the date is November 11, 1998
MEGA ART CORP. BALANCE SHEETS July 31, 1998, 1997 and 1996 1998 1997 1996 ---- ---- ---- Assets Current Cash and cash equivalents ...................... $ 29,907 $ 51,769 $ 125,055 Marketable securities .......................... 104,421 Accounts receivable ............................ 1,540,870 363,323 211,131 Prepaid expenses ............................... 89,587 Prepaid corporate income taxes ................. 8,000 Loans and exchanges ............................ 2,446 Advances to suppliers .......................... 35,000 ----------- ----------- ----------- Total current assets ........................ 1,705,810 519,513 336,186 Property and equipment at cost, less accumulated depreciation and amortization of $219,010, $4,258 and $156,516, respectively ..................... 979,336 460,029 620,030 Security deposits ................................. 25,191 10,688 ----------- ----------- ----------- Total assets ................................ $ 2,710,337 $ 990,230 $ 956,216 =========== =========== =========== Liabilities Current Current portion of long-term debt .............. $ 99,846 $ -- $ -- Loan payable - equipment ....................... 400,000 Accounts payable and accrued expenses .......... 765,196 31,687 725,290 Payroll and sales taxes payable ................ 5,405 3,691 13,180 Corporate income taxes payable ................. 21,000 9,000 Deferred income ................................ 91,667 Deferred taxes ................................. 379,000 117,000 70,000 ----------- ----------- ----------- Total current liabilities ................... 1,362,114 561,378 808,470 Long-term debt, net of current portion ............ 477,315 Loan payable - stockholder ........................ 322,871 240,641 46,302 ----------- ----------- ----------- Total liabilities ........................... 2,162,300 802,019 854,772 ----------- ----------- ----------- Stockholders' equity Common stock, no par value, 100 shares authorized, issued and outstanding ............. 2,000 2,000 2,000 Retained earnings ................................. 546,037 206,790 99,444 Unrealized loss on securities available for sale ....................................... (20,579) ----------- ----------- ----------- Total stockholders' equity .................. 548,037 188,211 101,444 ----------- ----------- ----------- Total liabilities and stockholders' equity .. $ 2,710,337 $ 990,230 $ 956,216 =========== =========== =========== The accompanying notes are an integral part of these financial statements.
MEGA ART CORP. STATEMENTS OF OPERATIONS For the Years Ended July 31, 1998, 1997 and 1996 1998 1997 1996 ---- ---- ---- Revenue Sales ................................... $ 4,516,340 $ 1,006,199 $ 503,928 Cost of goods sold ...................... 2,202,574 553,840 122,161 ----------- ----------- ----------- Gross profit ......................... 2,313,766 452,359 381,767 ----------- ----------- ----------- Expenses Selling, general and administrative expenses ............................. 1,698,570 601,740 251,986 Depreciation and amortization ........... 214,752 1,742 155,008 ----------- ----------- ----------- Total expenses ....................... 1,913,322 603,482 406,994 ----------- ----------- ----------- Income (loss) from operations ..... 400,444 (151,123) (25,227) ----------- ----------- ----------- Other income (expense) Consulting income ....................... 225,000 205,062 227,718 Gain on sale of marketable securities ... 103,660 Gain on sale of equipment ............... 124,000 Interest income ......................... 5,326 Interest expense - stockholder .......... (10,992) Interest expense ........................ (14,853) ----------- ----------- ----------- Total other income ................... 308,141 329,062 227,718 ----------- ----------- ----------- Income before provision for income taxes .................. 708,585 177,939 202,491 ----------- ----------- ----------- Provision for income taxes Current ................................. 33,000 14,593 3,508 Deferred ................................ 253,000 56,000 70,000 ----------- ----------- ----------- Total provision for income taxes ..... 286,000 70,593 73,508 ----------- ----------- ----------- Net income .................... $ 422,585 $ 107,346 $ 128,983 =========== =========== =========== The accompanying notes are an integral part of these financial statements.
MEGA ART CORP. STATEMENTS OF STOCKHOLDERS' EQUITY For the Years Ended July 31, 1998, 1997 and 1996 Common Stock ----------------------- (Accumulated Unrealized Number deficit) loss on Total of Retained marketable stockholders' shares Amount earnings securities equity (deficit) ------ ------ -------- ---------- ---------------- Balance, July 31, 1995 ....... 100 $ 2,000 $ (29,539) $ -- $ (27,539) Net income for the year ended July 31, 1996 ..... 128,983 128,983 --------- --------- --------- -------- --------- Balance, July 31, 1996 ....... 100 2,000 99,444 101,444 Adjustment for unrealized loss on securities available- for-sale ................ (20,579) (20,579) Net income for the year ended July 31, 1997 ..... 107,346 107,346 --------- --------- --------- -------- --------- Balance, July 31, 1997 ....... 100 2,000 206,790 (20,579) 188,211 Adjustment for unrealized loss on securities available- for-sale ................ 20,579 20,579 Prior period adjustment for changes in accounts receivable and accounts payable (See Note 9) .... (83,338) (83,338) Net income for the year ended July 31, 1998 ..... 422,585 422,585 --------- --------- --------- -------- --------- Balance, July 31, 1998 ....... 100 $ 2,000 $ 546,037 $ -- $ 548,037 ========= ========= ========= ======== ========= The accompanying notes are an integral part of these financial statements.
MEGA ART CORP. STATEMENTS OF CASH FLOWS For the Years Ended July 31, 1998, 1997 and 1996 1998 1997 1996 ---- ---- ---- Cash flows from operating activities: Net income ............................. $ 422,585 $ 107,346 $ 128,983 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization .... 214,752 1,742 155,008 Prior period adjustment .......... (83,338) Realized gain on sale of marketable securities ........ (103,660) Gain on sale of property and equipment .................... (124,000) Bad debts ........................ 7,877 (Increase) decrease in: Accounts receivable ................. (1,185,424) (152,192) (211,131) Prepaid expenses .................... (89,587) Prepaid corporate income taxes ...... (8,000) Loans and exchanges ................. (2,446) Advances to suppliers ............... (35,000) Security deposits ................... (14,503) (10,688) Increase (decrease) in: Accounts payable and accrued expenses ................. 733,509 (693,604) 725,112 Payroll and sales taxes payable ..... 1,714 (9,489) 13,180 Corporate income taxes payable ...... 12,000 9,000 Deferred income ..................... 91,667 Deferred taxes ...................... 262,000 47,000 70,000 ----------- ----------- ----------- Net cash provided by (used in) operating activities ................ 224,146 (824,885) 881,152 ----------- ----------- ----------- Balance carried forward .................... 224,146 (824,885) 881,152 ----------- ----------- ----------- The accompanying notes are an integral part of these financial statements.
MEGA ART CORP. STATEMENTS OF CASH FLOWS (continued) For the Years Ended July 31, 1998, 1997 and 1996 1998 1997 1996 ---- ---- ---- Balance brought forward ............................... $ 224,146 $(824,885) $ 881,152 --------- --------- --------- Cash flows from investing activities: Purchase of marketable securities ................. (125,000) Proceeds from sale of marketable securities ..................................... 228,660 Purchase of property and equipment ................ (734,059) (457,740) (775,037) Proceeds from sale of equipment ................... 740,000 --------- --------- --------- Net cash provided by (used in) investing activities ........................ (505,399) 157,260 (775,037) --------- --------- --------- Cash flows from financing activities: Principal repayments on loan payable - equipment .. (22,839) Proceeds from stockholder loan .................... 82,230 194,339 18,940 Repayment of loan payable - equipment ............. (400,000) Proceeds from equipment loan ...................... 250,000 400,000 Increase in obligation under a capital lease .......................................... 350,000 --------- --------- --------- Net cash provided by financing activities .................................. 259,391 594,339 18,940 --------- --------- --------- Net increase (decrease) in cash and cash equivalents .................................. (21,862) (73,286) 125,055 Cash and cash equivalents, beginning of year ........................................... 51,769 125,055 --------- --------- --------- Cash and cash equivalents, end of year ................ $ 29,907 $ 51,769 $ 125,055 ========= ========= ========= Supplemental disclosure: Interest paid ..................................... $ 25,845 $ -- $ -- Income taxes paid ................................. $ 20,000 $ 14,722 $ 3,508 The accompanying notes are an integral part of these financial statements.
MEGA ART CORP. NOTES TO FINANCIAL STATEMENTS For the Years Ended July 31, 1998, 1997 and 1996 1. Business Activity Mega Art Corp., (the "Company"), was incorporated on November 30, 1994, under the laws of the State of New York. The Company is located in New York City, and its principal activity is the development and production of media display advertising for a variety of companies locally and throughout the world. 2. Summary of Significant Accounting Policies The major accounting and reporting policies which have been followed in preparing the accompanying financial statements are set forth below: Concentration of Credit Risk ---------------------------- The Company maintains cash in bank deposit accounts at high credit quality financial institutions. The balances, at times, may exceed federally insured limits. At July 31,1998, the Company exceeded the insured limit by $589,731. Accounts Receivable ------------------- The Company periodically reviews accounts receivable. When accounts are determined to be uncollectible, they are charged to operations. For the years ended July 31, 1998, 1997 and 1996, the amounts charged to operations were $7,877, $0 and $0, respectively. The Company considers all other accounts receivable to be fully collectible; accordingly, no allowance for doubtful accounts is required. Property and Equipment ---------------------- Property and equipment is stated at cost. Significant additions or improvements extending asset lives are capitalized; normal maintenance and repair costs are expensed as incurred. Property and equipment is depreciated over the estimated useful lives of the related assets using the Modified Accelerated Cost Recovery System. Such depreciation approximates that which is allowed using methods acceptable under generally accepted accounting principles. Revenue Recognition ------------------- Revenue is recognized when the goods produced are shipped. Certain sales involve the rentals of display space. Revenues related to these sales are recognized based on the actual amount of time that the display space is rented. Billings in advance are recorded as deferred income. MEGA ART CORP. NOTES TO FINANCIAL STATEMENTS Income Taxes ------------ The Company follows the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes," which requires an asset and liability approach for income taxes. This method requires the recognition of a deferred tax charge or credit for the expected future tax consequences of temporary differences. Items that resulted in the recognition of deferred income tax liabilities include the differences recognized between the accrual basis of accounting and the cash basis of accounting, which is used for income tax purposes. Reclassifications ----------------- Certain amounts in the 1997 financial statements have been reclassified in order to conform with the 1998 presentation. Estimates --------- The financial statements are prepared in conformity with generally accepted accounting principals which require management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. 3. Cash and Cash Equivalents Cash equivalents include highly liquid investments with a maturity of three months or less. Cash equivalents consisted exclusively of money market accounts at July 31, 1998, 1997 and 1996. 4. Property and Equipment Property and equipment at July 31, 1998, 1997 and 1996 consists of the following: 1998 1997 1996 ---- ---- ---- Equipment ....................... $1,064,834 $ 458,787 $ 776,546 Furniture and fixtures .......... 5,405 Leasehold improvements .......... 128,107 5,500 ---------- ---------- ---------- 1,198,346 464,287 776,546 Less: accumulated depreciation .. 219,010 4,258 156,516 ---------- ---------- ---------- $ 979,336 $ 460,029 $ 620,030 ========== ========== ========== MEGA ART CORP. NOTES TO FINANCIAL STATEMENTS 5. Long-Term Debt Long-term debt at July 31, 1998, 1997 and 1996 consists of the following: 1998 1997 1996 ---- ---- ---- Loan payable due in monthly installments of $5,386 through December 2002, including interest at 10.60%.......................... $ 227,161 $ -- $ -- Equipment financing loan due in monthly installments of $7,371 through July 2003, including interest at 9.62%.................. 350,000 ---------- -------- -------- 577,161 Less: current maturities........... 99,846 ---------- -------- -------- Long-term portion.................. $ 477,315 $ -- $ -- ========== ======== ======== Aggregate maturities of long-term debt for the fiscal year ending July 31, are as follows: 1999...................................... $ 99,846 2000...................................... 110,344 2001...................................... 121,950 2002...................................... 134,778 2003...................................... 110,243 --------- $ 577,161 ========= The loan payable and equipment loan are secured by UCC filings and credit guarantees on the equipment financed. MEGA ART CORP. NOTES TO FINANCIAL STATEMENTS 6. Income Taxes Income tax expense at July 31, 1998, 1997 and 1996 is comprised of the following: 1998 1997 1996 ---- ---- ---- Current tax expense Federal ..................... $ 21,000 $ 8,000 $ -- State and local ............. 12,000 6,593 3,508 -------- -------- -------- Total current ............ 33,000 14,593 3,508 -------- -------- -------- Deferred tax expense Federal ..................... 201,000 29,000 41,000 State and local ............. 52,000 27,000 29,000 -------- -------- -------- Total deferred ........... 253,000 56,000 70,000 -------- -------- -------- Total income tax expense.. $286,000 $ 70,593 $ 73,508 ======== ======== ======== 7. Related Party Transactions The Company has an unsecured demand loan payable to one of its stockholders with no definite terms of repayment. Interest is being paid at an annual rate of 5.85%. The outstanding balance at July 31, 1998, 1997 and 1996 is $322,871, $240,641 and $46,302, respectively. 8. Lease Commitments The Company leases office and warehouse space under operating leases expiring on March 31, 2002. The office space lease contains provisions for periodic rate adjustments (e.g., real estate tax escalations) to reflect cost of living index changes. The future minimum lease payments under the operating leases at July 31, 1998 consists of the following: 1999...................................... $ 97,640 2000...................................... 102,319 2001...................................... 105,389 2002...................................... 36,939 --------- $ 342,287 ========= MEGA ART CORP. NOTES TO FINANCIAL STATEMENTS 9. Prior Period Adjustment Certain adjustments, relating to the overstatement of the reported net income in the Company's previously issued July 31, 1997 financial statements, are reflected in the financial statements of the current year. This resulted in the following changes to retained earnings as of July 31, 1997: Overstatement of accounts receivable................ $ 35,327 Understatement of accounts payable.................. 48,011 --------- Net decrease in retained earnings............... $ 83,338 ========= 10. Stock Purchase Agreement The shareholders of Mega Art Corp. have entered into an agreement dated August 3, 1998 with Unidigital Inc. whereby Unidigital would purchase the stock of the Company. The closing of this agreement is scheduled to take place by August 31, 1998. SUPPLEMENTARY INFORMATION MEGA ART CORP. SCHEDULES OF SELLING, GENERAL AND ADMINISTRATIVE EXPENSES For the Years ended July 31, 1998, 1997 and 1996 1998 1997 1996 ---- ---- ---- Salary - officers .................. $ 741,100 $ 120,000 $ 116,000 Consulting fees .................... 401,199 76,878 Professional fees .................. 146,247 38,321 13,822 Travel ............................. 81,437 54,706 17,218 Telephone .......................... 51,717 19,485 10,036 Meals and entertainment ............ 45,043 12,527 15,256 Rent ............................... 43,419 15,125 33,620 Commissions ........................ 33,941 192,550 8,842 Office expense and supplies ........ 33,797 23,016 4,007 Payroll taxes ...................... 32,779 6,225 9,326 Promotion and marketing ............ 29,108 26,986 20,182 Repairs and maintenance ............ 16,140 10,350 Insurance .......................... 11,707 938 1,290 Employee benefits .................. 11,695 Bad debts .......................... 7,877 Miscellaneous ...................... 5,112 2,423 Equipment lease .................... 4,438 Utilities .......................... 1,814 2,210 2,387 ---------- ---------- ---------- Total selling, general and administrative expenses .. $1,698,570 $ 601,740 $ 251,986 ========== ========== ========== See Independent Auditors' Report. (b) Pro Forma Financial Information (unaudited). PRO FORMA FINANCIAL INFORMATION The following Pro Forma Financial Statements are based on the historical financial statements of the Company, adjusted to give effect to the acquisition of all of the capital stock of Mega Art by the Company (the "Mega Art Acquisition"). The Pro Forma Balance Sheet assumes the Mega Art Acquisition occurred as of the most recent balance sheet date prior to the acquisition date of September 2, 1998. The Pro Forma Income Statements for the nine months ended May 31, 1998 and the twelve months ended August 31, 1997 assume that the Mega Art Acquisition occurred as of the first day of the applicable period. In addition, the Pro Forma Income Statement for the twelve months ended August 31, 1997 is adjusted to give effect to the Company's acquisition of all of the capital stock of Libra City Corporate Printing Limited on May 22, 1997 (the "Libra Acquisition"), its acquisition of substantially all of the assets of Boris Image Group, Inc. on April 4, 1997 (the "Boris Acquisition") and its acquisition of substantially all of the assets of Kwik International Color, Ltd. on March 25, 1998 (the "Kwik Acquisition") and assumes that such acquisitions occurred as of September 1, 1996. The Pro Forma Financial Statements should be read in conjunction with the audited consolidated financial statements of the Company and the related notes thereto which are included in the Company's Annual Report on Form 10-KSB for the year ended August 31, 1997, the Company's Quarterly Report on Form 10-QSB for the quarter ended May 31, 1998, the Company's Current Report on Form 8-K dated September 14, 1998, the Company's Current Report on Form 8-K/A dated June 8, 1998, the Company's Current Report on Form 8-K dated April 8, 1998, the Company's Current Report on Form 8-K dated June 6, 1997, the Company's Current Report on Form 8-K/A dated August 5, 1997 (each as filed with the Securities and Exchange Commission) and the audited financial statements of Mega Art that are filed herewith. The pro forma financial information does not purport to present what the Company's results of operations would actually have been if the Mega Art Acquisition, the Kwik Acquisition, the Libra Acquisition and the Boris Acquisition had occurred on the assumed dates, as specified above, or to project the Company's financial condition or results of operations for any future period.
Unidigital Inc. Pro Forma Condensed Balance Sheet (Unaudited) May 31, 1998 ASSETS Unidigital Mega Art Adjustments Pro Forma ---------- -------- ----------- --------- Current assets: Cash and cash equivalents ............................... $ 162,098 $ 500,321 $ -- $ 662,419 Accounts receivable (less allowance for doubtful accounts for Unidigital of $553,499) .................. 14,546,337 830,000 -- 15,376,337 Deferred financing costs, net ........................... 1,107,204 -- -- 1,107,204 Prepaid expenses ........................................ 3,201,952 13,438 -- 3,215,390 Other current assets .................................... 3,645,179 -- -- 3,645,179 ------------ ------------ ------------ ------------ Total current assets .................................. 22,662,770 1,343,759 -- 24,006,529 Property and equipment, net ............................... 13,807,594 731,836 -- 14,539,430 Intangible assets, net .................................... 27,252,774 -- 10,131,025 37,383,799 Other assets .............................................. 342,123 -- -- 342,123 ------------ ------------ ------------ ------------ Total assets .......................................... $ 64,065,261 $ 2,075,595 $ 10,131,025 $ 76,271,881 ============ ============ ============ ============ LIABILITIES Current liabilities: Accounts payable and accrued expenses ................... $ 7,258,029 $ 803,424 $ -- $ 8,061,453 Current portion of capital lease obligations ............ 2,230,281 -- -- 2,230,281 Current portion of long-term debt ....................... 2,942,775 315,444 -- 3,258,219 Income taxes payable .................................... 1,050,412 -- -- 1,050,412 Loans and notes payable to stockholders ................. 168,906 185,752 -- 354,658 ------------ ------------ ------------ ------------ Total current liabilities ............................. 13,650,403 1,304,620 -- 14,955,023 Capital lease obligations, net of current portion ......... 3,275,900 -- -- 3,275,900 Long-term debt, net of current portion .................... 32,393,333 -- 5,900,000 38,293,333 Deferred income taxes ..................................... 543,970 -- -- 543,970 Loans and notes payable to stockholders, net of current portion................................................. 207,495 -- -- 207,495 ------------ ------------ ------------ ------------ Total liabilities ..................................... 50,071,101 1,304,620 5,900,000 57,275,721 ------------ ------------ ------------ ------------ STOCKHOLDERS' EQUITY Preferred stock -- authorized 5,000,000 shares for Unidigital, $.01 par value each; none issued or outstanding ............................................. -- -- -- -- Common stock -- authorized 10,000,000 shares for Unidigital, $.01 par value each; 3,902,634 shares issued and outstanding at May 31, 1998; authorized 100 shares for Mega Art, without par value; 100 shares issued and outstanding at May 31, 1998 .................. 39,206 2,000 5,541 46,747 Additional paid-in capital ................................ 9,814,625 -- 4,992,459 14,807,084 Retained earnings ......................................... 4,404,005 7,689,975 (766,975) 4,406,005 Cumulative foreign translation adjustment ................. (263,676) -- -- (263,676) ------------ ------------ ------------ ------------ Total stockholders' equity ............................ 13,994,160 770,975 4,231,025 18,996,160 ------------ ------------ ------------ ------------ Total liabilities and stockholders' equity ............ $ 64,065,261 $ 2,075,595 $ 10,131,025 $ 76,271,881 ============ ============ ============ ============
Unidigital Inc. Pro Forma Condensed Statement of Operations (Unaudited) Nine Months Ended May 31, 1998 Unidigital Kwik* Mega Art Adjustments Pro Forma ---------- ---- -------- ----------- --------- Revenues Net sales ................ $ 32,845,094 $ 8,092,515 $ 3,350,848 $ -- $ 44,288,457 ------------ ------------ ------------ ------------ ------------ Expenses Cost of sales ............ 17,597,651 5,569,089 1,460,302 -- 24,627,042 Selling, general & administrative expenses . 10,943,509 2,982,431 688,075(a) (721,118) 13,892,897 ------------ ------------ ------------ ------------ ------------ Total operating expenses . 28,541,160 8,551,520 2,148,377 (721,118) 38,519,939 Income from operations ... 4,303,934 (459,005) 1,202,471 721,118 5,768,518 Interest expense ......... 1,341,359 134,199 10,761(b) 1,587,518 3,073,837 Interest expense-deferred financing costs ......... 695,721 -- -- -- 695,721 Interest and other expenses (income) ....... 126,604 72,363 -- -- 54,241 Expenses incurred due to restructuring ........... 246,932 -- -- -- 246,930 ------------ ------------ ------------ ------------ ------------ Income before income taxes 1,893,320 (520,841) 1,191,710 (866,400) 1,697,789 Provision for income taxes 727,299 78,770 548,187(c) (397,164) 957,092 ------------ ------------ ------------ ------------ ------------ Net income ............... $ 1,166,021 $ (599,611) $ 643,523 $ (469,236) $ 740,697 ============ ============= ============ ============ ============ Net income per share available to common stockholders: Basic .................. $ 0.34 $ 0.18 ============ ============ Diluted ................ $ 0.32 $ 0.17 ============ ============ Shares used to compute net income per share: Basic .................. 3,403,721 754,148 4,157,869 ============ ============ ============ Diluted ................ 3,640,752 754,148 4,394,900 ============ ============ ============ * September 1, 1997 to March 25, 1998.
Unidigital Inc. Pro Forma Condensed Statement of Operations (Unaudited) Year Ended August 31, 1997 Unidigital Libra Boris Kwik Mega Art ---------- ----- ----- ---- -------- Revenues Net sales ............. $ 27,261,856 $ 4,202,018 $ 3,276,883 $ 14,096,098 $ 1,642,750 ------------ ------------ ------------ ------------ ------------ Expenses Cost of sales ......... 14,449,663 3,053,209 1,733,080 8,435,133 729,254 Selling, general & administrative expenses ............. 9,673,071 1,270,444 1,615,998 4,965,031 644,709 (d) ------------ ------------ ------------ ------------ ------------ Total operating expenses ............. 24,122,734 4,323,653 3,349,078 13,400,164 1,373,963 Income (loss) from operations ........... 3,139,122 (121,635) (72,195) 695,934 268,787 Interest expense ...... 1,094,628 37,282 92,972 212,520 -- (e) Interest expense- deferred financing costs ................ 138,069 -- -- -- -- Interest and other (income) expenses .... (27,587) (21,584) -- 124,000 (124,000) ------------ ------------ ------------ ------------ ------------ Income (loss) before income taxes ........ 1,934,012 (137,333) (165,167) 359,115 392,787 Provision for income taxes ................ 593,280 (26,493) 3 178,237 140,593 (f) ------------ ------------ ------------ ------------ ------------ Net income (loss) ....... $ 1,340,732 $ (110,840) $ (165,170) $ 180,878 $ 252,194 ============ ============ ============ ============ ============ Net income per share available to common stockholders: Basic................. $ 0.41 ============ Diluted............... $ 0.40 ============ Shares used to compute net income per share: Basic ................ 3,239,040 ============ Diluted .............. 3,378,775 ============ Unidigital Inc. Pro Forma Condensed Statement of Operations (Unaudited) Year Ended August 31, 1997 Adjustments Pro Forma ----------- --------- Revenues Net sales ............. $ -- $ 50,479,605 ------------ ------------ Expenses Cost of sales ......... 28,400,339 Selling, general & administrative expenses ............. (144,594) 18,024,659 ------------ ------------ Total operating expenses ............. (144,594) 46,424,998 Income (loss) from operations ........... 144,594 4,054,607 Interest expense ...... 3,045,480 4,482,882 Interest expense- deferred financing costs ................ -- 138,069 Interest and other (income) expenses .... -- (48,872) ------------ ------------ Income (loss) before income taxes ........ (2,900,886) (517,472) Provision for income taxes ................ (1,049,050) (163,430) Net income (loss) ....... $ (1,851,836) $ (354,042) ============ ============ Net income per share available to common stockholders: Basic........... $ (0.08) ============ Diluted......... $ (0.07) ============ Shares used to compute net income per share: Basic ................ 1,403,989 4,643,029 ============ =========== Diluted .............. 1,403,989 4,782,764 ============ ===========
Notes to Pro Forma Condensed Consolidated Financial Statements (Unaudited) For purposes of determining the pro forma effect of the Mega Art Acquisition on the Company's balance sheet as of May 31, 1998 and the Company's income statement for the nine months ended May 31, 1998, the following pro forma adjustments have been made: May 31, 1998 ---- Cash received from borrowings ......................... $ 5,900,000 Cash consideration for Kwik Acquisition ............... 5,900,000 ----------- $ -- ----------- Consideration for Mega Art Acquisition -------------------------------------- Cash .................................................. 5,800,000 Issuance of 754,148 common shares at $6.63 per share .. 5,000,000 Expenses of acquisition................................ 100,000 ----------- Total Consideration ........................ $10,900,000 Total value of net assets acquired ......... 768,975 Goodwill ................................... $10,131,025 ===========
Mega Art Kwik Total -------- ---- ----- (a) Amortization of goodwill over 25 years.. $ 300,543 $ 514,592 $ 815,136 (Excess) owners' compensation........... (12,000) (1,524,254) (1,536,254) ----------- ----------- ----------- $ 288,543 $(1,009,602) $ (721,118) =========== =========== =========== (b) Additional financing costs ............. $ (369,750) $(1,247,768) $(1,587,518) =========== =========== =========== (c) Pro forma tax adjustment ............... $ 246,752 $ (95,729) $ (397,164) =========== =========== ===========
Notes to Pro Forma Condensed Consolidated Financial Statements (Unaudited) For purposes of determining the pro forma effect of the Mega Art Acquisition, the Kwik Acquisition, the Libra Acquisition and the Boris Acquisition on the Company's income statement for the twelve months ended August 31, 1997, the following pro forma adjustments have been made:
Mega Art Kwik Libra Boris Total -------- ---- ----- ----- ----- (d) Amortization of goodwill ....... $ 400,725 $ 882,158 $ 128,962 $ 66,614 $ 1,478,459 Additional (Excess) owners' compensation ................. 80,000 (1,703,053) -- -- (1,623,053) ----------- ----------- ----------- ------------- ----------- $ 480,725 $ (820,895) $ 128,962 $ 66,614 $ (144,594) =========== =========== =========== ============= =========== (e) Additional financing costs ..... $ (493,000) $(2,111,480) $ (441,000) $ -- $(3,045,480) =========== =========== =========== ============= =========== (f) Pro forma tax adjustment ....... $ (405,984) $ (457,678) $ (185,388) $ -- $(1,049,050) =========== =========== =========== ============= ===========
(c) Exhibits. Exhibit No. Description of Exhibit ----------- ---------------------- 4.1 Stockholders' Agreement dated as of September 2, 1998 by and between Unidigital Inc. and Ehud Aloni (included as an exhibit to the Current Report on Form 8-K of the Company dated September 14, 1998 and incorporated by reference herein). 10.1 Agreement and Purchase of Sale dated as of August 3, 1998 by and among Unidigital Inc., Unison (NY), Inc., Mega Art Corp., Ehud Aloni, Amit Primor, Jeffrey E. Rothman and Seligson, Rothman & Rothman (included as an exhibit to the Current Report on Form 8-K of the Company dated September 14, 1998 and incorporated by reference herein). 10.2 Employment Agreement dated as of September 2, 1998 by and between Mega Art Corp. and Ehud Aloni (included as an exhibit to the Current Report on Form 8-K of the Company dated September 14, 1998 and incorporated by reference herein). 23.1 Consent of Robbins Spielman Koenigsberg & Parker, LLP. 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. Unidigital Inc. By: /s/ William E. Dye ----------------------- William E. Dye, Chief Executive Officer (Principal Executive, Financial and Accounting Officer) Date: November 16, 1998 CONSENT OF INDEPENDENT AUDITORS We consent to the inclusion in this Form 8-K/A of our report dated August 25, 1998, except for the years ended July 1997 and 1996 as to which the date is November 11, 1998, on our audit of the financial statements of Mega Art Corp. as of July 31, 1998, and for each of the three years in the period ended, which report is included in this Form 8-K/A. /s/ Robbins Spielman Koenigsberg & Parker, LLP New York, New York November 16, 1998 -----END PRIVACY-ENHANCED MESSAGE-----