Delaware | 001-34835 | 20-1409613 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
35 East Wacker Drive, Suite 2400 Chicago, Illinois | 60601 | |
(Address of principal executive offices) | (Zip Code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240-13e-4(c)) |
Title of each class | Trading symbol(s) | Name of exchange on which registered |
Common Stock, par value $0.005 per share | ENV | New York Stock Exchange |
Exhibit No. | Description | |
23.1 | Consent of Keiter, Independent Auditors. | |
23.2 | Consent of Wiss & Company, LLP, Independent Auditors. | |
99.1 | Audited consolidated financial statements of PIEtech, Inc. and Subsidiaries as of and for the year ended December 31, 2018, and Independent Auditors’ Report thereon. | |
99.2 | Audited consolidated financial statements of PIEtech, Inc. and Subsidiaries as of and for the year ended December 31, 2017, and Independent Auditors’ Report thereon. | |
99.3 | Unaudited pro forma condensed combined financial statements and explanatory notes for Envestnet, Inc. as of and for the year ended December 31, 2018. |
ENVESTNET, INC. | |
By: | /s/ Peter H. D'Arrigo |
Name: | Peter H. D'Arrigo |
Title: | Chief Financial Officer |
Exhibit No. | Description | |
23.1 | ||
23.2 | ||
99.1 | ||
99.2 | ||
99.3 |
Page | |
Report of Independent Auditors | 1 |
Financial Statements: | |
Balance Sheets | 3 |
Statements of Income | 4 |
Statements of Changes in Stockholders' Equity | 5 |
Statements of Cash Flows | 6-7 |
Notes to Financial Statements | 8 |
/s/ Keiter |
2018 | 2017 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 20,823,288 | $ | 16,896,364 | ||||
Certificates of deposit | 3,070,998 | 2,682,595 | ||||||
Accounts receivable | 1,793,004 | 1,070,843 | ||||||
Due from related party | — | 51,968 | ||||||
Prepaid expenses and other current assets | 801,148 | 792,609 | ||||||
Total current assets | 26,488,438 | 21,494,379 | ||||||
Property and equipment, net | 8,269,302 | 7,837,846 | ||||||
Internally developed software, net | 4,485,388 | 4,044,173 | ||||||
Intangible assets, net | 91,116 | 98,766 | ||||||
Equity in joint venture | 1,136,506 | — | ||||||
Other non-current assets | 1,518,230 | 920,361 | ||||||
$ | 41,988,980 | $ | 34,395,525 | |||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 485,119 | $ | 821,819 | ||||
Accrued expenses | 534,951 | 519,760 | ||||||
Deferred revenue | 10,702,213 | 8,367,632 | ||||||
Note payable to former stockholder, current portion | 489,580 | 489,580 | ||||||
Total current liabilities | 12,211,863 | 10,198,791 | ||||||
Long-term liabilities: | ||||||||
Note payable to former stockholder, long-term | — | 489,580 | ||||||
Deferred revenue, non-current | 817,664 | 866,715 | ||||||
Total liabilities | 13,029,527 | 11,555,086 | ||||||
Stockholders' equity: | ||||||||
Common stock, no par value, 25,000 shares | ||||||||
authorized, 11,481 shares issued and outstanding | 1,649,981 | 1,649,981 | ||||||
Retained earnings | 27,309,472 | 21,190,458 | ||||||
Total stockholders' equity | 28,959,453 | 22,840,439 | ||||||
$ | 41,988,980 | $ | 34,395,525 |
2018 | 2017 | |||||||
Revenue: | ||||||||
Software license fees | $ | 40,996,361 | $ | 32,596,344 | ||||
Software customization fees | 2,375,438 | 2,280,816 | ||||||
Software training fees | 496,516 | 508,858 | ||||||
Total revenue | 43,868,315 | 35,386,018 | ||||||
Operating expenses: | ||||||||
Compensation and benefits | 14,577,280 | 15,018,289 | ||||||
General and administration | 9,085,341 | 7,622,947 | ||||||
Depreciation and amortization | 2,846,965 | 2,314,557 | ||||||
Total operating expenses | 26,509,586 | 24,955,793 | ||||||
Income from operations | 17,358,729 | 10,430,225 | ||||||
Other income (expense): | ||||||||
Interest income | 300,772 | 78,134 | ||||||
Interest expense | (14,704 | ) | (12,109 | ) | ||||
Equity in loss from unconsolidated joint venture | (63,494 | ) | — | |||||
Other loss | (25,833 | ) | — | |||||
Total other income (expense), net | 196,741 | 66,025 | ||||||
Net income | $ | 17,555,470 | $ | 10,496,250 |
Common Stock | Note Receivable from Stockholder | Retained Earnings | Total Stockholders' Equity | |||||||||||||
Balance at January 1, 2017 | $ | 3,149,981 | $ | (1,527,150 | ) | $ | 17,856,783 | $ | 19,479,614 | |||||||
Accrued interest to stockholder | — | (6,811 | ) | — | (6,811 | ) | ||||||||||
Retirement of accrued interest | ||||||||||||||||
from stockholder | — | 33,961 | — | 33,961 | ||||||||||||
Retirement of common stock | (1,500,000 | ) | 1,500,000 | (1,502,700 | ) | (1,502,700 | ) | |||||||||
Distributions to stockholders | — | — | (5,659,875 | ) | (5,659,875 | ) | ||||||||||
Net income | — | — | 10,496,250 | 10,496,250 | ||||||||||||
Balance at December 31, 2017 | 1,649,981 | — | 21,190,458 | 22,840,439 | ||||||||||||
Adoption of ASC 606 | — | — | 877,536 | 877,536 | ||||||||||||
Distributions to stockholders | — | — | (12,313,992 | ) | (12,313,992 | ) | ||||||||||
Net income | — | — | 17,555,470 | 17,555,470 | ||||||||||||
Balance at December 31, 2018 | $ | 1,649,981 | $ | — | $ | 27,309,472 | $ | 28,959,453 |
2018 | 2017 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 17,555,470 | $ | 10,496,250 | ||||
Adjustments to reconcile net income to net cash | ||||||||
from operating activities: | ||||||||
Depreciation and amortization | 2,846,965 | 2,314,557 | ||||||
Loss on disposal of property and equipment | 25,834 | — | ||||||
Interest reinvested in certificates of deposit | (33,750 | ) | (18,296 | ) | ||||
Equity loss from unconsolidated joint venture | 63,494 | — | ||||||
Accrued interest on notes receivable from stockholder | — | (6,811 | ) | |||||
Change in operating assets and liabilities: | ||||||||
Accounts receivable | (722,161 | ) | (127,543 | ) | ||||
Prepaid expenses and other current assets | (8,539 | ) | (321,150 | ) | ||||
Other non-current assets | 279,667 | (148,987 | ) | |||||
Accounts payable | (336,700 | ) | 349,073 | |||||
Accrued expenses | 15,191 | 208,181 | ||||||
Deferred revenue | 2,334,581 | 1,253,906 | ||||||
Deferred revenue, non-current | (49,051 | ) | (30,014 | ) | ||||
Net cash provided by operating activities | 21,971,001 | 13,969,166 | ||||||
Cash flows used in investing activities: | ||||||||
Net investments in certificates of deposit | (354,653 | ) | — | |||||
Purchase of property and equipment | (1,280,504 | ) | (376,903 | ) | ||||
Capitalization of internally developed software | (2,490,082 | ) | (2,494,234 | ) | ||||
Proceeds from sale of property and equipment | 32,766 | — | ||||||
Investment in joint venture | (1,200,000 | ) | — | |||||
Net cash used in investing activities | (5,292,473 | ) | (2,871,137 | ) | ||||
Cash flows used in financing activities: | ||||||||
Due from related party | 51,968 | 691,893 | ||||||
Payments on note payable - former stockholder | (489,580 | ) | (489,579 | ) | ||||
Distributions to stockholders | (12,313,992 | ) | (5,659,875 | ) | ||||
Net cash used in financing activities | (12,751,604 | ) | (5,457,561 | ) | ||||
Net change in cash and cash equivalents | 3,926,924 | 5,640,468 | ||||||
Cash and cash equivalents - beginning of year | 16,896,364 | 11,255,896 | ||||||
Cash and cash equivalents - end of year | $ | 20,823,288 | $ | 16,896,364 |
2018 | 2017 | |||||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for: | ||||||||
Interest | $ | 20,758 | $ | — | ||||
Supplemental disclosure of non-cash activities: | ||||||||
Purchase of common stock through issuance of note | ||||||||
payable and retirement of notes receivable including | ||||||||
accrued interest from stockholder | $ | — | $ | 3,002,700 |
Balance at December 31, 2017 | Cumulative Catch-up Adjustments | Opening Balance at January 1, 2018 | ||||||||||
Balance Sheets | ||||||||||||
Assets: | ||||||||||||
Other non-current assets | $ | 920,361 | $ | 877,536 | $ | 1,797,897 | ||||||
Equity: | ||||||||||||
Retained earnings | 21,190,458 | 877,536 | 22,067,994 |
Year Ended December 31, 2018 | ||||||||||||
As Reported | Without Adoption of ASC 606 | Effect of Change Higher/(Lower) | ||||||||||
Statement of Income | ||||||||||||
Revenues: | ||||||||||||
Software license fees | $ | 40,996,361 | $ | 40,996,361 | $ | — | ||||||
Software customization fees | 2,375,438 | 2,375,438 | — | |||||||||
Software training fees | 496,516 | 496,516 | — | |||||||||
Total revenue | 43,868,315 | 43,868,315 | — | |||||||||
Operating expenses: | ||||||||||||
Compensation and benefits | 14,577,280 | 14,719,980 | (142,700 | ) | ||||||||
General and administration | 9,085,341 | 9,085,341 | — | |||||||||
Depreciation and amortization | 2,846,965 | 2,846,965 | — | |||||||||
Total Operating expenses | 26,509,586 | 26,652,286 | (142,700 | ) | ||||||||
Income from operations | 17,358,729 | 17,216,029 | 142,700 | |||||||||
Net income | $ | 17,555,470 | $ | 17,412,770 | $ | 142,700 |
2. | Revenue, Continued: |
Year Ended December 31, 2018 | ||||||||||||
As Reported | Without Adoption of ASC 606 | Effect of Change Higher/(Lower) | ||||||||||
Balance Sheets | ||||||||||||
Assets: | ||||||||||||
Other non-current assets | $ | 1,518,230 | $ | 497,994 | $ | 1,020,236 | ||||||
Equity: | ||||||||||||
Retained earnings | 27,309,472 | 26,289,236 | 1,020,236 |
Years ending December 31, | ||||
2019 | $ | 36,073,540 | ||
2020 | 29,428,830 | |||
2021 | 9,566,064 | |||
2022 | 5,843,558 | |||
2023 | 1,097,500 | |||
Total | $ | 82,009,492 |
2. | Revenue, Continued: |
Receivables, which are included in accounts receivable | Unbilled receivables, which are included in accounts receivable | Deferred Revenue (current) | Deferred Revenue (non-current) | |||||||||||||
Ending balance as of December 31, 2017 | $ | 664,321 | $ | 406,522 | $ | 8,367,632 | $ | 866,715 | ||||||||
Increase (decrease), net | 334,621 | 387,540 | 2,334,581 | (49,051 | ) | |||||||||||
Ending balance as of December 31, 2018 | $ | 998,942 | $ | 794,062 | $ | 10,702,213 | $ | 817,664 |
2. | Revenue, Continued: |
December 31, | ||||||||
2018 | 2017 | |||||||
Prepaid technology | $ | 425,827 | $ | 312,229 | ||||
Prepaid insurance | 198,549 | 165,460 | ||||||
Prepaid taxes | 21,740 | 21,814 | ||||||
Other prepaid expenses | 155,032 | 293,106 | ||||||
Total | $ | 801,148 | $ | 792,609 |
Estimated Useful Life | December 31, | |||||||||
2018 | 2017 | |||||||||
Cost: | ||||||||||
Land | not applicable | $ | 2,873,762 | $ | 2,873,762 | |||||
Building | 39 years | 2,640,586 | 2,663,979 | |||||||
Furniture and fixtures | 7 years | 789,327 | 746,327 | |||||||
Computer equipment and software | 3 years | 2,810,762 | 2,220,346 | |||||||
Office equipment | 5 years | 293,684 | 224,234 | |||||||
Automotive equipment | 5 years | 270,309 | 270,309 | |||||||
Building improvements | 7-39 years | 2,195,371 | 2,195,371 | |||||||
Leasehold improvements | Shorter of the lease term or useful life of the asset | 2,069,445 | 1,536,225 | |||||||
13,943,246 | 12,730,553 | |||||||||
Less: accumulated depreciation and amortization | (5,673,944 | ) | (4,892,707 | ) | ||||||
Total | $ | 8,269,302 | $ | 7,837,846 |
Estimated Useful Life | December 31, | |||||||||
2018 | 2017 | |||||||||
Internally developed software | 3 years | $ | 9,024,022 | $ | 6,533,940 | |||||
Less: accumulated depreciation and amortization | (4,538,634 | ) | (2,489,767 | ) | ||||||
Total | $ | 4,485,388 | $ | 4,044,173 |
Estimated Useful Life | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||
Definite lived intangible assets: | ||||||||||||||
Domain name | 15 years | $ | 81,886 | $ | (19,152 | ) | $ | 62,734 | ||||||
Trademarks | 15 years | 32,861 | (7,686 | ) | 25,175 | |||||||||
Patents | not applicable | 3,207 | — | 3,207 | ||||||||||
$ | 117,954 | $ | (26,838 | ) | $ | 91,116 |
Estimated Useful Life | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||
Definite lived intangible assets: | ||||||||||||||
Domain name | 15 years | $ | 81,886 | $ | (13,693 | ) | $ | 68,193 | ||||||
Trademarks | 15 years | 32,861 | (5,495 | ) | 27,366 | |||||||||
Patents | not applicable | 3,207 | — | 3,207 | ||||||||||
$ | 117,954 | $ | (19,188 | ) | $ | 98,766 |
Total assets | $ | 2,164,628 | ||
Total liability | $ | 376 | ||
Total equity | $ | 2,164,252 | ||
Revenues | $ | — | ||
Net loss | $ | (238,100 | ) | |
Company's share of net loss | $ | (63,494 | ) |
December 31, | ||||||||
2018 | 2017 | |||||||
Unbilled contract revenue | $ | 768,303 | $ | 920,361 | ||||
Deferred sales incentive compensation | 1,020,236 | — | ||||||
Total | $ | 1,788,539 | $ | 920,361 |
December 31, | ||||||||
2018 | 2017 | |||||||
Accrued compensation and related taxes | $ | 175,701 | $ | 226,641 | ||||
Accrued rent expense | 162,840 | 100,882 | ||||||
Accrued sales taxes | 124,832 | 152,620 | ||||||
Interest payable to former stockholder | 6,054 | 12,109 | ||||||
Other accrued expenses | 65,524 | 27,508 | ||||||
Total | $ | 534,951 | $ | 519,760 |
December 31, 2018 | ||||||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets | ||||||||||||||||
Money market funds and other (1) | $ | 19,276,560 | $ | 19,276,560 | $ | — | $ | — | ||||||||
Certificates of deposit (2) | 3,070,998 | — | 3,070,998 | — | ||||||||||||
Total assets | $ | 22,347,558 | $ | 19,276,560 | $ | 3,070,998 | $ | — |
December 31, 2017 | ||||||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets | ||||||||||||||||
Money market funds and other (1) | $ | 12,829,492 | $ | 12,829,492 | $ | — | $ | — | ||||||||
Certificates of deposit (2) | 2,682,595 | — | 2,682,595 | — | ||||||||||||
Total assets | $ | 15,512,087 | $ | 12,829,492 | $ | 2,682,595 | $ | — |
(1) | The fair values of the Company’s investments in money-market funds are based on the daily quoted market prices for the net asset value of the various money market funds and time deposit accounts which mature on a daily basis. |
(2) | The fair value of the Company's certificates of deposit are based on the initial investment, plus accrued interest, which approximates fair value due to the short duration before maturity. |
Year | Amount | |||
2019 | $ | 599,826 | ||
2020 | 604,247 | |||
2021 | 619,353 | |||
2022 | 634,837 | |||
$ | 2,458,263 |
Page | |
Report of Independent Auditors | 1-2 |
Financial Statements: | |
Balance Sheet | 3 |
Statement of Income | 4 |
Statement of Changes in Stockholders' Equity | 5 |
Statement of Cash Flows | 6-7 |
Notes to Financial Statements | 8-19 |
/s/ WISS & COMPANY, LLP |
Assets | ||||
Current assets: | ||||
Cash and cash equivalents | $ | 16,896,364 | ||
Certificates of deposit | 2,682,595 | |||
Accounts receivable | 1,070,843 | |||
Due from related party | 51,968 | |||
Prepaid expenses and other current assets | 792,609 | |||
Total current assets | 21,494,379 | |||
Property and equipment, net | 7,837,846 | |||
Internally developed software, net | 4,044,173 | |||
Intangible assets, net | 98,766 | |||
Unbilled contract revenue, long-term | 920,361 | |||
$ | 34,395,525 | |||
Liabilities and Stockholders' Equity | ||||
Current liabilities: | ||||
Accounts payable | $ | 821,819 | ||
Accrued expenses | 519,760 | |||
Deferred revenue | 8,367,632 | |||
Note payable to former stockholder, current portion | 489,580 | |||
Total current liabilities | 10,198,791 | |||
Long-term liabilities: | ||||
Note payable to former stockholder, long-term | 489,580 | |||
Deferred revenue, non-current | 866,715 | |||
Total liabilities | 11,555,086 | |||
Stockholders' equity: | ||||
Common stock, no par value, 25,000 shares | ||||
authorized, 11,481 shares issued and outstanding | 1,649,981 | |||
Retained earnings | 21,190,458 | |||
Total stockholders' equity | 22,840,439 | |||
$ | 34,395,525 |
Revenue: | ||||
Software license fees | $ | 32,596,344 | ||
Software customization fees | 2,280,816 | |||
Software training fees | 508,858 | |||
Total revenue | 35,386,018 | |||
Operating expenses: | ||||
Compensation and benefits | 15,018,289 | |||
General and administration | 7,622,947 | |||
Depreciation and amortization | 2,314,557 | |||
Total operating expenses | 24,955,793 | |||
Income from operations | 10,430,225 | |||
Other income (expense): | ||||
Interest income | 78,134 | |||
Interest expense | (12,109 | ) | ||
Total other income (expense), net | 66,025 | |||
Net income | $ | 10,496,250 |
Common Stock | Note Receivable from Stockholder | Retained Earnings | Total Stockholders' Equity | |||||||||||||
Balance at January 1, 2017 | $ | 3,149,981 | $ | (1,527,150 | ) | $ | 17,856,783 | $ | 19,479,614 | |||||||
Accrued interest to stockholder | — | (6,811 | ) | — | (6,811 | ) | ||||||||||
Retirement of accrued interest | — | |||||||||||||||
from stockholder | — | 33,961 | — | 33,961 | ||||||||||||
Retirement of common stock | (1,500,000 | ) | 1,500,000 | (1,502,700 | ) | (1,502,700 | ) | |||||||||
Distributions to stockholders | — | — | (5,659,875 | ) | (5,659,875 | ) | ||||||||||
Net income | — | — | 10,496,250 | 10,496,250 | ||||||||||||
Balance at December 31, 2017 | $ | 1,649,981 | $ | — | $ | 21,190,458 | $ | 22,840,439 |
Cash flows from operating activities: | ||||
Net income | $ | 10,496,250 | ||
Adjustments to reconcile net income to net cash | ||||
from operating activities: | ||||
Depreciation and amortization | 2,314,557 | |||
Interest reinvested in certificates of deposit | (18,296 | ) | ||
Accrued interest on notes receivable from stockholder | (6,811 | ) | ||
Change in operating assets and liabilities: | ||||
Accounts receivable | (127,543 | ) | ||
Prepaid expenses and other current assets | (321,150 | ) | ||
Unbilled contract revenue | (148,987 | ) | ||
Accounts payable | 349,073 | |||
Accrued expenses | 208,181 | |||
Deferred revenue | 1,253,906 | |||
Deferred revenue, non-current | (30,014 | ) | ||
Net cash provided by operating activities | 13,969,166 | |||
Cash flows used in investing activities: | ||||
Due from related party | 691,893 | |||
Purchase of property and equipment | (376,903 | ) | ||
Capitalization of internally developed software | (2,494,234 | ) | ||
Net cash used in investing activities | (2,179,244 | ) | ||
Cash flows used in financing activities: | ||||
Payments on note payable - former stockholder | (489,579 | ) | ||
Distributions to stockholders | (5,659,875 | ) | ||
Net cash used in financing activities | (6,149,454 | ) | ||
Net change in cash and cash equivalents | 5,640,468 | |||
Cash and cash equivalents - beginning of year | 11,255,896 | |||
Cash and cash equivalents - end of year | $ | 16,896,364 |
Supplemental disclosure of non-cash activities: | ||||
Purchase of common stock through issuance of note | ||||
payable and retirement of notes receivable including | ||||
accrued interest from stockholder | $ | 3,002,700 |
Receivables, which are included in accounts receivable | Unbilled receivables, which are included in accounts receivable | Deferred Revenue (current) | Deferred Revenue (non-current) | |||||||||||||
Opening balance as of January 1, 2017 | $ | 798,461 | $ | 144,839 | $ | 7,113,726 | $ | 896,729 | ||||||||
Increase (decrease), net | (134,140 | ) | 261,683 | 1,253,906 | (30,014 | ) | ||||||||||
Ending balance as of December 31, 2017 | $ | 664,321 | $ | 406,522 | $ | 8,367,632 | $ | 866,715 |
Prepaid technology | $ | 312,229 | ||
Prepaid insurance | 165,460 | |||
Prepaid taxes | 21,814 | |||
Other prepaid expenses | 293,106 | |||
Total | $ | 792,609 |
Estimated Useful Life | ||||||
Cost: | ||||||
Land | not applicable | $ | 2,873,762 | |||
Building | 39 years | 2,663,979 | ||||
Furniture and fixtures | 7 years | 746,327 | ||||
Computer equipment and software | 3 years | 2,220,346 | ||||
Office equipment | 5 years | 224,234 | ||||
Automotive equipment | 5 years | 270,309 | ||||
Building improvements | 7-39 years | 2,195,371 | ||||
Leasehold improvements | Shorter of the lease term or useful life of the asset | 1,536,225 | ||||
12,730,553 | ||||||
Less: accumulated depreciation and amortization | (4,892,707 | ) | ||||
Total | $ | 7,837,846 |
Estimated Useful Life | ||||||
Internally developed software | 3 years | $ | 6,533,940 | |||
Less: accumulated depreciation and amortization | (2,489,767 | ) | ||||
Total | $ | 4,044,173 |
Estimated Useful Life | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||
Definite lived intangible assets: | ||||||||||||||
Domain name | 15 years | $ | 81,886 | $ | (13,693 | ) | $ | 68,193 | ||||||
Trademarks | 15 years | 32,861 | (5,495 | ) | 27,366 | |||||||||
Patents | not applicable | 3,207 | — | 3,207 | ||||||||||
$ | 117,954 | $ | (19,188 | ) | $ | 98,766 |
Accrued compensation and related taxes | $ | 226,641 | ||
Accrued rent expense | 100,882 | |||
Accrued sales taxes | 152,620 | |||
Interest payable to former stockholder | 12,109 | |||
Other accrued expenses | 27,507 | |||
Total | $ | 519,759 |
Level I: | Inputs based on quoted market prices in active markets for identical assets or liabilities at the measurement date. |
Level II: | Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or inputs that are observable and can be corroborated by observable market data. |
Level III: | Inputs reflect management’s best estimates and assumptions of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the valuation of the instruments. |
December 31, 2017 | ||||||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets | ||||||||||||||||
Money market funds and other (1) | $ | 12,829,492 | $ | 12,829,492 | $ | — | $ | — | ||||||||
Certificates of deposit (2) | 2,682,595 | — | 2,682,595 | — | ||||||||||||
Total assets | $ | 15,512,087 | $ | 12,829,492 | $ | 2,682,595 | $ | — |
(1) | The fair values of the Company’s investments in money-market funds are based on the daily quoted market prices for the net asset value of the various money market funds and time deposit accounts which mature on a daily basis. |
(2) | The fair value of the Company's certificates of deposit are based on the initial investment, plus accrued interest, which approximates fair value due to the short duration before maturity. |
Year | Amount | |||
2018 | $ | 540,002 | ||
2019 | 599,826 | |||
2020 | 604,247 | |||
2021 | 619,353 | |||
2022 | 634,837 | |||
$ | 2,998,265 |
Historical | Pro Forma | |||||||||||||||||
Condensed combined pro forma total for Envestnet and PortfolioCenter (1) | PIEtech (2) | Adjustments | Combined | |||||||||||||||
Assets | ||||||||||||||||||
Current assets: | ||||||||||||||||||
Cash and cash equivalents | $ | 271,845 | $ | 23,894 | $ | (186,904 | ) | (a) | $ | 108,835 | ||||||||
Fees receivable, net | 68,050 | 1,793 | (36 | ) | (b) | 69,807 | ||||||||||||
Prepaid expenses and other current assets | 23,557 | 801 | — | 24,358 | ||||||||||||||
Total current assets | 363,452 | 26,488 | (186,940 | ) | 203,000 | |||||||||||||
Property and equipment, net | 44,991 | 8,269 | (2,389 | ) | (c) | 50,871 | ||||||||||||
Internally developed software, net | 38,209 | 4,485 | (4,485 | ) | (d) | 38,209 | ||||||||||||
Intangible assets, net | 317,641 | 91 | 216,909 | (e) | 534,641 | |||||||||||||
Goodwill | 533,708 | — | 349,561 | (f) | 883,269 | |||||||||||||
Other non-current assets | 25,298 | 2,656 | (1,137 | ) | (g) | 26,817 | ||||||||||||
Total assets | $ | 1,323,299 | $ | 41,989 | $ | 371,519 | $ | 1,736,807 | ||||||||||
Liabilities and Equity | ||||||||||||||||||
Current liabilities: | ||||||||||||||||||
Accrued expenses and other liabilities | $ | 133,298 | $ | 535 | $ | 7,025 | (h),(j) | $ | 140,858 | |||||||||
Accounts payable | 19,219 | 485 | (36 | ) | (i) | 19,668 | ||||||||||||
Convertible Notes due 2019 | 165,711 | — | — | 165,711 | ||||||||||||||
Note payable | — | 490 | (490 | ) | (j) | — | ||||||||||||
Contingent consideration | 732 | — | — | 732 | ||||||||||||||
Deferred revenue | 25,588 | 10,702 | (5,458 | ) | (k) | 30,832 | ||||||||||||
Total current liabilities | 344,548 | 12,212 | 1,041 | 357,801 | ||||||||||||||
Convertible Notes due 2023 | 294,725 | — | — | 294,725 | ||||||||||||||
Revolving credit facility | — | — | 130,000 | (a) | 130,000 | |||||||||||||
Contingent consideration | 8,300 | — | — | 8,300 | ||||||||||||||
Deferred revenue | 6,910 | 818 | (417 | ) | (k) | 7,311 | ||||||||||||
Deferred rent and lease incentive | 17,569 | — | — | 17,569 | ||||||||||||||
Deferred tax liabilities, net | 640 | — | 40,271 | (l) | 40,911 | |||||||||||||
Other non-current liabilities | 18,005 | — | — | 18,005 | ||||||||||||||
Total liabilities | 690,697 | 13,030 | 170,895 | 874,622 | ||||||||||||||
Stockholders’ equity: | ||||||||||||||||||
Common stock and additional paid in capital | 761,434 | 1,650 | 220,834 | (m) | 983,918 | |||||||||||||
Accumulated deficit and accumulated other comprehensive loss | (59,876 | ) | 27,309 | (20,210 | ) | (n) | (52,777 | ) | ||||||||||
Treasury stock | (67,858 | ) | — | — | (67,858 | ) | ||||||||||||
Total stockholders' equity | 633,700 | 28,959 | 200,624 | 863,283 | ||||||||||||||
Non-controlling interest | (1,098 | ) | — | — | (1,098 | ) | ||||||||||||
Total equity | 632,602 | 28,959 | 200,624 | 862,185 | ||||||||||||||
Total liabilities and equity | $ | 1,323,299 | $ | 41,989 | $ | 371,519 | $ | 1,736,807 |
(1) | Based on calculations set forth in the unaudited pro forma condensed combined statement of operations for Envestnet, including PortfolioCenter, included elsewhere in this Exhibit 99.3. |
(2) | Certain reclassifications were made to conform to Envestnet’s financial statement presentation. These reclassifications primarily consist of certificates of deposits being reclassified to cash and cash equivalents and equity in joint venture being reclassified to other non-current assets. |
Historical | Pro Forma | |||||||||||||||||
Condensed combined pro forma total for Envestnet and PortfolioCenter (1) | PIEtech | Adjustments | Combined | |||||||||||||||
Revenues | $ | 825,777 | $ | 43,868 | $ | (398 | ) | (o) | $ | 869,247 | ||||||||
Operating expenses: | — | |||||||||||||||||
Cost of revenues | 263,292 | — | (398 | ) | (o) | 262,894 | ||||||||||||
Compensation and benefits | 323,448 | 14,577 | 2,278 | (p) | 340,303 | |||||||||||||
General and administration | 142,880 | 9,085 | — | 151,965 | ||||||||||||||
Depreciation and amortization | 79,848 | 2,847 | 22,793 | (d),(e) | 105,488 | |||||||||||||
Total operating expenses | 809,468 | 26,509 | 24,673 | 860,650 | ||||||||||||||
Income from operations | 16,309 | 17,359 | (25,071 | ) | 8,597 | |||||||||||||
Other income (expense), net | (23,327 | ) | 196 | (10,416 | ) | (g),(q) | (33,547 | ) | ||||||||||
Income (loss) before income tax benefit | (7,018 | ) | 17,555 | (35,487 | ) | (24,950 | ) | |||||||||||
Income tax benefit | (12,762 | ) | — | (1,058 | ) | (r) | (13,820 | ) | ||||||||||
Net income (loss) | 5,744 | 17,555 | (34,429 | ) | (11,130 | ) | ||||||||||||
Add: Net loss attributable to non-controlling interest | 1,745 | — | — | 1,745 | ||||||||||||||
Net income (loss) attributable to Envestnet, Inc. | $ | 7,489 | $ | 17,555 | $ | (34,429 | ) | $ | (9,385 | ) | ||||||||
Net income (loss) per share: | ||||||||||||||||||
Basic | $ | 0.17 | $ | (0.19 | ) | |||||||||||||
Diluted | $ | 0.16 | $ | (0.19 | ) | |||||||||||||
Weighted average common shares outstanding: | ||||||||||||||||||
Basic | 45,268,002 | 3,184,713 | (s) | 48,452,715 | ||||||||||||||
Diluted | 47,384,085 | 1,068,630 | (s) | 48,452,715 |
(1) | Based on calculations set forth in the unaudited pro forma condensed combined statement of operations for Envestnet, including PortfolioCenter, included elsewhere in this Exhibit 99.3. |
Cash consideration | $ | 299,370 | ||
Stock consideration | 222,484 | |||
Total consideration paid | 521,854 | |||
Less: cash acquired | (6,360 | ) | ||
Total estimated fair value of consideration transferred, net of cash acquired | $ | 515,494 |
Total tangible assets acquired, net of cash acquired | $ | 9,957 | ||
Total liabilities assumed | (61,024 | ) | ||
Identifiable intangible assets | 217,000 | |||
Goodwill | 349,561 | |||
Total estimated preliminary consideration allocation | $ | 515,494 |
Estimated Fair Value | Estimated Useful Life in Years | |||||
Customer lists | $ | 181,000 | 10-16 | |||
Proprietary technologies | 25,000 | 5 | ||||
Trade names | 11,000 | 8 | ||||
Total intangible assets acquired | $ | 217,000 |
Amortization | ||||||||||
Estimated Fair Value | Estimated Useful Life in Years | For the Year Ended December 31, 2018 | ||||||||
Customer lists | $ | 181,000 | 10-16 | $ | 18,475 | |||||
Proprietary technologies | 25,000 | 5 | 5,000 | |||||||
Trade names | 11,000 | 8 | 1,375 | |||||||
Total intangible assets acquired | $ | 217,000 | $ | 24,850 |
For the Year Ended December 31, 2018 | ||||
Non-cash compensation expense for new RSU grants | $ | 1,610 | ||
Non-cash compensation expense for new PSU grants | 668 | |||
Non-cash compensation expense adjustment | $ | 2,278 |
For the Year Ended December 31, 2018 | ||||
Estimated interest expense on revolving credit facility | $ | 6,699 | ||
Estimated foregone interest income | 3,795 | |||
Less: historical interest expense on PIEtech note payable | (15 | ) | ||
Net interest expense adjustment | $ | 10,479 |
For the Year Ended December 31, 2018 | ||
Envestnet weighted average shares used to compute basic EPS | 45,268,002 | |
Envestnet shares issued to acquire PIEtech | 3,184,713 | |
Pro forma weighted average basic shares outstanding | 48,452,715 |
For the Year Ended December 31, 2018 | ||
Envestnet weighted average shares used to compute diluted EPS | 47,384,085 | |
Less: common equivalent shares no longer dilutive | -2,116,083 | |
Envestnet shares issued to acquire PIEtech | 3,184,713 | |
Total adjustment | 1,068,630 | |
Pro forma weighted average diluted shares outstanding | 48,452,715 |
Historical | Pro Forma | |||||||||||||||||
Envestnet | PortfolioCenter | Adjustments | Combined | |||||||||||||||
Assets: | ||||||||||||||||||
Current assets: | ||||||||||||||||||
Cash and cash equivalents | $ | 289,345 | $ | — | $ | (17,500 | ) | (a) | $ | 271,845 | ||||||||
Fees and other receivables, net | 68,004 | 394 | (348 | ) | (b) | 68,050 | ||||||||||||
Prepaid expenses and other current assets | 23,557 | — | — | 23,557 | ||||||||||||||
Total current assets | 380,906 | 394 | (17,848 | ) | 363,452 | |||||||||||||
Property and equipment, net | 44,991 | — | — | 44,991 | ||||||||||||||
Internally developed software, net | 38,209 | — | — | 38,209 | ||||||||||||||
Intangible assets, net | 305,241 | — | 12,400 | (c) | 317,641 | |||||||||||||
Goodwill | 519,102 | 3,229 | 11,377 | (d) | 533,708 | |||||||||||||
Other non-current assets | 25,298 | — | — | 25,298 | ||||||||||||||
Total assets | $ | 1,313,747 | $ | 3,623 | $ | 5,929 | $ | 1,323,299 | ||||||||||
Liabilities and Equity: | ||||||||||||||||||
Current liabilities: | ||||||||||||||||||
Accrued expenses | $ | 133,298 | $ | — | $ | — | $ | 133,298 | ||||||||||
Accounts payable | 19,567 | — | (348 | ) | (b) | 19,219 | ||||||||||||
Convertible Notes due 2019 | 165,711 | — | — | 165,711 | ||||||||||||||
Deferred revenue | 23,988 | 3,965 | (2,365 | ) | (e) | 25,588 | ||||||||||||
Contingent Consideration | 732 | — | — | 732 | ||||||||||||||
Total current liabilities | 343,296 | 3,965 | (2,713 | ) | 344,548 | |||||||||||||
Convertible notes | 294,725 | — | — | 294,725 | ||||||||||||||
Contingent consideration | — | — | 8,300 | (f) | 8,300 | |||||||||||||
Deferred revenue | 6,910 | — | — | 6,910 | ||||||||||||||
Deferred rent and lease incentive | 17,569 | — | — | 17,569 | ||||||||||||||
Deferred tax liabilities, net | 640 | — | — | (j) | 640 | |||||||||||||
Other non-current liabilities | 18,005 | — | — | 18,005 | ||||||||||||||
Total liabilities | 681,145 | 3,965 | 5,587 | 690,697 | ||||||||||||||
Equity: | ||||||||||||||||||
Total Stockholders' equity | 633,700 | (342 | ) | 342 | (g) | 633,700 | ||||||||||||
Non-controlling interest | (1,098 | ) | — | — | (1,098 | ) | ||||||||||||
Total liabilities and equity | $ | 1,313,747 | $ | 3,623 | $ | 5,929 | $ | 1,323,299 |
Historical | Pro Forma | |||||||||||||||||
Envestnet | PortfolioCenter | Adjustments | Combined | |||||||||||||||
Revenues | $ | 812,363 | $ | 18,790 | $ | (5,376 | ) | (h) | $ | 825,777 | ||||||||
Operating expenses: | ||||||||||||||||||
Cost of revenues | 263,400 | 3,812 | (3,920 | ) | (h) | 263,292 | ||||||||||||
Compensation and benefits | 317,188 | 6,425 | (165 | ) | (i) | 323,448 | ||||||||||||
General and administration | 139,984 | 1,816 | 1,080 | (f) | 142,880 | |||||||||||||
Depreciation and amortization | 77,626 | — | 2,222 | (c) | 79,848 | |||||||||||||
Total operating expenses | 798,198 | 12,053 | (783 | ) | 809,468 | |||||||||||||
Income from operations | 14,165 | 6,737 | (4,593 | ) | 16,309 | |||||||||||||
Other expense, net | (23,327 | ) | — | — | (23,327 | ) | ||||||||||||
Income (loss) before income tax benefit | (9,162 | ) | 6,737 | (4,593 | ) | (7,018 | ) | |||||||||||
Income tax provision (benefit) | (13,172 | ) | — | 410 | (j) | (12,762 | ) | |||||||||||
Net income | 4,010 | 6,737 | (5,003 | ) | 5,744 | |||||||||||||
Add: net loss attributable to non-controlling interest | 1,745 | — | — | 1,745 | ||||||||||||||
Net income attributable to Envestnet, Inc. | $ | 5,755 | $ | 6,737 | $ | (5,003 | ) | $ | 7,489 | |||||||||
Net income per share: | ||||||||||||||||||
Basic | $ | 0.13 | — | — | $ | 0.17 | ||||||||||||
Diluted | $ | 0.12 | — | — | $ | 0.16 | ||||||||||||
Weighted average common shares outstanding: | ||||||||||||||||||
Basic | 45,268,002 | — | — | 45,268,002 | ||||||||||||||
Diluted | 47,384,085 | — | — | 47,384,085 |
1. | Description of Transaction |
Base consideration | $ | 17,500 | ||
Estimated contingent consideration (see footnote 6(f)) | 8,300 | |||
Total estimated fair value of consideration transferred | $ | 25,800 |
Total tangible assets acquired | $ | 394 | |
Total liabilities assumed | (1,600 | ) | |
Identifiable intangible assets | 12,400 | ||
Goodwill | 14,606 | ||
Total estimated preliminary consideration allocation | $ | 25,800 |
Estimated Fair Value | Estimated Useful Life in Years | ||||||
Customer list | $ | 9,100 | 10 | ||||
Proprietary technology | 3,300 | 4 | |||||
Total intangible assets acquired | $ | 12,400 |
Amortization | |||||||||||
Estimated Fair Value | Estimated Useful Life in Years | For the year ended December 31, 2018 | |||||||||
Customer relationship | $ | 9,100 | 10 | $ | 1,397 | ||||||
Proprietary technology | 3,300 | 4 | 825 | ||||||||
Total intangible assets acquired | $ | 12,400 | $ | 2,222 |
For the year ended December 31, 2018 | ||||
Stock compensation expense for new RSU grants | $ | 63 | ||
Less: Historical PortfolioCenter Business RSU stock compensation expense | (228 | ) | ||
Net | $ | (165 | ) |
#Q3]GK9_UM_F)5+_ )?G_DSU]HKJ
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end