SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ___________________________ AMENDMENT NO. 1 ON FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) December 27, 1995 ------------------------ Alpharel, Inc. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) California 0-15935 95-3634089 - -------------------------------------------------------------------------------- (State or other jurisdiction of (Commission file number) (IRS employer incorporation) identification no.) 9339 Carroll Park Drive, San Diego, California 92121 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code (619) 625-3000 ---------------------------- Not applicable - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) EXPLANATORY NOTE On December 27, 1995, Alpharel, Inc., a California corporation (the "Company"), acquired all of the outstanding stock of Trimco Group plc, a United Kingdom company ("Trimco"). The Company's Current Report on Form 8-K dated December 27, 1995 (the "Form 8-K") was filed with the Securities and Exchange Commission on January 10, 1996 to report the completion of such transaction. This Amendment No. 1 on Form 8-K/A is being filed in order to provide the pro forma financial information required under Item No. 7 that was unavailable at the time of the filing of the Form 8-K. Except as specifically amended by this Form 8-K/A, the Form 8-K shall remain unchanged. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) Financial Statements of Businesses Acquired: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF TRIMCO GROUP, PLC: Consolidated Profit and Loss Account for the years ended June 30, 1994 and 1993 (1) Consolidated Balance Sheets at June 30, 1994 and 1993 (1) Consolidated Statement of Total Recognized Gains and Losses for the years ended June 30, 1994 and 1993 (1) Consolidated Cash Flow Statement for the years ended June 30, 1994 and 1993 (1) Notes to the Accounts for the year ended June 30, 1994 (1) Auditors Report to the Members of Trimco Group, plc (1) Consolidated Profit and Loss Account for the years ended June 30, 1995 and 1994 (1) Consolidated Balance Sheets at June 30, 1995 and 1994 (1) Consolidated Statement of Total Recognized Gains and Losses for the years ended June 30, 1995 and 1994 (1) Consolidated Cash Flow Statement for the years ended June 30, 1995 and 1994 (1) Notes to the Accounts for the year ended June 30, 1995 (1) Auditors Report to the Members of Trimco Group, plc (1) Report of the Auditors to the Directors of Trimco Group, plc (2) UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF TRIMCO GROUP, PLC (3): Consolidated Profit and Loss Account for the three months ended September 30, 1995 Consolidated Balance Sheet at September 30, 1995 Consolidated Cash Flow Statement for the three months ended September 30, 1995 Notes to the Accounts for the three months ended September 30, 1995 (b) Unaudited Pro Forma Financial Information (4): Pro Forma Consolidated Balance Sheet as of September 30, 1995 Pro Forma Consolidated Statement of Operations for the year ended December 31, 1994 Pro Forma Consolidated Statement of Operations for the nine months ended September 30, 1995 Notes to Pro Forma Consolidated Financial Statements 2 (c) EXHIBITS: 2.1 Purchase and Sale Agreement dated December 27, 1995 by and between the Company, Mr. Tanna and the shareholders of Trimco Group, plc (filed as Exhibit 2.1 to the Company's Current Report on Form 8-K dated December 27, 1995 and incorporated herein by this reference). 2.2 Convertible Loan Note dated December 27, 1995 issued by the Company (filed as Exhibit 2.2 to the Company's Current Report on Form 8-K dated December 27, 1995 and incorporated herein by this reference). 4.1 Certificate of Determination of the Series B Convertible Preferred Stock (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K dated December 27, 1995 and incorporated herein by this reference). 4.2 Convertible Preferred Stock Purchase Agreement dated December 20, 1995 by and between the Company and Newsun Limited (filed as Exhibit 4.2 to the Company's Current Report on Form 8-K dated December 27, 1995 and incorporated herein by this reference). 4.3 Convertible Preferred Stock Purchase Agreement dated December 20, 1995 by and between the Company and THC, Inc. (filed as Exhibit 4.3 to the Company's Current Report on Form 8-K dated December 27, 1995 and incorporated herein by this reference). 4.4 Form of Certificate representing the Series B Convertible Preferred Stock (filed as Exhibit 4.4 to the Company's Current Report on Form 8-K dated December 27, 1995 and incorporated herein by this reference). 4.5 Letter Agreement dated January 2, 1996 by and among the Company, Newsun Limited and THC, Inc. (filed as Exhibit 4.5 to the Company's Current Report on Form 8-K dated December 27, 1995 and incorporated herein by this reference). 23.1 Consent of Independent Accountants. ____________________ (1) Filed as Exhibit 99.1 to the Company's Current Report on Form 8-K dated November 20, 1995 and incorporated herein by this reference. (2) Attached as page F-1 to the Company's Current Report on Form 8-K dated December 27, 1995 and incorporated herein by this reference. (3) Attached as pages F-2 through F-5 to the Company's Current Report on Form 8-K dated December 27, 1995 and incorporated herein by this reference. (4) Attached hereto as pages F-1 through F-5. 3 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. Date: March 8, 1996 ALPHAREL, INC. By: /S/ JOHN W. LOW ---------------------------- John W. Low, Chief Financial Officer 4 ALPHAREL AND TRIMCO GROUP PLC UNAUDITED PRO FORMA FINANCIAL INFORMATION Unaudited pro forma consolidated balance sheet at September 30, 1995 and pro forma consolidated statements of operation for the year ended December 31, 1994 and the nine months ended as of September 30, 1995. F-1 ALPHAREL, INC. AND TRIMCO GROUP PLC UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1995 (in thousands) Pro Forma Consolidated Alpharel Trimco Adjustments Total -------- ------ ----------- ------------ ASSETS Cash and short-term investments $ 2,696 $ 168 $ 2,864 Receivables 3,559 2,244 5,803 Inventory 405 117 522 Other current assets 564 55 619 -------- ------ -------- Total current assets 7,224 2,584 9,808 Property and equipment, net 935 980 1,915 Computer software, net 1,923 $ 1,288 (a) 2,648 (563)(b) Goodwill, net - - 4,175 (a) 3,132 (1,043)(c) Other assets 1,026 - 1,026 -------- ------ -------- -------- Total assets $ 11,108 $3,564 $ 3,857 $ 18,529 -------- ------ -------- -------- -------- ------ -------- ------- LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable $ 1,032 $1,160 $ 2,192 Accrued liabilities 858 927 $2,873 (a)(d) 4,658 Payable to Trimco shareholders - - 6,601 (a) 6,601 Payable to former Optigraphics shareholders 1,634 - 1,634 Deferred revenue 255 419 674 Current portion of note payable 200 - 200 -------- ------ -------- Total current liabilities 3,979 2,506 15,959 Long-term notes payable 500 - 1,000 (a) 1,500 -------- ------ -------- Total liabilities 4,479 2,506 17,459 Commitments and contingencies Shareholders' equity Capital stock 43,193 586 5,979 (a) 49,758 Retained earnings (deficit) (36,564) 472 (12,596)(a)-(d) (48,688) -------- ------ -------- Total shareholders' equity 6,629 1,058 1,070 -------- ------ -------- -------- Total shareholders' equity and liabilities $ 11,108 $3,564 $ 3,857 $ 18,529 -------- ------ -------- -------- -------- ------ -------- -------- See accompanying notes to unaudited pro forma consolidated financial statements F-2 ALPHAREL, INC. AND TRIMCO GROUP PLC UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 (in thousands) Pro Forma Consolidated Alpharel Trimco Adjustments Total -------- ------ ----------- ------------ Revenue $9,629 $7,017 $16,646 Cost of revenue 4,390 1,967 $ 241 (b) 6,598 Operating expenses 4,377 4,771 447 (c) 9,595 ----- ----- ------- Income from operations 862 279 453 Interest income 101 8 109 Interest expense (82) (23) (52)(d) (157) ----- ----- ------- Net income from operations before taxes 881 264 405 Tax expense - 92 92 ----- ----- ------- Net income $ 881 $ 172 $ 313 ----- ----- ------- ----- ----- ------- Net income per share $ .02 ------- ------- Weighted average shares 16,079 ------- ------- See accompanying notes to unaudited pro forma consolidated financial statements F-3 ALPHAREL, INC. AND TRIMCO GROUP PLC UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1994 (in thousands) Pro Forma Consolidated Alpharel Trimco Adjustments Total -------- ------ ----------- ------------ Revenue $9,547 $6,758 $ 16,305 Cost of revenue 4,822 2,398 322 (b) 7,542 Operating expenses 4,542 4,343 596 (c) 9,481 Charge for purchased R&D - - 10,595 (a) 10,595 ----- ----- -------- Income (loss) from operations 183 17 (11,313) Interest income 207 5 212 Interest expense (115) (26) (70)(d) (211) ----- ----- -------- Net income (loss) from operations before taxes 275 (4) (11,312) Tax expense - - - ----- ----- -------- Net income (loss) $ 275 $ (4) $(11,312) ----- ----- -------- ----- ----- -------- Net income (loss) per share $ (.72) -------- -------- Weighted average shares 15,698 -------- -------- See accompanying notes to unaudited pro forma consolidated financial statements F-4 ALPHAREL, INC. AND TRIMCO GROUP PLC NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (a) Adjustment reflects the purchase of Trimco Group plc pursuant to a Sale and Purchase Agreement dated as of December 27, 1995 by and among the Company, Mr. Jay Tanna and the shareholders and optionholders of Trimco (the "Agreement"). Pursuant to the Agreement, the Company acquired the Trimco shares for an aggregate purchase price of $14,165,000 before acquisition costs which was comprised of $5,550,000 cash, 1,614,189 shares of Alpharel common stock, a convertible promissory note having a total principal amount of $1,000,000 due September 27, 1996 and a bonus paid to employees in connection with the acquisition, comprising cash of $1,047,000 and 100,599 shares of Alpharel common stock. Acquisition costs to be incurred by Alpharel are estimated to be $630,000. The adjustment, assumed effective Janaury 1, 1994 for purposes of the pro forma consolidated financial statements, reflects expensing $10,595,000 of the purchase price as purchased research and development in accordance with "Accounting and Research and Development Costs," Statement of Financial Accounting Standards No. 2. The Company capitalized $1,288,000 related to existing Trimco software technology acquired. For purposes of the pro forma financial statements, the technology was assumed to have a useful estimated life of four years. The excess of the purchase price over the fair value of the net assets acquired after the research and development expense totals $4,175,000 and is recorded as goodwill. (b) Reflects amortization of Trimco's existing software technology acquired over its useful life of four years. (c) Reflects amortization of goodwill over its useful life of seven years. (d) Reflects interest expense associated with notes issued at 7% annual interest rate in connection with the acquisition. (See (a) above.) (e) The pro forma adjustments do not include any charges associated with the write down of Alpharel's assets to net realizable value. F-5 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION 2.1 Purchase and Sale Agreement dated December 27, 1995 by and between the Company and, Mr. Tanna and the shareholders of Trimco Group, plc (filed as Exhibit 2.1 to the Company's Current Report on Form 8-K dated December 27, 1995 and incorporated herein by this reference). 2.2 Convertible Loan Note dated December 27, 1995 issued by the Company (filed as Exhibit 2.2 to the Company's Current Report on Form 8-K dated December 27, 1995 and incorporated herein by this reference). 4.1 Certificate of Determination of the Series B Convertible Preferred Stock (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K dated December 27, 1995 and incorporated herein by this reference). 4.2 Convertible Preferred Stock Purchase Agreement dated December 20, 1995 by and between the Company and Newsun Limited (filed as Exhibit 4.2 to the Company's Current Report on Form 8-K dated December 27, 1995 and incorporated herein by this reference). 4.3 Convertible Preferred Stock Purchase Agreement dated December 20, 1995 by and between the Company and THC, Inc. (filed as Exhibit 4.3 to the Company's Current Report on Form 8-K dated December 27, 1995 and incorporated herein by this reference). 4.4 Form of Certificate representing the Series B Convertible Preferred Stock (filed as Exhibit 4.4 to the Company's Current Report on Form 8-K dated December 27, 1995 and incorporated herein by this reference). 4.5 Letter Agreement dated January 2, 1996 by and among the Company, Newsun Limited and THC, Inc. (filed as Exhibit 4.5 to the Company's Current Report on Form 8-K dated December 27, 1995 and incorporated herein by this reference). 23.1 Consent of Independent Accountants.