SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
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) August 27, 1999
INTELLIGENT LIFE CORPORATION
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(exact name of registrant as specified in chapter)
Florida 0-25681 65-0423422
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(State or other jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
11811 U.S. Highway One
Suite 101
North Palm Beach, Florida 33408
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(zip code)
Registrant's telephone number, including area code: (561) 627-7330
Not Applicable
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(Former name or former address, if changed since last report)
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
The undersigned registrant hereby amends its Form 8-K dated August 27, 1999 by
adding Items 7 (a) and 7 (b).
(a) Financial Statements of Business Acquired
The following financial statements of Green Magazine, Inc. are filed herewith:
Independent Auditors' Report
Balance Sheet at December 31, 1998
Statement of Operations for the year ended December 31, 1998
Statement of Stockholders' Deficit for the year ended December 31, 1998
Statement of Cash Flows for the year ended December 31, 1998
Notes to Financial Statements
Independent Auditors' Report
The Board of Directors
Green Magazine, Inc.:
We have audited the accompanying balance sheet of Green Magazine, Inc., as of
December 31, 1998, and the related statements of operations, stockholders'
deficit, and cash flows for the year 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 audit 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 audit provides 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 Green Magazine, Inc., as of
December 31, 1998, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
/s/ Koppelman, Eglow, Francis, & Wiener
Springfield, New Jersey
November 3, 1999
GREEN MAGAZINE, INC.
Balance Sheet
December 31, 1998
Assets
1998
---------
Current assets:
Cash $ 24,295
Magazine inventory at distributors 1,000
---------
Total current assets 25,295
Organization costs net of $800 accumulated amortization 200
---------
Total assets $ 25,495
=========
Liabilities and Stockholders' Deficit
Liabilities:
Accrued expenses $ 7,058
Deferred subscription revenue 67,740
---------
Total current liabilities 74,798
Loans payable to officers 58,400
---------
Total liabilities 133,198
---------
Stockholders' deficit:
Common stock, no par value, authorized 1,500 shares;
issued and outstanding 300 shares 1,000
Accumulated deficit (108,703)
---------
Total stockholders' deficit (107,703)
---------
Total liabilities and stockholders' deficit $ 25,495
=========
See accompanying notes to financial statements.
GREEN MAGAZINE, INC.
Statement of Operations
For the Year ended December 31,1998
1998
----------
Revenue:
Subscription revenue $ 12,015
Advertising revenue 612
--------
Total revenue 12,627
--------
Cost of operations:
Publication and marketing 32,475
General and administrative expenses 4,623
Depreciation and amortization 200
--------
Total cost of operations 37,298
--------
Operating loss (24,671)
--------
Interest income 223
--------
Net loss before provision for state taxes (24,448)
Provision for state and local income taxes 525
--------
Net loss after provision for state taxes $(24,973)
========
See accompanying notes to financial statements.
GREEN MAGAZINE, INC.
Statement of Stockholders' Deficit
For the Year Ended December 31, 1998
Additional Total
Common Stock Paid-in Accumulated Stockholders'
Shares Amount Capital Deficit Deficit
------- --------- ---------- ----------- ------------
Balance at January 1, 1998 300 $ 1,000 -- $ (83,730) $ (82,730)
Net loss -- -- -- (24,973) (24,973)
------- -------- --------- --------- ---------
Balance at December 31, 1998 300 $ 1,000 -- $(108,703) $(107,703)
======= ======== ========= ========= =========
See accompanying notes to financial statements.
GREEN MAGAZINE, INC.
Statement of Cash Flows
For the Year Ended December 31, 1998
1998
---------
Cash flows from operating activities:
Net loss $(24,973)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 200
Changes in assets and liabilities:
Magazine inventory at distributors (1,000)
Prepaid expenses 3,500
Accrued expenses 4,904
Deferred subscription revenue 2,230
--------
Net cash used in operating activities (15,139)
--------
Cash flows from financing activities:
Borrowings from officers 50,000
Repayment of borrowings from officers (10,000)
--------
Net cash provided by financing activities 40,000
--------
Net increase in cash 24,861
Cash at beginning of period (566)
Cash at end of period 24,295
--------
Supplemental disclosure of cash paid during the period for state taxes $ 525
========
See accompanying notes to financial statements.
GREEN MAGAZINE, INC.
Notes to Financial Statements
December 31, 1998
(1) Description of Business
Green Magazine, Inc. (the "Company") was incorporated under the laws of
the State of Delaware on June 6, 1995.
The Company was created to publish and distribute a quarterly financial
magazine to the consumer.
(2) Summary of Significant Accounting Policies
(a) Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
(b) Income Taxes
Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and operating loss and
tax credit carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
(c) Revenue Recognition
The Company generates revenue primarily from subscription income,
wholesale newsstand distribution, and advertising income. Revenue
is recognized when the pro-rata portion of the multi-issue
subscription is delivered, when the distributor returns
outstanding issues, and when the issue for which the advertising
sold space is produced and distributed. Deferred subscription
revenue represents the unfulfilled portion of magazine
subscriptions.
(d) Magazine Inventory
Magazine inventory represents the number of current dated
magazines on consignment to various newsstand distributors. The
inventory is valued at production cost. At December 31, 1998,
there were approximately 550 magazines outstanding.
(e) Comprehensive Income
No statements of comprehensive income have been included in the
accompanying financial statements since comprehensive loss and net
loss presented in the accompanying statements of operations would
be the same.
(3) Loans Payable to Officers
Loans payable to officers represents non-interest bearing demand notes
for monies lent to the Company by three officers.
(4) Income Taxes
The Company has incurred net operating losses since inception.
Accordingly, the Company has not reflected any benefit of such net
operating loss carryforwards in the accompanying financial statements.
(5) Subsequent Event
On August 27, 1999, Intelligent Life Corporation acquired certain assets
and assumed certain liabilities of the Company for $200,000 in cash and
100,000 unregistered shares of Intelligent Life Corporation common stock
valued at approximately $584,000.
(b) Pro Forma Financial Information
The following unaudited pro forma combined condensed financial
statements are filed herewith:
Unaudited Pro Forma Combined Condensed Balance Sheet at June 30,
1999
Unaudited Pro Forma Combined Condensed Statement of Operations for
the Year Ended December 31, 1998
Unaudited Pro Forma Combined Condensed Statement of Operations for
the Six Months Ended June 30, 1999
Notes to Unaudited Pro Forma Combined Condensed Financial Statements
On August 27, 1999, Intelligent Life Corporation, a Florida corporation
("ILIF"), acquired certain assets and assumed certain liabilities of Green
Magazine, Inc., a Delaware corporation ("Green"), for approximately $831,000
including acquisition costs. ILIF acquired the rights to all agreements,
contracts, commitments, licenses, copyrights, trademarks and the
subscriber/customer list of Green. The total consideration paid by ILIF in
connection with the acquisition was approximately $784,000 consisting of
$200,000 in cash and 100,000 unregistered shares of ILIF common stock valued at
approximately $584,000. The acquisition was accounted for under the purchase
method of accounting.
The Unaudited Pro Forma Combined Condensed Balance Sheet as of June 30, 1999
gives effect to the acquisition of Green as if it had occurred on that date. The
Unaudited Pro Forma Combined Condensed Statement of Operations for the year
ended December 31, 1998 gives effect to the acquisition as if it had occurred on
January 1, 1998 and is based on the historical results of operations of ILIF and
Green for the year ended December 31, 1998. The Unaudited Pro Forma Combined
Condensed Statement of Operations for the six months ended June 30, 1999 gives
effect to the acquisition as if it had occurred on January 1, 1998 and is based
on the historical results of operations of ILIF and Green for the six months
ended June 30, 1999. The Unaudited Pro Forma Combined Condensed Balance Sheet
and Statements of Operations and the accompanying notes should be read in
conjunction with, and are qualified by, the historical financial statements of
Green and the notes thereto included in this filing and by the historical
financial statements of ILIF and the notes thereto included in ILIF's Transition
Report on Form 10-K for the transition period from July 1, 1998 to December 31,
1998.
The unaudited pro forma financial information has been prepared by ILIF and all
calculations are based on assumptions deemed appropriate by ILIF. These
assumptions are set forth in the Notes to Unaudited Pro Forma Combined Condensed
Financial Statements.
The unaudited pro forma financial information is intended for informational
purposes only and is not necessarily indicative of the future financial position
or future results of operations of the consolidated company after the
acquisition of Green, or of the financial position or results of operations of
the consolidated company that would have actually occurred had the acquisition
of Green been effected on January 1, 1998.
Intelligent Life Corporation
Unaudited Pro Forma Combined Condensed Balance Sheet
June 30, 1999
Pro Forma
Intelligent Life ------------------------------
Corporation Green Adjustments Combined
---------------- ------------ ------------- ------------
Assets
Cash and cash equivalents $39,397,886 $ 7,697 (A) $(200,000) $39,197,886
(B) (7,697)
Accounts receivable, net 1,040,888 1,040,888
Other current assets 750,711 -- -- 750,711
----------- ------------ --------- -----------
Total current assets 41,189,485 7,697 40,989,485
Furniture, fixtures and equipment, net 1,328,461 1,328,461
Goodwill and intangible assets, net 83,498 100 (A) 902,485 985,983
----------- ------------ ----------
(B) 100
---------
Total assets $42,601,444 $ 7,797 $ 694,688 $43,303,929
=========== ============ ========= ===========
Liabilities and Stockholders' Equity (Deficit)
Accounts payable $ 1,514,697 $ $ $ 1,514,697
Accrued stock compensation expense 488,072 488,072
Other accrued expenses 995,729 706 (A) 47,431 1,043,160
(B) (706)
Deferred revenue 554,203 71,274 625,477
Current portion of capital lease obligations 201,857 201,857
Other current liabilities 109,644 -- -- 109,644
----------- ------------ --------- -----------
Total current liabilities 3,864,202 71,980 46,725 3,982,907
Officer loan payable -- 46,900 (B) (46,900) --
Long-term portion of capital lease obligations 353,744 -- 353,744
----------- ------------ --------- -----------
Total liabilities 4,217,946 118,880 (175) 4,336,278
Stockholders' equity (deficit) 38,383,498 (111,083)(A) 583,780 38,967,278
----------- ------------ -----------
(B) 111,083
---------
Total liabilities and stockholders' equity (deficit) $42,601,444 $ 7,797 $ 694,688 $43,303,929
=========== ============ ========= ===========
See accompanying Notes to Unaudited Pro Forma Combined
Condensed Financial Statements.
Intelligent Life Corporation
Unaudited Pro Forma Combined Condensed Statement of Operations
Year Ended December 31, 1998
Pro Forma
Intelligent Life ------------------------------
Corporation Green Adjustments Combined
---------------- ------------ ------------- ------------
Revenue:
Online publishing $ 2,582,444 $ -- $ -- $ 2,582,444
Print publishing and licensing 3,039,085 -- 3,039,085
Other -- 12,627 12,627
------------ ---------- ------------
Total revenue 5,621,529 12,627 5,634,156
------------ ---------- ------------
Cost of operations:
Online publishing 1,519,755 -- 1,519,755
Print publishing and licensing 2,104,960 32,475 2,137,435
Sales 1,365,110 -- 1,365,110
Marketing 432,427 -- 432,427
Product research 1,638,592 -- 1,638,592
General and administrative expenses 1,839,594 4,623 1,844,217
Depreciation and amortization 140,069 200 140,269
Goodwill amortization -- -- (A) 300,828 300,828
Noncash stock based compensation 757,563 -- -- 757,563
------------ ---------- --------- ------------
9,798,070 37,298 300,828 10,136,196
------------ ---------- --------- ------------
Loss from operations (4,176,541) (24,671) (300,828) (4,502,040)
------------ ---------- --------- ------------
Other income (expense):
Interest income 36,006 223 36,229
Interest expense (18,649) (18,649)
Other 185,588 -- -- 185,588
------------ ---------- --------- ------------
202,945 223 -- 203,168
------------ ---------- --------- ------------
Loss before income taxes (3,973,596) (24,448) (300,828) (4,298,872)
Income taxes -- 525 -- 525
------------ ---------- --------- ------------
Net loss (3,973,596) (24,973) (300,828) (4,299,397)
Accretion of Convertible Series A and
Series B preferred stock to redemption value (4,438,141) -- -- (4,438,141)
------------ ---------- --------- ------------
Net loss applicable to common stock $ (8,411,737) $ (24,973) $(300,828) $ (8,737,538)
============ ========== ========= ============
Basic and diluted net loss per share $ (2.14) $ (2.17)
============ ============
Weighted average shares outstanding used in
basic and diluted per-share calculation 3,925,597 (B) 100,000 4,025,597
============ ========= ============
See accompanying Notes to Unaudited Pro Forma Combined Condensed
Financial Statements.
Intelligent Life Corporation
Unaudited Pro Forma Combined Condensed Statement of Operations
Six Months Ended June 30, 1999
<CURRENT>
Pro Forma
Intelligent Life ------------------------------
Corporation Green Adjustments Combined
---------------- ------------ ------------- ------------
Revenue:
Online publishing $ 3,295,685 $ -- $ -- $ 3,295,685
Print publishing and licensing 1,742,536 -- -- 1,742,536
Other -- -- -- --
------------ -------- --------- ------------
Total revenue 5,038,221 -- -- 5,038,221
------------ -------- --------- ------------
Cost of operations:
Online publishing 1,616,998 -- 1,616,998
Print publishing and licensing 1,190,970 1,000 1,191,970
Sales 1,283,392 -- 1,283,392
Marketing 2,700,755 -- 2,700,755
Product research 1,227,978 -- 1,227,978
General and administrative expenses 1,738,107 1,847 1,739,954
Depreciation and amortization 176,535 100 176,635
Goodwill amortization -- -- (A) 150,414 150,414
Noncash stock based compensation 2,618,867 -- -- 2,618,867
------------ -------- --------- ------------
12,553,602 2,947 150,414 12,706,963
------------ -------- --------- ------------
Loss from operations (7,515,381) (2,947) (150,414) (7,668,742)
------------ -------- --------- ------------
Other income (expense):
Interest income 249,450 92 249,542
Interest expense (40,023) (40,023)
Noncash financing charge (2,656,000) -- (2,656,000)
Other 10,457 -- -- 10,457
------------ -------- --------- ------------
(2,436,116) 92 -- (2,436,024)
------------ -------- --------- ------------
Loss before income taxes (9,951,497) (2,855) (150,414) (10,104,766)
Income taxes -- 525 -- 525
------------ -------- --------- ------------
Net loss (9,951,497) (3,380) (150,414) (10,105,291)
Accretion of Convertible Series A and
Series B preferred stock to redemption value (2,281,000) -- -- (2,281,000)
------------ -------- --------- ------------
Net loss applicable to common stock $(12,232,497) $ (3,380) $(150,414) $(12,386,291)
============ ======== ========= ============
Basic and diluted net loss per share $ (1.84) $ (1.83)
============ ============
Weighted average shares outstanding used in
basic and diluted per-share calculation 6,661,558 (B) 100,000 6,761,558
============ ========= ============
See accompanying Notes to Unaudited Pro Forma Combined Condensed
Financial Statements.
Intelligent Life Corporation
Notes to Unaudited Pro Forma Combined Condensed Financial Statements
Note 1 -- Basis of Presentation
The Unaudited Pro Forma Combined Condensed Balance Sheet as of June
30, 1999 has been prepared to reflect the acquisition of Green Magazine, Inc.
("Green") by Intelligent Life Corporation ("ILIF") as if the acquisition had
occurred on June 30, 1999. The Unaudited Pro Forma Combined Condensed Statement
of Operations for the year ended December 31, 1998 gives effect to the
acquisition as if it had occurred on January 1, 1998 and is based on the
historical results of operations of ILIF and Green for the twelve months ended
December 31, 1998. The Unaudited Pro Forma Combined Condensed Statement of
Operations for the six months ended June 30, 1999 gives effect to the
acquisition as if it had occurred on January 1, 1998 and is based on the
historical results of operations of ILIF and Green for the six months ended June
30, 1999.
There were no significant differences in the accounting policies of
ILIF and Green for the periods presented.
Note 2 -- Purchase Accounting
On August 27, 1999, ILIF acquired certain assets and assumed certain liabilities
of Green for approximately $831,000 including acquisition costs. ILIF acquired
the rights to all agreements, contracts, commitments, licenses, copyrights,
trademarks and the subscriber/customer list of Green. The total consideration
paid by ILIF in connection with the acquisition was approximately $784,000
consisting of $200,000 in cash and 100,000 unregistered shares of ILIF common
stock valued at approximately $584,000. The acquisition was accounted for under
the purchase method of accounting. The net assets acquired were assumed to be at
fair market value. The excess of the purchase price over the fair value of the
net assets acquired was recorded as goodwill and will be amortized over three
years, the expected benefit period. The pro forma adjustments to the Unaudited
Pro Forma Combined Condensed Statements of Operations reflect amortization of
goodwill for the periods presented assuming the acquisition occurred at
January 1, 1998. The value of goodwill at January 1, 1998 would have been
approximately $902,000.
Note 3 -- Pro Forma Adjustments
The following adjustments were made to the historical balance sheets to
arrive at the Unaudited Pro Forma Combined Condensed Balance Sheet at June 30,
1999:
(A) Record the payment of cash, the issuance of ILIF common stock, the net
assets acquired and the excess of the purchase price over the fair value of
the net assets acquired.
(B) Eliminate the assets, liabilities and equity not acquired.
The following adjustments were made to the historical statements of
operations to arrive at the Unaudited Pro Forma Combined Condensed Statements of
Operations for the year ended December 31, 1998 and for the six months ended
June 30, 1999:
(A) Record goodwill amortization.
(B) Record additional shares of common stock issued.
(c) Exhibits:
2.1 Asset Purchase Agreement, dated August 27, 1999, by
and among Intelligent Life Corporation, Green
Magazine, Inc., Kenneth A. Kurson, John F. Packel
and James Michaels.*
99.1 Text of Press Release of Intelligent Life
Corporation dated August 30, 1999*
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* Previously filed with Form 8-K dated August 27, 1999.
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 thereunto duly authorized.
INTELLIGENT LIFE CORPORATION
/s/ Robert J. DeFranco
--------------------------------------
Date: November 10, 1999 Robert J. DeFranco
Vice President -- Finance and
Chief Accounting Officer