SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: January 19, 2000
SPIGADORO, INC.
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(Exact name of registrant as specified in charter)
DELAWARE
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(State of other jurisdiction of incorporation)
0-22101 13-3920210
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(Commission File Number) (IRS Employer Identification No.)
70 East 55th Street, 24th Floor, New York, New York 10022
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(Address of principal executive offices) (Zip Code)
Registrant's telephone no. including area code: 212-754-4271
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(Former Address, if changed since Last Report) (Zip Code)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Under a Stock Purchase Agreement dated as of January 19, 2000 (the
"Agreement"), Spigadoro, Inc. (the "Company") sold its 80% equity interest in
FSE Computer-Handel GmbH & Co. KG and its 100% equity interest in FSE Computer
Handel-Verwaltung GmbH (collectively, "FSE") to Frank Strauss (the founder of
FSE) and the other parties named therein, some of whom are employees or former
employees of FSE (the "Purchasers"). In addition, Dr. Alfred Simmet, the former
Chief Operating Officer of FSE, sold his 20% equity interest in FSE
Computer-Handel GmbH & Co. KG to the Purchasers. FSE was responsible for the
marketing of the Company's high performance personal computers in Germany. Under
the terms of the Agreement, the Purchasers assumed all of the outstanding third
party liabilities of FSE (aggregating approximately $1.4 million) and agreed to
pay the Company up to an aggregate of approximately $263,000 (DM 500,000) based
upon the "cash flow" of FSE (as defined in the Agreement) over the next several
years. Of the purchase, up to approximately $53,000 (DM 100,000) was
attributable to Dr. Simmet's ownership and under the terms of the Agreement, Dr.
Simmet transferred his right to receive the approximately $53,000 to the Company
to satisfy a portion of Dr. Simmet's obligations to the Company. The purchase
price will be paid as follows:
o 5% of the "cash flow" of FSE for the fiscal year ending December
31, 2000;
o 15% of the "cash flow" of FSE for the fiscal year ending December
31, 2001; and
o 25% of the "cash flow" of FSE for the fiscal years ending December
31, 2002 through 2004.
The Company has made customary representations and warranties in the
Agreement and under the terms of the Agreement, the Company has agreed to
indemnify the Purchasers for any breaches of these representations and
warranties and the covenants of the Company contained in the Agreement;
provided, that the Company's liability is limited to the amount of the purchase
price paid by the Purchasers to the Company.
The Company also intends to sell Columbus Computer Handel and its
affiliates (collectively, "Columbus"). Columbus distributes personal computer
components, peripherals and software, as well as personal computers, in Germany.
The Company has commenced discussions relating to the sale of Columbus, but no
agreement has been reached with any party regarding the terms of a potential
transaction and the Company cannot predict whether it will be able to sell this
business on terms favorable to the Company or at all.
The Stock Purchase Agreement is attached hereto as Exhibit 10.78 and is
incorporated herein by reference.
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Statements in this report that are not descriptions of historical facts
are forward-looking statements that are subject to risks and uncertainties. Such
statements, including those regarding among other things, the Company's strategy
and future prospects, are dependent on any number of factors, including market
conditions, competition and the availability of financing, many of which are
outside of the Company's control. Actual results could differ materially from
those currently anticipated due to a number of factors, including those set
forth in the Company's Securities and Exchange Commission filings under "Risk
Factors", including the following: we are operating a new business; if we do not
successfully sell our computer business, the combined company may be adversely
affected; Vertical Financial Holdings and its affiliates have the power to
control Spigadoro; our strategy of acquiring other companies for growth may not
succeed and may adversely affect our financial condition and results of
operations; we are subject to numerous risks related to foreign operations; and
other risks.
Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits.
(b) Pro Forma Financial Information
SPIGADORO, INC. AND SUBSIDIARIES
Pro Forma Financial Information..................................................................................F-1
Unaudited Pro Forma Condensed Consolidated Balance Sheet September 30, 1999......................................F-2
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Nine
Months Ended September 30, 1999.........................................................................F-4
Unaudited Pro Forma Condensed Consolidated Statement of Operations for Year Ended
December 31, 1998.......................................................................................F-5
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.........................................F-6
(c) Exhibits
10.78 Stock Purchase Agreement dated as of January 19, 2000 by
and between the Company and the other parties named therein.
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SIGNATURE
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.
SPIGADORO, INC.
By: /s/ Klaus Grissemann
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Klaus Grissemann
Chief Financial Officer
Date: February 1, 2000
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PRO FORMA FINANCIAL INFORMATION
Spigadoro, Inc. (formerly IAT Multimedia, Inc.) (the "Company" or "Spigadoro")
entered in a transaction with Gruppo Spigadoro, NV. ("GSNV") in December 1999,
whereby the Company acquired 100% of the outstanding common stock of Petrini
from GSNV. GSNV entered into an agreement during 1998 to acquire 67% of the
outstanding common stock of Petrini and later entered into an agreement to
acquire the additional 33% of the outstanding common stock from the minority
shareholder. At the time of the acquisition, the Company changed its name from
IAT Multimedia Inc. to Spigadoro, Inc.
In December 1999, in conjunction with the acquisition of Petrini, the Company
decided to discontinue the computer businesses previously operated by the
Company. These businesses had been the major source of the Company's revenues.
The computer businesses consisted of FSE Computer-Handel GmbH & Co. KG ("FSE")
and Columbus Computer Handels-und Vetrieb, branch office of IAT Multimedia GmbH
("Columbus"). In January 2000, the Company sold FSE for net proceeds of
approximately $200,000. The Company is currently seeking a buyer for Columbus.
The following unaudited pro forma condensed consolidated financial statements
are based on the historical statements of the Company and Petrini which give
effect to the following:
o the acquisition of 100% of the outstanding common stock of Petrini by the
Company,
o the push-down accounting adjustments relating to the acquisition of 100% of
the outstanding common stock of Petrini by GSNV,
o the sale of FSE, and the discontinuance of the computer business of
Columbus.
The unaudited pro forma condensed consolidated statements of operations give
effect to the events described above as if they occurred as of January 1, 1998,
and the unaudited pro forma condensed consolidated balance sheet gives effect to
the events described above as if they occurred as of September 30, 1999. The
events described above and the related adjustments are described in the
accompanying notes. The pro forma adjustments are based upon available
information and certain assumptions that management believes are reasonable. The
pro forma financial information do not purport to represent what Spigadoro's
results of operations or financial condition would actually have been had the
events described above in fact occurred on such dates or to project Spigadoro's
results of operations or financial condition for any future period or date.
F-1
SPIGADORO, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1999
Spigadoro Petrini Pro Discontinuance of
Historical Petrini Forma Adjustments Computer Businesses Pro forma
------------------------ ----------------- ------------------- ---------
(in thousands)
ASSETS
Current assets
Cash and cash equivalents $5,102 $110 ($373)(A) $ 4,839
Marketable securities 746 746
Securities held for sale 2,940 2,940
Accounts receivable, net 1,965 35,909 (1,965)(A) 35,909
Taxes receivable 7,207 7,207
Deferred income taxes 532 ($532)(B)
Inventories 1,713 12,495 (1,713)(A) 12,495
Cash to factor 4,422 4,422
Other current assets 176 1,212 (126)(A) 1,262
--------------------- -------- ------- --------
Total current assets 12,642 61,887 (532) (4,177) 69,820
--------------------- -------- ------- --------
Equipment and improvements, net 391 26,125 15,380 (B) (391)(A) 41,505
--------------------- -------- ------- --------
Other assets:
Intangible assets 4,253 606 (B) 4,859
Excess of cost over net assets
acquired 3,437 5,923 (B) (3,437)(A) 5,923
Deferred income taxes 3,095 (3,095)(B)
200 (A)
Other assets 1,126 2,652 (1,067)(A) 2,911
Assets held for disposition 2,600 (A) 2,600
--------------------- -------- ------- --------
Total other assets 4,563 10,000 3,434 (1,704) 16,293
--------------------- -------- ------- --------
Total assets $17,596 $98,012 $18,282 ($6,272) $127,618
===================== ======== ======= ========
F-2
SPIGADORO, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1999
Spigadoro Petrini Pro Discontinuance of
Historical Petrini Forma Adjustments Computer Businesses Pro forma
------------------------ ----------------- ------------------- ---------
(in thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $356 $21,945 ($356)(A) $21,945
Current portion of long-term debt 2,473 $7,388 (D) 9,861
Liability to factor 4,422 4,422
Accounts payable and other (183)(E)
current liabilities 2,861 23,164 600 (E) (2,465)(A) 23,977
--------------------- -------- ------- --------
Total current liabilities 3,217 52,004 7,805 (2,821) 60,205
--------------------- -------- ------- --------
Long-term debt, net of current portion 7,355 12,115 (D) 19,470
Employee termination indemnities 8,333 8,333
Other liabilities 27 3,709 3,022 (B) (27)(A) 6,731
------- ------- -------- ------- --------
Total long-term liabilities 27 19,397 15,137 (27) 34,534
------- ------- -------- ------- --------
Total liabilities 3,244 71,401 22,942 (2,848)(A) 94,739
------- ------- -------- ------- --------
Convertible debentures 2,848 (2,848)(E) 0
------- ------- -------- ------- --------
Stockholders' Equity
Preferred stock
(21,085)(C)
Common stock 101 21,569 25 (E) 610
15,260 (B)
(12,878)(C)
(19,503)(D)
Capital in excess of par 32,595 2,781 2,406 (E) 20,661
Step up adjustments (11,751) 11,751 (C) 0
Accumulated other comprehensive income 404 30 (404)(C) 30
Treasury stock (2,204) (2,204)
Retained earnings (19,392) 13,982 22,616 (C) (3,424)(A) 13,782
------- ------- -------- ------- --------
Total stockholders' equity 11,504 26,611 (1,812) (3,424) 32,879
------- ------- -------- ------- --------
Total liabilities and stockholders'
equity $17,596 $98,012 $18,282 ($6,272) $127,618
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F-3
SPIGADORO, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1999
Spigadoro Petrini Pro Discontinuance of
Historical Petrini Forma Adjustments Computer Businesses Pro forma
------------------------ ----------------- ------------------- ---------
(in thousands except for per share information)
Net sales $31,164 $103,224 ($31,143)(A) $103,245
Cost of sales 29,445 74,214 $668 (F) (29,445)(A) 74,882
----------------------- -------- -------- --------
Gross profit 1,719 29,010 (668) (1,698) 28,363
----------------------- -------- -------- --------
Operating expenses:
Selling expenses 1,825 19,332 (1,825)(A) 19,332
General & administrative expenses 1,897 5,768 245 (F) (1,114)(A) 6,796
----------------------- -------- -------- --------
Total operating expenses 3,722 25,100 245 (2,939) 26,128
----------------------- -------- -------- --------
Operating income (loss) (2,003) 3,910 (913) 1,241 2,235
(3,440)(E)
110 (E)
Other income (expense) 3,593 (1,132) (728)(G) (83)(A) (1,680)
----------------------- -------- -------- --------
Income (loss) before income taxes 1,590 2,778 (4,971) 1,158 555
Income taxes (benefit) 1,961 (285)(H) 1,676
----------------------- -------- -------- --------
Income (loss) from continuing operations $1,590 $817 ($4,686) $1,158 ($1,121)
======================= ======== ======== ========
Income/(loss) per common share - basic $0.17 ($0.02)
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diluted $0.16 ($0.02)
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Weighted average number of
common shares outstanding - basic 9,332 60,150
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diluted 10,614 60,150
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F-4
SPIGADORO, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31,1998
Spigadoro Petrini Pro Discontinuance of
Historical Petrini Forma Adjustments Computer Businesses Pro forma
---------- ----------------------------- ------------------- ---------
(in thousands except for per share information)
Net sales $38,340 $141,127 ($38,315)(A) $141,152
Cost of sales 35,465 104,347 $891 (F) (35,465)(A) 105,238
------------------------------------ -------- --------
Gross profit 2,875 36,780 (891) (2,850) 35,914
------------------------------------ -------- --------
Operating expenses:
Selling expenses 2,821 24,480 (2,821)(A) 24,480
General & administrative expenses 2,112 7,800 326 (F) (972)(A) 9,266
------------------------------------ -------- --------
Total operating expenses 4,933 32,280 326 (3,793) 33,746
------------------------------------ -------- --------
Operating income (loss) (2,058) 4,500 (1,217) 943 2,168
75 (E)
Other income (expense) (97) (2,160) (971)(G) (85)(A) (3,238)
------------------------------------ -------- --------
Income (loss) before income taxes (2,155) 2,340 (2,113) 858 (1,070)
Income taxes (benefit) (412) 1,901 (380)(H) 412(A) 1,521
------------------------------------ -------- --------
Income (loss) from continuing operations ($1,743) $439 ($1,733) $446 ($2,591)
==================================== ======== ========
Income/(loss) per common share - basic
and diluted ($0.19) ($0.04)
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Weighted average number of
common shares outstanding - basic
and diluted 9,327 60,145
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F-5
SPIGADORO, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(A) The Pro Forma Financial Statements give effect to the discontinuance of the
computer businesses of Spigadoro and the disposal of FSE for net proceeds
of approximately $200,000. The unaudited pro forma condensed consolidated
balance sheet reflects the elimination of the FSE assets and liabilities
sold and the reclassification of the assets and liabilities of the
remaining computer business (Columbus) to assets held for disposition. The
amounts recorded have been adjusted to give effect to management's estimate
of their net realizable value resulting in an estimated loss on disposal of
$3,424,000. The unaudited pro forma condensed consolidated statements of
operations reflect the reclassification of the operations of these computer
businesses to discontinued operations resulting in a loss from discontinued
operations for the nine months ended September 30, 1999 and the year ended
December 31, 1998 of $1,158,000 and $446,000, respectively. The total
assets of FSE as of September 30, 1999 were $3,886,000. The net sales of
FSE for the nine months ended September 30, 1999 and the year ended
December 31, 1998 were $11,279,000 and $31,922,000, respectively. The loss
before income taxes of FSE for the nine months ended September 30, 1999 and
the year ended December 31, 1998 was $1,024,000 and $965,000, respectively.
(B) The unaudited pro forma condensed consolidated balance sheet gives effect
to the acquisition of Petrini by Spigadoro by combining the historical
balance sheet of Petrini and the historical balance sheet of Spigadoro,
adjusted for the sale of FSE and the discontinued operations as mentioned
in (A) above and the purchase accounting adjustments in (E) below, at
September 30, 1999. The Petrini transaction was accounted for as a reverse
acquisition, whereby Petrini was the accounting acquirer and Spigadoro
(formerly IAT Multimedia, Inc.) was the legal acquirer, using the purchase
method of accounting. During September 1998, GSNV entered into a
transaction to acquire 67% of the outstanding common stock of Petrini from
Carlo Petrini and received an option to acquire the remaining 33% interest
from the bankruptcy receiver of the minority shareholder of Petrini. The
option to purchase the remaining 33% was exercised prior to the
consummation of the acquisition by Spigadoro in December 1999. Since GSNV
owned 100% of Petrini prior to Spigadoro's acquisition of Petrini, the
purchase accounting adjustments are "pushed-down" to Petrini and are
included within the pro forma adjustments in the accompanying Pro Forma
Financial Statements. The purchase price for Petrini paid by GSNV,
including cash paid at closing and the issuance of debt, aggregated
$44,360,000 and was allocated as follows:
F-6
(IN THOUSANDS)
Cash, notes and common stock issued $ 44,360
Petrini liabilities assumed 82,073
---------
$ 126,433
=========
Allocated to assets as follows: September 30, 1998
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FMV Historical Adjustment
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Current assets $ 68,261 $ 68,793 $ (532)
Equipment and improvements 46,645 31,265 15,380
Intangibles 5,935 5,329 606
Other assets 2,691 5,786 (3,095)
Deferred tax liability (3,022) (3,022)
Goodwill 5,923 5,923
--------- --------- --------
$ 126,433 $ 111,173 $ 15,260
========= ========= ========
The above adjustment was included in the pro forma condensed consolidated
balance sheet in the Petrini pro forma adjustment column.
(C) The unaudited pro forma condensed consolidated balance sheet was adjusted
to reflect the issuance of 48,366,530 shares of Spigadoro common stock to
GSNV, in exchange for 100% of the outstanding common stock of Petrini. As a
result of the reverse acquisition, the unaudited pro forma condensed
consolidated balance sheet was adjusted to reflect the historical equity of
Petrini. The historical retained earnings of Petrini has been carried
forward and the remaining equity accounts of Petrini have been reclassified
to reflect the par value of the Spigadoro stock issued with any differences
reflected as paid-in capital. In addition, paid-in capital of Petrini has
been increased by an amount equal to the excess of cost over book basis of
net assets acquired and reduced by the amount of the Predecessor's debt
assumed by Spigadoro. The pro forma condensed consolidated balance sheet
also reflects the reclassification of Spigadoro's equity accounts exclusive
of common stock and treasury stock to paid-in capital.
(D) In connection with the Petrini transaction, Spigadoro assumed certain debt
of GSNV related to its acquisition of Petrini in the amount of $19,503,000
(face value of approximately $20 million), resulting in an increase in
liabilities and a decrease in paid-in capital. Certain notes have a stated
interest rate of 5% per annum and certain other notes have no stated
interest rate and were discounted at an average rate of 5%. The notes
require principal payments of $7,388,000 and $12,115,000 for the years
ended September 30, 2000 and 2001, respectively.
F-7
(E) The unauidted pro forma condensed consolidated balance sheet reflects
Spigadoro's assets at their fair market value and the conversion of the
Series A convertible debentures and accrued interest into 2,452,000 shares
of common stock which was completed in November and December 1999. The
unaudited pro forma condensed consolidated statements of operations reflect
the elimination of $3,440,000 gain realized by Spigadoro on the sale of
intellectual property during the nine months ended September 30, 1999 to
give effect to the adjustment of Spigadoro's assets to fair value as of
January 1, 1998. The unaudited condensed consolidated statements of
operations also reflects the elimination of interest related to the
convertible debentures for the nine months ended September 30, 1999 and the
year ended December 31, 1998 of $110,000 and $75,000, respectively. In
addition, Spigadoro recorded an accrual of $600,000 relating to estimated
costs to be incurred in the Petrini acquisition which has been charged to
paid-in capital.
(F) The purchase accounting for the acquisition of Petrini by GSNV resulted in
an increase in the basis of equipment and improvements of $15,380,000 and
trademarks of $606,000 as well as the recording of $5,923,000 of goodwill.
The increase in the basis of assets acquired is being depreciated and
amortized over the estimated useful lives ranging from 10 to 33 years. The
goodwill is being amortized over twenty years. The unaudited pro forma
condensed consolidated statements of operations reflect depreciation and
amortization expense recorded in cost of sales and general and
administrative expenses for the nine months ended September 30, 1999 and
the year ended December 31, 1998 of $668,000 and $891,000, respectively,
and $245,000 and $326,000 respectively.
(G) Interest expense in the unaudited pro forma condensed consolidated
statements of operations, has been adjusted to reflect the increase in
interest relating to the debt assumed in the acquisition as if it occurred
on January 1, 1998. The amount of interest expense recorded for the nine
months ended September 30, 1999 and the year ended December 31, 1998 was
$728,000 and $971,000, respectively.
(H) Income taxes (benefit) in the pro forma condensed consolidated statements
of operations have been adjusted to reflect the tax effect of the pro forma
adjustments relating to the additional depreciation and amortization on
purchase accounting adjustments made to fixed assets and trademarks using
the company's effective tax rate of 41.25%.
F-8