- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 8-K/A
AMENDMENT TO CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 16, 1999
COMPS.COM, Inc.
(Exact name of registrant as specified in its charter)
- --------------------------------------------------------------------------------
Delaware 000-25913 33-0645337
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
- --------------------------------------------------------------------------------
9888 Carroll Centre Road, Suite 100, San Diego, 92126
California
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
- --------------------------------------------------------------------------------
Registrant's telephone number, including area code: (858) 578-3000
Item 7. Financial Statements and Exhibits.
COMPS.COM, Inc. (the "Company") filed a Current Report on Form 8-K with the
Commission on June 30, 1999. At Item 7 of the report, the Company indicated
that it would file audited financial statements of the acquired business and the
Company's pro forma financial information at a later date. That information
follows.
(a) Financial Statements of Inside Prospects of California.
Audited Financial Statements of Inside Prospects of California as of
and for the year ended December 31, 1998, which include the following:
(i) Report of Ernst & Young LLP, Independent Auditors
(ii) Balance Sheets
(iii) Statements of Operations
(iv) Statements of Owner's Deficit
(v) Statements of Cash Flows
(vi) Notes to Financial Statements
(b) Pro Forma Financial Statements.
Unaudited Pro Forma Condensed Financial Statements of COMPS.COM, Inc.
as of June 30, 1999 and December 31, 1998, which include the following:
(i) Introduction to Unaudited Pro Forma Condensed Financial
Statements
(ii) Unaudited Pro Forma Condensed Statements of Operations
(iii) Notes to Unaudited Pro Forma Condensed Financial Statements of
Operations
(c) Exhibits.
None.
Report of Ernst & Young LLP, Independent Auditors
The Sole Proprietor
Inside Prospects of California
We have audited the accompanying balance sheet of Inside Prospects of California
as of December 31, 1998, and the related statements of operations, owner's
deficit, and cash flows for the year ended December 31, 1998. 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 Inside Prospects of California
at 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.
ERNST & YOUNG LLP
San Diego, California
July 21, 1999
Inside Prospects of California
Balance Sheets
December 31, June 16,
1998 1999
-------------------------------
(Unaudited)
Assets
Current assets:
Cash $ - $ 109,068
Accounts receivable 79,730 39,892
Other receivables - 2,092
-------------------------------
Total current assets 79,730 151,052
Furniture and equipment 24,254 24,253
Accumulated depreciation (9,343) (11,769)
-------------------------------
14,911 12,484
-------------------------------
Total assets $ 94,641 $ 163,536
===============================
Liabilities and owner's deficit
Current liabilities:
Checks written but not paid $ 14,163 $ -
Accounts payable 8,715 5,105
Accrued liabilities 14,704 32,819
Deferred subscription revenue 223,051 231,520
-------------------------------
Total current liabilities 260,633 269,444
Owner's deficit (165,992) (105,908)
-------------------------------
Total liabilities and owner's deficit $ 94,641 $ 163,536
===============================
See accompanying notes.
Inside Prospects of California
Statements of Operations
Period from
Six months January 1,
Year ended ended 1999 to
December 31, June 30, June 16,
1998 1998 1999
------------------------------------------
(Unaudited)
Revenues $856,891 $449,736 $503,150
Cost of revenues 418,157 168,682 188,480
------------------------------------------
Gross profit 438,734 281,054 314,670
Selling, general and administrative
expenses 360,073 155,698 195,505
------------------------------------------
Net income $ 78,661 $125,356 $119,165
==========================================
See accompanying notes.
Inside Prospects of California
Statements of Owner's Deficit
Deficit at December 31, 1997 $(170,719)
Distributions to owner (73,934)
Net income 78,661
--------------
Deficit at December 31, 1998 (165,992)
Distributions to owner (unaudited) (59,081)
Net income (unaudited) 119,165
--------------
Deficit at June 16, 1999 (unaudited) $(105,908)
==============
See accompanying notes.
Inside Prospects of California
Statements of Cash Flows
Period from
Six months January 1,
Year ended ended 1999 to
December 31, June 30, June 16,
1998 1998 1999
--------------------------------------------
(Unaudited)
Operating activities
Net income $ 78,661 $125,356 $119,165
Adjustments to reconcile net loss
to net cash provided by operating
activities:
Depreciation 3,867 1,520 2,427
Changes in operating assets and
liabilities:
Accounts receivable 10,328 (30,298) 37,746
Accounts payable (36,138) (52,224) (17,773)
Accrued liabilities 14,704 4,240 18,115
Deferred subscription revenue 11,562 34,234 8,469
--------------------------------------------
Net cash provided by operating 82,984 82,828 168,149
activities
Investing activities
Purchases of furniture and equipment (9,050) (1,453) -
--------------------------------------------
Net cash used in investing (9,050) (1,453) -
activities
Financing activities
Distributions to owner (73,934) (48,332) (59,081)
--------------------------------------------
Net cash used in financing (73,934) (48,332) (59,081)
activities
Net increase in cash - 33,043 109,068
Cash at beginning of period - - -
--------------------------------------------
Cash at end of period $ - $ 33,043 $109,068
============================================
See accompanying notes.
Inside Prospects of California
Notes to Financial Statements
(All information related to the six months ended June 30, 1998
and the period from January 1, 1999 through June 16, 1999 is unaudited)
1. Organization and Summary of Significant Accounting Policies
Organization and Business Activities
Inside Prospects of California (the "Company") is a sole proprietorship with
operations in Southern California. The Company provides comprehensive commercial
tenant information for the Southern California area using both the internet and
traditional communication technologies.
Unaudited Interim Financial Information
The financial statements for the six months ended June 30, 1998 and for the
period from January 1, 1999 through June 16, 1999 are unaudited. The unaudited
financial statements have been prepared on the same basis as the audited
financial statements, and in the opinion of management, include all adjustments,
consisting only of normal recurring adjustments, necessary to state fairly the
financial information set forth therein, in accordance with generally accepted
accounting principles.
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 amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Furniture and Equipment
Furniture and equipment are stated at cost and are depreciated using the
straight-line method over their estimated useful lives of three to five years.
Revenue Recognition
The Company recognizes product and related services revenue at the time of
shipment or performance of services. A substantial portion of the Company's
revenues come from subscription sales. Subscription revenue is recognized over
the subscription term. Unearned subscription revenues are recorded as deferred
subscription revenue at the time the customer is invoiced.
Inside Prospects of California
Notes to Consolidated Financial Statements(continued)
(All information related to the six months ended June 30, 1998
and the period from January 1, 1999 through June 16, 1999 is unaudited)
2. Commitments
The Company leases its facilities under two operating leases expiring on July 7,
1999 and January 31, 2000, respectively. Rent expense totaled $37,489, $13,520
and $26,129 for the year ended December 31, 1998, for the six months ended June
30, 1998, and for the period from January 1, 1999 through June 16, 1999,
respectively.
The scheduled annual future minimum lease payments under these operating leases
are as follows at December 31, 1998:
1999 $42,817
2000 9,554
-----------
$52,371
===========
3. Income Taxes
The Company is a sole proprietorship for federal and state income tax reporting
purposes. Accordingly, the taxable income or loss of the Company is included in
the tax return of the sole proprietor and no provision for federal and state
income taxes has been made in the accompanying financial statements.
4. Subsequent Event (Unaudited)
On June 16, 1999, the Company sold its assets, excluding cash to COMPS.COM, Inc.
for $3,000,000. The sales price consisted of cash consideration of $1,650,000
and a subordinated convertible promissory note of $1,350,000.
Inside Prospects of California
Notes to Consolidated Financial Statements(continued)
(All information related to the six months ended June 30, 1998
and the period from January 1, 1999 through June 16, 1999 is unaudited)
5. Year 2000 Compliance (Unaudited)
Many currently installed computer systems and software products are coded to
accept only two-digit entries in the date code field. Beginning in the year
2000, these date code fields will need to accept four-digit entries to
distinguish 21/st/ century dates from 20/th/ century dates. As a result,
computer systems and/or software used by many companies may need to be upgraded
to comply with such "Year 2000" requirements.
Significant uncertainty exists concerning the potential effects associated with
compliance. Although the Company believes that it is year 2000 compliant, there
can be no assurance that coding errors or other defects will not be discovered
in the future. Any year 2000 compliance problem of the Company, its service
providers, its customers or the Internet infrastructure could result in a
material adverse effect on the Company's business, operating results and
financial condition.
COMPS.COM, Inc. and Inside Prospects of California
Unaudited Pro Forma Condensed Statements of Operations
The unaudited pro forma condensed statements of operations give effect to the
acquisition of Inside Prospects of California ("Inside Prospects") using the
purchase method of accounting.
The pro forma 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.
The pro forma 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,
1999 and is comprised of the unaudited financial information of COMPS.COM, Inc.
for the six months ended June 30, 1999 and Inside Prospects for the period from
January 1, 1999 to June 16, 1999.
No pro forma condensed balance sheet as of June 30, 1999 has been included in
this filing because the unaudited balance sheet filed on Form 10-Q of the
Company for the quarter ended June 30, 1999 includes the acquisition of Inside
Prospects, which was effective June 17, 1999.
The unaudited pro forma condensed statements of operations are presented for
illustrative purposes only and are not necessarily indicative of the results of
operations that would have actually been reported had the acquisition of Inside
Prospects occurred at the beginning of the applicable periods, as assumed, nor
is it necessarily indicative of the Company's future results of operations.
These unaudited pro forma condensed statements of operations do not incorporate,
nor do they assume, any benefits from cost savings or synergies of operations
resulting from the acquisition. They should be read in conjunction with the
historical financial statements and notes thereto of the respective entities.
Pro Forma Condensed Statement of Operations
For the Six Months Ended June 30, 1999
(Unaudited)
(In thousands, except per share data)
COMPS.COM, Inside
Inc. Prospects
Six Months Period From
Ended January 1, to
June 30, June 16, Pro Forma Combined
1999 1999 Adjustments Pro Forma
---- ---- ----------- ---------
Net revenues $ 7,400 $ 503 $ - $ 7,903
Cost of revenues 3,728 188 - 3,916
------------------------------------------------------------
Gross profit 3,672 315 - 3,987
Operating expenses:
Selling, marketing and administrative 6,561 196 351 (a) 7,108
Product development and engineering 1,014 - - 1,014
------------------------------------------------------------
Total operating expenses 7,575 196 351 8,122
Income (loss) from operations (3,903) 119 (351) (4,135)
Interest income (expense), net (4) - (105) (b) (109)
------------------------------------------------------------
Net income (loss) (3,907) 119 (456) (4,244)
Dividend accretion on preferred stock (435) - - (435)
------------------------------------------------------------
Net income (loss)attributable to common
stockholders, basic and diluted $ (4,342) $ 119 $ (456) $ (4,679)
============================================================
Net loss per share attributable to common
stockholders, basic and diluted $ (0.72) $ (0.77)
========== ===========
Shares used in computing net loss attributable
to common stockholders, basic and diluted 6,057,459 6,057,459
========== ===========
See accompanying notes to pro forma condensed statements of operations.
Pro Forma Condensed Statement of Operations
For the Year Ended December 31, 1998
(Unaudited)
(In thousands, except per share data)
COMPS.COM, Inside Pro Forma Combined
Inc. Prospects Adjustments Pro Forma
------------ --------- ----------- ---------
Net revenues $ 12,900 $857 $ - $ 13,757
Cost of revenues 5,768 418 - 6,186
-----------------------------------------------------
Gross profit 7,132 439 - 7,571
Operating expenses:
Selling, marketing and administrative 7,298 360 761 (a) 8,419
Product development and engineering 1,233 - - 1,233
-----------------------------------------------------
Total operating expenses 8,531 360 761 9,652
Income (loss) from operations (1,399) 79 (761) (2,081)
Interest income (expense), net (260) - (240) (b) (500)
-----------------------------------------------------
Net income (loss) (1,659) 79 (1,001) (2,581)
Dividend accretion on preferred stock (454) - - (454)
-----------------------------------------------------
Net income (loss) attributable to common
stockholders, basic and diluted $ (2,113) $ 79 $(1,001) $ (3,035)
=====================================================
Net loss per share attributable to common
stockholders, basic and diluted $ (0.60) $(0.86)
============ ===========
Shares used in computing net loss attributable
to common stockholders, basic and diluted 3,517,056 3,517,056
============ ===========
See accompanying notes to pro forma condensed statements of operations.
COMPS.COM, Inc. and Inside Prospects of California
Notes To Pro Forma Condensed Statements of Operations
(Unaudited)
Note 1.
On June 16, 1999, COMPS.COM, Inc. (the "Company") acquired all of the
assets, excluding cash, of Inside Prospects of California ("Inside Prospects")
for cash of $1,650,000 and a subordinated convertible note of $1,350,000. The
note is payable in full on June 16, 2003, bears interest at 8% per annum payable
monthly during the term of the note, and may be converted at the option of the
note holder into common stock of the Company at any time after December 16, 2000
at $20 per share. The total purchase price of $3,180,000, including acquisition
costs of $52,700 and assumption of liability for deferred subscription revenue
of $127,300, was allocated, based upon management's best estimate of expected
future results of the acquired assets, as follows:
Current assets acquired $ 39,900
Furniture and equipment 12,500
Intangible assets 3,127,600
----------
$3,180,000
==========
The intangible assets are being amortized over estimated useful lives ranging
from two to five years.
Note 2.
The following are explanations of the adjustments reflected on the pro forma
statements of operations.
(a) Reflects amortization of intangible assets acquired as a result of the
acquisition. The pro forma adjustment for the six months ended June 30,
1999 reflects amortization expense for the period from January 1, 1999
through June 16, 1999. The pro forma adjustment for the year ended December
31, 1998 reflects twelve months of amortization expense.
(b) Reflects interest expense on the subordinated convertible note of
$1,350,000 plus assumed interest expense on the cash outlay of $1,650,000
at 8%, as the Company was in a net borrowing position at the beginning of
each fiscal year presented. The pro forma adjustment for the six months
ended June 30, 1999 reflects interest expense on the $1,350,000 for the
period from January 1, 1999 through June 16, 1999 and interest expense on
the $1,650,000 for the period from January 1, 1999 through May 10, 1999
(closing of the Company's IPO), plus a reduction of interest income on the
cash outlay from May 10, 1999 through June 16, 1999. The pro forma
adjustment for the year ended December 31, 1998 reflects twelve months of
interest expense.
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.
COMPS.COM, Inc.
Date: August 27, 1999 /s/ Karen Goodrum
------------------
(Karen Goodrum)
Vice President, Chief Financial Officer
(Principal Financial and Accounting Officer)