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: December 19, 2002
(Date of earliest event reported)
SofTech, Inc.
-------------
(Exact name of registrant as specified in its charter)
Massachusetts 0-10665 #04-2453033
---------------- ---------- -----------------
(State or other jurisdiction (Commission (IRS Employer
of Incorporation or file number) Identification Number)
organization)
2 Highwood Drive, Tewksbury, MA 01876
-------------------------------------------------
(Address of principal executive offices) (Zip Code)
(978) 640-6222
--------------
(Registrant's telephone number, including area code)
Item 7 is amended in its entirety as follows:
Item 7(b) Pro Forma Financial Information.
INTRODUCTION TO PRO FORMA COMBINED
CONDENSED FINANCIAL INFORMATION (Unaudited)
The Pro Forma Combined Condensed Income Statements for the year ended May 31,
2002 for the six months ended November 30, 2002 present the combined results of
the continuing operations of SofTech, Inc. (the "Company") and Workgroup
Technology Corporation ("WTC") assuming the acquisition had been consummated as
of the beginning of the periods indicated. WTC's operations are combined using
its fiscal year ended March 31, 2002 and the six months ended December 31, 2002.
The Pro Forma Combined Condensed Balance Sheet as of November 30, 2002 presents
the combined financial position of the Company at that date and WTC as of
December 31, 2002, assuming the acquisition was consummated on the balance sheet
date.
The pro forma information does not purport to be indicative of the results of
operations or the financial position which would have actually been obtained if
the acquisition had been consummated on the dates indicated. The pro forma
information does not purport to be indicative of the results of operations or
financial positions which may result in the future.
The pro forma financial information has been prepared by the Company based upon
assumptions deemed appropriate by the Company's management. Certain of the most
significant assumptions are set forth under the Notes to Pro Forma Combined
Condensed Financial Statements.
The pro forma financial information should be read in conjunction with the
Company's historical Consolidated Financial Statements and Notes thereto
contained in the 2002 Annual Report on Form 10-K and in its subsequent interim
reports on Form 10-Q.
SofTech, Inc.
Unaudited Pro Forma Combined Condensed Balance Sheet
As of November 30, 2002
(in thousands)
----------------- -------------- ------------------- ------------- ------- -----------
SofTech Workgroup
Historical Technology
Unaudited Corporation
Results Historical
As of Unaudited Results Pro Forma
November 30, As of Pro Forma Combined
2002 December 31, 2002 Adjustments Notes Results
----------------- -------------- ------------------- ------------- ------- -----------
Cash $ 3,479 $ 390 $ (3,010) (B) $ 859
----------------- -------------- ------------------- ------------- ------- -----------
Accounts
receivables, net 1,395 431 1,826
----------------- -------------- ------------------- ------------- ------- -----------
Prepaid
expenses and
other assets 235 234 469
--- --- ---
----------------- -------------- ------------------- ------------- ------- -----------
Current assets 5,109 1,055 (3,010) 3,154
----------------- -------------- ------------------- ------------- ------- -----------
----------------- -------------- ------------------- ------------- ------- -----------
Property, plant
and equipment,
net 240 62 302
----------------- -------------- ------------------- ------------- ------- -----------
Capitalized
software, net 8,601 0 8,601
----------------- -------------- ------------------- ------------- ------- -----------
Goodwill, net
2,197 0 1,509 (A) 3,706
----------------- -------------- ------------------- ------------- ------- -----------
Other intangible
assets 0 0 3,500 (A) 3,500
----------------- -------------- ------------------- ------------- ------- -----------
Marketable
securities 183 0 (183) (C) 0
----------------- -------------- ------------------- ------------- ------- -----------
Other assets 143 300 443
--- --- ---
----------------- -------------- ------------------- ------------- ------- -----------
Total assets $ 16,473 $ 1,417 $ 1,816 $ 19,706
------ ----- ----- ------
----------------- -------------- ------------------- ------------- ------- -----------
Accounts $ 356 $ 7 $ 363
payable
----------------- -------------- ------------------- ------------- ------- -----------
Accrued
expenses 530 533 $ 1,056 (D) 2,119
----------------- -------------- ------------------- ------------- ------- -----------
Deferred
revenue 1,898 1,322 3,220
----------------- -------------- ------------------- ------------- ------- -----------
Current portion
of debt 1,110 0 1,110
----- - -----
----------------- -------------- ------------------- ------------- ------- -----------
----------------- -------------- ------------------- ------------- ------- -----------
Current
liabilities 3,894 1,862 1,056 6,812
----------------- -------------- ------------------- ------------- ------- -----------
----------------- -------------- ------------------- ------------- ------- -----------
Other liabilities 466 315 781
----------------- -------------- ------------------- ------------- ------- -----------
Long term debt 13,603 0 13,603
------ - ------
----------------- -------------- ------------------- ------------- ------- -----------
Total liabilities 17,963 2,177 1,056 21,196
----------------- -------------- ------------------- ------------- ------- -----------
Stockholders'
deficit (1,490) (760) 760 (E) (1,490)
------ ----- ---
----------------- -------------- ------------------- ------------- ------- -----------
Total liabilities
and
stockholders'
deficit $ 16,473 $ 1,417 $ 1,816 $ 19,706
------ ----- ----- ------
----------------- -------------- ------------------- ------------- ------- -----------
See accompanying notes to pro forma combined condensed financial statements.
SofTech, Inc.
Unaudited Pro Forma Combined Condensed Income Statement
For the six months ended November 30, 2002
(in thousands)
----------------- -------------- ------------------- ------------- ------- -----------
SofTech
Historical Workgroup
Unaudited Technology
Results Corporation
Six months Historical
ended Unaudited Results Pro Forma
November 30, Six months ended Pro Forma Combined
2002 December 31, 2002 Adjustments Notes Results
----------------- -------------- ------------------- ------------- ------- -----------
Revenue
----------------- -------------- ------------------- ------------- ------- -----------
Products $ 1,135 $ 734 $ 1,869
----------------- -------------- ------------------- ------------- ------- -----------
Services 2,812 2,528 5,340
----- ----- -----
----------------- -------------- ------------------- ------------- ------- -----------
Total revenue 3,947 3,262 7,209
----------------- -------------- ------------------- ------------- ------- -----------
----------------- -------------- ------------------- ------------- ------- -----------
Cost of products 33 21 54
----------------- -------------- ------------------- ------------- ------- -----------
Cost of services 137 1,033 1,170
--- ----- -----
----------------- -------------- ------------------- ------------- ------- -----------
Gross margin 3,777 2,208 5,985
----------------- -------------- ------------------- ------------- ------- -----------
----------------- -------------- ------------------- ------------- ------- -----------
Research &
development 696 1,378 2,074
----------------- -------------- ------------------- ------------- ------- -----------
Selling, general
&
administrative 3,250 2,738 438 (F) 6,426
----- ----- --- -----
----------------- -------------- ------------------- ------------- ------- -----------
Loss from
operations (169) (1,908) (438) (2,515)
----------------- -------------- ------------------- ------------- ------- -----------
Interest expense
(income) 576 (12) 123 (G) 687
--- ---- --- ---
----------------- -------------- ------------------- ------------- ------- -----------
Loss before tax (745) (1,896) (561) (3,202)
----------------- -------------- ------------------- ------------- ------- -----------
Tax provision 0 0 0 0
- - - -
----------------- -------------- ------------------- ------------- ------- -----------
Net loss (745) (1,896) (561) (3,202)
----------------- -------------- ------------------- ------------- ------- -----------
----------------- -------------- ------------------- ------------- ------- -----------
Basic and
diluted net loss
per common
share $ (.06) $ (1.03) $ (.26)
----------------- -------------- ------------------- ------------- ------- -----------
Weighted
average
common shares
outstanding 12,205 1,841 12,205
----------------- -------------- ------------------- ------------- ------- -----------
See accompanying notes to pro forma combined condensed financial statements.
SofTech, Inc.
Unaudited Pro Forma Combined Condensed Incone Statement
For the fiscal year ended May 31, 2002
(in thousands)
----------------- ----------------- --------------------- ------------- ------- -----------
Workgroup
SofTech Technology
Historical Corporation
Audited Results Historical Audited
Twelve months Results Pro Forma
ended Twelve months ended Pro Forma Combined
May 31, 2002 March 31, 2002 Adjustments Notes Results
----------------- ----------------- --------------------- ------------- ------- -----------
Revenue
----------------- ----------------- --------------------- ------------- ------- -----------
Products $ 2,300 $ 1,338 $ 3,638
----------------- ----------------- --------------------- ------------- ------- -----------
Services 6,484 6,060 12,544
----- ----- ------
----------------- ----------------- --------------------- ------------- ------- -----------
Total revenue 8,784 7,398 16,182
----------------- ----------------- --------------------- ------------- ------- -----------
----------------- ----------------- --------------------- ------------- ------- -----------
Cost of products 58 250 308
----------------- ----------------- --------------------- ------------- ------- -----------
Cost of services 366 3,182 3,548
--- ----- -----
----------------- ----------------- --------------------- ------------- ------- -----------
Gross margin 8,360 3,966 12,326
----------------- ----------------- --------------------- ------------- ------- -----------
----------------- ----------------- --------------------- ------------- ------- -----------
Research &
development 1,572 3,439 5,011
----------------- ----------------- --------------------- ------------- ------- -----------
Selling, general
&
administrative 8,180 4,095 $ 875 (F) 13,150
----- ----- --- ------
----------------- ----------------- --------------------- ------------- ------- -----------
Loss from
operations (1,392) (3,568) (875) (5,835)
----------------- ----------------- --------------------- ------------- ------- -----------
Interest expense
(income) 1,277 (129) 245 (G) 1,393
----- ----- --- -----
----------------- ----------------- --------------------- ------------- ------- -----------
Loss before tax (2,669) (3,439) (1,120) (7,228)
----------------- ----------------- --------------------- ------------- ------- -----------
Tax provision 11 0 0 11
-- - - --
----------------- ----------------- --------------------- ------------- ------- -----------
Net loss (2,680) (3,439) $ (1,120) (7,239)
----------------- ----------------- --------------------- ------------- ------- -----------
----------------- ----------------- --------------------- ------------- ------- -----------
Basic and
diluted net loss
per common
share $ (.24) $ (1.87) $ (.66)
----------------- ----------------- --------------------- ------------- ------- -----------
Weighted
average
common shares
outstanding 10,986 1,842 10,986
----------------- ----------------- --------------------- ------------- ------- -----------
See accompanying notes to pro forma combined condensed financial statements.
SOFTECH, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA COMBINED CONDENSED
FINANCIAL STATEMENTS (Unaudited)
The Pro Forma Combined Condensed Statement of Income for the year ended May 31,
2002 is derived from the historical audited financial statements of the Company
included in its 2002 Annual Report on Form 10-KSB and the historical audited
financial statements of WTC included in its 2002 Annual Report on Form 10-K for
the year ended March 31, 2002. The Pro Forma Combined Condensed Balance Sheet as
of November 30, 2002 and Statement of Income for the Six Months Ended November
30, 2002 were derived from the historical unaudited financial statements of the
Company included in its November 30, 2002 Interim Report on Form 10-QSB and the
historical unaudited financial statements of WTC included in its December 31,
2002 Interim Report on Form 10-Q. The pro forma financial information includes
adjustments to reflect the purchase of WTC by SofTech on December 19, 2002
including the consideration paid and the resulting intangible assets. The
allocation of the intangible asset between Goodwill and Other Intangible Assets
is based on preliminary estimates by management. The final allocation will be
determined upon completion of the valuation report by a third party appraiser.
The Pro Forma Combined Condensed Financial Statements should be read in
conjunction with the Company's historical Consolidated Financial Statements and
Notes thereto contained in the 2002 Annual Report on Form 10-KSB. The Pro Forma
Combined Condensed Financial Statements do not purport to be indicative of
financial position or results of operations if the acquisitions had been
consummated on the dates indicated or which may be obtained in the future.
Notes to pro forma financial statements (in thousands):
(A) To record the estimated intangible asset generated from the acquisition of
WTC. This allocation of the intangible asset between Goodwill and Other
Intangible Assets as well as the estimated 4 year life is based on preliminary
estimates by management. Such final allocation will be determined by the yet to
be completed Valuation Report by a third party appraiser. The purchase price is
as follows:
Cash paid at closing of the Offer $ 3,010
Shares purchased prior to commencement of Offer 183
Amounts due minority shareholders and option holders 461
Other costs associated with transaction 595
---
Subtotal 4,249
Net liabilities assumed 760
---
Total Purchase Price $ 5,009
-------
Preliminary estimate of Purchase Price allocation:
Other intangible assets (estimated 4 year life) $ 3,500
Goodwill 1,509
-----
Total intangible assets $ 5,009
-------
(B) To record the cash paid to acquire 1,505 shares of WTC at the closing of the
tender offer.
C) To eliminate the $183 the Company paid to acquire 129.5 WTC shares prior to
commencement of the tender offer.
(D) To record the estimated liability for costs associated with the transaction.
(E) To eliminate WTC's stockholders' deficit.
(F) To record the estimated amortization of Other Intangible Assets totaling
$3.5 million at the acquisition date with an estimated life of 4 years.
(G) To record the interest expense related to the Company's borrowing of
approximately $3.5 million at a rate of 7% to complete the tender offer.
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.
SOFTECH, INC.
Date: March 3, 2003 By: /S/ Joseph P. Mullaney
--------------------------------
Name: Joseph P. Mullaney
Title: President and Chief Operating Officer
(Principal Financial and
Accounting Officer)