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EX-99.1 - EX-99.1 - Infor, Inc.d249116dex991.htm

Exhibit 99.2

 

   LogicBlox-Predictix Holdings, Inc.
   Unaudited Condensed Consolidated Financial Statements
   March 31, 2016 and 2015


LogicBlox-Predictix Holdings, Inc.

Contents

 

 

Financial Statements   

Unaudited Condensed Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015

     2   

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2016 and 2015

     3   

Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015

     4   

Notes to Unaudited Condensed Consolidated Financial Statements

     5-12   


LogicBlox-Predictix Holdings, Inc.

Unaudited Condensed Consolidated Balance Sheets

 

 

     March 31,
2016
    December 31,
2015
 

Assets

    

Current Assets

    

Cash

   $ 1,431,006      $ 589,752   

Accounts receivable, Net

     3,014,620        2,700,765   

Prepaid expenses

     273,482        287,217   
  

 

 

   

 

 

 

Total Current Assets

     4,719,108        3,577,734   

Property and Equipment, Net

     291,245        241,747   

Intangible Assets, Net

     16,475,384        17,069,894   

Goodwill

     17,274,890        17,274,890   

Other Assets

     37,437        37,318   
  

 

 

   

 

 

 

Total Assets

   $ 38,798,064      $ 38,201,583   
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Current Liabilities

    

Accounts payable

   $ 2,177,071      $ 2,025,170   

Accrued payroll liabilities

     394,225        1,749,272   

Other accrued liabilities

     933,180        3,302,788   

Line of credit

     —          1,609,502   

Current portion of long-term debt

     1,000,000        1,000,000   
  

 

 

   

 

 

 

Total Current Liabilities

     4,504,476        9,686,732   
  

 

 

   

 

 

 

Non Current Liabilities

    

Long-term debt

     1,750,000        2,000,000   

Deferred revenue

     2,097,273        1,292,667   

Other liabilities

     820,548        —     
  

 

 

   

 

 

 

Total Non Current Liabilities

     4,667,821        3,292,667   
  

 

 

   

 

 

 

Stockholders’ Equity

    

Preferred Series A stock, $0.0001 par value, 120,000,000 shares authorized, 94,042,025 issued and outstanding as of March 31, 2015

     —          9,404   

Common stock, $0.0001 par value, 162,000,000 shares authorized, 25,680,374 shares issued and outstanding as of March 31, 2016 and December 31, 2015,

     —          —     

and 27,165,434 shares of Class B common shares issued and outstanding as of March 31, 2016.

     4,695        2,568   

Additional paid-in capital - preferred stock

     27,736,265        30,041,051   

Additional paid-in capital - common stock

     12,219,048        2,686,133   

Accumulated deficit

     (10,332,448     (7,513,249

Accumulated other comprehensive loss

     (1,793     (3,723
  

 

 

   

 

 

 

Total Stockholders’ Equity

     29,625,767        25,222,184   
  

 

 

   

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 38,798,064      $ 38,201,583   
  

 

 

   

 

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

2


LogicBlox-Predictix Holdings, Inc.

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss

 

 

     Three Months Ended March 31,  
     2016     2015  

Revenues

   $ 5,716,855      $ 4,513,386   

Costs of Revenues

     4,013,267        2,658,325   
  

 

 

   

 

 

 

Gross Profit

     1,703,588        1,855,061   

Operating Expenses

    

Selling, general and administrative expenses

     3,278,981        2,798,403   

Depreciation and amortization

     625,052        668,397   
  

 

 

   

 

 

 

Total Operating Expenses

     3,904,033        3,466,800   
  

 

 

   

 

 

 

Operating Loss

     (2,200,445     (1,611,739

Other Expense

    

Interest expense

     58,608        19,553   

Other

     560,146        248,700   
  

 

 

   

 

 

 

Total Other Expense

     618,754        268,253   
  

 

 

   

 

 

 

Loss Before Income Tax Benefit

     (2,819,199     (1,879,992

Income Tax Benefit

     —          699,167   
  

 

 

   

 

 

 

Net Loss

     (2,819,199     (1,180,825

Other Comprehensive (Loss) Income - Foreign Currency Translation

     (1,800     17,993   
  

 

 

   

 

 

 

Comprehensive Loss

   $ (2,820,999   $ (1,162,832
  

 

 

   

 

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

3


LogicBlox-Predictix Holdings, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

 

 

     Three Months Ended March 31,  
     2016     2015  

Cash Flows from Operating Activities

    

Net loss

   $ (2,819,199   $ (1,180,825

Adjustments to reconcile net loss to net cash used in operating activities:

    

Depreciation and amortization

     625,052        668,397   

Stock-based compensation

     35,186        —     

Deferred income taxes

     —          (699,167

Changes in operating assets and liabilities:

    

Accounts receivable

     (313,856     (305,921

Prepaid expenses

     13,735        5,656   

Other assets

     1,812        (18,750

Accounts payable

     151,901        (524,337

Accrued payroll liabilities

     (1,355,047     157,529   

Deferred revenue

     804,606        (123,280

Other accrued liabilities

     123,187        (1,718,360
  

 

 

   

 

 

 

Net cash used in operating activities

     (2,732,623     (3,739,088
  

 

 

   

 

 

 

Cash Flows from Investing Activities

    

Purchases/acquisitions of property and equipment

     (80,040     (38,169
  

 

 

   

 

 

 

Net cash used in investing activities

     (80,040     (38,169
  

 

 

   

 

 

 

Cash Flows from Financing Activities

    

Distribution to Series A Preferred shareholders

     (19,503,654     —     

Issuance of common stock

     25,017,073        —     

Proceeds from revolving line of credit, net

     —          1,609,502   

Repayment from revolving line of credit, net

     (1,609,502     —     

(Repayment) proceeds from term loan

     (250,000     3,000,000   
  

 

 

   

 

 

 

Net cash provided by financing activities

     3,653,917        4,609,502   
  

 

 

   

 

 

 

Net Increase in Cash

     841,254        832,275   

Cash, beginning of period

     589,752        763,309   
  

 

 

   

 

 

 

Cash, end of period

   $ 1,431,006      $ 1,595,584   
  

 

 

   

 

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

4


LogicBlox-Predictix Holdings, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

 

1. Description of Business and Summary of Significant Accounting Policies

Organization and Operations

LogicBlox-Predictix Holdings, Inc. (the “Company”) was legally formed in Delaware on November 5, 2014, and is the ultimate parent company of LogicBlox, Inc. (“LogicBlox”) and Predictix, LLC (“Predictix”). LogicBlox and Predictix became subsidiaries of the Company upon completion of a merger transaction on November 20, 2014. Since its inception through the date of the merger, the Company did not have any activity other than the issuance of preferred stock. Additionally, the Company does not have its own operations.

LogicBlox was formed on May 29, 2002, for the purpose of developing and delivering, as a cloud service, hybrid database technology that combines transactions, analytics, graphs, statistics, machine learning, planning, and business logic. The LogicBlox database is used principally by Predictix, and also by independent software vendors and end customers to build “Big Data” predictive and prescriptive applications in industries including retail, consumer packaged goods, finance, and healthcare. Predictix was formed on June 17, 2005, for the purpose of providing Software as a Service (“SaaS”) for retailers and wholesalers in the United States of America and abroad. Software developed by the Company helps retailers focus on merchandise planning and allocation, assortment and space planning, pricing and promotions, and forecasting and replenishment.

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited financial statements and related notes for the year ended December 31, 2015. In the opinion of management, the unaudited interim condensed consolidated financial statements include all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the information required to be set forth therein.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, which are comprised of LogicBlox, Inc. and Predictix, LLC and Predictix’s wholly-owned subsidiaries, Predictix, Ltd., which is based in the United Kingdom, and Predictix SARL, which is based in Tunisia (collectively referred to as “the Company”).

 

5


LogicBlox-Predictix Holdings, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

 

 

All significant intercompany transactions and balances have been eliminated upon consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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.

Cash and Cash Equivalents

Cash and cash equivalents include all cash balances and highly liquid investments with an initial maturity of three months or less. The Company places its temporary cash investments with high credit quality financial institutions in the United States of America. At times, such investments may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limit. As of March 31, 2016 and December 31, 2015, $1,289,699 and $444,106 was on deposit at a single financial institution with $789,699 and $194,103 of that cash above the federal deposit insurance limits, respectively.

Goodwill

Goodwill is the excess of purchase price over the fair value of the identifiable net assets acquired in business combinations. Goodwill is not subject to amortization, rather it is tested for impairment annually, and more frequently if events or changes in circumstances indicate that it is more likely than not that it is impaired. There were no events or changes in circumstances during the three months ended March 31, 2016 that indicated a need for an interim goodwill impairment test. The Company did not recognize any impairment loss during the three months ended March 31, 2016 and March 31, 2015. The carrying amount of goodwill as of March 31, 2016 and December 31, 2015 was $17,274,890.

Other Intangible Assets

Intangible assets, other than goodwill, consist primarily of acquired customer relationships, software technology and trademarks. Customer relationships represent the value to the Company of the benefit of acquiring the existing customer base and are amortized over the estimated life of the customer base of 14 years using an accelerated method. Software technology and trademarks are amortized on a straight-line basis over their estimated useful lives of seven years and 15 years, respectively. For definite lived intangible assets, the Company regularly evaluates whether events or changes in circumstances have occurred that indicate that the carrying amount of these assets may not be recoverable. There were no events or changes in circumstances during the three months ended March 31, 2016 that required an impairment review. No impairments of intangible assets were identified during the three months ended March 31, 2016 or March 31, 2015.

 

6


LogicBlox-Predictix Holdings, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

 

 

Revenues

Revenues are primarily derived from SaaS and technology license subscription fees, cloud hosting, and related professional services. The Company recognizes revenue only when all of the following criteria have been met: persuasive evidence of an arrangement exists; delivery has occurred; the fee for the arrangement is fixed or determinable; and collectability is reasonably assured. Deferred revenues represent cash received in advance of services performed under contracts.

The Company may enter into multiple element revenue arrangements in which a customer may purchase hosting services, implementation services, maintenance, and support. In these arrangements, the Company allocates revenue to each element of the arrangement based on their relative selling prices, if the elements have standalone value. The Company uses a hierarchy to determine the selling price to be used for allocating revenue to deliverables: (i) vendor-specific objective evidence of fair value (“VSOE”), (ii) third-party evidence of selling price (“TPE”) and (iii) best estimate of the selling price (“ESP”). The Company determines ESP for each deliverable by considering multiple factors including pricing practices, hardware platforms, geographies and customer classes. Once elements of an arrangement are separated into more than one unit of accounting, revenue is recognized for each separate unit of accounting based on the nature of the revenue. The guidance suggests specific considerations should be given to the evaluation of standalone value for professional services sold with cloud hosting services. The Company considers in its evaluation of standalone value (i) if the Company, or other vendors, sell similar services separately, and (ii) the professional services are so unique that only the Company can provide them. To date, the Company has concluded implementation services, maintenance, and support, included in the cloud based multiple-deliverable arrangement do not have standalone value and, therefore, all revenue is recognized ratably over the contractual term of the subscription agreement.

Stock-based Compensation

Stock-based compensation expense related to employee and director share-based compensation plans, including stock options and restricted stock units, is measured on the grant date, based on the fair value-based measurement of the award and is recognized as an expense using the straight-line method over the requisite service period which generally equals the vesting period of each grant. The Company selected the Black-Scholes option pricing model for determining the estimated fair value-based measurements of share-based awards. The use of the Black-Scholes model requires the use of assumptions including expected term, expected volatility, risk-free interest rate and expected dividends. The Company estimates the fair value of awards of restricted shares as being equal to the market value of the common stock on the date of the award. For the three months ended March 31, 2016 and 2015 the Company recognized stock-based compensation expense of $35,186 and $0, respectively.

 

7


LogicBlox-Predictix Holdings, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

 

 

2. Liquidity and Management’s Plan

The Company believes that it currently has sufficient cash and financing commitments to meet its funding requirements over the next fiscal year. In order to meet the Company’s obligations related to the Credit Agreement discussed in Note 4, the Company expects that it will need to extend, restructure, renegotiate or refinance these obligations, or obtain additional funding over the next two years. There can be no assurance as to the availability or terms upon which such financing might be available. These condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern arising from its inability to continue to meet its obligations as they become due. See Note 9 for subsequent events.

3. Intangible Assets

Intangible assets, other than goodwill, subject to amortization consist of the following at March 31, 2016 and December 31, 2015:

 

     March 31,
2016
     December 31,
2015
 

Trademark

   $ 1,485,000       $ 1,485,000   

Customer relationships

     12,310,000         12,310,000   

Non-compete agreement

     75,000         75,000   

Technology and software

     6,120,000         6,120,000   
  

 

 

    

 

 

 
     19,990,000         19,990,000   

Less accumulated amortization

     (3,514,616      (2,920,106
  

 

 

    

 

 

 
   $ 16,475,384       $ 17,069,894   
  

 

 

    

 

 

 

Amortization expense is included in depreciation and amortization expense in the Condensed Consolidated Statements of Operations and Comprehensive Loss. Amortization expense recognized for the three months ended March 31, 2016 and 2015 was $594,510 and $652,396, respectively.

As of March 31, 2016, amortization expense over the next five years and thereafter is expected to be as follows:

 

2016 (remaining nine months)

   $ 1,783,532   

2017

     2,237,153   

2018

     2,110,354   

2019

     1,996,235   

2020

     1,893,527   

Thereafter

     6,454,583   
  

 

 

 

Total

   $ 16,475,384   
  

 

 

 

 

8


LogicBlox-Predictix Holdings, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

 

 

4. Long-term Debt

On February 6, 2015, the Company entered into a loan and security agreement with a financial institution (the “Credit Agreement”). Under the terms of the Credit Agreement, the Company was extended a line of credit and a term loan of $3,000,000.

The maximum amount available for borrowing under the line of credit portion of the Credit Agreement is $2,750,000 with variable monthly interest payable at the applicable prime rate plus 1.0%. As of December 31, 2015, the revolving line of credit had a balance of $1,609,502 which was repaid on February 9th, 2016.

The term loan has variable monthly interest payable at the applicable prime rate plus 1.0%. The term loan requires interest-only payment from the effective date of the loan through December 31, 2015 and 36 monthly principal payments of $83,333 plus interest on the outstanding balance beginning January 1, 2016 through the maturity date of December 1, 2018. As of March 31, 2016 and December 31, 2015, the term loan had a balance of $2,750,000 and $3,000,000, respectively.

On September 18, 2015, due to the Company’s noncompliance with certain financial covenants, Company entered into an amended loan and security agreement (the “First Amendment to the Credit Agreement”) with the lender to waive the event of default and increase the interest rate of both the revolving line of credit and the term loan to applicable prime rate plus 1.5% (5.0% at December 31, 2015). The First Amendment to the Credit Agreement also added a lockbox arrangement. Funds deposited into the lockbox can be used at the lender’s discretion to paydown the revolving line of credit obligations. As a result, the Company classified the borrowings under the line of credit as short-term liability in the accompanying balance sheet as of December 31, 2015.

The Credit Agreement places restrictions on the Company as to the maintenance of certain financial ratios, including minimum liquidity ratio, adjusted EBITDA, fixed charge coverage ratio and senior leverage, and certain non-financial covenants. As of December 31, 2015, the Company was not in compliance with the minimum adjusted EBITDA covenant. The lender waived this event of default upon execution of a forbearance and second amendment to the credit agreement on May 3, 2016 (the “Second Amendment to the Credit Agreement”). In addition to the forbearance of the event of default by the lender, the Second Amendment to the Credit Agreement reduced the required minimum adjusted EBITDA for the periods ended September 30, 2016 and December 31, 2016. As of March 31, 2016, the Company was in compliance with the minimum adjusted EBITDA covenant.

 

9


LogicBlox-Predictix Holdings, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

 

 

A summary of the Company’s long-term debt is as follows:

 

     March 31,
2016
     December 31,
2015
 

Revolving line of credit

   $ —         $ 1,609,502   

Term Loan

     2,750,000         3,000,000   
  

 

 

    

 

 

 

Total long-term debt

     2,750,000         4,609,502   

Less current portion

     (1,000,000      (2,609,502
  

 

 

    

 

 

 

Long-term debt, net of current portion

   $ 1,750,000       $ 2,000,000   
  

 

 

    

 

 

 

5. Property and Equipment

Property and equipment as of March 31, 2016 and December 31, 2015 primarily consisted of computer equipment. Depreciation expense for the three months ended March 31, 2016 and 2015 amounted to $30,542 and $16,001, respectively.

6. Commitment and Contingencies

Operating Lease

The Company leases an office space under a non-cancelable operating lease agreement which terminates on April 30, 2019. The Company recognizes rent expense on a straight-line basis over the lease term. Rental expense totaled $94,355 and $107,238 for the three months ended March 31, 2016 and 2015, respectively.

The lease agreement provides for increases in future minimum annual rental payments.

 

10


LogicBlox-Predictix Holdings, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

 

The following is a schedule by year of future minimum rental payments required under the operating lease agreement as of March 31, 2016:

 

2016 (remaining nine months)

   $ 293,754   

2017

     379,972   

2018

     387,589   

2019

     131,736   

2020

     —     
  

 

 

 

Total

   $ 1,193,051   
  

 

 

 

Litigation

From time to time, the Company and its subsidiaries may become involved in various claims and lawsuits arising in the ordinary course of business. The Company’s management expects that the ultimate resolution of any such matters will not have a material adverse effect on the Company’s financial position or results of operations.

7. Income Taxes

The provision for income taxes consisted of the following:

 

Three Months Ended March 31    2016      2015  

Current

     

Federal

   $ —         $ —     

State

     —           —     
  

 

 

    

 

 

 

Total Current

     —           —     

Deferred

     

Federal

     —           (656,290

State

     —           (42,877
  

 

 

    

 

 

 

Total Deferred

     —           (699,167
  

 

 

    

 

 

 

Income tax benefit

   $         —         $ (699,167
  

 

 

    

 

 

 

The difference in the Company’s effective tax rate for the three months ended March 31, 2016 compared to the statutory rate is primarily due to an increase in related valuation allowances. For the three months ended March 31, 2015, the difference in the Company’s effective tax rate compared to the statutory rate was primarily driven by the impact of state income taxes.

The components of the Company’s deferred tax assets and liabilities at March 31, 2016 and December 31, 2015 are as follows:

 

     March 31,
2016
     December 31,
2015
 

Deferred Tax Assets

     

Net operating loss carryforwards

   $ 5,794,586       $ 5,284,154   

R&D credit

     1,000,040         1,000,040   

Deferred revenue

     776,111         582,773   

Other

     228,142         187,385   
  

 

 

    

 

 

 

Total deferred tax assets

     7,798,879         7,054,352   

Valuation Allowance

     (1,560,754      (591,126
  

 

 

    

 

 

 

Net Deferred Tax Asset

   $ 6,238,125       $ 6,463,226   
  

 

 

    

 

 

 

Deferred Tax Liabilities

     

Intangible assets

     (6,238,125      (6,463,226
  

 

 

    

 

 

 

Net Deferred Tax Liability

   $ (6,238,125    $ (6,463,226
  

 

 

    

 

 

 

Net Deferred Tax Liability

   $ —         $ —     
  

 

 

    

 

 

 

8. Stockholders’ Equity and Stock-based Compensation

Common Stock

The Company was authorized to issue 162,000,000 shares of common stock. As of March 31, 2016 and December 31, 2015, there were 25,680,374 shares of common stock issued and outstanding.

Class B Common Stock

On January 19, 2016, the Company issued 27,165,434 of its Class B common stock for $0.92 per share for an aggregate purchase price of approximately $25,000,000, pursuant to a stock purchase agreement entered into by the Company with an outside investor, Infor, Inc., on January 18, 2016. As of March 31, 2016, there were 27,165,434 shares of Class B common stock issued and outstanding.

 

11


LogicBlox-Predictix Holdings, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

 

 

Preferred Stock

The Company was authorized to issue 120,000,000 shares of Series A preferred stock. As of March 31, 2016 and December 31, 2015, there were 94,042,025 shares of Series A preferred stock outstanding, respectively.

Each holder of Series A preferred stock is entitled to receive, whether or not declared by the Board of Directors, cumulative annual cash dividends at an annual rate of 8.0% per share of stock.

Pursuant to the stock purchase agreement, the Company paid out the preference of preferred stock and distributed dividends of approximately $19,500,000 including all unpaid and accrued dividends to its then outstanding Series A preferred shares using the proceeds from the Class B common stock issuance.

9. Subsequent Events

On June 23, 2016, Infor, Inc. entered into an agreement and plan of merger with the Company under which Infor, Inc. acquired the Company for $150 million, which is inclusive of the $25 million investment Infor, Inc. made in the Company on January 18, 2016. The acquisition was completed on June 27, 2016.

The Company evaluated subsequent events through August 31, 2016, the date at which these financial statements were available to be issued and determined that there were no other items to adjust or disclose.

 

12