10-K/A 1 g03018e10vkza.htm GOLDLEAF FINANCIAL SOLUTIONS, INC. GOLDLEAF FINANCIAL SOLUTIONS, INC.
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-K/A
AMENDMENT NO. 3
CHECK ONE:
     
þ   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005,
OR
     
o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM           TO           
COMMISSION FILE NUMBER 000-25959
 
GOLDLEAF FINANCIAL SOLUTIONS, INC.
(Formerly named Private Business, Inc.)
(Exact name of Registrant as specified in its charter)
     
TENNESSEE
(State or other jurisdiction of incorporation or organization)
  62-1453841
(I.R.S. Employer Identification No.)
     
9020 OVERLOOK BOULEVARD, THIRD FLOOR
BRENTWOOD, TENNESSEE

(Address of principal executive offices)
  37027
(Zip Code)
(615) 221-8400
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
     Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ
     Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes o No þ
     Indicate by check mark whether the Registrant (1) has filed all reports pursuant to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. Yes þ No o
     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer (as defined in Exchange Act Rule 12b-2).
Large accelerated filer o   Accelerated filer o   Non-accelerated filer þ
     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
     The aggregate market value of Registrant’s voting stock held by non-affiliates of the Registrant, computed by reference to the price at which the stock was sold, or average of the closing bid and asked prices, as of June 30, 2005 was approximately $21,085,885.
     On July 31, 2006, 15,816,452 shares of the Registrant’s no par value Common Stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
     Portions of the Registrant’s definitive proxy statement for its 2006 annual meeting of stockholders are incorporated by reference into Part III, Items 10, 11, 12, 13 and 14 of this Form 10-K.
 
 

 


 

EXPLANATORY NOTE
     Goldleaf Financial Solutions, Inc. filed its Annual Report on Form 10-K for fiscal year 2005 with the SEC on March 23, 2006. On April 26, 2006, we filed a Registration Statement on Form S-1 with the SEC. On June 6, 2006, we filed Amendment No. 1 to the Registration Statement in response to the SEC’s letter containing comments on the initial filing. On June 7, 2006, we filed Amendment No. 1 to our Annual Report on Form 10-K to conform the disclosure contained in the Annual Report on Form 10-K to the disclosure contained in Amendment No. 1 to the Registration Statement. The SEC subsequently issued a letter containing additional comments on Amendment No. 1 to the Registration Statement, and, in response to those comments, we filed Amendment No. 2 to the Registration Statement on July 10, 2007. In response to that Amendment No. 2, the SEC issued a letter containing additional comments. To address the comments in that letter that related to our Annual Report on Form 10-K, on August 2, 2006 we filed with the SEC an Amendment No. 2 to our Annual Report on Form 10-K. In response to subsequent conversations with members of the SEC staff, we are filing this Amendment No. 3 to our Annual Report on Form 10-K.
     This Amendment No. 3 to our Annual Report on Form 10-K amends only the items listed below. With respect to each item, we are amending the annual report to delete the disclosure under that item contained in our Annual Report on Form 10-K, as amended, and to replace it in its entirety with the disclosure contained in this amendment.
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     Except for the foregoing amended information, this Annual Report on Form 10-K/A continues to speak as of the date of the original filing or the subsequent amendment, as applicable, and we have not updated the disclosures contained in this report to reflect events that occurred at a later date.

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PART II
Item 9A. Controls and Procedures.
          Based on our management’s evaluation, with the participation of our chief executive officer and chief financial officer, as of December 31, 2005, the end of the period covered by this report, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”)) were ineffective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
          Our chief executive officer and chief financial officer reached the conclusion expressed in the preceding paragraph because, as of December 31, 2005, we failed to prepare and report within the time periods specified in the rules and forms of the SEC certain audited and interim unaudited financial statements in connection with our acquisitions of KVI Capital, Inc, which we acquired effective August 1, 2005, and Captiva Solutions, LLC, which we acquired on December 9, 2005. With respect to KVI Capital, we failed to prepare and file audited annual and unaudited interim financial statements of that company within 75 days after August 1, 2005 as required by applicable SEC rules, because we initially concluded that we were not required to file any financial statements of KVI Capital with the SEC. With respect to Captiva, we initially concluded that we were required to file only one year of audited financial statements of Captiva because we did not include the contingent purchase price for Captiva in the significance analysis used to determine the number of years of audited financial statements we were required to file with the SEC. Accordingly, we filed a Current Report on Form 8-K on December 12, 2005 relating to the Captiva acquisition in which we provided only one year of audited financial statements instead of the required two years of audited financial statements and unaudited interim financial statements.
          In connection with our review of the significance of our January 31, 2006 acquisition of Goldleaf Technologies, Inc., we determined that we needed to prepare and file additional financial statements for both KVI Capital and Captiva. With regard to KVI Capital, we determined that the size of the invested lease assets required us to include additional historical financial statements. We have since filed these additional historical financial statements with the SEC in a Current Report on Form 8-K filed April 26, 2006, as amended on August 1, 2006. For Captiva, we determined that we should include the contingent purchase price in our significance analysis, from which we concluded that we were required to include an additional year of audited financial statements and unaudited interim financial statements. We have since filed these additional historical financial statements with the SEC in a Current Report on Form 8-K filed April 26, 2006, as amended on June 7, 2006 and August 1, 2006. We have not entered into any other acquisitions since we acquired Goldleaf Technologies.
          We believe that our failure to prepare and file with the SEC the financial statements described above within the time periods specified in the rules and forms of the SEC resulted from an inadequacy in our disclosure controls and procedures, which we have remediated in the second quarter of 2006 by improving our disclosure controls and procedures and implementing other remediation measures that include the following:
      After we determined that we needed to strengthen our disclosure controls and procedures in connection with acquisitions, in April 2006 we gave our executive vice president of finance and strategy, Scott R. Meyerhoff, the specific task of reviewing and analyzing all accounting aspects of the acquisitions we may pursue and close in the future. Mr. Meyerhoff was executive vice president and chief financial officer of Infor Global Solutions, Inc., a global provider of enterprise software solutions, from April 2004 until May 2005 and served as chief financial officer for InterCept, Inc. from January 1998 until March 2004. Mr. Meyerhoff is a certified public accountant and has extensive experience in accounting for mergers and acquisitions.
      We have increased the time allocated to review our acquisitions.
      We have determined to seek additional outside financial expertise from an accounting firm, other than our independent registered public accounting firm, with appropriate expertise in these matters. We intend to use this firm to assist with our determination of which financial statements, if any, are required to be filed with the SEC in connection with any acquisitions we close, and with the preparation, review and filing with the SEC of any such required financial statements and related reports.
          There have been no changes in our internal control over financial reporting identified in the evaluation that occurred during our fourth quarter of fiscal year 2005 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART IV
Item 15. Exhibits, Financial Statement Schedules.
Exhibits
     The Exhibits filed as part of the Report on Form 10-K are listed in the Index to Exhibits immediately following the signature page.

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SIGNATURES
     Pursuant to the requirements of Schedule 13 or 15(d) 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.
         
 
  GOLDLEAF FINANCIAL SOLUTIONS, INC.    
 
       
 
  /s/ G. Lynn Boggs    
 
 
 
G. Lynn Boggs
   
 
  Chief Executive Officer    
 
       
Date: August 15, 2006
       
     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
         
Signature   Title   Date
 
          /s/ G. Lynn Boggs
  Chief Executive Officer   August 15, 2006
          G. Lynn Boggs
  and Director    
 
       
          /s/ J. Scott Craighead
  Chief Financial Officer   August 15, 2006
          J. Scott Craighead
  (Principal Financial and    
          
  Accounting Officer)    
 
       
          /c/ John D. Schneider, Jr.
  Director   August 15, 2006
 
          John D. Schneider, Jr.
       
 
       
          
  Director   August      , 2006
 
          David W. Glenn
       
 
       
          /s/ Thierry F. Ho
  Director   August 15, 2006
 
          Thierry F. Ho
       
 
       
          /s/ David B. Ingram
  Director   August 15, 2006
 
          David B. Ingram
       
 
       
          /s/ Robert A. McCabe, Jr.
  Director   August 15, 2006
 
          Robert A. McCabe, Jr.
       
 
       
          /s/ Lawrence A. Hough
  Director   August 15, 2006
 
          Lawrence A. Hough
       

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INDEX TO EXHIBITS
         
Exhibit    
Number   Description of Exhibit
 
  3.1     Amended and Restated Charter of the Company (incorporated by reference to Exhibit 3.1 of Amendment No. 1 to the Company’s Registration Statement on Form S-1 (File No. 333-75013) filed with the SEC on May 3, 1999).
  3.1.1     Charter Amendment dated August 9, 2001 (incorporated by reference to Exhibit 3.3 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2001).
  3.1.2     Charter Amendment dated August 9, 2001 (incorporated by reference to Exhibit 3.4 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2001).
  3.1.3     Charter Amendment dated January 16, 2004 (incorporated by reference to Exhibit B of the Company’s Definitive Proxy Statement on Schedule 14A filed with the SEC on December 29, 2003).
  3.1.4     Charter Amendment dated January 23, 2006 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on January 26, 2006).
  3.1.5     Charter Amendment dated January 24, 2006 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the SEC on January 26, 2006).
  3.1.6     Charter Amendment dated May 4, 2006 and effective May 5, 2006 (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the SEC on May 10, 2006).
  3.2     Second Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 of Amendment No. 1 to the Company’s Registration Statement on Form S-1 (File No. 333-75013) filed with the SEC on May 3, 1999).
  3.2.1     Bylaws Amendment dated January 20, 2004 (incorporated by reference to Exhibit 3.2.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2003).
  10.1     Stock Purchase Agreement dated July 24, 1998 (incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-1 (File No. 333-75013) filed with the SEC on March 25, 1999).
  10.2     Form of Indemnification Agreement between the Company and each of its officers and directors (incorporated by reference to Exhibit 10.5 to the Company’s Registration Statement on Form S-1 (File No. 333-75013) filed with the SEC on March 25, 1999).
  10.3     Form of Non-qualified Stock Option Agreement without change of control provision (incorporated by reference to Exhibit 10.6 to the Company’s Registration Statement on Form S-1 (File No. 333-75013) filed with the SEC on March 25, 1999).
  10.4     Form of Non-qualified Stock Option Agreement with change of control provision (incorporated by reference to Exhibit 10.7 to the Company’s Registration Statement on Form S-1 (File No. 333-75013) filed with the SEC on March 25, 1999).
  10.5     The Company 1999 Amended and Restated Stock Option Plan (incorporated by reference to Exhibit 10.8 to the Company’s Registration Statement on Form S-1 (File No. 333-75013) filed with the SEC on May 3, 1999).
  10.6     Cendant Termination and Non-Competition Agreement dated August 7, 1998 (incorporated by reference to Exhibit 10.9 of Amendment No. 4 to the Company’s Registration Statement on Form S-1 (File No. 333-75013) filed with the SEC on May 24, 1999).
  10.7     Lease between Triple Brentwood as Landlord and 21 the Company as Tenant (incorporated by reference to Exhibit 10.11 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999).

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Exhibit    
Number   Description of Exhibit
 
  10.8     Amended and Restated Securities Purchase Agreement dated December 24, 2003, between the Company and Lightyear PBI Holdings, LLC (incorporated by reference to Exhibit A of the Company’s Definitive Proxy Statement on Schedule 14A filed with the SEC on December 29, 2003).
  10.9     Warrant Agreement dated January 20, 2004, by and among the Company and Lightyear PBI Holdings, LLC (incorporated by reference to Exhibit C of the Company’s Definitive Proxy Statement on Schedule 14A filed with the SEC on December 29, 2003).
  10.10     Security-holders Agreement dated January 20, 2004, by and among the Company and Lightyear PBI Holdings, LLC (incorporated by reference to Exhibit D of the Company’s Definitive Proxy Statement on Schedule 14A filed with the SEC on December 29, 2003).
  10.11     Credit Agreement dated January 19, 2004 between the Company, certain guarantees, and Bank of America, N.A. (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2004).
  10.12     The Company 2004 Equity Incentive Plan (incorporated by reference to Appendix B to the Company’s Definitive Proxy Statement on Schedule 14A filed with the SEC on April 23, 2004).
  10.13     Employment Agreement dated July 1, 2004 between the Company and Henry M. Baroco (incorporated by reference to Exhibit 10.4 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004).
  10.14     Incentive Stock Option Agreement dated August 4, 2004 between the Company and Henry M. Baroco (incorporated by reference to Exhibit 10.5 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004).
  10.15     Employment Agreement dated July 25, 2002 between the Company and Scott Craighead (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on January 14, 2005).
  10.16     Amendment to Employment Agreement dated October 21, 2005 between the Company and Henry M. Baroco (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 20, 2005).
  10.17     Agreement and Plan of Merger dated October 20, 2005 among the Company, CSL Acquisition Corporation, Captiva Solutions, LLC, and certain of the Captiva Solutions, LLC members (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 25, 2005).
  10.18     Registration Rights Agreement dated December 9, 2005 between the Company and certain of the Captiva Solutions, LLC members (incorporated by reference to Annex B to the Company’s Definitive Proxy Statement on Schedule 14A filed with the SEC on November 17, 2005).
  10.19     The Company 2005 Long-Term Equity Incentive Plan (incorporated by reference to Annex E to the Company’s Definitive Proxy Statement on Schedule 14A filed with the SEC on November 17, 2005).
  10.20     Securities Purchase Agreement dated December 9, 2005 between the Company and Lightyear PBI Holdings, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on December 13, 2005).
  10.21     Warrant Agreement dated December 9, 2005 between the Company and Lightyear PBI Holdings, LLC (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on December 13, 2005).
  10.22     Warrant Certificate dated December 9, 2005 issued by the Company to Lightyear PBI Holdings, LLC (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the SEC on December 13, 2005).
  10.23     Warrant Certificate dated December 9, 2005 issued by the Company to Lightyear PBI Holdings, LLC (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed with the SEC on December 13, 2005).

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Exhibit    
Number   Description of Exhibit
 
  10.24     First Amendment to Credit Agreement dated December 8, 2005 between the Company, the guarantors thereto, and Bank of America, N.A. (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed with the SEC on December 13, 2005).
  10.25     Revolving Note dated December 8, 2005 issued by the Company to Bank of America, N.A. (incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed with the SEC on December 13, 2005).
  10.26     Employment Agreement dated December 9, 2005 between the Company and G. Lynn Boggs (incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K filed with the SEC on December 13, 2005).
  10.27     Stock Purchase Agreement dated January 23, 2006 among the Company and the Stockholders of Goldleaf Technologies, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on January 24, 2006).
  10.28     Amended and Restated Credit Agreement dated January 23, 2006 between the Company and Bank of America, N.A. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on January 26, 2006).
  10.29     Guaranty Side Letter dated January 23, 2006 between the Company, The Lightyear Fund, L.P. and Lightyear PBI Holdings, LLC (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on January 26, 2006).
  10.30     Exchange Agreement dated January 23, 2006 between the Company and Lightyear PBI Holdings, LLC (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on January 26, 2006).
  10.31     Amended and Restated Warrant Agreement dated January 23, 2006 between the Company and Lightyear PBI Holdings, LLC (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the SEC on January 26, 2006).
  10.32     Amended and Restated Warrant Certificate dated January 23, 2006 issued by the Company to Lightyear PBI Holdings, LLC. (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed with the SEC on January 26, 2006).
  10.33     Amended and Restated Warrant Certificate dated January 23, 2006 issued by the Company to Lightyear PBI Holdings, LLC (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed with the SEC on January 26, 2006).
  10.34     Second Amendment to Amended and Restated Credit Agreement dated April 5, 2005 by and among the Company, Bank of America, N.A., First Horizon Bank, and The Peoples Bank (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 6, 2006).
  10.35     Term C Loan Note dated April 5, 2006 between the Company and First Horizon Bank (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on April 6, 2006).
  10.36     Term D Loan Note dated April 5, 2006 between the Company and The People’s Bank (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on April 6, 2006).
  10.37     Employment Agreement dated January 31, 2006 between the Company and Paul McCulloch (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 26, 2006.
  10.38     Redemption and Recapitalization Agreement dated April 25, 2006 between the Company and Lightyear PBI Holdings, LLC. (incorporated by reference to Exhibit 10.38 to the Company's Registration Statement on Form S-1 filed with the SEC on April 26, 2006).
  10.39     Third Amendment to Amended and Restated Credit Agreement dated May 3, 2006 by and among the Company, Bank of America, N.A., First Horizon Bank, and The Peoples Bank (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 16, 2006).
  21.1     Subsidiaries of the Company (incorporated by reference to Exhibit 21.1 to the Amendment No. 1 to the Company’s Registration Statement on Form S-1 filed with the SEC on June 6, 2006).
  23.1     Consent of Grant Thornton LLP (incorporated by reference to Exhibit 23.1 to the Amendment No. 2 to the Company’s Annual Report on Form 10-K filed with the SEC on August 2, 2006).
  23.2     Consent of Ernst & Young LLP (incorporated by reference to Exhibit 23.2 to the Amendment No. 2 to the Company’s Annual Report on Form 10-K filed with the SEC on August 2, 2006).
  31.1     Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002-Chief Executive Officer.
  31.2     Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002-Chief Financial Officer.
  32.1     Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002-Chief Executive Officer.
  32.2     Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002-Chief Financial Officer.

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