UNITED STATES 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 (Date of earliest event reported): September 6, 2002
ELEVON, INC. (Exact name of Registrant as specified in its Charter)
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303 Second Street
San Francisco, California 94107
(Address of Principal Executive Offices including Zip Code)
(415) 495-8811
(Registrant's Telephone Number, Including Area Code)
Item 2. Acquisition or Disposition of Assets
On September 6, 2002, Elevon, Inc. (the "Company") sold all of the outstanding shares of Elevon International Limited and its subsidiaries, the Company's Elevon 5 intellectual property, and certain of the Company's North American Elevon 5 net assets (the "Sale") to Novele Limited for $16.5 million in cash pursuant to a Share Purchase Agreement and a Deed of Assignment of e-5. The Company received approximately $15.7 million at the closing with the remaining $800,000 due on or before December 31, 2002 subject to certain conditions under the terms of the Share Purchase Agreement. In connection with the Sale, the Company entered into software distribution agreements (the "Software Distribution Agreements") with Elevon Limited, a subsidiary of Novele Limited, covering the Company's Active Financial Planning and Elevon 2 intellectual property. The Share Purchase Agreement, Deed of Assignment of e-5 and Software Distribution Agreements are attached hereto as Exhibits 2.1, 2.2, 2.3 and 2.4, respectively, and are incorporated into this item of this report as if fully set forth herein. The full text of the press release announcing the transactions described above is attached hereto as Exhibit 99.1 and is incorporated into this item of this report as if fully set forth herein.
Item 5. Other Events
On September 6, 2002, in connection with the Sale described in Item 2 of this Report, the Company entered into software distribution agreements (the "Software Distribution Agreements") with Elevon Limited, a subsidiary of Novele Limited, covering the Company's Active Financial Planning and Elevon 2 intellectual property. The Software Distribution Agreements are attached hereto as Exhibits 2.3 and 2.4, respectively, and are incorporated into this item of this report as if fully set forth herein.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business to be Acquired
N/A
(b) Pro Forma Financial Information
The unaudited pro forma consolidated financial information gives effect to the Sale described in Item 2 of this Report. The pro forma information is based on the historical consolidated statement of operations of Elevon, Inc. for the six month period ending June 30, 2002 and the twelve month period ending December 31, 2001 as if the Sale had occurred on June 30, 2002, or January 1, 2001, respectively, giving effect to the adjustments as discussed in the accompanying notes. Additionally the pro forma consolidated balance sheet of Elevon, Inc. is based on the historical consolidated balance sheet at June 30, 2002 as if the Sale had occurred on June 30, 2002, giving effect to the adjustments as discussed in the accompanying notes.
The unaudited pro forma consolidated financial information is not necessarily indicative of the actual operating results or financial position of Elevon, Inc. for the period presented, nor is it necessarily indicative of future operating results or financial position. The pro forma adjustments are based upon current available information and certain assumptions set forth below in the notes to the unaudited pro forma consolidated financial statements.
ELEVON, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET (UNAUDITED)
AS OF JUNE 30, 2002
(in thousands)
HISTORICAL
Elevon UK Pro Forma
Elevon, Inc. Operations Adjustments Notes Pro Forma
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(Note 1)
ASSETS
Current assets:
Cash and cash equivalents........................... $5,060 $15,700 (2) $20,760
Accounts receivable, net of allowances.............. 11,332 (5,374) 5,958
Prepaid expenses.................................... 1,483 (814) 669
Other receivables................................... 56 (54) 800 (3) 802
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Total current assets............................ 17,931 (6,242) 16,500 28,189
Property and equipment, net 1,625 (459) 1,166
Capitalized software, net of accumulated amortization 3,403 (1,333) (4) 2,070
Long-term accounts receivable.......................... 112 112
Other assets........................................... 366 366
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Total assets........................................... $23,437 ($6,701) $15,167 $31,903
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable.................................... $2,312 ($743) $1,569
Accrued liabilities................................. 7,139 (2,945) 750 (5) 4,944
Income taxes payable................................ 200 (7) 200
Deferred revenue.................................... 13,483 (6,098) 7,385
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Total current liabilities....................... 22,934 (9,786) 950 14,098
Deferred revenue....................................... 1,162 1,162
Other long-term obligations............................ 2,428 (935) 1,493
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Total liabilities............................... 26,524 (10,721) 950 16,753
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Stockholders' equity (deficit):
Common Stock........................................ 15 15
Additional paid-in capital.......................... 76,773 76,773
Accumulated other comprehensive income.............. 371 (230) 141
Accumulated deficit................................. (80,246) 4,250 14,417 (6) (61,579)
(200) (7) (200)
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Total stockholders' equity/(deficit)............ (3,087) 4,020 14,217 15,150
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Total liabilities and stockholders' equity/(deficit)... $23,437 ($6,701) $15,167 $31,903
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Notes:
(1) Includes assets and liabilities of Elevon International Limited ("EIL") and Elevon 5 North America operations as of June 30, 2002
sold to Novele Limited.
(2) To reflect cash proceeds received from Novele Limited.
(3) To reflect proceeds due from Novele Limited on or before December 31, 2002, subject to certain conditions under the terms of the Share Purchase Agreement.
(4) To reflect sale of Elevon 5 intellectual property to Novele Limited.
(5) To reflect estimated transaction costs, including legal and accounting fees.
(6) To reflect the estimated gain on sale, including elimination of net deficit in EIL and Elevon 5 North America operations as of June 30, 2002, calculated as follows:
Gross proceeds received or receivable $ 16,500
Elevon 5 capitalized software (net) (1,333)
Estimated liabilities incurred as a result of the sale (750)
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Subtotal 14,417
Elimination of net deficit in EIL and Elevon 5 North America operations as of June 30, 2002 4,020
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Estimated gain on sale before income taxes $ 18,437
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(7) To reflect estimated taxes payable associated with gain on sale.
ELEVON, INC.
PRO FORMA COMBINED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDING JUNE 30, 2002
(in thousands, except per share amounts)
HISTORICAL
Elevon UK Pro Forma
Elevon, Inc. Operations Adjustments Notes Pro Forma
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REVENUES: (Note 1)
License............................ $2,027 ($1,509) $516 (2) $1,034
Maintenance........................ 11,253 (4,139) 7,114
Consulting......................... 11,937 (4,255) 7,682
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Total revenues.................. 25,217 (9,903) 516 15,830
OPERATING EXPENSES:
Costs of revenues:
Cost of licenses,
maintenance and consulting..... 10,492 (4,292) 6,200
Amortization of
capitalized software........... 1,933 (498) (3) 1,435
Sales and marketing................ 6,054 (2,195) 3,859
Product development................ 3,141 (326) 2,815
General and administrative......... 3,600 (1,048) 2,552
Restructuring charge............... 892 (180) 712
Impairment of capitalized
software......................... 365 365
Special credit..................... (1,732) (1,732)
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Total operating expenses........ 24,745 (8,041) (498) 16,206
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Operating income..................... 472 (1,862) 1,014 (376)
Interest income, net............ 43 43
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Income before income taxes........... 515 (1,862) 1,014 (333)
Provision for income taxes...... 50 50
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NET INCOME........................... $465 ($1,862) $1,014 ($383)
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BASIC NET INCOME PER SHARE........... $0.03 ($0.03)
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Shares used to compute basic
net income per share............ 15,186 15,186
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DILUTED NET INCOME PER SHARE......... $0.03 ($0.03)
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Shares used to compute diluted
net income per share............ 15,602 15,186
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Notes: (1) Reflects elimination of results of operations relative to EIL and Elevon 5 North America operations for the six months ending June 30, 2002. (2) To reflect estimated royalty income that would have been earned under the terms of the Master Distribution Agreements. (3) To reflect elimination of amortization resulting from disposal of Elevon 5 intellectual property.
ELEVON, INC.
PRO FORMA COMBINED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE YEAR ENDING DECEMBER 31, 2001
(in thousands, except per share amounts)
HISTORICAL
Elevon UK Pro Forma
Elevon, Inc. Operations Adjustments Notes Pro Forma
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REVENUES: (Note 1)
License............................ $8,665 ($2,532) $1,641 (2) $7,774
Maintenance........................ 22,110 (5,505) 16,605
Consulting......................... 18,290 (4,060) 14,230
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Total revenues.................. 49,065 (12,097) 1,641 38,609
OPERATING EXPENSES:
Costs of revenues:
Cost of licenses,
maintenance and consulting..... 18,206 (5,700) 12,506
Amortization of
capitalized software........... 3,398 (167) (3) 3,231
Sales and marketing................ 12,459 (3,119) 9,340
Product development................ 8,324 (87) 8,237
General and administrative......... 5,869 (1,243) 4,626
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Total operating expenses........ 48,256 (10,149) (167) 37,940
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Operating income..................... 809 (1,948) 1,808 669
Interest income, net............ 778 778
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Income before income taxes........... 1,587 (1,948) 1,808 1,447
Provision for income taxes...... 100 100
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NET INCOME........................... $1,487 ($1,948) $1,808 $1,347
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BASIC NET INCOME PER SHARE........... $0.10 $0.09
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Shares used to compute basic
net income per share............ 14,917 14,917
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DILUTED NET INCOME PER SHARE......... $0.10 $0.09
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Shares used to compute diluted
net income per share............ 14,958 14,958
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Notes: (1) Reflects elimination of results of operations of EIL for the year ending December 31, 2001. (2) To reflect estimated royalty income that would have been earned under the terms of the Master Distribution Agreements. (3) To reflect elimination of amortization resulting from disposal of Elevon 5 intellectual property.
(c) Exhibits.
Number
2.1 Share Purchase Agreement, dated as of September 6, 2002, by and between Elevon Inc., a Delaware corporation, and Novele Limited, a United Kingdom company.
2.2 Deed of Assignment of e-5
2.3 Software Distribution Agreement for AFP, dated as of September 6, 2002, by and between Elevon Inc., a Delaware corporation, and Elevon Limited, a subsidiary of Novele Limited.
2.4 Software Distribution Agreement for e-2, dated as of September 6, 2002, by and between Elevon Inc., a Delaware corporation, and Elevon Limited, a subsidiary of Novele Limited.
99.1 Press Release dated September 6, 2002 announcing the Sale and the Software Distribution Agreements.
ELEVON SYSTEMS, INC.
FORM 8K
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 thereunto duly authorized.
| ELEVON, INC. |
| (Registrant) |
| By: | /s/ Stanley V. Vogler |
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| Stanley V. Vogler | |
| Chief Financial Officer | |
| (Principal Financial and Accounting Officer) |