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UNITED STATES
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: November 13, 2000
Entrada Networks, Inc.
(Exact name of registrant as specified in its charter)
000-26952
(Commission File Number)
DELAWARE 33-0676350
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
10070 Mesa Rim Road, San Diego, CA 92121
(Address of principal executive offices, with zip code)
(858) 623-3265
(Registrant's telephone number, including area code)
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Pro forma Financial Information.
These unaudited pro forma condensed consolidated financial statements should be
read in conjunction with, the historical consolidated financial statements and
the related notes thereto of Sync Research, Inc., a Delaware corporation "Sync",
and Entrada Networks, a Delaware corporation "Entrada" incorporated in the Form
S-4/A filed on August 3, 2000 and Form 8-K Item 5 that was filed for Entrada
Networks Inc. on October 13, 2000.
The following unaudited pro forma consolidated financial statements between Sync
and Entrada will be accounted for as an acquisition of Sync by Entrada and are
based upon the respective historical financial statements and notes thereto of
Entrada and Sync. The following Pro Forma Consolidated Statement of Operations
for the six months ended July 31, 2000 present unaudited pro forma operating
results for Entrada as if the transaction between Entrada and Sync had occurred
as of the beginning of the periods presented. The following Pro Forma
Consolidated Balance Sheet presents the unaudited pro forma financial condition
of Entrada as if the merger had occurred as of July 31, 2000. The unaudited pro
forma adjustments are described in the accompanying notes. The carrying values
of Sync's net assets are equal to their fair values for purposes of these
unaudited pro forma financial statements, unless indicated otherwise in the
accompanying notes.
The unaudited pro forma financial information presented does not consider any
future events, which may occur after the merger. The unaudited pro forma
financial information presented does not attempt to quantify any operating
expense synergies or cost reductions of the consolidated operations of Sync and
Entrada that may or may not be realized after the merger. The unaudited pro
forma financial information does not consider the incremental expense, capital
or conversion costs, which may be incurred as a result of the merger.
THE UNAUDITED PRO FORMA FINANCIAL INFORMATION IS PRESENTED FOR INFORMATIONAL
PURPOSES ONLY AND IS NOT NECESSARILY INDICATIVE OF THE OPERATING RESULTS OR
FINANCIAL POSITION THAT WOULD HAVE OCCURRED HAD THE MERGER BEEN CONSUMMATED AT
THE DATES INDICATED, NOR IS IT NECESSARILY INDICATIVE OF FUTURE OPERATING
RESULTS OR FINANCIAL POSITION OF THE CONSOLIDATED COMPANIES FOLLOWING THE
MERGER.
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<TABLE>
<CAPTION>
ENTRADA NETWORKS, INC.
Pro Forma Consolidated Statement of Operations
Unaudited
(In Thousands, except per share data)
Historical Pro Forma
----------------------------------------- ---------------------------------
Sync Research Entrada
Year Year
ended ended
December 31, 1999 January 31, 2000 Adjustments Consolidated
----------------- ---------------- ----------- ------------
<S> <C> <C> <C> <C>
Net sales $ 18,152 $ 28,771 $ -- $ 46,923
Cost of sales 9,905 17,498 -- 27,403
-------- -------- -------- --------
Gross profit 8,247 11,273 -- 19,520
Research and development 5,503 6,223 -- 11,726
Selling and Marketing 5,136 5,647 -- 10,783
General and Administrative 2,284 2,177 640 5,101
Non-recurring charges -- -- -- --
-------- -------- -------- --------
Total Operating expenses 12,923 14,047 640 27,610
-------- -------- -------- --------
Loss from operations (4,676) (2,774) (640) (8,090)
Other income (expense) 408 (613) -- (205)
-------- -------- -------- --------
Loss before income taxes (4,268) (3,387) (640) (8,295)
Provision for income taxes 6 -- -- 6
-------- -------- -------- --------
Net loss (4,274) (3,387) (640) (8,301)
======== ======== ======== ========
Net loss per share, basic and dilutive (1.22) (0.80) (0.76)
======== ======== ========
Shares used in computation of net loss
per share, basic and dilutive 3,493 4,244 10,920
======== ======== ========
See accompanying notes
</TABLE>
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<TABLE>
<CAPTION>
ENTRADA NETWORKS, INC.
Condensed Consolidated Pro Forma Balance Sheets
Unaudited
(In Thousands)
Historical Pro Forma
------------------------------- -----------------------------
Sync Research Entrada
as of as of
June 30, 2000 July 31, 2000 Adjustments Consolidated
------------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 8,236 $ 6 $ 8,025 $ 16,267
Accounts receivable, net 732 5,639 -- 6,371
Inventory, net 2,622 3,996 -- 6,618
Due from affiliates -- 157 -- 157
Prepaid expenses and other current assets 751 228 -- 979
-------- -------- -------- --------
Total Current Assets 12,341 10,026 8,025 30,392
-------- -------- -------- --------
Property and Equipment, net 1,322 1,211 -- 2,533
Goodwill -- -- 3,201 3,201
Capitalized software, net 55 813 -- 868
-------- -------- -------- --------
Total Other Assets 1,377 2,024 3,201 6,602
-------- -------- -------- --------
Total Assets $ 13,718 $ 12,050 $ 11,226 $ 36,994
======== ======== ======== ========
Current Liabilities:
Accounts payable $ 1,202 $ 2,435 $ 900 $ 4,537
Accrued liabilities 2,564 2,127 -- 4,691
Short-term debt -- 3,363 -- 3,363
Current maturities of capitalized lease obligations 23 381 -- 404
Income taxes payable -- -- -- --
-------- -------- -------- --------
Total Current Liabilities: 3,789 8,306 900 12,995
-------- -------- -------- --------
Capital lease obligations less current maturities 5 181 -- 186
Due to former parent company -- 26,086 (26,086) --
-------- -------- -------- --------
Total Liabilities 3,794 34,573 (25,186) 13,181
-------- -------- -------- --------
Stockholder's Equity:
Common stock 4 1 6 11
Preferred Stock 2,066 -- (2,066) --
Additional paid-in capital 72,017 5,761 (26,245) 51,533
Accumulated deficit (64,163) (28,285) 64,717 (27,731)
-------- -------- -------- --------
Total Stockholder's Equity 9,924 (22,523) 36,412 23,813
-------- -------- -------- --------
Total liabilities and stockholder's equity $ 13,718 $ 12,050 $ 11,226 $ 36,994
======== ======== ======== ========
See accompanying notes
</TABLE>
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<TABLE>
<CAPTION>
ENTRADA NETWORKS, INC.
Pro Forma Consolidated Statement of Operations
Unaudited
(In Thousands, except per share data)
Historical Pro Forma
-------------------------------- ------------------------------
Sync Research Entrada
Six Months Six Months
ended ended
June 30, 2000 July 31, 2000 Adjustments Consolidated
------------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
Net sales $ 5,568 $ 9,751 $ -- $ 15,319
Cost of sales 6,113 9,093 -- 15,206
------- ------- -------- --------
Gross profit (545) 658 -- 113
Research and development 2,128 2,352 -- 4,480
Selling and Marketing 1,628 2,758 -- 4,386
General and Administrative 1,402 1,052 320 2,774
Non-recurring charges -- 2,088 -- 2,088
------- ------- -------- --------
Total Operating expenses 5,158 8,250 320 13,728
------- ------- -------- --------
Loss from operations (5,703) (7,592) (320) (13,615)
Other income (expense) 212 (225) -- (13)
------- ------- -------- --------
Loss before income taxes (5,491) (7,817) (320) (13,628)
Provision for income taxes 1 -- -- 1
------- ------- -------- --------
Net loss (5,492) (7,817) (320) (13,627)
======= ======= ======== ========
Net loss per share, basic and dilutive (1.56) (1.84) (1.25)
======= ======== ========
Shares used in computation of net loss
per share, basic and dilutive 3,527 4,244 10,920
======= ======== ========
See accompanying notes
</TABLE>
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<TABLE>
<CAPTION>
ENTRADA NETWORKS, INC.
Pro Forma Balance Sheet Adjustments
Unaudited
(In Thousands)
Unaudited Pro Forma Adjustments
--------------------------------------------------------------------
Convertible Merger
Preferred Merger Costs
(a) (b) (c) Total
---------------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ -- $ 8,025 $ -- $ 8,025
Accounts receivable, net -- -- -- --
Inventory, net -- -- -- --
Due from affiliates -- -- -- --
Prepaid expenses and other current assets -- -- -- --
------- -------- ------ --------
Total Current Assets -- 8,025 -- 8,025
------- -------- ------ --------
Property and Equipment, net -- -- -- --
Goodwill -- 1,747 1,454 3,201
Capitalized software, net -- -- -- --
------- -------- ------ --------
Total Other Assets -- 1,747 1,454 3,201
------- -------- ------ --------
Total Assets $ -- $ 9,772 $1,454 $ 11,226
======= ======== ====== ========
Current Liabilities:
Accounts payable $ -- $ -- $ 900 $ 900
Accrued liabilities -- -- -- --
Short-term debt -- -- -- --
Current maturities of capitalized lease obligations -- -- -- --
Income taxes payable -- -- -- --
------- -------- ------ --------
Total Current Liabilities: -- -- 900 900
------- -------- ------ --------
Capital lease obligations less current maturities -- -- -- --
Due to former parent company -- (26,086) -- (26,086)
------- -------- ------ --------
Total Liabilities -- (26,086) 900 (25,186)
------- -------- ------ --------
Stockholder's Equity:
Common stock 2 4 -- 6
Preferred Stock (2,066) -- -- (2,066)
Additional paid-in capital 2,064 (28,309) -- (26,245)
Accumulated deficit -- 64,163 554 64,717
------- -------- ------ --------
Total Stockholder's Equity -- 35,858 554 36,412
------- -------- ------ --------
Total liabilities and stockholder's equity $ -- $ 9,772 $1,454 $ 11,226
======= ======== ====== ========
</TABLE>
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ENTRADA NETWORKS, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
A. ACCOUNTING PERIODS - The Company has prepared the accompanying audited
financial data of January 31, 2000, and the unaudited July 31, 2000, pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations.
B. PRO FORMA ADJUSTMENTS - Pro forma Condensed Consolidated Financial Statements
as of July 31, 2000
(1) On August 31, 2000 Sync Research, Inc. acquired all the outstanding capital
of a wholly owned subsidiary of Osicom Technologies, Inc. that was doing
business as Entrada Networks. The shareholders of Entrada Networks received
common shares equal to the outstanding stock at the time of the merger or
4,244,155 shares as well as an additional 2,448,818 shares of common stock for
cash of $8.025 million. As a result of the merger and stock sale the former
shareholder of Entrada Networks held a majority interest in the combined entity
that was renamed Entrada Networks, Inc. from Sync Research, Inc. Generally
accepted accounting principles require in certain circumstances that a company
whose shareholders retain the majority voting interest in the combined business
to be treated as the acquirer for financial reporting purposes. Accordingly, the
merger will be accounted for as a "reverse merger" whereby Entrada Networks is
deemed to have purchased Sync Research, Inc. However, Sync remains the legal
entity and the Registrant for Security and Exchange Commission reporting
purposes. As a result of this transaction the Registrant will assume Entrada's
year-end of January 31. The accounting treatment of the merger was done under
guidelines of purchase accounting that requires the inclusion of the results of
operations of Sync from the date acquired.
(2) All of Sync's Preferred Stock Series A of 700,000 shares were converted into
Common Stock on the merger date.
(3) The Pro forma Condensed Consolidated Balance Sheet reflects the allocation
of approximately $11.7 million to Sync's assets and liabilities based upon a
value of $2.75 per share, the closing price of Sync's common stock on the Nasdaq
National Market on July 31, 2000. The excess of the net book value of Sync's net
assets over the purchase price as of the pro forma balance sheet date,
approximately $3.2 million, has been reported as goodwill.
(4) In connection with the merger, the outstanding intercompany payable of
$26.08 million due to Entrada's former Parent was converted into equity. This
equity contribution has been reflected in the accompanying pro forma condensed
consolidated balance sheet.
(5) As of June 30, 2000, merger costs of $554,000 have been incurred, as of
September 30, 2000 Entrada has incurred an additional $900,000 direct
transaction costs for a total of $1.5 million associated with the merger. These
costs consist primarily of fees for investment banking, filings with regulatory
agencies, legal, accounting, financial printing and other related costs. These
transaction costs have been incorporated in the purchase price and are reflected
in the goodwill balance of $3.2 million.
(6) In connection with the merger, the goodwill of $3.2 million is amortized
over a 60-month period. For the six months period ended July 31, 2000, $320,000
would have been amortized.
(7) Shares outstanding after the consolidation and merger are computed as
follows:
<TABLE>
<S> <C>
Shares outstanding from Sync Research 3,527
Shares of Sync Stock received by Osicom 4,244
Conversion of the Sync Series A preferred stock 700
Osicom purchased shares at time of merger 2,449
------
Total shares outstanding after the merger 10,920
======
</TABLE>
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ENTRADA NETWORKS, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
C. PRO FORMA ADJUSTMENTS - Pro forma Condensed Consolidated Statement of
Operations as of January 31, 2000
(1) Shares indicated for Sync are the shares outstanding as of December 31,
1999. Shares outstanding for Entrada and the consolidated companies are the
shares outstanding at the conclusion of the merger.
2) In connection with the merger, the goodwill of $3.2 million is amortized
over a 60-month period. For the twelve months period ended January 31, 2000,
$640,000 would have been amortized.
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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.
ENTRADA NETWORKS, INC.
Date: November 13, 2000
/s/
-------------------------------------------
Kanwar J.S. Chadha
President and Chief Executive Officer
/s/
-------------------------------------------
Lana Nino
Vice President, Chief Financial Officer
Chief Accounting Officer
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