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: January 27, 1998
THE ASHTON TECHNOLOGY GROUP, INC.
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(Exact name of registrant as specified in its charter)
Delaware 333-1182 22-6650372
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(State of other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification Number
1900 Market Street, Suite 701, Philadelphia, Pennsylvania 19103
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 751-1900
<PAGE>
Item 5. Other Events
On September 18, 1997, the Company commenced a private offer and exchange
offer pursuant to which it offered to certain investors (i) up to 250,000 shares
of its Series A Convertible PIK Preferred Stock (with a liquidation preference
of $10.00 per share) (the "Series A Preferred"); (ii) up to 250,000 shares of
its Series B Convertible Preferred Stock (with a liquidation preference of
$10.00 per share) ("Series B Preferred"); and (iii) to exchange (the "Exchange
Offer") up to 300,000 shares of its Series B Preferred for up to $3,000,000 of
convertible and non-convertible notes (the "UTTC Notes") issued by the Company's
subsidiary, Universal Trading Technologies Corporation ("UTTC"). The Series A
Preferred pays cumulative dividends semi-annually at an annual rate of $0.50 per
share and is payable in additional shares of Series A Preferred until February
15, 2000. At any time after February 15, 1998, each holder of shares of Series A
Preferred will have the right to convert each share of Series A Preferred into :
(i) ten shares of the Common Stock, par value $0.01 per share, of Ashton (the
"Common Stock"); and (ii) one two-year warrant to purchase three shares of the
Common Stock, par value $0.01 per share, of UTTC (the "UTTC Common Stock"), with
an exercise price of $0.75 per share, subject to adjustment (the "Warrant"). The
Series B Preferred pays cumulative dividends semi-annually at an annual rate of
$0.90 per share. At any time after June 30, 1998, each holder of shares of
Series B Preferred will have the right to convert each share of Series B
Preferred into: (i) six shares of Common Stock; and (ii) one two-year Warrant to
purchase two shares of UTTC Common Stock, with an exercise price of $0.75 per
share, subject to adjustment.
As of December 31, 1997, the Company completed the sale of all of the
shares of the Series A Preferred offered (250,000 shares) and 5,000 of the
shares of Series B Preferred offered. In addition, as of January 15, 1998, the
expiration date of the Exchange Offer, the Company had received tenders of
$2,975,000 of UTTC Notes for which the Company will issue 297,500 shares of
Series B Preferred. As of November 30, 1997, the Company had received either a
binding subscription for or a tender of the securities listed above.
The Company has extended its private offer to institutional and accredited
investors of Series B Preferred until May 15, 1998. Such offering of Series B
Preferred will not be registered under Securities Act of 1933, as amended, and
may not be offered or sold in the United States absent registration thereunder
or an applicable exemption from the registration requirements thereunder.
On January 27, 1998, the Company completed the sale of 100,000 shares of
the Series C Convertible Preferred Stock to a group of foreign investors (the
"Investors"), with a liquidation preference of $10.00 per share (the "Series C
Preferred"), for an aggregate purchase price of $1,000,000 ("Series C Shares").
Holders of the Series C Shares will have the right to convert each Series C
Share into one share of Common Stock at the conversion price which shall be
equal to the following: (i) if the Market Price (as hereinafter defined) on the
Conversion Date (as hereafter defined) is less than $1.8774, the conversion
price is equal to the lesser of 75% of the Market Price at the Conversion Date
or $1.2516; and (ii) if the Market Price at the Conversion Date is equal to or
greater than $1.8774, the conversion price is equal to $1.2516 plus 50% of the
difference between the Market Price at the Conversion Date and $1.8774. The
"Market Price" shall mean the average of the closing bid prices per share of the
Common Stock over the five consecutive trading days ending on the trading day
immediately preceding the date the holder elects to have the shares of Series C
Preferred Stock converted (the "Conversion Date"). In addition, the Investors
will receive Warrants exercisable into an aggregate of 100,000 shares of Common
Stock at an exercise price of 105% of the Market Price for a period of 5 years.
In connection with the sale, the Company has agreed to pay a placement fee to
the placement agent of $50,000 and to transfer to it 5,000 Share of the Series C
Convertible Preferred Stock and a Warrant to purchase 100,000 shares of Common
Stock at an exercise price of 105% of Market Price for a period of 5 years.
Upon request of The NASDAQ Stock Market, Inc., Ashton is filing herewith an
unaudited balance sheet as of November 30, 1997 with pro forma adjustments for
any significant events or transactions occurring on or before the filing date.
The balance sheet evidences $4,759,993 in total assets as of November 30, 1997
and $5,759,933 on a pro forma, adjusted basis.
Item 7. Financial Statements and Exhibits
Exhibits
--------
99 Consolidated and Consolidated Proforma Financial
Statements. November 30, 1997
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned herewith duly authorized.
Date: January 27, 1998 The Ashton Technology Group, Inc.
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(Registrant)
By: /s/ John Blohm
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John Blohm
Vice President
THE ASHTON TECHNOLOGY GROUP, INC.
CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1997
<PAGE>
TABLE OF CONTENTS
PAGE NO.
FINANCIAL STATEMENTS
Consolidated Balance Sheet - November 30, 1997
and Proforma Consolidated Balance Sheet as at January 26, 1998
Consolidated Statements of Operations -
For the Eight Months Ended November 30, 1997
Consolidated statements of Cash Flows -
For the Eight Months Ended November 30, 1997
Notes to Unaudited Consolidated Financial Statements
<PAGE>
The Ashton Technology Group, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
November 30, 1997
**Consolidated
Balance Sheet with
November 30, 1997 Proforma Adjustments
Consolidated for Additional Equity
Balance Sheet Financing
(Unaudited) (Unaudited)
----------- -----------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 1,504,585 $ 2,504,585
Accounts receivable 7,409 7,409
Notes receivable 100,353 100,353
Prepaids and Other Assets 721,552 721,552
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Total Current Assets 2,333,899 3,333,899
Property and equipment, net 730,832 730,832
Private placement costs 679,152 679,152
Investment in ECOM 105,000 105,000
Development costs 349,590 349,590
Notes receivable 493,772 493,772
Other assets 67,688 67,688
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Total Assets $ 4,759,933 $ 5,759,933
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 1,572,006 $ 1,572,006
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Total current liabilities 1,572,006 1,572,006
Long-term debt 38,000 38,000
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Total liabilities 1,610,006 1,610,006
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Stockholders' Equity:
Preferred stock 5,510 6,510
Common stock 75,625 75,625
Additional paid-in capital 15,254,200 16,253,200
Accumulated earnings (deficit) (12,185,408) (12,185,408)
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Total stockholders' equity 3,149,927 4,149,927
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Total Liabilities and Stockholders' Equity $ 4,759,933 $ 5,759,933
============= =============
<FN>
**Consolidated Balance Sheet with proforma adjustments for additional equity
financing.
</FN>
</TABLE>
The accompanying notes are an integral part of
these consolidated balance sheets.
<PAGE>
The Ashton Technology Group, Inc. and Subsidiaries
Consolidated Statements of Operations
For the Eight Months Ended November 30, 1997
Revenues $ 3,310,367
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Costs and expenses:
Cost of revenues 2,620,896
Development costs 271,299
Selling, general and administrative expenses 2,557,744
Depreciation and amortization 328,384
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Total costs and expenses 5,778,323
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Loss from operations (2,467,956)
Other costs and revenues:
Gain on sale of subsidiary 101,992
Interest income 33,557
Interest expense (158,246)
Private placement costs (146,671)
Minority interest in earnings of subsidiary (11,464)
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Loss before provision for income taxes (2,648,788)
Provision for income taxes 41,775
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Net Loss $(2,690,563)
============
Net loss per common share $ (0.36)
============
Weighted average number of common shares outstanding 7,562,500
============
The accompanying notes are an integral part of
these consolidated financial statements.
<PAGE>
The Ashton Technology Group, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For the Eight Months Ended November 30, 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(2,690,536)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 475,055
Increase in minority interest of subsidiary 11,464
Gain on sale of subsidiary (101,992)
Increases (decreases) in operating assets
and liabilities
Notes receivable (594,125)
Accounts receivable (7,409)
Prepayments and other assets (541,301)
Accounts payable and accrued expenses 113,307
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Net cash used in operating activities (3,335,564)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in ECOM (105,000)
Purchase of fixed assets (117,657)
Cash received from sale of subsidiary 600,000
Development costs (349,590)
Adjustment of net cash for subsidiary sold (45,448)
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Net cash used in investing activities (17,695)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance costs for private placement (702,997)
Proceeds from private placement 5,500,000
------------
Net cash provided by financing activities 4,797,003
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NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS: 1,443,744
Cash and cash equivalents, beginning of period 60,841
------------
Cash and cash equivalents, end of period $ 1,504,585
============
The accompanying notes are an integral part of
these consolidated financial statements.
<PAGE>
THE ASHTON TECHNOLOGY GROUP, INC. AND SUBSIDIARIES NOTES TO UNAUDITED
CONSOLIDATED BALANCE SHEET
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
-------------------------------------------------
The accompanying unaudited Financial Statements for the eight months ended
November 30, 1997 includes the accounts of The Ashton Technology Group,
Inc. ("Ashton") and its subsidiaries, Universal Trading Technologies
Corporation ("UTTC"), and Gomez Advisors, Inc. ("Gomez"). Ashton, together
with UTTC and Gomez, is the "Company". The Company's Computer Science
Innovations, Inc. ("CSI(R)"), subsidiary was sold on November 4, 1997.
The accompanying unaudited consolidated financial statements have been
prepared by the Company in accordance with generally accepted accounting
principles for interim financial statements and in accordance with the
instructions for Form 10-QSB. Accordingly, they do not contain all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
the accompanying unaudited consolidated financial statements have been
prepared on the same basis as the audited statements and include all
adjustments, consisting only of normal recurring adjustments, which are
necessary for a fair statement of the results of the interim periods
presented.
The preparation of interim financial statements, in conformity with
generally accepted accounting principles, also requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities; the disclosure of contingent assets and liabilities at the
date of the interim statements; and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
2. PREPAYMENTS AND OTHER CURRENT ASSETS
------------------------------------
Included in prepayments are $413,980 of legal costs for a lawsuit with one
shareholder. To the extent such costs are not recoverable from the
Company's insurance carrier, Fredric W. Rittereiser and The Dover Group,
Inc. have agreed to pay such costs.
3. PROFORMA CONSOLIDATED BALANCE SHEET
-----------------------------------
The November 30, 1997 consolidated balance sheet includes the effect of the
transactions listed below.
On September 18, 1997, the Company commenced a private offer and exchange
offer pursuant to which it offered to certain investors (i) up to 250,000
shares of its Series A Convertible PIK Preferred Stock (with a liquidation
preference of $10.00 per share) (the "Series A Preferred"); (ii) up to
250,000 shares of its Series B Convertible Preferred Stock (with a
liquidation preference of $10.00 per share) ("Series B Preferred"); and
(iii) to exchange (the "Exchange Offer") up to 300,000 shares of its Series
B Preferred for up to $3,000,000 of convertible and non-convertible notes
(the "UTTC Notes") issued by the Company's subsidiary, Universal Trading
Technologies Corporation ("UTTC"). The Series A Preferred pays cumulative
dividends semi-annually at an annual rate of $0.50 per share and is payable
in additional shares of Series A Preferred until February 15, 2000. At any
time after February 15, 1998, each holder of shares of Series A Preferred
will have the right to convert each share of Series A Preferred into : (i)
ten shares of the Common Stock, par value $0.01 per share, of Ashton (the
"Common Stock"); and (ii) one two-year warrant to purchase three shares of
the Common Stock, par value $0.01 per share, of UTTC (the "UTTC Common
Stock"), with an exercise price of $0.75 per share, subject to adjustment
(the "Warrant"). The Series B Preferred pays cumulative dividends
semi-annually at an annual rate of $0.90 per share. At any time after June
30, 1998, each holder of shares of Series B Preferred will have the right
to convert each share of Series B Preferred into: (i) six shares of Common
Stock; and (ii) one two-year Warrant to purchase two shares of UTTC Common
Stock, with an exercise price of $0.75 per share, subject to adjustment.
As of December 31, 1997, the Company completed the sale of all of the
shares of the Series A Preferred offered (250,000 shares) and 5,000 of the
shares of Series B Preferred offered. In addition, as of January 15, 1998,
the expiration date of the Exchange Offer, the Company had received tenders
of $2,975,000 of UTTC Notes for which the Company will issue 297,500 shares
of Series B Preferred. As of November 30, 1997, the Company had received
either a binding subscription for or a tender of the securities listed
above.
The Company has extended its private offer to institutional and accredited
investors of Series B Preferred until May 15, 1998. Such offering of Series
B Preferred will not be registered under Securities Act of 1933, as
amended, and may not be offered or sold in the United States absent
registration thereunder or an applicable exemption from the registration
requirements thereunder.
The November 30, 1997 consolidated balance sheet with proforma adjustments
for additional equity financings through January 26, 1998 includes the
effect of the following.
On January 27, 1998, the Company completed the sale of 100,000 shares of
the Series C Convertible Preferred Stock to a group of foreign investors
(the "Investors"), with a liquidation preference of $10.00 per share (the
"Series C Preferred"), for an aggregate purchase price of $1,000,000
("Series C Shares"). Holders of the Series C Shares will have the right to
convert each Series C Share into one share of Common Stock at the
conversion price which shall be equal to the following: (i) if the Market
Price (as hereinafter defined) on the Conversion Date (as hereafter
defined) is less than $1.8774, the conversion price is equal to the lesser
of 75% of the Market Price at the Conversion Date or $1.2516; and (ii) if
the Market Price at the Conversion Date is equal to or greater than
$1.8774, the conversion price is equal to $1.2516 plus 50% of the
difference between the Market Price at the Conversion Date and $1.8774. The
"Market Price" shall mean the average of the closing bid prices per share
of the Common Stock over the five consecutive trading days ending on the
trading day immediately preceding the date the holder elects to have the
shares of Series C Preferred Stock converted (the "Conversion Date"). In
addition, the Investors will receive Warrants exercisable into an aggregate
of 100,000 shares of Common Stock at an exercise price of 105% of the
Market Price for a period of 5 years. In connection with the sale, the
Company has agreed to pay a placement fee to the placement agent of $50,000
and to transfer to it 5,000 Share of the Series C Convertible Preferred
Stock and a Warrant to purchase 100,000 shares of Common Stock at an
exercise price of 105% of Market Price for a period of 5 years.
