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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities and Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
April 21, 1999
CELERITY SYSTEMS, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-23279 52-2050585
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(State or Other (Commission File (IRS Employer
Jurisdiction of Number) Identification No.)
Incorporation)
1400 Centerpoint Boulevard
Knoxville, Tennessee 37932
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(Address of Principal Executive Offices)
Registrant's Telephone Number, including
area code: (423) 539-5300
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(Former Address, if changed since last report)
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This Form 8-K contains forward-looking statements. Such statements involve
various risks that may cause actual results to differ materially from those
expressed in such forward looking statements. These risks and uncertainties
include, but are not limited to: market demand for Celerity's products,
successful implementation of Celerity's products, competitive factors, the
ability to manage Celerity's growth and the ability to recruit additional
personnel and other risks detailed from time to time in Celerity's filings with
the Securities and Exchange Commission, including but not limited to, those
described under the caption "Description of Business - Risk Factors" in
Celerity's Annual Report on Form 10-KSB for the fiscal year ended December 31,
1998.
Item 5: OTHER EVENTS
On April 22, 1999, Celerity Systems, Inc. (the "Company") received a
letter from Nasdaq stating that the closing bid price of the Company's common
stock during the last thirty consecutive trade dates failed to maintain a price
greater than or equal to the $1.00 price required for listing on the Nasdaq
SmallCap Market. The Company has been provided ninety calendar days in which to
comply with the minimum bid price requirement. In addition, the Company received
a letter from Nasdaq on April 21, 1999 requesting a discussion of the Company's
plans to address the specific items that led to the issuance of a "going
concern" opinion in the Form 10-KSB for fiscal 1998 by the Company's independent
auditors as well as the Company's continued compliance with the listing
requirements of the Nasdaq SmallCap Market. The Company is in the process of
responding to Nasdaq concerning the "going concern issue" and is considering
several steps to address that issue and the minimum bid price requirement,
including the potential merger, as discussed below. Although the Company is
attempting to respond to Nasdaq's concerns, no assurance can be given that the
Company will be successful in meeting the Nasdaq SmallCap listing requirements.
Attached hereto as Exhibit 99.3 is a copy of a press release dated April
27, 1999 and attached hereto as Exhibit 99.4 is a Letter of Intent between the
Company and FutureTrak International, Inc., a Florida corporation
("FutureTrak"), dated as of April 26, 1999, regarding a merger of FutureTrak
into the Company or a subsidiary of the Company. Certain of the proposed terms
of such transaction can be found in Exhibit 99.4 attached hereto. Although the
Company intends to consummate the merger, no assurance can be given that the
parties will reach a definitive agreement concerning such merger or that the
merger will be consummated.
Item 7: FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
99.1 Letter from Nasdaq to the Company dated April 22, 1999.
99.2. Letter from Nasdaq to the Company dated April 21, 1999.
99.3 Press Release issued by the Company on April 27, 1999.
99.4 Letter of Intent between the Company and FutureTrak
dated April 26, 1999.
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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.
Dated: May 6, 1999
CELERITY SYSTEMS, INC.
By: /s/ KENNETH D. VAN METER
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Kenneth D. Van Meter
President and Chief Executive Officer
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EXHIBIT 99.1
[LETTERHEAD]
VIA FACSIMILE & REGULAR MAIL
April 22, 1999
Mr. Doyal H. Hodge
Chief Financial Officer
Celerity Systems, Inc.
1400 Centerpoint Boulevard
Knoxville, TN 37932
Dear Mr. Hodge:
The purpose of my letter is to bring to your attention a concern regarding the
continued listing of Celerity Centerpoint Boulevard's shares of common stock
(CLRT) on The Nasdaq SmallCap Market. Based upon the staff's review of the price
data covering the last thirty consecutive trade dates, your Company's shares of
common stock have failed to maintain a closing bid price greater than or equal
to $1.00. To be eligible for continued listing, all securities, the Company's
shares of common stock, must maintain a minimum bid price of $1.00.(1)
We recognize this deficiency may be a temporary situation, and no delisting
action with respect to the bid price deficiency will be initiated at this time.
Instead, the Company will be provided ninety (90) calendar days in which to
regain compliance with the minimum bid price requirement.(2) If at anytime
within the next ninety calendar days from the date of this letter, the shares of
common stock reports a closing bid price of $1.00 or greater for a minimum of
ten consecutive trading days, it will have complied with the minimum bid price
requirement.
However, if the Company is unable to demonstrate compliance with the minimum
$1.00 bid price on or before the end of the ninety day period July 22, 1999, the
Company's securities will be subject to delisting, effective with the close of
business on July 22, 1999. To stay the delisting, the Company may request a
hearing by the close of business on July 22, 1999. For more information on the
hearing process, please contact the Listing Qualifications Hearing Department at
(202) 496- 2635.
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(1) Marketplace Rule 4310(c)(04).
(2) The ninety day period relates exclusively to the bid price deficiency.
The Company may be delisted during the ninety day period for failure to maintain
compliance with any other listing requirement for which it is currently on
notice or which occurs during the period.
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If you have any questions concerning the compliance issues discussed above,
please contact Razina Boursiquot, Listing Analyst at (800) 330-8920.
Very truly yours,
/s/ Kit Milholland
Kit Milholland
Associate Director
Nasdaq Listing Qualifications
cc: Cam Funkhouser
Market Surveillance
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EXHIBIT 99.2
[LETTERHEAD]
VIA FACSIMILE & FIRST CLASS MAIL
April 21, 1999
Mr. Doyal H. Hodge
Chief Financial Officer
Celerity Systems, Inc.
1400 Centerpoint Boulevard
Knoxville, TN 37932
Dear Mr. Hodge:
Upon review of Celerity Systems, Inc.'s (the "Company") Form 10-K for the fiscal
year ended December 31, 1998, Staff noted that the Company received a "going
concern" opinion from its independent auditor, PriceWaterhouseCoopers LLP. In
light of the auditor's opinion, we are concerned that the Company may not be
able to sustain compliance with the continued listing requirements of The Nasdaq
Stock Market.
To address this concern, please send a detailed letter describing the Company's
plans to address the specific items that led to the issuance of the "going
concern" opinion, along with an expected timeline for resolution of these items.
Your letter should include a discussion of the Company's plans to address the
specific concerns highlighted by your auditor including, but not limited to:
o the Company's recurring losses from operations, and
o its cash flow and working capital problems.
In addition, your letter should include a discussion explaining why the Company
believes it will be able to sustain compliance with the continued listing
standards of The Nasdaq SmallCap Market. Please also provide exhibits or
additional information which you feel will help us understand how the Company
intends to address the issues noted above. Please provide this information on or
before May 7, 1999.
If you have any questions or require additional information, please contact your
Nasdaq Listing Qualifications Analyst, Razine Boursiquot at (800) 330-8920.
Sincerely,
/s/ Kit Milholland
Kit Milholland
Associate Director
Nasdaq Listing Qualifications
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EXHIBIT 99.3
Celerity Systems and FutureTrak Announce Letter of Intent to Merge
KNOXVILLE, Tenn./POMPANO BEACH, FLA.-April 27, 1999-Celerity Systems, Inc.,
(NASDAQ:CLRT) and FutureTrak International, Inc. (NASD OTC BB:FTRK) today
announced that they have executed a Letter of Intent to merge the two companies
into a combined entity as soon as practicable, subject to shareholder approval.
The new entity will continue to have operations in Knoxville, Tennessee and
Pompano Beach, Florida, and will continue to remain in the businesses in which
they are now engaged.
Celerity Systems, Inc. manufactures interactive video services and high speed
Internet hardware and software, including Digital Video Servers and Digital Set
Top Boxes. FutureTrak International, Inc. is engaged in delivering Integrated
Entertainment/Information Products and Services such as DIRECTV, real time stock
quote, weather information, high speed Internet, and other content to multi
housing units. FutureTrak also delivers services and contents using Space
Scanner Satellite positioning systems manufactured by Lockheed Martin - Ocala
Operations. There units are currently marketed to the mobile industry (i.e.
yachts, boats and recreational vehicles).
"We are very pleased at the opportunity to combine the activities of Celerity
and Future Trak," said Ken Van Meter, Chairman, President and CEO of Celerity
Systems. "We believe that there is excellent synergy between the two companies,
and that these products are complementary, particularly in marketplaces such as
multi housing units (MHU). We also believe that there is great chemistry between
the management of the two companies, and we share a common vision for the
digital future."
"We are equally enthusiastic about merging with Celerity," said Dr. Ahmad
Moradi, CEO of FutureTrak International, Inc. "We believe that the technologies
of the two companies, along with our aggressive efforts to deploy these systems
in a variety of markets, have the potential to achieve significant rewards for
our shareholders long term, as well as a stronger presence in the marketplace."
"The mergers of both companies pools our resources and talents, and the
resulting Company is in a great position to offer equipment, hardware, software,
and satellite solutions to the multi housing units, mobile, and direct broadcast
satellite (DBS) markets. This combination should position the Company to achieve
improved growth in media information delivery systems revenue and Internet
related services," said Steve Remondini, President and Chairman of FutureTrak
International, Inc. For more information about FutureTrak contact Stefanie
Haden, Investor Relations at (954) 971- 2244, fax (954) 971-2228 or visit the
FutureTrak web site at http://www.futuretrak.com.
For more information about Celerity Systems, contact Margaret Anderson, Director
of Marketing, at (423) 539-3513, fax (423) 539-3502, or visit the Celerity web
sit at http://www.celerity.com.
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This press release contains forward-looking statements. Such statements involve
various risks that may cause actual results to differ materially from those
expressed in such forward looking statements. These risks and uncertainties
include, but are not limited to: market demand for Celerity's products,
successful implementation of Celerity's products, competitive factors, the
ability to manage Celerity's growth and the ability to recruit additional
personnel and other risks detailed from time to time in Celerity's filings with
the Securities and Exchange Commission, including but not limited to, those
described under the caption "Description of Business - Risk Factors" in
Celerity's Annual Report on Form 10-K for the fiscal year ended December 31,
1998.
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EXHIBIT 99.4
As of April 26, 1999
FutureTrak International, Inc.
3635 Park Central Boulevard North
Pompano Beach, FL 33064
Gentlemen:
This Letter sets forth our mutual understanding and agreement in principle
pursuant to which FutureTrak International, Inc., a Florida corporation
("FutureTrak"), will merge with and into Celerity Systems, Inc., a Delaware
corporation ("Celerity"; Celerity and FutureTrak are sometimes hereinafter
referred to singly as a "Company" and together as the "Companies"), or a
subsidiary of Celerity.
1. MERGER. Upon the consummation of the merger of FutureTrak with and into
Celerity or a subsidiary of Celerity upon the terms described in this Letter
(the "Merger"), Celerity will issue one share of the common stock of Celerity
for each issued and outstanding share of the common stock of FutureTrak. The
foregoing assumes that FutureTrak will, prior to Merger, consummate a 1 for 4
reverse split of its issued and outstanding shares of common stock, such that
9,546,195 shares of such common stock will be outstanding upon consummation of
the date of the Merger. The Companies agree that the Merger is intended to be a
tax-free reorganization for federal income tax purposes.
2. OTHER TRANSACTIONS. The definitive agreements described in paragraph 5
of this Letter shall provide for the occurrence of the following, upon the
consummation of the Merger:
(a) the Board of Directors of Celerity shall consist of six
members: three representatives of FutureTrak and three
representatives of Celerity;
(b) Celerity shall change its name to FutureTrak International,
Inc. and shall change the symbol for its common stock to FTRK
or such similar symbol as may be available; and
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(c) Celerity shall amend its Certificate of Incorporation to
increase its authorized capital stock as agreed to by the
Companies, including to permit the issuance of shares of its
common stock in the Merger and to reserve sufficient shares of
common stock for issuance in respect of outstanding common
stock equivalents.
3. CLOSING CONDITIONS. The consummation of the Merger and related
transactions contemplated hereby by each of the Companies shall be subject to
the fulfillment of customary conditions, including the following conditions
precedent:
(a) the negotiation and execution of a merger agreement and other
definitive agreements with respect to the transactions
contemplated hereby;
(b) the formal approval of the Board of Directors and, to the
extent required, the stockholders of each of the Companies to
the transactions contemplated hereby;
(c) receipt of all required third-party, regulatory and
governmental approvals; and
(d) the completion by each of the Companies of its "due diligence"
investigation concerning the other Company.
4. CLOSING. It is anticipated that the consummation of the transactions
contemplated herein will occur on or before October 30, 1999, or such other date
as the parties may agree.
5. DEFINITIVE AGREEMENTS. The definitive agreements with respect to the
transactions contemplated hereby will contain mutually agreeable representations
and warranties, mutually agreeable provisions for indemnification and other
appropriate and customary terms and conditions.
6. CONFIDENTIALITY. Except to the extent that information with respect to
either Company provided by it, or discovered by the other Company, is in the
public domain without breach of any obligation of confidentiality, such
information concerning each Company is hereinafter referred to as "Confidential
Information." Prior to the consummation of the Merger, neither Company shall
disclose Confidential Information of the other, except on a confidential basis,
to its respective employees, accountants, attorneys and other professional
advisors or as otherwise expressly provided herein, without the prior written
consent of the other Company. If at any time either Company is requested or
required (by oral questions, interrogatories, requests for information or
documents, subpoenas or similar legal process) to disclose any Confidential
Information of the other Company, it (to the extent reasonably practical) shall
promptly notify the Company so that such Company may seek an appropriate
protective order and/or waive compliance with the provisions hereof. If, in the
absence of a protective order or the receipt of a waiver hereunder, in the
reasonable opinion of counsel for either Company, such Company is compelled to
disclose Confidential Information of the other Company to any tribunal or any
governmental agency, it may disclose such information to such tribunal or agency
without liability hereunder.
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7. EXPENSES. Except as may be otherwise provided in the definitive
agreement, the Companies shall each pay their respective expenses (including
fees and expenses of legal counsel) in connection with the transactions
contemplated hereby.
8. EXCLUSIVITY. Unless this Agreement has been terminated, during the
period ending 60 days following the date of this Letter, the Board of Directors
and officers of FutureTrak agree that they will not solicit proposals or provide
any information to any third party for the purpose of sale, tender offer or
merger with any entity except Celerity. Each such officer or director agrees
that he will vote his capital stock in favor of the Merger, and will not seek to
exercise any appraisal or dissenters rights with respect to the Merger. Should
any officer or director sell or otherwise dispose of any capital stock during
this period, he will retain legal proxy rights to such shares and will vote such
shares in favor of the Merger.
9. PUBLIC DISCLOSURE. Subject to any applicable requirements of law,
neither of the Companies shall make any public disclosure concerning the subject
matter hereof or the transactions contemplated hereby without the prior written
consent of the other. The parties agree to prepare a mutually acceptable press
release or releases with respect to the transactions contemplated hereby which
will be released by the Companies on or about the date of the execution of this
Letter.
10. PREPARATION. Each of the Companies agrees to provide the other Company
and its advisors full access to its books, records and premises in order to
enable them to complete their "due diligence" with respect to the Merger and
related transactions. Subject to Section 11, each of the Companies agrees to
negotiate in good faith and cooperate with the other party in connection with
the preparation of definitive agreements, to use its commercially reasonable
efforts to complete such preparation and execute and deliver definitive
agreements prior to June 30, 1999 and to close the transactions contemplated
hereby as expeditiously as possible thereafter; provided that, if the Companies
conclude prior to June 30, 1999 that it is impractical for them to consummate
the Merger, subject to Section 11, each of the Companies agrees to negotiate in
good faith and cooperate with the other party in connection with the preparation
of definitive documents concerning another business combination intended to
achieve, as nearly as practicable, similar economic results for the Companies as
the Merger, if any such business combination is practicable, to use commercially
reasonable efforts to execute and deliver definitive agreements with respect
thereto prior to June 30, 1999 and to close the transactions contemplated hereby
as soon as practicable thereafter. The parties further agree to cooperate in
connection with the preparation of any required governmental or regulatory
filings.
11. TERMINATION. The obligations of the Companies under this Letter may be
terminated (a) by mutual agreement of the Companies; (b) by either Company if
the definitive agreements have not been executed on or prior to June 30, 1999;
or (c) prior thereto, if the other Company is no longer negotiating in good
faith as provided in Section 10 or if the Board of Directors of such Company
determines in the good faith exercise of its fiduciary duties that such
termination is in the best interests of such Company. In the event either of the
Companies decides to terminate this Agreement, it shall, to the extent
reasonably practical, endeavor to inform the other Company of
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the reasons for such decision, to provide the other Company ten days' prior
written notice of its intention to terminate and to afford the other party an
opportunity during such ten-business day period to address the reasons for such
termination.
12. NATURE OF AGREEMENT. The Companies acknowledge that this Letter is a
statement of their mutual intention only, and unless definitive agreements are
executed and delivered by the Companies, there are no legally binding agreements
between the Companies with respect to the transactions contemplated hereby.
Notwithstanding the foregoing, the provisions of paragraphs 6, 7, 8, 9, 10 and
11 hereof shall constitute binding legal agreements, shall be enforceable
against the parties in accordance with their respective terms and shall survive
any termination of the transactions contemplated hereby.
13. GOVERNING LAW. This Letter shall be governed by, and construed in
accordance with, the laws of the State of Delaware applicably to contracts made
and wholly to be performed within such state.
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If you are in agreement with the terms and conditions of this
Letter, please sign and date the enclosed duplicate of this Letter in the space
provided below and return it to the undersigned.
Very truly yours,
CELERITY SYSTEMS, INC.
By: /s/ KENNETH D. VAN METER
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Name: Kenneth D. Van Meter
Title: President/CEO
Accepted and agreed as of the
27th day of April, 1999:
FUTURETRAK INTERNATIONAL, INC.
By: /s/ AHMAD MORADI
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Name: Ahmad Moradi
Title: CEO
Accepted and agreed with respect to
Section 8 only, as of the 27th day
of April, 1999:
/s/ AHMAD MORADI
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Ahmad Moradi
/s/ ROBERT KELNER
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Robert Kelner
/s/ WILLIAM TESSARO
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William Tessaro
/s/ STEPHEN REMONDINI
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Stephen Remondini
