<PAGE>
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1
FORM 8-K/A
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):
October 21, 1999
CELERITY SYSTEMS, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 0-23279 52-2050585
- ---------------- ---------------- --------------
(State or Other (Commission File (IRS Employer
Jurisdiction of Number) Identification No.)
Incorporation)
1400 Centerpoint Boulevard
Knoxville, Tennessee 37932
----------------------------------------
(Address of Principal Executive Offices)
Registrants Telephone Number, including
area code: (423) 539-5300
--------------------------------------------
(Former Address, if changed since last report)
<PAGE>
- -------------------------------------------------------------------------
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: Celerity System Inc.s (Celerity) history of
losses and need for financing, market demand for Celeritys products, successful
implementation of Celeritys products, competitive factors, the ability to manage
Celeritys growth and the ability to recruit additional personnel, risks
involving the proposed merger of a subsidiary of Celerity with FutureTrak
International, Inc., including that the merger will not be consummated, and
other risks detailed from time to time in Celeritys filings with the Securities
and Exchange Commission (Commission), including but not limited to, those
described under the caption Description of Business - Risk Factors in Celeritys
Annual Report on Form 10-KSB for the fiscal year ended December 31, 1998,
Celeritys Registration Statement on Form S-3 (Registration No. 333-81099),
Celeritys current reports on Form 8-K filed with the Commission on September 14,
1999, September 29, 1999, October 8, 1999 and this Form 8-K.
This Amendment No. 1 to Form 8-K filed October 27, 1999 amends and restates
Item 5 and Exhibit 99.1 in their entirety and adds Item 7.
Item 5: Other Events
------------
The Company was delisted from the Nasdaq SmallCap Market, effective October 21,
1999. The Company will continue to trade on the OTC Bulletin Board under the
symbol CLRT. The delisting follows a Nasdaq panels determination that the
Company did not meet the minimum $1.00 per share bid price and $2,000,000 net
tangible assets requirements for maintenance on the Nasdaq SmallCap Market. The
panel also cited the going concern qualification in the opinion of the Company's
auditors for the fiscal year ended December 31, 1998 and determined that the
Company's proposed merger with FutureTrak International, Inc. constitutes a
reverse merger, requiring the Company to comply with the more stringent initial
listing requirements. The panel was of the opinion that the Company failed to
present a definitive plan which will enable it to evidence compliance with all
of the requirements for continued listing on the Nasdaq SmallCap Market within a
reasonable period and to sustain compliance with those requirements over the
long-term.
Attached hereto as Exhibit 99.1 is a letter from Nasdaq to the Company dated
October 21, 1999 regarding the Company's delisting from the Nasdaq SmallCap
Market. The Company's capital raising plans and plans to address deficiencies
in net tangible assets cited in the letter were preliminary in nature. No
assurance can be given that any such plans will be realized.
Item 7: Financial Statements, Pro Forma Financial Information and Exhibits
------------------------------------------------------------------
(c) Exhibits
99.1 Letter dated October 21, 1999, from Nasdaq to the Company.
<PAGE>
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: October 28, 1999
CELERITY SYSTEMS, INC.
By: /s/ Kenneth D. Van Meter
-------------------------------------
Kenneth D. Van Meter
President and Chief Executive Officer
<PAGE>
Exhibit 99.1
October 21, 1999
Sent Via Facsimile and Overnight Commercial Carrier
- ---------------------------------------------------
Mr. Kenneth Van Meter
President and Chief Executive Officer
Celerity Systems, Inc.
1400 Centerpoint Boulevard
Knoxville, TN 37932
Re: Celerity Systems, Inc. (Symbol: CLRT)
Nasdaq Listing Qualifications Panel
Decision NQ 3089C-99
Dear Mr. Van Meter:
This is to inform you that, pursuant to the September 16, 1999 oral
hearing before a Nasdaq Listing Qualifications Panel (the "Panel"), a
determination has been made in the matter of Celerity Systems, Inc. (the
"Company") and its request for continued inclusion on The Nasdaq SmallCap Market
pursuant to an exception to the bid price and net tangible assets/market
capitalization/net income requirements, as set forth in Nasdaq Marketplace Rules
4310(c)(4) and 4310(c)(2), respectively. A determination was also made with
respect to the "reverse merger" concerns raised by staff, pursuant to Nasdaq
Marketplace Rules 4330(f).1
After a careful review of the entire record, the Panel relied upon
the following information in reaching its determination. The Company is a
provider of interactive digital video servers and digital set top boxes for the
interactive video and high speed Internet markets. The Form 10-Q for the quarter
ended June 30, 1999 reported total assets of $3,025,934 and net tangible assets
of $(458,556). Revenue and net income (loss) for the six months ended June 30,
- ----------------------------
1 Nasdaq Marketplace Rule 4330(f) states that if a Nasdaq SmallCap issuer enters
into a merger agreement causing a change in control and a change in financial
structure, that issuer shall be required to meet all INITIAL inclusion
requirements for The Nasdaq SmallCap Market.
<PAGE>
1999 totaled $81,156 and $(17,033,182), respectively.2 The Company reported
4,763,412 total shares outstanding and 3,505,011 shares in the public float. The
intra-day bid price of the Company's common stock on October 21, 1999 was
$0.46875 per share; consequently, the market capitalization and market value of
public float were $2,232,849 and $1,642,974, respectively.
In response to the reverse merger concerns raised by staff, the
Company asserted that the merger with FutureTrak International, Inc.
("FutureTrak") is a "merger of equals" with sound business synergy. The Company
challenged staff's assertion that on a post-merger basis, FutureTrak will own
68% of the outstanding stock of the merged entity. Although it did concede that
FutureTrak will own the majority of the outstanding stock of the post-merger
entity, the Company was unable to provide the exact ownership percentages, due
to the still undetermined number of warrants and options that will be issued to
each group. In the reference to staff's contention that a change of control will
occur in the merged entity, the Company stated that the Board of Directors will
be composed of seven members, two of which will be nominated by the Company, two
of which will be nominated by FutureTrak, with the remaining three directors
being independently appointed by both companies. The officers of the new entity
will be composed of three members from each company, with FutureTrak's current
CEO serving as the merged entity's CEO, and the Company's current CEO serving as
President. Both individuals will be Joint Chairmen of the new Board of
Directors. As such, the Company was of the belief that the structure of the
merger agreement will not constitute a change in control.
The Company has retained Sands Brothers & Co., Ltd. ("Sands Brother")
to provide investment banking services over the next two years, to advise the
Company through the merger with FutureTrak and to assist in obtaining the
necessary financing to enable the surviving entity to thrive. In a letter dated
September 15, 1999, Sands Brothers stated that, after having discussions with
both companies, it believes that between $10,000,000 and $30,000,000 will have
to be raised for the post-merger entity. The manner by which that capital will
be raised has not yet been determined. The Company has also had preliminary
discussions with two other potential financiers which it believes are capable of
raising the necessary capital; however, the Company conceded at the hearing that
any financing will be predominantly contingent upon the completed merger
agreement.
The Company asserted that it plans to wait for the merger to be
consummated before it attempts to remedy the minimum $1.00 per share bid price
deficiency by means of a reverse stock split. In response the Company's belief
that the current stock price does not reflect the true value of the Company, it
has retained an investment relations firm to address.
- ----------------------------
2 The Forms 10-K for the fiscal years ended December 31, 1998, 1997 and 1996
reported net income (loss) of $6,955,847), $(8,675,030) and $(5,790,287),
respectively.
<PAGE>
At the hearing, the Panel expressed concern that the Company no
longer meets the $2,000,000 net tangible assets requirements. The Company
believes that certain officers, members of the Board of Directors and individual
investors may be willing to convert an aggregate of approximately $300,000 of
debt into equity in the short term. The Company also pointed to its plan to
raise equity in relation to the merger agreement.
The Company received a "going concern" qualification in the auditors'
opinion included within the Form 10-K for the fiscal year ended December 31,
1998. The auditors cited losses from continuing operations, as well as cash flow
and working capital deficiencies. The Company was of the opinion that, once the
merger agreement is consummated and the equity infusion is received, all the
issues raised in the "going concern" opinion will be addressed.
The Company requested an exception of 120 to 150 days to secure the
necessary financing and consummate the merger agreement with FutureTrak. Once
the merger agreement is consummated, the Company believes that it will meet all
continued listing requirements for The Nasdaq SmallCap Market.
PANEL DECISION
The Panel was of the opinion that the Company failed to present a
definitive plan which will enable it to evidence compliance with all
requirements for continued listing on The Nasdaq SmallCap Market within a
reasonable period of time and to sustain compliance with those requirements over
the long term. The Panel was further of the opinion that the Company's proposed
merger with FutureTrak will constitute a change of control and a change of
financial structure, particularly in light of the proposed financing. As a
result, the Panel determined that the Company would have to meet the initial
listing requirements for The Nasdaq SmallCap Market upon consummation of the
merger. While the Panel acknowledged the Company's proposal to convert certain
debt securities into equity in the short term to address its net tangible assets
deficiency, it was of the opinion that the transactions discussed would not be
sufficient to achieve compliance, particularly in light of the continuing
losses. Finally, the Panel expressed concern with the amount of time that the
Company has been out of compliance with the minimum $1.00 per share bid price
requirement, and the amount of time the Company requested to evidence compliance
with all continued listing requirements.3 The Panel was of the opinion that the
net tangible assets and bid price deficiencies each provide a separate basis for
delisting. Accordingly, the Panel determined to delist the Company's securities
from The Nasdaq Stock Market effective with the close of business today, October
21, 1999.
- ----------------------------
3 The closing bid price of the Company's common shares has been below $1.00 per
share since March 8, 1999, with the exception of 12 days.
<PAGE>
The Company should be aware that the Nasdaq Listing and Hearing
Review Counsel ("Review Council") may, on its own motion, determine to review
ANY Panel decision within 45 calendar days after issuance of the written
decision. If the Review Council determines to review this decision it may
affirm, modify, reverse, dismiss, or remand the decision to a Panel. The Company
will be immediately notified in the event the Review Council determines that
this matter will be called for review.
The Company may also request that the Review Council review this
decision. The request for review must be made in writing and received within 15
days from the date of this decision. Requests must be sent to: Sara Nelson
Bloom, Office of General Counsel, The Nasdaq Stock Market, 1801 K Street, N.W.,
8th Floor, Washington, DC 20006, (202) 728-8478 and facsimile (202) 728-8321.
Pursuant to Nasdaq Marketplace Rule 4840(b), the Company must submit a fee of
$1,400 to The Nasdaq Stock Market, Inc., to cover the cost of the review. Please
be advised that the institution of a review, whether by way of the Company's
request or on the initiative of the Review Council, will NOT operate as a stay
of this decision.
The securities of the Company may immediately be eligible to trade on
the OTC Bulletin Board. Pursuant to SEC File No. TP 97-235, an exemption from
Rule 15c2-11 has been granted to permit a broker-dealer, without having the
information specified by the Rule, to publish in, or submit for publication in,
a quotation medium, quotations for a security immediately after such security is
no longer authorized for quotation on The Nasdaq Stock Market, subject to the
following conditions:
1. Removal of the security from authorization for quotation on
The Nasdaq Stock Market must be attributable solely to the
issuer's failure to satisfy the revised initial listing or
maintenance standards, as continued in SEC Release no.
34-38961 (August 22, 1997);
2. The security must have been quoted continuously on The Nasdaq
Stock Market during the 30 calendar days preceding its
delisting from that market, exclusive of any trading halt not
exceeding one day to permit the dissemination of material news
concerning the security's issuer;
3. The issuer of the security must not be the subject of
bankruptcy proceedings;
4. The issuer of the security must be current in all of its
periodic reporting requirements pursuant to Section 13(a) or
15(d) of the Exchange Act;
<PAGE>
5. A broker-dealer relying upon this exemption must have been a
market maker registered with the NASD in the security no
longer eligible for quotation during the 30 day period
preceding the security's removal from The Nasdaq Stock Market;
and
6. The exemption is available only for securities that were
authorized for quotation on The Nasdaq Stock Market and then
delisted, and not for any other securities of the issuer.
If you have any questions, please do not hesitate to contact me at (301)
978-8070.
Sincerely,
/s/ David A. Donohoe, Jr.
---------------------------------------
David A. Donohoe, Jr.
Chief Counsel
Nasdaq Listing Qualifications Hearings
