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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 22, 1999
Alysis Technologies, Inc.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
Delaware 00021539 94-3161772
<S> <C> <C>
(State or other jurisdiction (Commission File Number) (I.R.S. Employer Identification No.)
of incorporation)
</TABLE>
1900 Powell Street, Suite 600
Emeryville, California 94608
(Address of principal executive offices)
(510) 450-7000
(Registrant's telephone number, including area code)
<PAGE>
The undersigned registrant hereby amends Item 7 of its Current Report on Form
8-K filed with the commission on September 27, 1999 as set forth in the pages
attached hereto.
Item 7. Financial Statements, Pro Forma Financial Information, and Exhibits
(a) Financial Statements of Business Acquired
The following are included in the audited financial statements herein:
1. Report of Independent Auditors;
2. Balance Sheet as of June 30, 1999;
3. Statement of Operations for the year ended June 30, 1999;
4. Statement of Stockholders' Deficit as of June 30, 1999;
5. Statement of Cash Flows for the year ended June 30, 1999; and
6. Notes to Financial Statements for the year ended June 30, 1999.
(b) Unaudited Pro Forma Condensed Combined Financial Information
The following are included in the pro forma condensed combined
financial information herein:
1. Introduction to Unaudited Pro Forma Condensed Combined Financial
Information;
2. Unaudited Pro Forma Condensed Combined Statement of Operations
for the nine months ended September 30, 1999;
3. Unaudited Pro Forma Condensed Combined Statement of Operations
for the year ended December 31, 1998; and
4. Notes to Unaudited Pro Forma Condensed Combined Financial
Information.
1
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Item 7(a). Financial Statements of Business Acquired
Report of Independent Auditors
The Board of Directors and Stockholders
At Work Corporation
We have audited the accompanying balance sheet of At Work Corporation as of June
30, 1999, and the related statements of operations, stockholders' deficit, and
cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of At Work Corporation at June 30,
1999, and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
Walnut Creek, California
September 1, 1999, except for
Notes 5 and 7 as to which the date is
September 15, 1999
2
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AT WORK CORPORATION
BALANCE SHEET
June 30, 1999
<TABLE>
<S> <C>
Assets
Current assets:
Cash $ 140,579
Accounts receivable, net of allowance for doubtful accounts of $3,290 71,000
Notes receivable from stockholders 4,000
-----------
Total current assets 215,579
Equipment, net 16,251
Other assets 3,252
-----------
Total assets $ 235,082
===========
Liabilities and stockholders' deficit
Current liabilities:
Accounts payable $ 20,803
Accrued payroll and related liabilities 9,870
Deposits 200,000
Borrowings under line of credit agreements 6,111
Income taxes payable 55,221
-----------
Total current liabilities 292,005
Stockholders' deficit:
Common stock, no par value;
Authorized shares - 200
Issued and outstanding shares - 10 1,000
Accumulated deficit (57,923)
-----------
Total stockholders' deficit (56,923)
-----------
Total liabilities and stockholders' deficit $ 235,082
===========
</TABLE>
See accompanying notes.
3
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AT WORK CORPORATION
STATEMENT OF OPERATIONS
Year ended June 30, 1999
<TABLE>
<S> <C>
Revenues:
License $ 203,290
Service 131,291
-----------
Total revenues 334,581
Cost of revenues 65,645
-----------
Gross profit 268,936
Operating expenses:
Sales and marketing 107,876
Product development 81,314
General and administrative 61,195
-----------
Operating expenses 250,385
-----------
Income from operations 18,551
Interest expense 2,819
Income taxes 55,221
-----------
Net loss $ (39,489)
===========
</TABLE>
See accompanying notes.
4
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AT WORK CORPORATION
STATEMENT OF STOCKHOLDERS' DEFICIT
For the year ended June 30, 1999
<TABLE>
<CAPTION>
Common Stock Accumulated
----------------------
Shares Amount Deficit Total
----------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at June 30, 1998 10 $1,000 $(18,434) $(17,434)
Net loss and comprehensive loss - - (39,489) (39,489)
----------------------------------------------------------
Balance at June 30, 1999 10 $1,000 $(57,923) $(56,923)
==========================================================
</TABLE>
See accompanying notes.
5
<PAGE>
AT WORK CORPORATION
STATEMENT OF CASH FLOWS
Year ended June 30, 1999
<TABLE>
<CAPTION>
<S> <C>
Operating activities
Net loss $(39,489)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation 8,813
Allowance for doubtful accounts 3,290
Change in operating assets and liabilities:
Accounts receivable (73,790)
Accounts payable 4,528
Accrued payroll and related liabilities 10,043
Deposits 200,000
Income taxes payable 55,221
-------------
Net cash provided by operating activities 168,616
Investing activities
Purchase of equipment (9,530)
Notes receivable from shareholders (4,000)
-------------
Net cash used in investing activities (13,530)
Financing activities
Borrowings from line of credit agreements 53,111
Repayments on line of credit agreements (79,284)
-------------
Net cash used in financing activities (26,173)
-------------
Net increase in cash 128,913
Cash at beginning of year 11,666
-------------
Cash at end of year $140,579
=============
Supplemental disclosures of cash flow information
Cash paid during the year for:
Interest $ 2,819
=============
</TABLE>
See accompanying notes.
6
<PAGE>
AT WORK CORPORATION
Notes to Financial Statements
June 30, 1999
1. The Company and Summary of Significant Accounting Policies
The Company
At Work Corporation, d/b/a @Work Technologies (the "Company"), was incorporated
on October 18, 1995 in New York for the purpose of developing software products
to organize data for distribution over the Internet. The Company's products and
services organize data generated by customer accounting systems into an
appropriate format for distribution over the Internet. The primary application
of the Company's software products has been within customers' billing
applications.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported results of operations during the reporting period.
Actual results could differ from those estimates.
Concentrations of Credit Risk and Credit Evaluations
The Company conducts business primarily with companies in the United States and
Australia. The Company generally does not conduct credit evaluations of these
customers and does not require collateral, as the majority of its business is
with large financially secure companies.
At June 30, 1999, three customers accounted for 37%, 35% and 17%, respectively,
of the Company's total revenues.
Revenue
License revenue is recognized when a noncancelable license agreement has been
executed, the product has been shipped, the license fee is fixed or determinable
and collectibility is reasonably assured. Service revenue primarily consists of
consulting revenue, which is recognized as services are performed.
Equipment
Equipment is stated at cost. Depreciation is computed using the straight-line
method over the estimated useful lives of the assets, which range from three to
five years.
Software Development Costs
The Company accounts for software development costs in accordance with Statement
of Financial Accounting Standards No. 86, "Accounting for Costs of Computer
Software to be Sold, Leased, or Otherwise Marketed," under which certain
software development costs incurred subsequent to the establishment of
technological feasibility are capitalized and amortized over the estimated lives
of the related products. Technological feasibility is established upon
completion of a working model. As of June 30, 1999, such capitalized software
development costs were insignificant and all software development costs have
been charged to product development expenses in the accompanying statement of
operations.
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Income Taxes
The Company accounts for income taxes in accordance with Statement of Financial
Accounting Standard No. 109 ("FAS 109"), "Accounting for Income Taxes," which
requires the use of the liability method in accounting for income taxes. Under
this method, deferred income tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and liabilities
and are measured using enacted tax rules and laws that are expected to be in
effect when the differences are expected to reverse.
2. Equipment
The components of equipment are as follows at June 30, 1999:
Computer equipment and software $ 33,193
Furniture and fixtures 5,489
--------
38,682
Less accumulated depreciation (22,431)
--------
$ 16,251
========
3. Line of Credit Agreements
The Company has a line of credit agreement with a bank which allows for
borrowings up to $50,000. The line expires on December 31, 1999 and requires no
collateral. Interest on the outstanding balance accrues at the bank's prime rate
plus 1% (9% at June 30, 1999) per annum. Outstanding principal balances are due
ratably over 36 months and accrued interest is payable monthly. The Company had
no outstanding amounts under this agreement at June 30, 1999.
The Company also has an unsecured line of credit agreement with a financial
institution which allows for borrowings of up to $12,000. This line does not
expire and does not require collateral. Interest on the outstanding balance
accrues at the prime rate plus 3.9% (11.65% at June 30, 1999) per annum.
Outstanding principal and accrued interest are payable monthly. The Company had
$6,111 outstanding under this line at June 30, 1999.
4. Operating Lease
The Company leases its principal facility under an operating lease which is
renewed on a monthly basis at the option of the Company. The Company does not
have a liability for future minimum lease payments under the terms of the lease
agreement.
Rent expense for the year ended June 30, 1999 was $19,620.
5. Notes Receivable From Stockholders
The Company has outstanding notes receivable from certain officers who are also
stockholders of the Company. These notes do not bear interest and are secured
by the stockholders' personal assets. All outstanding amounts were repaid in
September 1999.
8
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6. Income Taxes
The provision for income taxes consists of the following components as of June
30, 1999:
Current:
Federal $ 40,662
State 14,559
---------
55,221
Deferred:
Federal -
State -
---------
-
---------
Total provision for income tax $ 55,221
=========
The provision for income taxes differs from the amount computed by applying the
federal statutory income tax rate to the Company's income before taxes as
follows at June 30, 1999:
Income tax provision at federal statutory rate $ 5,349
State income tax, net of federal tax effect 1,052
Nondeductible expenses 668
Change in valuation allowance 48,152
---------
Provision for income taxes $ 55,221
=========
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
and the amounts used for income tax purposes. Significant components of the
Company's deferred tax assets are as follows at June 30, 1999:
Deferred tax assets:
Accrual to cash adjustments $ 54,503
---------
Total deferred tax assets 54,503
Valuation allowance (54,503)
---------
Total net deferred tax assets $ -
=========
A valuation allowance was established against the deferred tax assets due to
uncertainty regarding their realizability. The valuation allowance increased by
$48,152 in the year ending June 30, 1999. The Company prepares its federal and
state income tax returns on the cash basis and has a September 30 year end for
income tax purposes.
7. Subsequent Events
Sale of the Business
On September 15, 1999, the Company's stockholders entered into a Stock Purchase
Agreement with Alysis Technologies, Inc., an unrelated public company, under
which all of the Company's outstanding common stock was sold to Alysis
Technologies, Inc. No adjustments to the financial position or results of
operations which may result from this acquisition have been included in the
accompanying financial statements.
8. Year 2000 (Unaudited)
The Year 2000 issue relates to the use by many existing computer programs of
only two digits to identify a year in the date field. If not corrected, many
computer applications could fail or create erroneous results by or at the Year
2000. The Company recognizes the need to ensure that the potential Year 2000
software failures will not
9
<PAGE>
adversely impact its operations. The Company believes that Year 2000 problems
will not have a material adverse effect on its results of operations or
financial position.
The Company has evaluated all internally developed and purchased software and
hardware for Year 2000 compliance. The Company believes no changes to its
systems or hardware are necessary to reach compliance. To date, Year 2000 costs
have been minimal and the Company believes that future costs, if any, will be
immaterial. However, there can be no assurances that the Company will not
experience serious unanticipated negative consequences and/or material costs
caused by undetected errors or defects in the technology used in its internal
systems.
At this time, the Company cannot quantify the potential impact of third-party
Year 2000 issues, nor has it developed contingency plans for the possibility
that one or more of such third parties may experience a significant disruption
due to Year 2000 issues.
10
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Item 7(b). Pro Forma Condensed Combined Financial Information
The unaudited pro forma condensed combined financial information for Alysis
Technologies, Inc. (the "Company") set forth below, gives effect to the
acquisition of At Work. The Company acquired At Work in September 1999.
Accordingly, the results of operations of At Work subsequent to the acquisition
are included in the Company's historical results of operations for the three and
nine month periods ended September 30, 1999. The historical financial
information set forth below has been derived from, and is qualified by reference
to, the financial statements and the notes thereto of At Work included herein.
The unaudited pro forma condensed combined statements of operations data for the
nine months ended September 30, 1999 and the year ended December 31, 1998 set
forth below give effect to the acquisition as if it occurred as of the beginning
of each period presented. The unaudited pro forma condensed combined financial
information set forth below reflects certain adjustments, including adjustments
to reflect amortization of the acquired intangible assets. The information set
forth below should be read in conjunction with the financial statements and
related notes to the financial statements of At Work included herein and the
financial statements and related notes of the Company which are included in the
Company's Annual Reports on Form 10-K for the years ended December 31, 1998 and
the Company's Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1999. The unaudited pro forma condensed combined financial
information set forth below does not purport to represent what the results of
operations or financial condition of the Company would actually have been if the
At Work acquisition and related transactions had in fact occurred on such date
or to project the future results of operations or financial condition of the
Company.
11
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
for the Nine Months Ended September 30, 1999
(in thousands)
<TABLE>
<CAPTION>
Historical Pro Forma Pro Forma
----------------------
Alysis At Work Adjustments Combined
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
License $ 5,769 $ 118 $ - $ 5,887
Service 5,525 35 - 5,560
Maintenance 3,810 - - 3,810
---------- ---------- ----------- -----------
Total revenues 15,104 153 - 15,257
Cost of revenues 7,712 25 - 7,737
Operating expenses:
Sales and marketing 3,297 94 - 3,391
General and administrative 3,128 65 630 c 3,823
Product development 1,070 161 - 1,231
---------- ---------- ----------- -----------
Total operating expenses 7,495 320 630 8,445
---------- ---------- ----------- -----------
Operating loss (103) (192) (630) (925)
Interest income 224 - - 224
---------- ---------- ----------- -----------
Income (loss) before income taxes 121 (192) (630) (701)
Income taxes - 55 (55) b -
---------- ---------- ----------- -----------
Net income (loss) 121 (247) 575 (701)
Preferred stock dividends 47 - - 47
---------- ---------- ----------- -----------
Net income (loss) applicable to common
shareholders $ 74 $ (247) $ 575 $ (748)
========== ========== =========== ===========
Basic net income (loss) per share applicable to common
shareholders (a) $ 0.01 $ (0.06)
========== ===========
Diluted net income (loss) per share applicable to
common shareholders (a) $ 0.01 $ (0.06)
========== ===========
Shares used in computing basic net income (loss) per
share applicable to common shareholders (a) 12,134 12,588
========== ===========
Shares used in computing diluted net income (loss) per
share applicable to common shareholders (a) 13,042 12,588
========== ===========
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Information
12
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
for the Year Ended December 31, 1998
(in thousands)
<TABLE>
<CAPTION>
Historical Pro Forma Pro Forma
-----------------------------------
Alysis At Work Adjustments Combined
--------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Revenues:
License $ 3,141 $ 100 $ - $ 3,241
Service 5,661 184 - 5,845
Maintenance 4,369 - - 4,369
-------------- ---------- ---------- ----------
Total revenues 13,171 284 - 13,455
Cost of revenues 10,814 32 - 10,846
Operating expenses:
Sales and marketing 5,234 40 - 5,274
General and administrative 4,456 60 839 c 5,355
Product development 5,343 28 - 5,371
-------------- ---------- ---------- ----------
Total operating expenses 15,033 128 839 16,000
-------------- ---------- ---------- ----------
Operating income (loss) (12,676) 124 (839) (13,391)
Interest income 395 - - 395
-------------- ---------- ---------- ----------
Income (loss) before income taxes (12,281) 104 (839) (12,996)
Income taxes - 49 (49) b -
-------------- ---------- ---------- ----------
Net income (loss) (12,281) 75 (790) (12,996)
============== ========== ========== ==========
Basic and diluted net loss per share (a) $ (1.06) $ (1.08)
============== ==========
Shares used in computing basic and diluted net
loss per share (a) 11,596 12,076
============== ==========
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Information
13
<PAGE>
Notes to Unaudited Pro Forma Condensed Combined Financial Information
Note 1. Pro Forma Adjustments
The following adjustments were applied to the statements of operations to arrive
at the unaudited pro forma condensed combined statements of operations.
(a) Pro forma net income (loss) reflects the impact of the adjustments below.
Pro forma basic net income (loss) per share is computed using the weighted
average number of shares of common stock outstanding after the issuance of
Alysis common stock to acquire the outstanding shares of At Work common
stock as of January 1, 1998. Pro forma diluted net income per share is
computed as described above and also gives effect to any dilutive options.
Dilutive options are excluded from the computation during loss periods, as
their effect is antidilutive.
(b) Reflects the elimination of At Work's income taxes payable. We believe the
combined entity will be able to utilize the current net operating loss
carryforward of the Company.
(c) Reflects the amortization of the Intangible assets as if they were
established as of the beginning of each period presented and are amortized
over three years. Quarterly amortization expense is $210,000.
14
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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.
Name
Dated: November 22, 1999 By: /s/ Leslie J. Alvarez
-----------------------
Leslie J. Alvarez
15
