<PAGE> 1
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 (DATE OF EARLIEST EVENT REPORTED): JULY 21, 2000
ADEPT TECHNOLOGY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
CALIFORNIA 0-27122 94-2900635
(STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (IRS EMPLOYER
INCORPORATION) IDENTIFICATION NO.)
150 ROSE ORCHARD WAY
SAN JOSE, CALIFORNIA 95134
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (408) 432-0888
NONE
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 27, 2000, Adept Technology, Inc., a California corporation (the
"Registrant"), filed a Current Report on Form 8-K to report under Item 5 the
completion of the Registrant's acquisition of HexaVision Technologies Inc., a
Canadian corporation ("HexaVision), on July 21, 2000 (the "Acquisition").
This amendment is being filed to report the Acquisition under Item 2 of
Form 8-K and to provide the required financial statements and pro forma
financial information referenced in Item 7 of Form 8-K.
In exchange for all of the outstanding capital stock of HexaVision, the
Registrant paid $5.1 million in cash. In addition, the Registrant will be
issuing shares of its common stock with a value of $1.1 million and making two
cash payments totaling approximately $1.6 million to the shareholders of
HexaVision contingent upon the continued employment of selected HexaVision
employees through July 2001. The Registrant deposited $1.6 million into an
escrow account pending resolution of the contingencies. The consideration paid
by the Registrant for HexaVision's outstanding capital stock was negotiated at
arm's length between the parties on the basis of the Registrant's assessment of
the value of HexaVision and its capital stock, following an investigation of,
and discussions with HexaVision and its representatives concerning HexaVision
and its business and prospects. The funds were paid from the Registrants'
working capital. Certain of HexaVision's former shareholders and employees,
including Patrick Murphy and Eric St-Pierre, have entered into employment and
related agreements with the Registrant. To the Registrant's knowledge, there is
no other material relationship between any of the former shareholders of
HexaVision and the Registrant or any of its affiliates, any director or officer
of the Registrant, or any associate of any such director or officer.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
The following financial statements of HexaVision are included herewith:
Consolidated Financial Statements of HexaVision Technologies Inc.
Auditor's Report .................................................F-1
Consolidated Balance Sheets ......................................F-2
Consolidated Statements of Loss and Deficit ......................F-3
Consolidated Statements of Cash Flows ............................F-4
Notes to Consolidated Financial Statements .......................F-5
<PAGE> 3
(b) PRO FORMA FINANCIAL INFORMATION
The following pro forma financial information is included herewith:
Unaudited Pro Forma Combined Condensed Financial Statements
Unaudited Pro Forma Combined Condensed Statements
of Operations................................................F-21
Unaudited Pro Forma Combined Condensed Balance Sheet.............F-22
Notes to Unaudited Pro Forma Combined Condensed
Financial Statements.........................................F-23
(c) EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
2.1 Share Purchase Agreement among Marc Tremblay, Alain Rivard, Eric
St-Pierre, Pierre Boivin, 9044-0108 Quebec Inc., Societe Innovatech
Quebec et Chaudiere-Appalaches, Sofinov, Societe Financiere
d'Innovation Inc., Business Development Bank of Canada, Christian
Labbe, Patrick Murphy and certain other shareholders named therein,
Adept Technology Canada Holding Co., and Registrant, dated July 21,
2000.*
99.1 Press Release of the Registrant issued on July 27, 2000.**
</TABLE>
* Schedules have been omitted and will be provided to the Securities and
Exchange Commission upon request.
** Previously filed with the Registrant's Current Report on Form 8-K filed with
the Securities and Exchange Commission on July 27, 2000.
<PAGE> 4
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.
ADEPT TECHNOLOGY, INC.
Date: October 25, 2000 By: /s/ Michael W. Overby
--------------------------
Michael W. Overby
Chief Financial Officer
<PAGE> 5
Consolidated Financial Statements
HEXAVISION TECHNOLOGIES INC.
January 31, 2000
<PAGE> 6
AUDITORS' REPORT
To the Directors of
HEXAVISION TECHNOLOGIES INC.:
We have audited the consolidated balance sheets of HEXAVISION TECHNOLOGIES INC.
as at January 31, 2000 and 1999 and the consolidated statements of loss and
deficit and cash flows for each of the years in the two year period ended
January 31, 2000. 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 audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
an audit to obtain reasonable assurance 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.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at January 31, 2000 and 1999
and the results of its operations and its cash flows for each of the years in
the two year period ended January 31, 2000 in accordance with accounting
principles generally accepted in Canada.
Quebec City, Canada,
March 24, 2000 [except for note 14 /s/ Ernst & Young LLP
which is as at October 20, 2000]. Chartered Accountants
F-1
<PAGE> 7
HexaVision Technologies Inc.
[Incorporated under the Canada Business Corporations Act]
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
As at January 31 [In Canadian dollars]
2000 1999
$ $
----------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT
Cash 8,011 9,574
Accounts receivable [note 4] 127,018 308,761
Investment tax credits receivable 337,000 553,000
Inventories 6,424 49,592
Prepaid expenses 16,169 55,997
----------------------------------------------------------------------------
TOTAL CURRENT ASSETS 494,622 976,924
CAPITAL ASSETS [note 3] 500,525 607,798
DEFERRED FINANCING CHARGES 87,277 42,682
----------------------------------------------------------------------------
1,082,424 1,627,404
============================================================================
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Bank loan [note 4] 14,000 357,850
Accounts payable and accrued liabilities 306,683 604,523
Deferred revenue 54,062 50,000
Current portion of other long-term debt 68,604 68,604
----------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 443,349 1,080,977
CONVERTIBLE DEBENTURES [note 5] 3,450,000 1,050,000
OTHER LONG-TERM DEBT [note 6] 647,510 600,123
ACCRUED REDEMPTION PREMIUM ON CONVERTIBLE
DEBENTURES [note 5] 929,527 367,414
----------------------------------------------------------------------------
5,470,386 3,098,514
----------------------------------------------------------------------------
SHAREHOLDERS' DEFICIENCY
Capital stock [note 7] 1,471,000 1,471,000
Deficit (5,858,962) (2,942,110)
----------------------------------------------------------------------------
(4,387,962) (1,471,110)
----------------------------------------------------------------------------
1,082,424 1,627,404
============================================================================
</TABLE>
Commitments [note 13]
See accompanying notes
On behalf of the Board
F-2
<PAGE> 8
HEXAVISION TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
<TABLE>
<CAPTION>
Years ended January 31 [In Canadian dollars]
2000 1999
$ $
----------------------------------------------------------------------------
<S> <C> <C>
Revenues 67,872 389,366
Cost of revenues 30,118 296,811
----------------------------------------------------------------------------
Gross margin 37,754 92,555
----------------------------------------------------------------------------
Research and development expenses 959,884 1,134,933
Government assistance -- (217,108)
Investment tax credits (418,915) (651,260)
----------------------------------------------------------------------------
540,969 266,565
Selling, general and administrative 1,502,574 981,126
Amortization of capital assets 270,847 206,765
----------------------------------------------------------------------------
2,314,390 1,454,456
----------------------------------------------------------------------------
Operating loss 2,276,636 1,361,901
Finance charges 658,108 285,577
Interest and other income (17,892) (21,047)
----------------------------------------------------------------------------
NET LOSS FOR THE YEAR 2,916,852 1,626,431
Deficit, beginning for the year 2,942,110 1,315,679
----------------------------------------------------------------------------
DEFICIT, END OF YEAR 5,858,962 2,942,110
============================================================================
</TABLE>
See accompanying notes
F-3
<PAGE> 9
HEXAVISION TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended January 31 [In Canadian dollars]
<TABLE>
<CAPTION>
2000 1999
$ $
----------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss (2,916,852) (1,626,431)
Adjustments for
Accrued redemption premium on convertible
debentures 562,113 236,236
Amortization of capital assets 270,847 206,765
Amortization of deferred financing charges 30,583 12,805
Gain on disposal of fixed assets (4,596) --
----------------------------------------------------------------------------
(2,057,905) (1,170,625)
Net change in non-cash
working capital items [note 8] 186,961 137,739
----------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES (1,870,944) (1,032,886)
----------------------------------------------------------------------------
INVESTING ACTIVITIES
Additions to capital assets (163,978) (376,565)
Proceeds from disposal of capital assets 5,000 --
----------------------------------------------------------------------------
CASH FLOWS USED IN INVESTING ACTIVITIES (158,978) (376,565)
----------------------------------------------------------------------------
FINANCING ACTIVITIES
Net increase (decrease) in bank loan (343,850) 357,850
Increase in long-term debt 115,991 89,584
Repayment of long-term debt (68,604) (52,596)
Issuance of convertible debentures 2,400,000 --
Increase in deferred financing charges (75,178) --
----------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES 2,028,359 394,838
----------------------------------------------------------------------------
NET DECREASE IN CASH (1,563) (1,014,613)
Cash, beginning of year 9,574 1,024,187
----------------------------------------------------------------------------
CASH, END OF YEAR 8,011 9,574
============================================================================
ADDITIONAL INFORMATION
Interest paid 57,282 26,117
----------------------------------------------------------------------------
</TABLE>
See accompanying notes
F-4
<PAGE> 10
HEXAVISION TECHNOLOGIES INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
January 31, 2000 [In Canadian dollars]
1. INCORPORATION AND NATURE OF BUSINESS
The Company was incorporated under the Canada Business Corporations Act on
January 24, 1995 and specializes in the research, development and marketing of
artificial vision systems.
The Company intends to continue its research and development activities and the
marketing of its product in 2000. The Company's activities are subject to all
the inherent risks in establishing and maintaining a research and development
company; in particular, the successful completion of its research and
development activities, the marketing of its products and the securing of the
necessary financing.
2. SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements are prepared in accordance with
accounting principles generally accepted in Canada and using the Canadian
dollar as the functional currency. A reconciliation to United States generally
accepted accounting principles is disclosed in note 15.
CONSOLIDATED STATEMENT OF CASH FLOWS
As at February 1, 1999, the Company adopted the new recommendations of the
Canadian Institute of Chartered Accountants with respect to the presentation of
cash flow information.
According to the new recommendations, non-cash operations are excluded from the
statement of cash flows and are disclosed elsewhere in the financial
statements. Cash equivalents are limited to investments that can be easily
converted to a known amount of cash whose value is not likely to change
significantly and whose original maturity is no more than three months. Also,
changes in short-term loans, with the exception of overdrafts that are an
integral part of daily cash flow management, are recorded as financing
activities.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the Company's accounts and those
of its wholly owned United States subsidiary, HexaVision Inc. This foreign
operation is classified as an integrated operation.
F-5
<PAGE> 11
HEXAVISION TECHNOLOGIES INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
January 31, 2000 [In Canadian dollars]
2. SIGNIFICANT ACCOUNTING POLICIES [cont'd]
USE OF ESTIMATES
The preparation of financial statements requires that management use estimates
and assumptions which have an impact on the amounts of the assets and
liabilities recorded and on the presentation of contingent assets and
liabilities at year-end as well as on the revenues and expenses recorded during
the period covered. Actual results could differ from those estimates and
assumptions.
INVENTORIES
Inventories are valued at the lower of cost, determined on a first-in,
first-out basis, and net realizable value.
CAPITAL ASSETS
Capital assets are recorded at cost and amortized on a straight-line basis
according to the following estimated useful lives:
<TABLE>
<CAPTION>
<S> <C>
Furniture and office equipment 5 years
Computer equipment 3 years
Software 3 years
Equipment and tooling 5 years
Telephone system 5 years
Leasehold improvements Term of lease
Patents and trademarks 10 years
</TABLE>
GOVERNMENT ASSISTANCE
The acquisition of capital assets is recorded at cost net of the related
government assistance.
Period expenses are recorded net of the related government assistance.
F-6
<PAGE> 12
HEXAVISION TECHNOLOGIES INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
January 31, 2000 [In Canadian dollars]
2. SIGNIFICANT ACCOUNTING POLICIES [CONT'D]
DEFERRED FINANCING CHARGES
Professional fees and charges incurred with respect to the securing of
financing are recorded as deferred charges and depreciated over the duration of
the financial instruments issued.
STOCK OPTION PLAN
The Company has a stock option plan, which is described in note 7. No
compensation expense is recognised when stock options are granted to employees.
Any consideration paid by employees on exercise of stock options is credited to
capital stock. If stock options are repurchased from employees, the excess of
the consideration paid over the carrying amount of the stock options cancelled
is charged to deficit.
FOREIGN CURRENCY TRANSLATION
The integrated foreign operation and foreign currency accounts were translated
into Canadian dollars using the temporal method. Under this method, monetary
items on the balance sheet are translated at the exchange rates in effect at
year-end, while non-monetary items are translated at their original exchange
rates. Revenues and expenses [other than depreciation which is translated at
the rates that apply to corresponding capital assets] are translated at
exchange rates prevailing on the transaction date or at average rates for the
year. Gains or losses resulting from the translation are included in the
statement of loss, with the exception of those that result from the translation
of the long-term debt, which are deferred and amortized until the maturity of
the debt using the straight-line method.
INCOME TAXES
The Company follows the deferral method of tax allocation. Deferred income
taxes result from timing differences between the recognition of income tax and
financial statement purposes.
FINANCIAL INSTRUMENTS
The Company has elected not to comply, as permitted, with certain requirements
of section 3860 "Financial Instruments, presentation and disclosure" of the
Canadian Institute of Chartered Accountants Handbook.
F-7
<PAGE> 13
HEXAVISION TECHNOLOGIES INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
January 31, 2000 [In Canadian dollars]
3. CAPITAL ASSETS
<TABLE>
<CAPTION>
2000 1999
---------------------------- ----------------------------
ACCUMULATED ACCUMULATED
COST DEPRECIATION COST DEPRECIATION
$ % $ $
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Furniture and office
equipment 160,201 71,112 160,201 38,086
Computer equipment 446,102 318,052 374,548 191,328
Software 213,522 155,307 193,793 96,774
Equipment and tooling 261,617 92,849 212,582 46,307
Telephone system 34,398 16,310 33,710 9,032
Leasehold improvements 20,700 5,150 20,700 1,700
Patents and trademarks 61,352 10,887 47,345 5,452
---------------------------------------------------------------------------------------
1,197,892 669,667 1,042,879 388,679
Deduct
Government assistance 87,661 59,961 82,073 35,671
---------------------------------------------------------------------------------------
1,110,231 609,706 960,806 353,008
Accumulated amortization 609,706 353,008
---------------------------------------------------------------------------------------
500,525 607,798
=======================================================================================
</TABLE>
4. BANK LOAN
The Company has an operating credit facility for a maximum amount of $25,000,
which bears interest at prime rate plus 1%. A movable hypothec on all current
and future accounts receivable collateralizes the bank loan.
In 2000 and 1999, in accordance with an agreement with a government agency and
a financial institution, the Company can obtain financing with respect to
investment tax credits receivable. The maximum available financing is $350,000
[$580,000 in 1999], bearing interest at prime rate plus 1.25%.
F-8
<PAGE> 14
HEXAVISION TECHNOLOGIES INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
January 31, 2000 [In Canadian dollars]
5. CONVERTIBLE DEBENTURES
<TABLE>
<CAPTION>
2000 1999
$ $
--------------------------------------------------------------------------------------------
<S> <C> <C>
Debenture, bearing no interest, convertible no later than the
closing date of any public issue into a number of Class A
shares equal to an additional 5.625% of the Company's issued
and outstanding Class A capital stock. The debenture is
redeemable at the holder's option starting June 13, 2002 for a
price equal to the principal plus the greater of 5.625% of the
increase in market value, between June 13, 1997 and the
effective redemption date, of all the Company's issued and
outstanding Class A shares and a redemption premium
generating an annual compound return of 20% per year on
the principal. 450,000 450,000
Debenture, bearing no interest, convertible no later than the
closing date of any public issue into a number of Class A
shares equal to an additional 5% of the Company's issued and
outstanding Class A capital stock. The debenture is
redeemable at the holder's option starting June 13, 2002 for a
price equal to the principal plus the greater of 5% of the
increase in market value, between June 13, 1997 and the
effective redemption date, of all the Company's issued and
outstanding Class A shares and a redemption premium
generating an annual compound return of 20% per year on
the principal. 400,000 400,000
--------------------------------------------------------------------------------------------
To carry forward 850,000 850,000
</TABLE>
F-9
<PAGE> 15
HEXAVISION TECHNOLOGIES INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
January 31, 2000 [In Canadian dollars]
5. CONVERTIBLE DEBENTURES [cont'd]
2000 1999
$ $
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Carried forward 850,000 850,000
Debenture, bearing no interest, convertible no later than the closing date of
any public issue into a number of Class A shares equal to an additional 2.5% of
the Company's issued and outstanding Class A capital stock. The debenture is
redeemable at the holder's option starting June 13, 2002 for a price equal to
the principal plus the greater of 2.5% of the increase in market value, between
June 13, 1997 and the effective redemption date, of all the Company's issued
and outstanding Class A shares, or a redemption premium generating an annual
compound return of 20% per year on the principal. 200,000 200,000
Debentures, bearing no interest, convertible at any time but no later than the
closing date of any public issue into 1,788,276 Class B shares. In the event
of a public issue, a default in respect of the shareholder agreement or an
agreement with investors, or a transaction that would give control to a current
or future shareholder, the debentures will be convertible into 1,788,276
Class A shares. The debentures are also redeemable at the holder's option
starting June 13, 2002 for a price equal to the principal plus a redemption
premium generating an annual compound return of 20% per year on the principal. 2,400,000 --
-----------------------------------------------------------------------------------------------------------------
3,450,000 1,050,000
=================================================================================================================
</TABLE>
All debentures are due to shareholders of the Company.
F-10
<PAGE> 16
HEXAVISION TECHNOLOGIES INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
January 31, 2000 [In Canadian dollars]
6. OTHER LONG-TERM DEBT
<TABLE>
<CAPTION>
2000 1999
$ $
--------------------------------------------------------------------------------------
<S> <C> <C>
Repayable contribution from Canada Economic Development
(CED) bearing no interest, repayable as of March 31, 2000 in
annual instalments, amounting to 4% of reported product
sales to a maximum of $612,500. 350,000 350,000
Term loan, bearing interest at prime rate plus 2.75%,
repayable in monthly instalments of $4,383 plus interest,
maturing in 2002. A movable hypothec on equipment,
furniture, computer equipment and software collateralizes the
loan. 96,547 149,143
Term loan, at prime rate plus 2.75%, repayable in monthly
instalments of $1,334 plus interest, maturing in 2004. A
movable hypothec on computer equipment and equipment
collateralizes the loan. 63,992 80,000
Advance from a shareholder, bearing interest at prime rate
plus 3%, subordinated to the repayable contribution of
$350,000. 80,000 80,000
Repayable contribution from CED, bearing no interest,
repayable in five consecutive and equal annual instalments
starting June 30, 2002. The maximum authorized
contribution is $200,000. [note 14] 125,575 9,584
--------------------------------------------------------------------------------------
716,114 668,727
Current portion of other long-term debt 68,604 68,604
--------------------------------------------------------------------------------------
647,510 600,123
======================================================================================
</TABLE>
The payments required on the other long-term debt for the next five years are
as follows, without taking into account the payments to be made with respect to
the repayable contribution of $350,000: 2001 - $68,604; 2002 - $59,959; 2003 -
$41,123; 2004 - $41,083 and 2005 - $25,115.
F-11
<PAGE> 17
HEXAVISION TECHNOLOGIES INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
January 31, 2000 [In Canadian dollars]
7. CAPITAL STOCK
<S> <C>
AUTHORIZED
Authorized capital stock includes the following:
Unlimited number of shares, without par value -
Class A, voting and participating.
Class B, non-voting and participating.
Class C, non-voting, non-participating with a cumulative dividend of 10%
and redeemable at the option of the Company at the paid-up capital.
Class D, non-voting, non-participating with a cumulative dividend of 12%
and redeemable at the option of the Company at the paid-up capital.
Class E, non-voting, non-participating with a non-cumulative dividend at a
rate of 10% of the Company's net after-tax profits and redeemable at the
option of the Company at the paid-up capital.
Class F, issuable in series, voting or non-voting, participating. Directors
are authorized to determine the number and designation, rights, privileges,
restrictions and conditions associated with the shares of each series of
this category.
Class G, non-voting, non-participating and redeemable by the Company upon
the death of the holder.
</TABLE>
F-12
<PAGE> 18
HEXAVISION TECHNOLOGIES INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
January 31, 2000 [In Canadian dollars]
7. CAPITAL STOCK [CONT'D]
AUTHORIZED [CONT'D]
Class H, non-voting, non-participating, with a cumulative dividend of 12%
based on the redemption price of shares of this class and redeemable at the
option of the holder for the paid-up capital plus a premium per share equal
to the difference between its share of the fair value of the property
received in exchange by the Company at the time each share in this category
was issued and the amount paid up for each share in this category.
<TABLE>
<CAPTION>
2000 1999
$ $
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ISSUED AND PAID
3,000,000 Class A shares 1,451,000 1,451,000
40,000 Class B shares 20,000 20,000
------------------------------------------------------------------------------------------------------------
1,471,000 1,471,000
============================================================================================================
</TABLE>
Under a stock option plan approved on November 2, 1999, 95,000 options on Class
B shares were granted to 16 employees of the Company. The price at which these
options may be exercised was set at $1 per employee, for a total of $16. At the
time of issuance, 71,000 options were fully vested and 24,000 vest on the third
anniversary from the hiring date. The options expire on November 2, 2004 or one
month following the date of any future change of control if earlier. In the
case of an initial public offering, the options would become fully vested
immediately prior the initial public offering. As at January 31, 2000, 71,000
options were fully vested.
F-13
<PAGE> 19
HEXAVISION TECHNOLOGIES INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
January 31, 2000 [In Canadian dollars]
8. NET CHANGE IN NON-CASH WORKING CAPITAL ITEMS
<TABLE>
<CAPTION>
2000 1999
$ $
----------------------------------------------------------------------------
<S> <C> <C>
Decrease in accounts receivable 181,743 54,473
Decrease (increase) in investment tax credits
receivable 216,000 (211,000)
Decrease (increase) in inventories 43,168 (49,592)
Decrease in prepaid expenses 39,828 63,582
Increase (decrease) in accounts payable
and accrued liabilities (297,840) 230,276
Increase in deferred revenue 4,062 50,000
----------------------------------------------------------------------------
186,961 137,739
============================================================================
</TABLE>
9. RESEARCH AND DEVELOPMENT EXPENSES
The amounts recorded as investment tax credits for research and development
pertain to tax returns that have not yet been reviewed by tax authorities. In
the event of differences between the amounts claimed by the Company and the
amounts granted by the tax authorities, the resulting adjustment, which could
be material, will be entered in the year in which the differences are reported.
10. CREDIT RISK
48% of the accounts receivable are from one client which is the federal
government [80% in 1999]. Revenues in 1999 were totally from the federal
government [considered third party].
Investment tax credits receivable were from the federal and provincial
governments.
F-14
<PAGE> 20
HEXAVISION TECHNOLOGIES INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
January 31, 2000 [In Canadian dollars]
11. UNREALIZED TAX BENEFITS
The amount of losses that the Company may carry forward for tax purposes and
the expiry date of the period when the Company may take advantage of such
losses are as follows:
<TABLE>
<CAPTION>
AMOUNT
--------------------------
YEAR FEDERAL QUEBEC YEAR
OF LOSS $ $ OF EXPIRY
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 39,031 -- 2003
1997 113,096 113,096 2004
1998 461,710 320,408 2005
1999 1,023,488 912,446 2006
2000 1,888,463 1,836,410 2007
</TABLE>
Unclaimed expense balances in respect of scientific research and experimental
development that may be used to reduce the Company's taxable income in future
years total approximately $1,235,000 and $2,085,000 at the federal and Quebec
levels respectively.
The non-refundable federal tax credits that may be used to reduce the Company's
taxable income in future years total $131,337 and expire starting in 2007.
Unrealized eligible tax benefits resulting from losses, non-refundable tax
credits and unclaimed expense balances in respect of scientific research and
experimental development have not been recorded in the Company's books.
The US subsidiary has approximately $191,000 US [$Cdn 283,000] of operating
losses that may be carry forward for tax purposes until 2019.
12. RELATED PARTY TRANSACTIONS
In addition to the related party transactions disclosed elsewhere in these
financial statements, the Company paid $7,515 in interest on the advance
granted by a shareholder during 2000.
F-15
<PAGE> 21
HEXAVISION TECHNOLOGIES INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
January 31, 2000 [In Canadian dollars]
13. COMMITMENTS
As at January 31, 2000, the Company had committed to pay a total rent in the
amount of $794,213 under a lease terminating on May 31, 2009. However, the
lease may be canceled as of June 1, 2004 in consideration of $72,263 in
penalties. The rent payable over the next five years is as follows:
<TABLE>
<CAPTION>
$
-------------------------------------------------------------------
<S> <C>
2001 72,440
2002 75,247
2003 75,247
2004 82,263
2005 85,771
-------------------------------------------------------------------
390,968
====================================================================
</TABLE>
The lease also provides for the payment of operating expenses by the Company.
14. SUBSEQUENT EVENTS
On February 3, 2000, the Company amended its incorporating statutes whereby a
new class of shares was added to its authorized capital stock, namely, an
unlimited number of Class I shares. The shares in this class will be non-voting
and non-participating, with a cumulative annual dividend of 20%, and ranking
ahead of all other classes of shares, subject to the rights associated with the
Class G shares. Class I shares will also be convertible into Class A shares and
will be redeemable at the option of the holder.
On the same date, certain shareholders agreed to invest $750,000 in the Company
by way of Class I shares. On that date, the shareholders subscribed for
$255,000 of Class I shares. The remaining balance was to be paid in two
instalments of $247,500 in April and July 2000, with each instalment subject to
compliance with certain conditions by the Company. On May 23, 2000, the Company
issued 125,000 Class I shares for a cash consideration of $125,000.
In March 2000, the Company received $29,463 from Canada Economic Development as
the fourth instalment under the repayable contribution agreement in connection
with a maximum amount of $200,000.
F-16
<PAGE> 22
HEXAVISION TECHNOLOGIES INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
January 31, 2000 [In Canadian dollars]
14. SUBSEQUENT EVENTS [cont'd]
In April 2000, the Company received $150,000 as financing for its investment
tax credits receivable.
In July 2000, a subsidiary of Adept Technology, Inc. ("Adept"), a US public
company, purchased all of the issued and outstanding shares of the Company. In
respect of this change of control, on June 30, 2000, all the debentures
disclosed in note 5 were converted into 2,856,073 Class A shares. In addition,
on June 30, 2000, all issued and outstanding Class I shares were converted into
405,378 Class A shares.
- In July 2000, the Company vested all unvested stock options and employees
exercised 95,000 stock options and the Company issued 95,000 Class B shares
for a subscription of $16 under the stock option plan (see note 7).
- On July 10, 2000, the Company was continued under the Nova Scotia Companies
Act.
- In July 2000, the Company paid bonuses to employees for a total amount of
$216,336 US (approximately $Cdn 317,000).
- To October 20, 2000, the Company received advances from Adept of $1,528,000,
bearing no interest, convertible at the option of the Company into a number
of Preferred Shares to be created and having a paid-up capital and a
redemption value equal the amount advanced.
- On July 2000, the Company reimbursed the repayable contribution included in
the long-term debt of $350,000 (note 6) for an amount of $450,000.
- On July 2000, the Company reimbursed the advance from a shareholder of
$80,000 included on the long-term debt (note 6).
- The agreement to invest the remaining amount in Class I shares by certain
shareholders has been canceled as part of the acquisition by Adept.
F-17
<PAGE> 23
HEXAVISION TECHNOLOGIES INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
January 31, 2000 [In Canadian dollars]
15. RECONCILIATION OF SIGNIFICANT DIFFERENCES BET
WEEN ACCOUNTING PRINCIPLES GENERALLY ACCEPTED
IN CANADA AND THE UNITED STATES
The financial statements are prepared in accordance with accounting principles
generally accepted in Canada ("Canadian GAAP"). The following summary sets
out the material adjustments to the Company's reported net income, balance
sheet and cash flows to conform with accounting principles generally accepted
in the United States ("U.S. GAAP").
a) NET INCOME
<TABLE>
<CAPTION>
2000 1999
$ $
----------------------------------------------------------------------------
<S> <C> <C>
Net loss under Canadian GAAP (2,916,852) (1,626,431)
Adjustment related to equipment used in
research and development (i) 80,186 36,905
Adjustment related to stock compensation (ii) (127,300) --
----------------------------------------------------------------------------
NET LOSS AND COMPREHENSIVE LOSS UNDER U.S. GAAP (2,963,966) (1,589,526)
============================================================================
</TABLE>
b) BALANCE SHEET
<TABLE>
<CAPTION>
2000
-----------------------------------
ADDITIONAL
CAPITAL PAID IN CAPITAL -
ASSETS STOCK OPTIONS DEFICIT
$ $ $
---------------------------------------------------------------------------
<S> <C> <C> <C>
Balance under Canadian GAAP 500,525 -- 5,858,962
Adjustment related to equipment used
in research and development (i) (83,386) -- 83,386
Adjustment related to compensation
expense (ii) -- 127,300 127,300
---------------------------------------------------------------------------
BALANCE UNDER U.S. GAAP 417,139 127,300 6,069,648
===========================================================================
</TABLE>
F-18
<PAGE> 24
HEXAVISION TECHNOLOGIES INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
January 31, 2000 [In Canadian dollars]
15. RECONCILIATION OF SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES
GENERALLY ACCEPTED IN CANADA AND THE UNITED STATES [cont'd]
<TABLE>
<CAPTION>
1999
------------------------------------
ADDITIONAL
CAPITAL PAID IN CAPITAL -
ASSETS STOCK OPTIONS Deficit
$ $ $
----------------------------------------------------------------------------
<S> <C> <C> <C>
Balance under Canadian GAAP 607,798 -- 2,942,110
Adjustment related to equipment
used in research and development (i) (163,572) -- 163,572
Adjustment related to compensation
expense (ii) -- -- --
----------------------------------------------------------------------------
BALANCE UNDER U.S. GAAP 444,226 -- 3,105,682
============================================================================
</TABLE>
c) Cash flows
There are no material adjustments to the statements of cash flows.
---------------------------
(i) Under Canadian GAAP, research and development equipment is capitalized
and amortized over its useful life. Under U.S. GAAP, costs to acquire
such equipment with no alternative use are charged to operations as
incurred.
(ii) Under Canadian GAAP, no compensation expense is recorded when stock
options are issued. Under US GAAP, the Company has adopted accounting
principles board (APB) 25 to accounted for stock options. A compensation
expense is recorded when stock options that are issued with exercise
price lower than the fair value of the underlying shares.
F-19
<PAGE> 25
ADEPT TECHNOLOGY, INC. UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL
STATEMENTS
The following unaudited pro forma combined condensed financial
statements consist of the Adept Technology, Inc. unaudited pro forma combined
condensed statement of operations for the year ended June 30, 2000 and the Adept
Technology, Inc. unaudited pro forma combined condensed consolidated balance
sheet at June 30, 2000.
ACQUISITION OF HEXAVISION TECHNOLOGIES INC.
On July 21, 2000, the Company completed its acquisition of HexaVision
Technologies Inc. ("HexaVision"), a Canadian corporation. HexaVision is a
machine vision development company. Under the terms of the purchase agreement,
the Company paid $5.1 million in cash. In addition, the Company will be issuing
shares of its common stock with a value of $1.1 million and making two cash
payments totaling approximately $1.6 million to the shareholders of HexaVision
contingent upon the continued employment of selected HexaVision employees
through July 2001. The Company deposited $1.6 million into an escrow account
pending resolution of the contingencies. The Company will include the results of
operations of HexaVision in Adept Technology, Inc.'s results of operations
beginning July 21, 2000.
WHAT THESE PRO FORMA STATEMENTS SHOW
The Adept Technology, Inc. unaudited pro forma combined condensed
financial statements give effect to the acquisition of HexaVision accounted for
using the purchase method of accounting. The Adept Technology, Inc. pro forma
combined condensed statement of operations for the year ended June 30, 2000
assumes the acquisition of HexaVision took place on July 1, 1999. The Adept
Technology, Inc. unaudited pro forma combined condensed balance sheet assumes
the acquisition of HexaVision took place on June 30, 2000.
BASIS OF PRESENTATION
The Adept Technology, Inc. unaudited pro forma combined condensed
financial statements reflect the acquisition of HexaVision accounted for using
the purchase method of accounting and have been prepared on the basis of
assumptions described in the notes including assumptions relating to the
allocation of the amount of consideration paid to the assets and liabilities of
HexaVision based upon preliminary estimates of fair value and preliminary
estimates of assets acquired and liabilities assumed. The actual allocation of
the total consideration will differ from those assumption reflected in the Adept
Technology, Inc. unaudited pro forma combined condensed financial statements
after the valuation is completed, transaction costs are finalized and the final
assets acquired and liabilities assumed are determined.
THESE PRO FORMA UNAUDITED COMBINED CONDENSED FINANCIAL STATEMENTS SHOULD BE READ
WITH EACH COMPANY'S FINANCIAL STATEMENTS.
The Adept Technology, Inc. unaudited pro forma combined condensed financial
statements should be read in conjunction with the related notes included in this
document, and the audited financial statements of Adept Technology, Inc. and
HexaVision, including the notes to each, that are included elsewhere in this
document. The Adept Technology, Inc. unaudited pro forma combined condensed
financial statements do not necessarily indicate what the actual operating
results or financial position would have been had the acquisition of HexaVision
taken place on July 1, 1999 or June 30, 2000. They also do not purport to
indicate Adept Technology, Inc.'s future results of operations or financial
position.
F-20
<PAGE> 26
ADEPT TECHNOLOGY, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ADEPT HEXAVISION
TECHNOLOGY, TECHNOLOGIES
INC. INC. PRO FORMA
YEAR ENDED YEAR ENDED COMBINED
JUNE 30, APRIL 30, PRO FORMA JUNE 30,
2000 2000 ADJUSTMENTS 2000
------------------------------------------------------------
<S> <C> <C> <C> <C>
Net revenues $ 99,212 $ 119 $ -- $ 99,311
Cost of revenues 56,173 32 56 (5) 56,261
------------------------------------------------------------
Gross margin 43,039 87 (56) 43,070
Operating expenses:
Research, development and
engineering 14,629 376 -- 15,005
Selling, general and
administrative 29,503 1,101 -- 30,604
Merger-related charges 988 -- -- 988
Amortization of goodwill and
other intangibles 685 -- 2,207 (5) 2,892
------------------------------------------------------------
Total operating expenses 45,805 1,477 2,207 49,489
------------------------------------------------------------
Operating loss (2,766) (1,390) (2,263) (6,419)
Interest income 1,031 12 -- 1,043
Interest and other expense 285 434 -- 719
------------------------------------------------------------
(Loss) before (benefit from)
provision for income taxes (2,020) (1,812) (2,263) (6,095)
Benefit from income taxes (593) -- -- (593)
------------------------------------------------------------
Net loss: $ (1,427) $ (1,812) $ (2,263) $ (5,502)
============================================================
Net loss per share:
Basic $ (0.15) $ (0.56)
Diluted $ (0.15) $ (0.56)
Number of shares used in
computing per share amounts:
Basic 9,774 9,774
Diluted 9,774 9,774
</TABLE>
F-21
<PAGE> 27
ADEPT TECHNOLOGY, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADEPT HEXAVISION
TECHNOLOGY, TECHNOLOGIES PRO FORMA
INC. INC. PRO FORMA COMBINED JUNE
JUNE 30, 2000 APRIL 30, 2000 ADJUSTMENTS 30, 2000
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 13,487 $ 12 $ (5,452)(1) $ 8,047
Short-term investments 6,950 -- -- 6,950
Accounts receivable 25,527 58 -- 25,585
Inventories 15,153 5 -- 15,158
Deferred tax and other
current assets 7,049 265 -- 7,314
-----------------------------------------------------------------------
Total current assets 68,166 340 (5,452) 63,054
Property and equipment, net 5,583 262 -- 5,845
Goodwill and other
intangibles, net 16,963 -- 5,636 (2) 22,599
Other assets 2,811 53 (53)(2) 2,811
-----------------------------------------------------------------------
Total assets $ 93,523 $ 655 $ 131 $ 94,309
=======================================================================
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 10,841 $ 191 $ -- $ 11,032
Accrued payroll and related
expenses 4,727 -- -- 4,727
Accrued warranty 1,915 -- -- 1,915
Deferred revenue 1,511 -- -- 1,511
Taxes payable and other
accrued liabilities 2,579 101 -- 2,680
-----------------------------------------------------------------------
Total current liabilities 21,573 292 -- 21,865
Long term liabilities:
Deferred income tax 1,222 -- -- 1,222
Convertible debentures -- 3,103 (3,103)(3) --
Long-term debt -- 494 -- 494
Commitments and contingencies
Redeemable common stock -- 176 (176)(4) --
Shareholders' Equity:
Preferred stock -- -- -- --
Common stock 67,184 1,132 (1,132)(4) 67,184
Retained earnings 3,544 (4,542) 4,542 (4) 3,544
-----------------------------------------------------------------------
Total shareholders'
equity 70,728 (3,410) 3,410 70,728
-----------------------------------------------------------------------
Total liabilities and
shareholders' equity $ 93,523 $ 655 $ 131 $ 94,309
=======================================================================
</TABLE>
F-22
<PAGE> 28
NOTES TO ADEPT TECHNOLOGY, INC. UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL
STATEMENTS
1. Basis of pro forma presentation
On July 21, 2000, Adept Technology, Inc. acquired HexaVision Technologies Inc.
("HexaVision"), a Canadian corporation. The unaudited pro forma combined
condensed statement of operations reflects the acquisition as if the acquisition
took place on July 1, 1999. The unaudited pro forma combined condensed balance
sheet reflects the acquisition as if the acquisition took place on June 30,
2000. HexaVision's historical year-end was January 31 and HexaVision's balance
sheet as of April 30, 2000 and statement of operations for the year ended April
30, 2000 were used for purposes of preparing these unaudited pro forma combined
condensed financial statements.
Under the terms of the purchase agreement, Adept Technology, Inc. paid $5.5
million in cash (including transaction costs of $0.4 million). In addition, the
Company will be issuing shares of its common stock with a value of $1.1 million
and making two cash payments totaling approximately $1.6 million to the
shareholders of HexaVision contingent upon the continued employment of more than
fifty percent of selected HexaVision employees through July 2001. The Company
deposited $1.6 million into an escrow account pending resolution of the
contingencies. These contingent cash payments and shares issuances will be
accounted for as additional purchase price when the contingencies have been
resolved and if the payments are made and the shares issued. If the contingent
payments are paid and issued, these amounts will be allocated to goodwill. The
acquisition of HexaVision is accounted for under the purchase method of
accounting.
The unaudited pro forma combined condensed financial statements have been
prepared on the basis of assumptions relating to the allocation of the amount of
consideration paid to the assets and liabilities of HexaVision based on
preliminary estimates of fair value as well as HexaVision's balance sheet as of
April 30, 2000. The actual allocation of the amount such consideration will
differ from that reflected in these unaudited pro forma combined condensed
financial statements since the actual allocation will be based on the assets
acquired and the liabilities assumed as of July 21, 2000. In addition, the
actual allocation may differ from that reflected in these unaudited pro forma
combined condensed financial statements after valuations have been completed and
final transaction costs have been determined. Below is a table of the estimated
acquisition cost, purchase price allocation and annual amortization of the
intangible assets acquired, in thousands:
<TABLE>
<CAPTION>
ANNUAL
AMORTIZATION AMORTIZATION
ACQUISITION COST LIFE OF INTANGIBLES
-------------------- --------------- ------------------
<S> <C> <C> <C>
Cash.............................. $ 5,100
Transaction costs................. 352
------------
Total acquisition cost........ $ 5,452
============
Purchase Price Allocation
Net liabilities assumed......... $ (205)
Developed and core technology... 140 30 months $ 56
Non-compete covenant............ 130 30 months 52
Assembled workforce............. 254 30 months 102
Goodwill........................ 5,133 30 months 2,053
------------ ------------
Total......................... $ 5,452 $ 2,263
============ ============
</TABLE>
The acquired tangible assets of HexaVision principally include cash, accounts
receivable, and property and equipment. Liabilities assumed principally include
accounts payable, other accrued liabilities and long-term debt.
To determine the value of developed and core technology, the expected future
cash flows attributable to all existing technology was discounted, taking into
account the risks associated with the applications of the technology, existing
and future markets and the life cycle of the technology. The developed and core
technology is being amortized on the straight-line basis over the estimated
useful life of 30 months.
The values of the non-compete covenant and assembled workforce were derived by
estimating the cost of competition in the marketplace as well as the cost to
replace existing employees. The non-compete covenant and assembled workforce are
being amortized on the straight-line basis over the 30-month life of the
non-compete agreements.
F-23
<PAGE> 29
Goodwill is determined based on the residual difference between the amount paid
and the values assigned to identified tangible and intangible assets. Goodwill
is being amortized on the straight-line basis over 30 months.
2. Conversion of HexaVision financial statements to accounting principles
generally accepted in the United States and United States dollars
The financial statements for HexaVision which were prepared in accordance with
accounting principles generally accepted in Canada have been conformed to
accounting principles generally accepted in the United States for purposes of
including them in the Adept Technology, Inc. unaudited pro forma combined
condensed financial statements. The adjustments necessary to conform the
HexaVision financial statements to accounting principles generally accepted in
the United States consisted principally of stock compensation charges for
certain employee options, the write off of research and development equipment
without alternative uses.
The consolidated balance sheet and consolidated statement of operations for
HexaVision were translated to U.S. dollars using average exchange rates for the
Adept Technology, Inc. unaudited pro forma combined condensed statement of
operations and period end and historical exchange rates for the Adept
Technology, Inc. unaudited pro forma combined condensed balance sheet, as
applicable.
3. Pro forma adjustments
The Adept Technology, Inc. unaudited pro forma combined condensed financial
statements give effect to the following pro forma adjustments:
(1) To reflect the cash paid for the purchase of HexaVision
including transaction costs.
(2) To state the assets and liabilities of HexaVision at their fair
values.
(3) To reflect the elimination of HexaVision's convertible
debentures of $3.1 million not assumed in the purchase
transaction.
(4) To reflect the elimination of HexaVision's redeemable common
stock of $0.2 million, common stock of $1.1 million and
accumulated deficit of $4.5 million.
(5) To reflect amortization of goodwill and other intangibles
related to the HexaVision acquisition.
F-24
<PAGE> 30
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
2.1 Share Purchase Agreement among Marc Tremblay, Alain Rivard, Eric
St-Pierre, Pierre Boivin, 9044-0108 Quebec Inc., Societe Innovatech
Quebec et Chaudiere-Appalaches, Sofinov, Societe Financiere
d'Innovation Inc., Business Development Bank of Canada, Christian
Labbe, Patrick Murphy and certain other shareholders named therein,
Adept Technology Canada Holding Co., and Registrant, dated July 21,
2000.*
99.1 Press Release of the Registrant issued on July 24, 2000.**
</TABLE>
* Schedules have been omitted and will be provided to the Securities and
Exchange Commission upon request.
** Previously filed with the Registrant's Current Report on Form 8-K filed with
the Securities and Exchange Commission on July 24, 2000.
