<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 11, 2000
WAVO CORPORATION
(Exact name of registrant as specified in its charter)
INDIANA 0-24858 86-0491428
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
3131 E. CAMELBACK ROAD, SUITE 320, PHOENIX, ARIZONA 85016
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (602) 952-5500
Not applicable.
(Former name or former address, if changed since last report.)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On October 11, 2000, WAVO Corporation (the "Company") and WavePhore
Networks, Inc. ("Networks"), a wholly-owned subsidiary of the Company, completed
the sale of substantially all of the assets of Networks related to the satellite
and FM delivery of data, to Cidera, Inc. ("Cidera"), a privately held Delaware
corporation, for a purchase price of $12,000,000 in cash, $2,500,000 of Cidera's
common stock, and the assumption of certain liabilities of Networks. The value
of the Networks assets sold to Cidera and the amount and type of consideration
paid were negotiated among the Company, Networks and Cidera. The assets sold to
Cidera constituted approximately 33% of the Company's total assets and accounted
for approximately 71% and 27% of the Company's total revenue and expenses,
respectively, on a consolidated basis as of and for the fiscal year ended
December 31, 1999, and approximately 41%, 76% and 23% of such amounts,
respectively, as of and for the six months ended June 30, 2000. The Company
expects to recognize a gain of approximately $2 million as a result of this
transaction. The assets being sold to Cidera are not part of the Company's
strategic focus for the future. The Company believes that this transaction will
allow the Company to focus on its MediaXpress Internet media delivery business.
Cidera also has become a preferred Original Equipment Manufacturer of the
Company's MediaXpress service for Cidera's information provider customers. A
copy of the Press Release issued by the Company on October 12, 2000 is attached
hereto as Exhibit 99.1. Such Exhibit is incorporated by reference into this Item
2 and the foregoing description is qualified in its entirety by reference to
such Exhibit.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Pro Forma Financial Information.
The unaudited pro forma condensed consolidated statements of operations
of the Company for the year ended December 31, 1999 and the six months ended
June 30, 2000 present historical statements of operations data for the Company,
as if the sale of substantially all of the assets of WavePhore Networks, Inc.
had been sold to Cidera, Inc. on January 1, 1999. The following unaudited pro
forma condensed consolidated balance sheet at June 30, 2000 presents historical
information as if the Cidera transaction had occurred on June 30, 2000. The pro
forma data are not necessarily indicative of the financial position or results
of operations which would actually have been reported had the transactions been
consummated at the dates mentioned above or which may be reported in the future.
The pro forma financial information should be read in conjunction with
the notes to unaudited pro forma condensed financial information and the
historical financial statements of Wavo Corporation and notes thereto.
<PAGE> 3
Wavo Corporation
Unaudited Pro Forma Condensed Balance Sheet as of June 30, 2000
(in thousands)
<TABLE>
<CAPTION>
LESS
BUSINESS PRO FORMA
HISTORICAL DIVESTED ADJUSTMENTS PRO FORMA
--------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,772 $ -- $ 10,505 (A) $ 15,277
Cash held in escrow -- -- 500 (B) 500
Accounts receivable 2,443 1,871 -- 572
Inventories 1,790 1,790 -- --
Investments -- -- 2,500 (C) 2,500
Prepaid expenses and other 1,441 14 -- 1,427
-------------------------------------------------------------
Total current assets 10,446 3,675 13,505 20,276
Property and equipment, net 6,204 1,354 -- 4,850
Goodwill, net 2,439 -- -- 2,439
Intangible assets, net 10,647 7,441 -- 3,206
Deposits and other assets 566 91 -- 475
-------------------------------------------------------------
Total assets $ 30,302 $ 12,561 $ 13,505 $ 31,246
=============================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,180 $ 117 $ -- $ 2,063
Deferred revenue 1,668 195 -- 1,473
Accrued expenses 3,094 178 -- 2,916
Bank credit lines 1,660 -- (995) (D) 665
Current portion of long-term debt 1,008 -- -- 1,008
-------------------------------------------------------------
Total current liabilities 9,610 490 (995) 8,125
Long-term debt, less current portion 700 -- -- 700
Other long-term liabilities 1,024 -- -- 1,024
Minority interest (563) -- -- (563)
1999 Series D preferred stock 6,311 -- -- 6,311
Shareholders' equity 13,220 12,071 14,500 15,649
-------------------------------------------------------------
Total liabilities and shareholders' equity $ 30,302 $ 12,561 $ 13,505 $ 31,246
=============================================================
</TABLE>
See Notes to Unaudited Pro Forma Financial Statements.
<PAGE> 4
Wavo Corporation
Unaudited Pro Forma Condensed Consolidated Statement of Operations
for the year ended December 31, 1999
(in thousands, except per share data)
<TABLE>
<CAPTION>
LESS
BUSINESS PRO FORMA
HISTORICAL DIVESTED ADJUSTMENTS PRO FORMA
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $ 22,115 $ 15,662 $ 960 (E) $ 7,413
Cost of revenues 11,481 8,671 652 (F) 3,462
--------------------------------------------------------------
Gross margin 10,634 6,991 308 3,951
Operating expenses
Research and development 13,269 1,965 -- 11,304
Sales and marketing 12,929 2,663 -- 10,266
General and administrative 6,039 190 (240)(G) 5,609
Amortization 1,783 709 -- 1,074
Special charge 8,491 86 -- 8,405
--------------------------------------------------------------
42,511 5,613 (240) 36,658
Other (income) expense:
Interest expense 258 -- (84)(H) 174
Interest income and other (605) (6) -- (599)
Gain on sale of business -- -- -- --
Minority interest (417) -- -- (417)
--------------------------------------------------------------
(764) (6) (84) (842)
--------------------------------------------------------------
Net loss (31,113) 1,384 632 (31,865)
Less: Preferred stock dividends 1,437 -- -- 1,437
--------------------------------------------------------------
Net loss after preferred stock dividends $(32,550) $ 1,384 $ 632 $(33,302)
Basic and dilutive net loss per common
share after preferred stock dividends $ (1.13) $ (1.16)
==============================================================
Number of shares used in per share
calculations 28,827 28,827
==============================================================
</TABLE>
See Notes to Unaudited Pro Forma Financial Statements.
<PAGE> 5
Wavo Corporation
Unaudited Pro Forma Condensed Consolidated Statements of
Operations for the six months ended June 30, 2000 (in thousands,
except per share data)
<TABLE>
<CAPTION>
LESS
BUSINESS PRO FORMA
HISTORICAL DIVESTED ADJUSTMENTS PRO FORMA
----------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $ 8,925 $ 6,769 $ 480 (E) $ 2,636
Cost of revenues 4,523 3,681 326 (F) 1,168
----------------------------------------------------------
Gross margin 4,402 3,088 154 1,468
Operating expenses
Research and development 6,040 770 -- 5,270
Sales and marketing 7,044 1,072 -- 5,972
General and administrative 3,122 80 (120)(G) 2,922
Amortization 763 354 -- 409
Special charge 1,973 -- -- 1,973
----------------------------------------------------------
18,942 2,276 (120) 16,546
Other (income) expense:
Interest expense 228 -- (42)(H) 186
Interest income and other (357) (31) -- (326)
Gain on sale of business (1,544) -- -- (1,544)
Minority interest (451) -- -- (451)
----------------------------------------------------------
(2,124) (31) (42) (2,135)
----------------------------------------------------------
Net loss (12,416) 843 316 (12,943)
Less: Preferred stock dividends 2,334 -- -- 2,334
----------------------------------------------------------
Net loss after preferred stock dividends $(14,750) $ 843 $ 316 $(15,277)
Basic and dilutive net loss per
common share after preferred stock dividends $ (0.49) $ (0.51)
==========================================================
Number of shares used in per share calculations 30,117 30,117
==========================================================
</TABLE>
See Notes to Unaudited Pro Forma Financial Statements.
<PAGE> 6
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements as of
June 30, 2000 and December 31, 1999.
The following explanations serve to describe the assumptions used in
determining the pro forma adjustments necessary to present the pro forma
condensed consolidated balance sheet as of June 30, 2000.
A. Cash proceeds from the sale of certain assets of WavePhore Networks,
Inc., net of the cash used to paydown bank credit facilities ($995).
B. Cash proceeds from the sale of certain assets of WavePhore Networks,
Inc. being held in escrow.
C. Investments recorded for common shares of Cidera issued to the Company
as part of the sale of certain assets of WavePhore Networks, Inc.
D. Reduction of credit facilities using cash proceeds from the sale of
certain assets of WavePhore Networks, Inc.
The following explanations serve to describe the assumptions used in
determining the pro forma adjustments necessary to present the pro forma
condensed consolidated statements of operations for the year ended December 31,
1999 and the six months ended June 30, 2000.
E. Revenue earned by Wavo from the sale of the Company's MediaXpress
services to Cidera.
F. Cost of FM radio station licenses retained by the Company.
G. Reduction in general and administrative overhead, including such
expenses as compensation, audit fees and insurance.
H. Decrease of interest expense from reduction of bank credit facilities
using cash proceeds from the sale of certain assets of WavePhore
Networks, Inc.
(c) Exhibits.
Exhibit Number Description
99.1 Press Release, dated October 12, 2000.
<PAGE> 7
SIGNATURE
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.
WAVO CORPORATION
Date: October 26, 2000 By: /s/ Kenneth D. Swenson
-------------------------------
Kenneth D. Swenson
Executive Vice President and
Chief Financial Officer
<PAGE> 8
EXHIBIT INDEX
Exhibit Number Description
99.1 Press Release, dated October 12, 2000.
