<PAGE>
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
November 12, 1999
Date of Report (Date of earliest event reported)
TUT SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 0-25291 94-2958543
- -----------------------------------------------------------------------------------------------
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation) Identification No.)
</TABLE>
2495 ESTAND WAY
PLEASANT HILL, CALIFORNIA 94523
(Address of principal executive offices, including zip code)
(925) 682-6510
(Registrant's telephone number, including area code)
N/A
(Former name or address, if changed since last report)
1
<PAGE>
Item 2. Acquisition or Disposition of Assets
------------------------------------
Pursuant to an Agreement and Plan of Reorganization dated as of October 15,
1999 (the "Agreement") among Tut Systems, Inc., a Delaware corporation ("Tut"),
Vintel Acquisition Corporation, a California Corporation and a wholly owned
subsidiary of Tut ("Sub"), Vintel Communications, Inc. ("Vintel") and Peter C.
Vinsel, on November 12, 1999 (the "Closing"), Tut acquired Vintel by means of a
merger of Vintel with and into Sub (the "Merger"). As a result of the Merger,
each share of Vintel capital stock was converted into 0.054 shares of Tut Common
Stock, and each option to purchase one share of Vintel Common Stock was
cancelled and exchanged for an option to purchase 0.054 shares of Tut Common
Stock. At the Closing, five percent of the shares issued pursuant to the Merger
and five percent of the shares issuable upon exercise of options issued pursuant
to the Merger Agreement were deposited into an escrow account to secure the
indemnification obligations of Vintel (the "Escrow Fund"). The Escrow fund is
to be governed by the terms set forth in the Agreement at Tut's cost and
expense. The Escrow Fund shall be the sole source of funds available for the
fulfillment of any indemnification obligations of Vintel to Tut and Sub.
The provisions of the Agreement described in this report are qualified in
their entirety by reference to the actual text of that agreement, included as an
exhibit to this report.
Prior to the Merger, Tut owned an aggregate of 363,125 shares of Common
Stock of Vintel, representing approximately 11% of the outstanding capital stock
of Vintel immediately prior to the Merger.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
The unaudited financial statements for the period from inception
(March 31, 1999) to September 30, 1999.
(b) Pro Forma Financial Information.
The accompanying unaudited pro forma combined statement of
operations for the nine months ended September 30, 1999. The unaudited pro
forma financial information is not necessarily indicative of the results or
financial position that would actually have been reported had the sale and
purchase transactions underlying the pro forma adjustments actually been
consummated on such dates nor is it necessarily indicative of future operating
results or financial position.
(c) Exhibits.
The following exhibits are hereby incorporated herein:
2
<PAGE>
2.1 Agreement and Plan of Reorganization dated as of October 15, 1999
by and Tut Systems, Inc., Vintel Acquisition Corp., Vintel
Communications, Inc. and Peter C. Vinsel (filed as an Exhibit
to Quarterly Report on Form 10Q for the Quarter Ended September
30, 1999, filed November 5, 1999.)*
- --------------
* Certain exhibits to, and schedules delivered in connection with, the
Agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K.
Tut agrees to supplementally furnish to the Commission a copy of any such
exhibit or schedule upon request.
3
<PAGE>
SIGNATURE
Pursuant to requirements of the Securities Exchange Act of 1934, Tut
Systems, Inc. has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TUT SYSTEMS, INC.
Dated: February 7, 2000 By: /s/ Nelson B. Caldwell
--------------------------
Nelson B. Caldwell, Vice
President and Chief
Financial Officer
<PAGE>
ITEM 7(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED:
VINTEL COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED BALANCE SHEET
(in thousands)
September 30,
1999
----------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 380
Prepaid expenses and other 2
----------------
Total current assets 382
Property and equipment, net 48
Other assets 4
----------------
Total assets $ 434
================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 18
----------------
Shareholders' equity:
Common stock 522
Accumulated deficit (106)
----------------
Total shareholders' equity 416
----------------
Total liabilities and shareholders' equity $ 434
================
The accompanying notes are in integral part of these condensed financial
statements.
<PAGE>
VINTEL COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENT OF OPERATIONS
(in thousands, except per share amount)
March 31,
1999
(Inception)
through
September 30,
1999
----------------
(unaudited)
Product and services revenue $ 200
Cost of goods sold 110
----------------
Gross margin 90
----------------
Operating expenses:
Research and development 118
General and administrative 78
----------------
Total operating expenses 196
----------------
Net loss $ (106)
================
Net loss per share, basic and diluted $ (0.07)
================
Shares used in computing net loss,
basic and diluted 1,595
================
The accompanying notes are in integral part of these condensed financial
statements.
<PAGE>
VINTEL COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENT OF SHAREHOLDER'S EQUITY
(in thouands)
<TABLE>
<CAPTION>
Common Stock
------------------------------ Accumulated
Shares Amount Deficit Totals
------------- --------------- ---------------- ---------------
(unaudited)
<S> <C> <C> <C> <C>
Balances as of March 31, 1999 (Inception) - $ - $ - $ -
Common stock issued to founder 2,000 20 - 20
Common stock issued for consulting services 55 1 - 1
Common stock issued for cash 463 501 - 501
Net loss - - (106) (106)
-------------- --------------- --------------- --------------
Balances as of September 30, 1999 2,518 $ 522 $ (106) $ 416
============== =============== =============== ==============
</TABLE>
The accompanying notes are in integral part of these condensed financial
statements.
<PAGE>
VINTEL COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENT OF CASH FLOWS
(in thouands)
March 31,
1999
(Inception)
through
September 30,
1999
--------------
(unaudited)
Cash flows from operating activities:
Net loss $ (106)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation 8
Noncash compensation expense 21
Change in assets and liabilities:
Prepaid expenses and other assets (6)
Accounts payable 18
---------------
Net cash used in operating activities (65)
---------------
Cash flows from investing activities:
Purchase of property and equipment (56)
---------------
Net cash used in investing activities (56)
---------------
Cash flows from financing activities:
Proceeds from issuances of common stock 501
---------------
Net cash provided by financing activities 501
---------------
Net increase in cash and cash equivalents 380
Cash and cash equivalents, beginning of period -
---------------
Cash and cash equivalents, end of period $ 380
===============
The accompanying notes are in integral part of these condensed financial
statements.
<PAGE>
VINTEL COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - THE COMPANY:
Vintel Communications, Inc. (the "Company"), was incorporated in March 1999
in the state of California. The Company specializes in developing high-
performance circuit and packet switching software for use in DSL access
multiplexers.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Cash and cash equivalents
The Company includes in cash and cash equivalents all highly liquid
investments which mature within three months of their purchase date.
Property and equipment
Property and equipment are carried at cost. The Company provides for
depreciation by charges to expense which are sufficient to write off the cost of
the assets over their estimated useful lives on the straight-line basis. Useful
lives by principal classifications are as follows:
Furniture and fixtures 5 years
Computers and software 3 years
When assets are sold or otherwise disposed of, the cost and accumulated
depreciation and amortization are removed from the asset and allowance for
depreciation and amortization accounts, and any gain or loss on that sale or
disposal, is credited or charged to income.
Maintenance, repairs, and minor renewals are charged to expense as incurred.
Expenditures which substantially increase an asset's useful life are
capitalized.
Research and development
Research and development expenditures are charged to expense as incurred.
Income taxes
Deferred income taxes result primarily from temporary differences between
financial and tax reporting. Deferred tax assets and liabilities are determined
based on the difference between the financial statement bases and the tax bases
of assets and liabilities using enacted tax rates. A valuation allowance is
established to reduce a deferred tax asset to the amount that is expected more
likely than not to be realized.
Net loss per share
Basic and diluted net loss per share are computed using the weighted average
number of common shares outstanding.
8
<PAGE>
VINTEL COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(continued)
NOTE 3 - PROPERTY AND EQUIPMENT:
Property and equipment as of September 30, 1999 consists of the following:
Furniture and fixtures $ 26
Computure and software 30
------------
56
Less: Accumulated depreciation (8)
------------
$ 48
------------
NOTE 4 - STOCK OPTION PLAN:
The Company reserved 750,000 shares of common stock for issuance under the
1999 Stock Option Plan (the "Plan") to employees, outside directors and
consultants. Under the terms of the Plan options may be granted at prices no
less than 85% of the fair market value at the date of grant, as determined by
the Board of Directors. The options generally vest over four years and expire
ten years after the date of grant. The Plan provides that vesting accelerates
on all outstanding options upon a change of control, as defined.
As of September 30, 1999, 750,000 options at an exercise price of $0.10 were
outstanding.
NOTE 5 - OPERATING LEASE
In May 1999, the Company entered into a two year noncancelable office lease
for $4,220 per month plus common area charges.
NOTE 6 - INCOME TAXES:
Due to the uncertainty surrounding the realization of the tax attributes in
tax returns, the Company has placed a full valuation allowance against its
otherwise recognizable net deferred tax asset.
NOTE 7 - SUBSEQUENT EVENT:
On October 15, 1999, the Company entered into a definitive agreement to
exchange all outstanding shares for shares of Tut Systems, Inc.
9
<PAGE>
ITEM 7(B) PRO FORMA FINANCIAL INFORMATION:
TUT SYSTEMS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA
On November 12, 1999, Tut Systems, Inc. ("Tut") completed the acquisition of
Vintel Communications, Inc. ("Vintel") in a transaction to be accounted for as a
purchase. The stockholders of Vintel received 116,370 shares of Tut common
stock and $500,000 in cash. Additionally, Tut converted stock options to
purchase 750,000 shares of Vintel common stock into stock options to purchase
40,500 shares of Tut common stock. The total purchase price is $4,780,000. The
acquisition has been structured as a tax free reorganization.
The following unaudited pro forma combined financial data present the effect
of the acquisition of Vintel to be accounted for as a purchase. The unaudited
pro forma combined balance sheet presents the combined financial position of Tut
and Vintel as of September 30, 1999 assuming that the acquisition had occurred
as of that date. Such pro forma information is based upon the historical
balance sheet data of Tut and the historical balance sheet data of Vintel as of
September 30, 1999. The unaudited pro forma combined statement of operations
gives effect to the acquisition of Vintel by Tut for the nine months ended
September 30, 1999 as if such acquisition had occurred on January 1, 1999.
The unaudited pro forma combined financial data are based on the estimates
and assumptions set forth in the notes to such statements, which have been made
solely for purposes of developing such pro forma information. The unaudited pro
forma combined financial data are not necessarily an indication of the results
that would have been achieved had the transaction been consummated as of the
dates indicated or that may be achieved in the future.
These unaudited pro forma combined financial data should be read in
conjunction with the historical financial statements and notes thereto of Vintel
included elsewhere herein and the historical financial statements and notes
thereto of Tut included in their S-1 Registration, as amended, and their
Quarterly Report on Form 10-Q for the quarter ended September 30, 1999.
10
<PAGE>
TUT SYSTEMS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 1999
(in thousands)
<TABLE>
<CAPTION>
Tut Vintel
Systems, Communicatons, Pro Forma
Inc. Inc. Adjustments Combined
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 16,977 $ 380 $ - $ 17,357
Short-term investments 23,442 - - 23,442
Accounts receivable, net 8,663 - - 8,663
Inventories 4,784 - - 4,784
Prepaid expenses and other 1,440 2 - 1,442
---------------- ---------------- ---------------- ----------------
Total current assets 55,306 382 - 55,688
Property and equipment, net 2,924 48 - 2,972
Intangible assets - - 1,764 (A) 1,764
Other assets 2,340 4 - 2,344
---------------- ---------------- ---------------- ----------------
Total assets $ 60,570 $ 434 $ 1,764 $ 62,768
================ ================ ================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,166 $ 18 $ - $ 3,184
Accrued liabilities 2,015 - - 2,015
Line of credit 1,452 - - 1,452
Deferred revenue 770 - - 770
---------------- ---------------- ---------------- ----------------
Total current liabilities 7,403 18 7,421
Deferred revenue, net of current portion 2,310 - - 2,310
---------------- ---------------- ---------------- ----------------
Total liabilities 9,713 18 - 9,731
---------------- ---------------- ---------------- ----------------
Stockholders' equity:
Common stock 12 522 (522) (A) 12
Additional paid in capital 104,256 - 4,780 (A) 109,036
Deferred compensation (1,085) - - (1,085)
Accumulated deficit (52,326) (106) 106 (A) (54,926)
(2,600) (A)
---------------- ---------------- ---------------- ----------------
Total stockholders' equity 50,857 416 1,764 53,037
---------------- ---------------- ---------------- ----------------
Total liabilities and stockholders' equity $ 60,570 $ 434 $ 1,764 $ 62,768
================ ================ ================ ================
</TABLE>
See accompanying notes to the unaudited pro forma condensed combined financial
statements.
<PAGE>
TUT SYSTEMS, INC.
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Pro Forma
Historical Combined
---------------------------------- ----------------
March 31,
1999
Nine Months (Inception)
Ended through Nine Months
September 30, September 30, Ended
1999 1999 September 30,
---------------- ----------------
Tut Vintel Adjustments 1999
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Revenues:
Product and services $ 15,887 $ 200 $ (200) (B) $ 15,887
License and royalty 1,278 - - 1,278
---------------- ---------------- ---------------- ----------------
Total revenues 17,165 200 (200) 17,165
---------------- ---------------- ---------------- ----------------
Cost of goods sold:
Product and services 9,501 110 (110) (B) 9,501
License and royalty 3 - - 3
---------------- ---------------- ---------------- ----------------
Total cost of goods sold 9,504 110 (110) 9,504
---------------- ---------------- ---------------- ----------------
Gross margin 7,661 90 (90) 7,661
---------------- ---------------- ---------------- ----------------
Operating Expenses:
Sales and marketing 7,536 - - 7,536
Research and development 5,367 118 (90) (B) 5,395
General and administrative 3,110 78 - 3,188
Amortization of intangibles - - 296 (C) 296
Noncash compensation expense 342 - - 342
---------------- ---------------- ---------------- ----------------
Total operating expenses 16,355 196 206 16,757
---------------- ---------------- ---------------- ----------------
Loss from operations (8,694) (106) (296) (9,096)
Interest expense (467) - - (467)
Other income 1,587 - - 1,587
---------------- ---------------- ---------------- ----------------
Loss before income taxes (7,574) (106) (296) (7,976)
Income tax expense 1 - - 1
---------------- ---------------- ---------------- ----------------
Net loss (7,575) (106) (296) (7,977)
Dividend accretion on preferred stock 235 - - 235
---------------- ---------------- ---------------- ----------------
Net loss attributable to common stockholders $ (7,810) $ (106) $ (296) $ (8,212)
================ ================ ================ ================
Net loss per share attributable to common
stockholders, basic and diluted $ (0.75) $ (0.07) $ (0.78)
================ ================ ================ ================
Shares used in computing net loss attributable
to common stockholders, basic and diluted (D) 10,360 1,595 116 (A) 10,476
================ ================ ================ ================
</TABLE>
See accompanying notes to the unaudited pro forma condensed combined financial
statements.
<PAGE>
Tut Systems, Inc.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA
(in thousands, except per share amounts)
NOTE 1 - BASIS OF PRESENTATION:
On November 12, 1999, Tut Systems, Inc. ("Tut") completed the acquisition of
Vintel Communications, Inc. ("Vintel") in a transaction to be accounted for as a
purchase. Vintel stockholders and optionholders received an aggregate total of
156,870 shares of Tut common stock and shares subject to options, as applicable.
The purchase price of the Vintel acquisition is $4,780,000 including the
estimated value of the Tut shares and the estimated value of vested options
issued upon consummation of the acquisition and estimated transaction costs.
The allocation of the purchase price using balances as of September 30, 1999
is summarized below (in thousands):
Net tangible assets $ 416
In-process research and development 2,600
Workforce 380
Goodwill 1,384
------------
$ 4,780
------------
The actual purchase price allocation is dependent upon the fair values of the
acquired assets and assumed liabilities as for the acquisition date of the
preliminary valuation report. The amount allocated to the purchased in-process
technology was determined based on an appraisal completed by an independent
third party using established valuation techniques and was expensed upon
acquisition, because technological feasibility had not been established and no
future alternative uses existed. The product percentage of completion was
estimated to be 75%. The value of this in-process technology was determined by
estimating the cost to develop the purchased in-process technology into a
commercially viable product, estimating the resulting net cash flows from the
sale of the product resulting from the completion of the in-process technology,
and discounting the net cash flows back to their present value.
The amounts allocated to in-process research and development will be charged
to the statement of operations in the period the acquisition is consummated.
NOTE 2 - PRO FORMA ADJUSTMENTS
A. To reflect acquisition of Vintel based on the preliminary purchase
price allocation described in Note 1.
B. To eliminate intercompany transaction.
C. To reflect amortization of goodwill and workforce over their estimated
useful lives of five and three years, respectively, as if the
acquisition occurred on January 1, 1999.
D. Basic and diluted net loss per share is computed using the weighted
average number of common shares outstanding during the period.
Unaudited pro forma combined basic and diluted net loss per share also
includes shares of common stock to be issued in connection with the
proposed Vintel acquisition. Common equivalent shares, including stock
options, are excluded from the computation as their effect is anti-
dilutive.
The amount allocated to in-process research and development has not been
included in the unaudited pro forma combined statement of operations as it is
nonrecurring. This amount will be expensed in the period the acquisition is
consummated.
13
