SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
Pursuant to section 13 or 15(d) of
the Securities Act of 1934
July 22, 1997
INTERACTIVE TECHNOLOGIES CORPORATION, INC.
(Exact name of registrant as specified in charter)
Wyoming 0-19796 98-0120805
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
102 South Harbor City Boulevard
Melbourne, Florida 32901
(Address of Principal Executive Offices)
407-953-4811
(Registrant's telephone number including area code)
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Item 2. Acquisition or Disposition of Assets.
On May 8, 1997, the Registrant entered into a Stock Purchase Agreement with
Airtech International, Inc. ("Airtech") for the acquisition of a minimum of 81%
of the authorized and outstanding shares of stock of Airtech. The purchase price
includes Convertible Debentures of the Registrant in the face amount of
$9,000,000 with interest at the rate of 10% per annum; 8,850,000 shares of
Preferred Stock of the Registrant and 8,000,000 shares of common stock.
Airtech is the manufacturer and installer of advanced indoor air
purification technology. The Registrant expects to continue and expand the
business of Airtech.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Pro-Forma Combined Balance Sheet, Pro-Forma Combined Statement of
Operations, and Notes to Pro Forma Combined Financial Statements for Interactive
Technologies and Airtech are provided herein.
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July 18, 1997
Board of Directors
Interactive Technologies Corporation, Inc.
Melbourne, Flordia
The accompanying pro-forma balance sheet as of February 28, 1997 has been
prepared as if the Transaction between Interactive Technologies Corporation,
Inc. and Airtech International Corporation had been consummated as of that date.
The accompanying pro-forma statements of operation for the nine months ended
February 28, 1997 have been prepared as if the Transactions were consummated as
of June 1, 1996.
The pro-forma financial statements do not purport to be indicative of the
results which would actually have been obtained had the Transaction been
completed on the dates indicated or which may be obtained in the future. The
pro-forma financial statements should be read in conjuction with the notes
thereto and the historical financial statements of the parties involved in this
Transaction.
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INTERACTIVE TECHNOLOGIES CORPORATION, INC.
PRO-FORMA COMBINED BALANCE SHEETS
FEBRUARY 28, 1997
(Unaudited)
Historical
-----------------------------
(Acquired)
Interactive
Technologies Airtech Adjustments
Corporation International For
Inc. Corporation Acquisition Combined
------------------------------- ----------- -----------
ASSETS
----------------
Current Assets $ 206,627 $1,122,819 $ 1,329,446
Stock subscription
receivable 507,577(2) 507,577
Property and equipment
net of depreciation 96,289 214,485 310,774
Intellectial properties
net of amortization 5,142,712(3) 336,977(4) 12,250,000(5) 17,729,689
Goodwill 1,408,474(5) 1,408,474
Other assets
1,866 1,896,489 1,898,355
--------- -----------
Total Assets 5,447,494 4,078,347 $ 23,184,315
========== =========== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities $ 536,432 $ 248,205 (250,000)(6) $534,637
Long-term liabilities 1,299,573 26,116 (800,000)(6) 9,525,689
9,000,000 (5)
----------- --------- ---------
Total Liabilities 1,836,005 274,321 10,060,326
----------- --------- ----------
Commitments and contigencies (7)
Stockholders' Equity
Paid in Capital 9,614,244 4,360,281(1) 4,658,474(5) 19,682,999
1,050,000(6)
Retained Earning(Deficit)(6,002,755) (556,255) (6,559,010)
----------- ---------- -----------
3,611,489 3,804,026 13,123,989
----------- ---------- -----------
Total Liabilities and
Stockholders' Equity $5,447,494 $4,078,347 $23,184,315
========== =========== ============
See notes to Pro-Forma Combined Financial Statements
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INTERACTIVE TECHNOLOGIES CORPORATION, INC.
PRO-FORMA COMBINED STATEMENT OF OPERATIONS
For The Nine Months Ended February 28, 1997
(Unaudited)
Historical Adjustments
------------------------- -----------
Acquired
---------
Interactive
Technologies Airtech Adjustments
Corporation International For
Inc. Corporation Acquisition Combined
------------ ------------- ----------- ---------
Net revenues $ 197,804 $1,451,074 $1,648,878
Cost of Sales - 600,487 600,487
---------- ---------- -----------
Gross income 197,804 850,587 1,048,391
General and Administrative 1,356,397 746,497 2,102,894
---------- ---------- -----------
Net income from operations
before depreciation,
amortization and taxes
(1,158,593) 104,090 (1,054,503)
Depreciation and
amortization 721,088 - 721,088
----------- --------- -----------
Net income from operations (1,879,681) 104,090 (1,775,591)
Gain on sale of Charleston
lincense 311,500 - 311,500
---------- -------- -----------
Net income before
income taxes (1,568,181) 104,090 (1,464,091)
Income taxes - - -
Net Income $(1,568,181) $104,090 $1,464,091)
============ ======== ===========
Primary earnings per share $(0.13)(1) $0.01(1) $ (0.08)
Dulited earnings per share (1) (1) $ (0.04)
See notes to Pro-Forma Combined Financial Statements
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INTERACTIVE TECHNOLOGIES CORPORATION, INC.
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
FEBRUARY 28,1997
(Unaudited)
1. Basis of Presentation
The accompanying Pro-Forma Combined balance sheet at February 28, 1997 and
related combined statement of operations for the nine months then ended have
been prepared as if the business combination had occurred on June 1, 1996 the
start of the current fiscal year of Interactive. Airtech has elected to change
its fiscal year from February 28, 1997 to May 31, 1997 and accordingly has
restated its historical statements to reflect this change in fiscal year end.
The purchase of the outstanding stock of Airtech by Interactive is being
reflected in these Pro-Forma Combined Financial Statements using the purchase
method for recording the transaction. The excess of cost over book value has
been reclassified to other assets of Airtech based on managements estimates and
outside valuation based on projected cash flows and revenues from the revalued
assets. No provision for amortization of these revalued assets or goodwill are
reflected in these combined financial statements.
There have been no changes in generally accepted accounting principals in
the presentation of the combined financial statements from the historical
audited financial statements included herein by reference as previously filed or
in the audited financial statements of Airtech for its fiscal year ended
February 28, 1996.
Earnings per Share (EPS) is reflected as primary earning per share and
fully dilluted earnings per share as set forth in the following table used for
EPS computation:
Historical
ITC Airtech
Weighted average number of shares 12,857,143 17,485,000
Less shares cancelled ( 3,400,000)
Add shares issued for debentures 1,144,444
Adjustment for combined presentation (17,485,000)
Common shares issued for acquired 8,000,000
------------
Primary shares outstanding 17,884,309
Assuming conversion of convertable
preferred issued for acquired 8,850,000
Assuming conversion of convertable
Debentures issued for acquired 12,139,865
Fully diluted shares outstanding 39,591,452
Notes to Historical Financial Statements
1. Stock subscription receivable represents the monies received by Airtech
from the sale of shares of its common stock after balance sheet date.
2. Intellectual properties reflected on the balance sheet of Interactive
consist of the following:
License rights net of accumulated amortization
of $270,000 $ 408,050
Proprietary software and trademark, net of accumulated
amortization of $676,380 4,734,662
-----------
$5,142,712
License rights consist of ITC's Federal Communications Commission
Interactive Video and Data Services (IVDS) radio station license in the
Melbourne-Titusville-Palm Bay, Florida and the retained 10% interest in IVDS
license in the Charleston-North Charleston, South Carolina service areas
representing an additional enhancement to ITC's programming distribution. These
licenses have a duration of an initial five years, and are renewable if all
conditions of the license are met. IVDS, a two way communications system , will
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INTERACTIVE TECHNOLOGIES CORPORATION, INC.
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
FEBRUARY 28,1997
(Unaudited)
allow viewer to take an active role in systems delivered through broadcast
television, cable television, wireless cable, direct broadcast satellite or
other future television delivery methods. IVDS is regulated as a personal radio
service under the rules of the FCC which has allocated spectrum in the 218-219
MHZ range for its use. IVDS systems are designed to operate with a hand-held
remote control device that controls the interactive set top[ device on the
subscriber's television set. A viewer would interact with the TV station through
a radio signal using an IVDS frequency.
Proprietary software and trademarks consist of software developed for
integration into the rebate television market and a trademark known as Rebate TV
(TM) purchased in October 1995. This proprietary software allows ITC to be a
developer and producer of television, interactive television and interactive
digital media programming. These programs can be developed in various
interactive formats for cable, broadcast and direct broadcast satellite
television as well as for Internet distribution. Rebate TV is a television
program which incorporates interactive media and computer data management
allowing retail vendors to communicate their message to consumers, the allow the
consumer to verify his or her purchase, with the consumer receiving a cash
rebate from ITC for their purchases. Retailers represent a broad spectrum of the
business community including grocer chains, furniture stores, tire service
stores, banks, restaurants, car dealers and a variety of other specialty
businesses.
3. Intellectual properties reflected on the balance of Airtech consist of the
cost incurred to date for the development of a full line of air purification
products for commercial, consumer, automobile and medical use. Several of the
products will be eligible for a US and foreign patents with patent applications
currently in process or planned (See Note ).
Adjustments for Acquisition
4. Per the stock purchase agreement entered into on May 8, 1997 between
Interactive Technologies Corporation, Inc. and Airtech International Corporation
the following presents the securities and the related valuation of the purchase
of 100% of the issued and outstanding common stock of Airtech:
Value
Description of Securities Per Share Total
8,000,000 shares of Interactive
Common Stock, registered $0.56(a) $ 4,480,000
8,850,000 shares of Interactive
Preferred Stock, registered and
convertible into Common Stock $0.45(b) 3,982,500
$9,000,000 in Convertible
Debentures At Face 9,000,000
-------------
Total value of purchase of 100%of Airtech
Common Stock $ 17,462,500
------------
(a) The closing of bid price of Interactive common stock on May 8, 1997 was
$1.125, for valuation of a private placement type transaction of registered
shares of common stock Interactive has discounted the price per share by 50%.
(b) The Preferred Stock is convertible into one (1) share of Common Stock
after 24 months or can be called by the Company during that time, for valuation
purposes the assigned value of the common shares was reduced by 20%.
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INTERACTIVE TECHNOLOGIES CORPORATION, INC.
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
FEBRUARY 28,1997
(Unaudited)
Adjustments for Acquisition cont'd
The following represents the allocation of the purchase price:
Book value of Airtech common stock $ 3,804,026
Intellectual properties 12,250,000
Excess of purchase price over cost 1,408,474
--------------
Total purchase price $ 17,462,500
-------------
5. Under the terms of the stock purchase agreement Interactive is required to
reduce the liabilities to a total of $60,000. The outstanding debenture holders
have agreed to exchange their debentures totaling $1,050,000 for 1,144,444
registered shares of common stock and 1,144,444 warrants convertible into common
stock at a price ranging from $0.75 to $1.25 per share.
6. Interactive Technologies has the following litigation pending:
The Company is a defendant in a proceeding filed in the United States
District Court for the Southern District of New York. It accepted service April
5, 1997 in an action brought by Studiolink Corporation and Steven Campus for
damages arising out of an equipment lease agreement. The Company expects to
assert counterclaims against the Plaintiffs for losses suffered as a result of
their failure to perform. Settlement discussions have been ongoing and the
Company expects this matter to be settled in a manner not unfavorable to the
Company. In addition, in related matters, the Company is in litigation with LLB
Realty, L.L.C. which has filed a claim alleging claims under an office lease
agreement in Superior Court of New Jersey, Mercer County. The Company has
asserted claims against L.L.B. Realty, L.L.C. for failure to perform under the
conditions of the agreement. Settlement negotiations have been ongoing and the
Company expects this matter to be settled in a manner not unfavorable to the
Company.
The Company is not a party to any other pending legal proceedings except
for claims and lawsuits arising in the normal course of business. The Company
does not believe that these claims or lawsuits will have a material effect on
ITC's financial condition or results of operations. Accordingly no provision or
accrual for potential losses are reflected in the Pro-Forma Combined Financial
Statements.
Airtech International Corporation has the following litigation pending:
Airtech International Corporation, McCleskey Sales and Service, Inc., C.J.
Comu and John Potter, plaintiffs vs Honeywell, Inc., Honeywell Environmental Air
Control, Inc. And Suzanne Haas, defendants; No. 3:96CV-1855-D, United States
District Court for the Northern District of Texas, Dallas Division.
In this case, Airtech, a subsidiary and two of its officers filed suit
against Honeywell, Inc. And a Honeywell subsidiary and an employee asserting
several causes of action. These causes of action include breach of contract
relating to termination of the Company's Full Service Distributorship
agreements, for defamation and tortious interference with contract relating to a
merger agreement between the Company and DCX, Inc., for unfair competition
regarding claims made by Honeywell about it air purification products, for
negligent misrepresentation regarding representations made to the Company and
its subsidiary regarding the exclusivity of certain arrangements with the
defendants, and for declaratory relief and attorney's fees. Honeywell filed a
counterclaim against the Company, McCleskey, Comu and Potter. Honeywell alleges
that the Company and McCleskey owe Honeywell money for past purchases, and that
Comu and Potter interfered with the relationship between McCleskey and
Honeywell. Honeywell seeks $71,000 in actual damages and unspecified punitive
damages and attorney's fees. The Company has denied all of the material
allegations of Honeywell's counterclaim. The Company plans to vigorously defend
the counterclaim and believes the counterclaim to be without merit.
Honeywell, Inc., plaintiff, vs Airtech International Corporation,
AirSoPure, Inc. And Richard Allegrati, defendants: No. WMN 97-238 United States
District Court for the District of Maryland, Baltimore Division.
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INTERACTIVE TECHNOLOGIES CORPORATION, INC.
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
FEBRUARY 28,1997
(Unaudited)
Honeywell filed suit against the Company, a subsidiary and an employee,
alleging violations of the Lanham Act and the Maryland Uniform Trade Secrets Act
and the common law. The suit alleges that certain Airtech and AirSoPure products
were sold in violation of the Honeywell's trademarks, and that the cover design
of certain products of Airtech/AirSoPure was wrongfully obtained. The suit seeks
an injunction and unspecified damages. Rather than incur substantial additional
attorney's fees, the Company agreed to the entry of a preliminary injunction
regarding the sale of a very small number of modified Honeywell products,
immaterial to the Company's business. The Company denies all of the material
allegations of Honeywell's claims, is vigorously defending this case. The
Company believes Honeywell's claims to be without merit.
Accordingly no reserve or accrual has been reflected in these Combined
Pro-Forma Financial Statements for this pending litigation.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Interactive Technologies Corporation, Inc.
by: /s/Perry Douglas West
Perry Douglas West,
Chief Executive Officer
Dated: July 22, 1997
