<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 8-K/A-1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 28, 1997
------------------------
ON Technology Corporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-26376 04-3162846
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
One Cambridge Center Cambridge, MA 02142
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 374-1400
----------------------------
N/A
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(Former name or former address, if changed since last report.)
<PAGE>
ON Technology Corporation
Item 2 Acquisition or Disposition of Assets
On January 28, 1997, Wilma 96 Vermogensverwaltungs GmbH ("Wilma GmbH"), a
wholly-owned subsidiary of ON Technology Corporation ("ON Technology"),
purchased all of the outstanding capital stock of csd Software GmbH, a German
corporation for: (i) $5,000,000 in cash and (ii) approximately 1,315,790 newly
issued shares of ON Technology common stock with a value of $7,393,160 based on
the average closing price of ON Technology Common Stock during the five business
days preceding and the five business days following the date of execution of the
definitive Purchase Agreement.
The acquisition is being accounted for as a purchase. A significant portion
of the purchase price, as outlined in the attached notes to the pro forma
condensed consolidated financial statements, has been identified in an appraisal
as intangible assets, including approximately $13.8 million of in-process R&D
(see discussion in Note 1 to December 31, 1996 Pro Forma Condensed Consolidated
Balance Sheet).
The accompanying Pro Forma Condensed Consolidated Statement of Operations
for the year ended December 31, 1996 assumes that the acquisition took place
January 1, 1996, the beginning of ON Technology's most recently completed fiscal
year. The Pro Forma Condensed Consolidated Balance Sheet for the year ended
December 31, 1996 assumes that the acquisition took place on December 31, 1996,
the end of ON Technology's most recently completed fiscal year. The Pro Forma
Condensed Consolidated Statement of Operations does not include the effect of
the non-recurring write-off of in-process R&D directly attributable to the
acquisition.
The accompanying pro forma information is presented for illustrative
purposes only and is not necessarily indicative of the financial position or
results of operations which would actually have been reported had the
acquisition been in effect as presented, or which may be reported in the future.
The accompanying Pro Forma Condensed Consolidated Financial Statements
should be read in conjunction with the historical financial statements and
related notes thereto for ON Technology (not presented herein) and the csd
Software GmbH financial statements presented herein.
Item 7 Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
Report of Independent Public Accountants (Arthur Andersen LLP)
Balance Sheet at December 31, 1996
Statement of Operations for the year ended December 31, 1996
Statement of Stockholders' Equity for the year ended December 31, 1996
Statement of Cash Flows for the year ended December 31, 1996
Notes to Financial Statements
(b) Pro Forma Financial Information
Pro Forma Condensed Consolidated Balance Sheet at December 31, 1996
Pro Forma Condensed Consolidated Statement of Operations for the year ended
December 31, 1996
<PAGE>
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 thereunto duly authorized.
ON Technology Corporation
by: /s/ Christopher A. Risley
------------------------------------------
Christopher A. Risley
President and Chief Executive Officer
Dated: April 14, 1997
<PAGE>
Exhibit Index
(a) * Stock Purchase Agreement among Wilma 96 Vermogensverwaltungs GmbH and csd
Software GmbH dated January 28, 1997.
* Previously filed with Report on Form 8-K filed with the Securities and
Exchange Commission of February 6, 1997.
<PAGE>
Report of Independent Public Accountants
To the Stockholders and Directors of
csd Software GmbH
We have audited the accompanying balance sheet of csd Software GmbH as of
December 31, 1996, and the related statement of operations, stockholders' equity
and cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above present fairly, in all
material respects, the financial position of csd Software GmbH as of December
31, 1996, and the results of its operations and cash flows for the year then
ended, in conformity with the generally accepted accounting principles.
/s/ Arthur Andersen LLP
Boston, Massachusetts
February 10, 1997
<PAGE>
CSD SOFTWARE GMBH
Balance Sheet
as of December 31, 1996
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current Assets:
Cash and cash equivalents $ 346,532
Accounts receivable, net of allowance of $108,450 1,926,133
Inventory 70,559
Other current assets 96,835
Deferred tax asset 1,149,438
----------
Total current assets 3,589,497
----------
Fixed Assets:
Computer and office equipment 1,180,968
Automobiles 68,317
----------
Less--Accumulated depreciation 838,105
Total fixed assets 411,179
----------
Other assets 58,492
----------
Total assets $4,059,168
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Line of credit $ 934,837
Accounts payable 802,705
Accrued expenses 1,272,402
Deferred revenue 3,331,938
----------
Total current liabilities 6,341,882
----------
Commitments (Note 5)
Stockholders' Equity:
Called-up shares capital 34,805
Share premium account 632,605
Accumulated deficit (3,079,527)
Cumulative translation adjustment 129,403
----------
Total stockholders' equity (2,282,714)
----------
Total Liabilities and Stockholders' Equity $4,059,168
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CSD SOFTWARE GMBH
Statement of Operations
for the Year Ended December 31, 1996
<TABLE>
<CAPTION>
Revenue:
<S> <C>
Net product revenue $ 7,475,113
Other revenue 518,039
-----------
Total revenue 7,993,152
Cost and Expenses:
Cost of Revenue 3,793,804
Operating Expenses 5,720,813
-----------
Operating Loss (1,521,465)
Other Income, net 114,398
Provision for Income Taxes 8,191
-----------
Net Loss $(1,398,877)
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CSD SOFTWARE GMBH
Statement of Stockholders' Equity
for the Year Ended December 31, 1996
<TABLE>
<CAPTION>
CALLED-UP SHARE CUMULATIVE
SHARES PREMIUM ACCUMULATED TRANSLATION
CAPITAL ACCOUNT DEFICIT ADJUSTMENT TOTAL
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1995 $34,805 $ - $ (678,167) $ - $ (643,362)
Additions to share premium
account - 632,605 - - 632,605
Dividends paid - - (1,002,483) - (1,002,483)
Cumulative translation
adjustment - - - 129,403 129,403
Net loss - - (1,398,877) - (1,398,877)
--------- --------- ----------- ------------ -----------
Balance, December 31, 1996 $34,805 $632,605 $(3,079,527) $129,403 $(2,282,714)
========= ========= =========== ============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CSD SOFTWARE GMBH
Consolidated Statements of Cash Flows
for the Year Ended December 31, 1996
<TABLE>
<CAPTION>
<S> <C>
Cash Flows from Operating Activities
Net loss $ (1,398,877)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation 363,546
Change in deferred income taxes 82,659
Changes in assets and liabilities:
Accounts receivable (571,197)
Inventory 262,941
Other current assets (26,630)
Accounts payable 544,017
Accrued expenses (1,894,395)
Deferred revenue 369,444
-----------
Net cash used in operating activities (2,268,492)
-----------
Cash Flows from Investing Activities
Increase in other assets (28,437)
Purchase of fixed assets, net (204,437)
-----------
Net cash used in investing activities (232,874)
Cash Flows from Financing Activities
Additions to share premium account 632,605
Borrowings under line of credit, net 934,837
Dividends paid (1,002,483)
-----------
Net cash provided by financing activities 564,959
-----------
Effect of Exchange Rates on Cash and Cash Equivalents 129,403
Net Decrease in Cash and Cash Equivalents (1,936,407)
Cash and Cash Equivalents, beginning of period 2,153,536
-----------
Cash and Cash Equivalents, end of period $ 346,532
===========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for -
Interest $ 14,860
===========
Taxes $ 2,110,458
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CSD SOFTWARE GMBH
Notes to Financial Statements
December 31, 1996
(1) Operations
csd Software GmbH (the "Company") is engaged in the development, production
and sale of PC desktop software management tools.
(2) Summary of Significant Accounting Policies
The accompanying financial statements reflect the application of certain
accounting policies described below and elsewhere in the notes to the
financial statements.
(a) Foreign Currency Translation
The Companies functional currency is the German Mark (DM). For
financial statement purposes the assets and liabilities have been
translated at the exchange rate in effect at December 31, 1996.
Revenues and expenses have been translated at the average exchange
rate during the year ended December 31, 1996. A cumulative translation
adjustment has been recorded at December 31, 1996, to reflect the
difference in these exchange rates.
(b) Cash and Cash Equivalents
The Company follows the provisions of Statement of Financial
Accounting Standards (SFAS) no. 115, Accounting for Certain
Investments in Debt and Equity Securities. The Company has classified
its cash equivalents as held-to-maturity and recorded them at
amortized cost, which approximates market value. The Company considers
all highly liquid cash investments with maturities of three months or
less at the date of acquisition to be cash equivalents.
(c) Inventory
The Company values inventory at the lower of cost (first-in, first-
out) or market. Inventory consisted principally of finished goods at
December 31, 1996.
(d) Depreciation
The Company provides for depreciation by charges to operations in
amounts estimated to allocate the cost of these assets over their
estimated useful lives, of three to ten years.
<PAGE>
CSD SOFTWARE GMBH
Notes to Financial Statements
December 31, 1996
(Continued)
(2) Summary of Significant Accounting Policies (Continued)
(e) Concentration of Credit Risk
SFAS No. 105, Disclosure of Information About Financial Instruments
with Off-Balance-Sheet Risk and Financial Instruments with
Concentrations of Credit Risk, requires disclosure of any significant
off-balance-sheet and credit risk concentrations. Financial
instruments, which potentially subject the Company to concentrations
of credit risk, are cash equivalents, accounts receivable and debt.
The estimated fair value of these financial instruments approximates
their carrying value at December 31, 1996. The estimated fair values
have been determined through information obtained from market sources
and management estimates. During 1996, the Company had three customers
who accounted for 27.8%, 26.5% and 23.5% of total revenue,
respectively.
(f) Revenue Recognition
The Company recognizes revenue in accordance with the provisions of
Statement of Position No. 91-1, Software Revenue Recognition. Revenue
from software product sales is recognized upon shipment of the product
to customers where the Company has no significant obligations and
collectibility of the revenue is probable. The deferred revenue at
December 31, 1996 relates to license fees not yet earned including
revenue related to products not yet completed and shipped as well as
amounts related to software maintenance not yet provided. Maintenance
is recognized ratably as earned and is included in other revenue in
the statement of operations.
(g) Management 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 reported period. Actual results could differ
from those estimates.
(h) Income Taxes
The Company accounts for income taxes in accordance with SFAS 109,
Accounting for Income Taxes. The Company has recorded a deferred tax
asset for that portion of its asset which is deemed realizable. The
provision for the year ended December 31, 1996 represents amounts owed
for trade taxes.
<PAGE>
CSD SOFTWARE GMBH
Notes to Financial Statements
December 31, 1996
(Continued)
(3) Stockholder's Equity
The Company has called-up share capital of 50,000 DM, approximately
$35,000.
(4) Line of Credit
The Company has a line of credit (the "Line") with a bank for 2,000,000 DM,
approximately $1,300,000. Borrowing's under the Line bears interest at a
rate of 8.25% and expires on March 30, 1997 or until payment of a customer
invoice, as defined. The Line is collateralized by guaranties granted by
certain principals of the Company as well as certain receivables. As of
December 31, 1996, the Company had $934,837 outstanding under the Line.
(5) Lease Commitments
The Company has operating lease commitments for a leased facility and
equipment that expires through July, 1999. Future commitments under these
operating leases are approximately $477,000, $30,000 and $17,000 in 1997,
1998 and 1999, respectively. Rent expense incurred under these operating
leases was approximately $211,000 during the year ended 1996.
(6) Accrued Expenses
Accrued expenses consisted of the following:
Payroll and payroll related $ 162,508
Tax related 762,351
Other 347,543
----------
$1,272,402
==========
(7) Sale of the Company
On January 28, 1997 ON Technology Corporation ("ON") which is engaged in
the development, marketing and distribution of software for networks
acquired the outstanding stock of the Company. The shareholders of the
Company received $5,000,000 in cash and 1,315,790 shares of newly issued ON
common stock.
<PAGE>
<TABLE>
<CAPTION>
ON TECHNOLOGY CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS)
Historical
---------------------------------------
On Technology csd Software GmbH Pro Forma
December 31, 1996 December 31, 1996 Adjustments Combined
------------------- ----------------- ------------- ----------
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and Cash Equivalents $ 20,774 $ 347 $ (5,037) (1) $ 16,084
Accounts Receivable, Net 9,885 1,926 11,811
Inventory 2,323 71 2,394
Prepaid Expenses and Other Current Assets 2,504 97 2,601
Deferred Tax Asset - 1,149 1,149
------------------- ----------------- ------------- ----------
Total Current Assets 35,486 3,590 (5,037) 34,039
Property, Plant and Equipment , Net 5,841 411 6,252
Other Assets 2,815 58 1,620 (1) 4,493
------------------- ----------------- ------------- ----------
44,142 4,059 (3,417) 44,784
=================== ================= ============= ==========
CURRENT LIABILITIES:
Line of Credit - 935 935
Current Portion of Capital Lease Obligations 1,063 - 1,063
Accounts Payable 5,619 803 6,422
Accrued Expenses 2,456 1,272 734 (1) 4,462
Deferred Revenue 1,001 3,332 4,333
------------------- ----------------- ------------- ----------
Total Current Liabilities 10,139 6,342 734 17,215
Capital Lease Obligation, Net of Current Portion 510 - 510
STOCKHOLDER'S EQUITY: 33,493 (2,283) (4,151) (1) 27,059
------------------- ----------------- ------------- ----------
TOTAL LIABILTIES AND EQUITY 44,142 4,059 (3,417) 44,784
=================== ================= ============= ==========
</TABLE>
NOTE 1: PRO FORMA ADJUSTMENTS
(1) To record and to allocate the purchase price:
Purchased in-process R&D $ 13,780
Intangibles 1,620
-------
$15,400
<PAGE>
<TABLE>
<CAPTION>
ON TECHNOLOGY CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Historical
----------------------------------------
On Technology csd Software GmbH
Year ended Year ended Pro Forma
December 31, 1996 Decemeber 31, 1996 Adjustments Combined
----------------- ------------------ -------------- -------------
<S> <C> <C> <C> <C>
Net Product Revenue $ 50,165 $ 7,475 $ 57,640
Other Revenue 1,627 518 2,145
----------------- ------------------ -------------- -------------
Total Revenue 51,792 7,993 59,785
Operating Expenses:
Cost of Product Revenue 11,951 3,794 540 (1) 16,285
Sales and Marketing 24,176 - 24,176
Research and Development 9,456 - 9,456
General and Administrative 4,407 5,720 10,127
Charge for Purchased Research and
Development 13,285 - 13,285
Charge for Restructuring 5,415 - 5,415
----------------- ------------------ -------------- -------------
Loss From Operations (16,898) (1,521) (540) (18,960)
Interest Income, Net 1,134 114 (252) (2) 997
----------------- ------------------ -------------- -------------
Loss Before Provision for Income Taxes (15,764) (1,407) (792) (17,963)
Provision for Income Taxes 97 8 105
----------------- ------------------ -------------- -------------
Net Loss $ (15,861) $ (1,399) (792) $ (18,068)
================= ================== ============== =============
Net Loss Per Common and Common
Equivalent Share $ (1.46) $ (1.48)
================= =============
Weighted Average Common and
Common Equivalent Shares Outstanding 10,853,814 1,315,790(3) 12,169,604
================= ============== =============
</TABLE>
NOTE 1:
For the purpose of these Proforma Financial Statements, the Purchased R&D
was assumed to have been written off prior to the period presented herein,
so that the statement of operations includes only recurring costs.
NOTE 2: PROFORMA ADJUSTMENTS
The following is a description of each of the proforma adjustments:
(1) Amortization of Intangibles over three year lives.
(2) Reduce interest income as a result of utilizing cash for acquisition.
(3) Pro forma net loss per common and common equivalent share is computed
assuming the 1,315,790 shares issued in connection with the
acquisition was outstanding for the entire period.
