UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE OF 1934
Date of Report (Date of Earliest Event Reported): October 6, 2005
TELEVIDEO, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware |
| 000-11552 |
| 94-2383795 |
(State or Other Jurisdiction of |
| (Commission File No.) |
| (IRS. Employer Identification No.) |
2345 Harris Way, San Jose, California 95131
(Address of Principal Executive Office) (Zip Code)
Registrant’s Telephone Number, Including Area Code: (408) 954-8333
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.01 Completion of Disposition of Assets
TeleVideo, Inc. (“TeleVideo”), a developer and manufacturer of thin client hardware and software, announced on October 7, 2005 that it had completed the previously announced divestment of its thin client business to Neoware Systems, Inc. (“Neoware”) (Nasdaq: NWRE). Under the terms of an asset purchase agreement, TeleVideo sold its thin client business to Neoware, including intellectual property, customer lists, customer relationships, and goodwill. The transaction was completed for $3.35 million in cash, $300,000 of which will be held in escrow for twelve months as security for TeleVideo's representations and warranties under the asset purchase agreement. A copy of the asset purchase agreement is set forth on Exhibit 10.1 attached to this 8-K. Neoware is not assuming any liabilities or acquiring inventory as a result of this transaction. TeleVideo customers now have access to Neoware’s broad range of thin client, software, and support options. Except in respect of the asset purchase agreement, there is no material relationship between TeleVideo or its affiliates and Neoware or its affiliates.
A copy of the press release dated October 7, 2005, announcing the closing of the transaction is attached hereto as Exhibit 99.1.
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Item 9.01 Financial Statements and Exhibits
(b) Pro Forma Financial Information
The pro forma financial information presented below is for illustrative purposes only and does not purport to project TeleVideo's results of operations for the current year or for any future period. The pro forma financial information is based upon, and should be read in connection with, the latest audited consolidated financial statements and the notes thereto set forth in TeleVideo's annual report on Form 10-K for the fiscal year ended October 31, 2004 and TeleVideo's interim results for the nine months ended July 31, 2005.
TELEVIDEO, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
For the Nine Months Ended July 31, 2005
(in thousands, except per share amounts)
|
| Historical |
| Thin Client Divestiture |
| Notes |
| Pro Forma |
| |||
Net sales |
| $ | 5,007 |
| $ | (3,891 | ) | 2(a) |
| $ | 1,116 |
|
Cost of sales |
| $ | 3,896 |
| $ | (2,805 | ) | 2(a) |
| $ | 1,091 |
|
Gross profit |
| $ | 1,111 |
| $ | 1,086 |
|
|
| $ | 2,197 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
| |||
Sales and marketing |
| $ | 658 |
| $ | (484 | ) | 2(b) |
| $ | 174 |
|
Research and development |
| $ | 212 |
| $ | (156 | ) | 2(b) |
| $ | 56 |
|
General and administration |
| $ | 1,171 |
| $ | (862 | ) | 2(b) |
| $ | 309 |
|
Total operating expenses |
| $ | 2,041 |
| $ | (1,502 | ) |
|
| $ | 539 |
|
Loss from operations |
| $ | (930 | ) | $ | (416 | ) |
|
| $ | (1,346 | ) |
Other income, net |
|
|
|
|
|
|
|
|
| |||
Gain on extinguishment of related party note payable |
| $ | 100 |
| $ | — |
| 2(d) |
| $ | 100 |
|
Impairment losses on investment in affiliate |
| $ | (22 | ) | $ | — |
| 2(d) |
| $ | (22 | ) |
Interest expenses, net |
| $ | (964 | ) | $ | — |
| 2(d) |
| $ | (964 | ) |
Other income, net |
| $ | 24 |
| $ | — |
|
|
| $ | 24 |
|
Total, other income, net |
| $ | (862 | ) | $ | — |
|
|
| $ | (862 | ) |
Net loss |
| $ | (1,792 | ) | $ | (416 | ) |
|
| $ | (1,376 | ) |
|
|
|
|
|
|
|
|
|
| |||
Net loss per share, basic and diluted |
| $ | (0.16 | ) | $ | (0.04 | ) |
|
| $ | (0.12 | ) |
Weighted-average shares outstanding |
| 11,310 |
| 11,310 |
|
|
| 11,310 |
|
See notes to unaudited pro forma consolidated financial statements
3
TELEVIDEO, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
For the Year Ended October 31, 2004
(in thousands, except per share amounts)
|
| Historical |
| Thin Client Divestiture |
| Notes |
| Pro Forma |
| |||
Net sales |
| $ | 9,483 |
| $ | (7,761 | ) | 2(a) |
| $ | 1,722 |
|
Cost of sales |
| $ | 7,498 |
| $ | (6,193 | ) | 2(a) |
| $ | 1,305 |
|
Gross profit |
| $ | 1,985 |
| $ | 1,568 |
|
|
| $ | 417 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
| |||
Sales and marketing |
| $ | 1,331 |
| $ | (1,106 | ) | 2(b) |
| $ | 225 |
|
Research and development |
| $ | 567 |
| $ | (471 | ) | 2(b) |
| $ | 96 |
|
General and administration |
| $ | 1,648 |
| $ | (1,266 | ) | 2(b) |
| $ | 382 |
|
Loss on impairment of goodwill |
| $ | 3,358 |
| $ | — |
|
|
| $ | 3,358 |
|
Total operating expenses |
| $ | 6,904 |
| $ | (2,843 | ) |
|
| $ | 4,061 |
|
Loss from operations |
| $ | (4,919 | ) | $ | (1,275 | ) |
|
| $ | (3,644 | ) |
Other income, net |
|
|
|
|
|
|
|
|
| |||
Impairment losses on investments in affiliates |
| $ | (164 | ) | $ | — |
| 2(d) |
| $ | (164 | ) |
Gain on sale of marketable securities |
| $ | 203 |
| $ | — |
| 2(d) |
| $ | 203 |
|
Gain from termination of sale-leaseback transaction property |
| $ | 4,928 |
| $ | — |
| 2(d) |
| $ | 4,928 |
|
Interest expenses, net |
| $ | (623 | ) | $ | — |
| 2(d) |
| $ | (623 | ) |
Reserve of loan receivable-related party |
| $ | (62 | ) | $ | — |
| 2(d) |
| $ | (62 | ) |
Rental income |
| $ | 63 |
| $ | — |
| 2(d) |
| $ | 63 |
|
Total other income, net |
| $ | 4,445 |
| $ | — |
|
|
| $ | 4,445 |
|
Net loss |
| $ | (474 | ) | $ | (1,275 | ) |
|
| $ | 801 |
|
|
|
|
|
|
|
|
|
|
| |||
Net loss per share, basic and diluted |
| $ | (0.04 | ) | $ | (0.11 | ) |
|
| $ | 0.07 |
|
Weighted-average shares outstanding |
| 11,310 |
| 11,310 |
|
|
| 11,310 |
|
See notes to unaudited pro forma consolidated financial statements
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TELEVIDEO, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
As of July 31, 2005
(in thousands, except per share amounts)
|
| Historical |
| Thin Client Divestiture |
| Notes |
| Pro Forma |
| |
ASSETS |
|
|
|
|
|
|
|
|
| |
Current assets: |
|
|
|
|
|
|
|
|
| |
Cash and cash equivalents |
| $ | 163 |
| 3,050 |
| 2(c) |
| 3,213 |
|
Accounts receivable, net |
| 805 |
| 0 |
|
|
| 805 |
| |
Loan to related party |
| 200 |
| 0 |
|
|
| 200 |
| |
Inventories, net |
| 1,068 |
| 0 |
|
|
| 1,068 |
| |
Prepaids and other current assets |
| 126 |
| 0 |
|
|
| 126 |
| |
Total current assets |
| 2,362 |
| 3,050 |
|
|
| 5,412 |
| |
Property, plant and equipment, net |
| 4,851 |
| 0 |
|
|
| 4,851 |
| |
Mortgage escrow deposits |
| 601 |
|
|
|
|
| 601 |
| |
Investment in affiliate |
| 0 |
| 0 |
|
|
| 0 |
| |
Escrow from asset sale |
| 0 |
| 300 |
| 2(c) |
| 300 |
| |
Total assets |
| $ | 7,814 |
| 3,350 |
|
|
| 11,164 |
|
|
|
|
|
|
|
|
|
|
| |
LIABILITIES AND STOCKHOLDERS’ DEFICIT |
|
|
|
|
|
|
|
|
| |
Current liabilities: |
|
|
|
|
|
|
|
|
| |
Accounts payable |
| $ | 642 |
| 0 |
|
|
| 642 |
|
Accrued liabilities |
| 1,371 |
| 0 |
|
|
| 1,371 |
| |
Related party note payable |
| 3,867 |
| 0 |
|
|
| 3,867 |
| |
Mortgage loan payable - current |
| 8,751 |
| 0 |
|
|
| 8,751 |
| |
Total current liabilities |
| 14,631 |
| 0 |
|
|
| 14,631 |
| |
Mortgage loan payable, less current portion |
| 0 |
| 0 |
|
|
| 0 |
| |
Deferred gain on sale of assets |
| 0 |
| 300 |
| 2(c) |
| 300 |
| |
Total liabilities |
| 14,631 |
| 300 |
|
|
| 14,931 |
| |
|
|
|
|
|
|
|
|
|
| |
Stockholders’ deficit: |
|
|
|
|
|
|
|
|
| |
Common stock, $0.01 par value; |
| 453 |
|
|
|
|
| 453 |
| |
Authorized - 20,000,000 shares |
|
|
|
|
|
|
|
|
| |
Outstanding - 11,309,772 shares at July 31, 2005(net of 120,000 treasury shares) |
|
|
|
|
|
|
|
|
| |
Additional paid-in capital |
| 95,735 |
|
|
|
|
| 95,735 |
| |
Accumulated deficit |
| -103,005 |
| 3,350 |
|
|
| -99655 |
| |
Total stockholders’ deficit |
| -6,817 |
| 3,350 |
|
|
| -3467 |
| |
Total liabilities and stockholders’ deficit |
| $ | 7,814 |
| 3,350 |
|
|
| 11,164 |
|
See notes to unaudited pro forma consolidated financial statements
Following the asset sale, TeleVideo will retain its terminal sales business, the ownership of the headquarters property, certain rights and obligations regarding the sale of thin client inventory and products to Neoware, and other assets not related to the thin client business as described in the TeleVideo's annual report on Form 10-K for the year ended October 31, 2004. TeleVideo has not prepared estimates of its revenue and expenses following the consummation of the asset sale.
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TELEVIDEO, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited pro forma consolidated financial statements are based upon the Company’s historical consolidated financial statements for the fiscal year ended October 31, 2004 and the interim results for the nine months ended July 31, 2005.
NOTE 2 - PRO FORMA ADJUSTMENTS
The following pro forma adjustments are reflected in the accompanying unaudited pro forma consolidated financial statements:
(a) To eliminate the Company’s thin client operations from historical operating results.
(b) The pro forma operating expenses for each period were based on the proportion of the thin client business’s Cost of Sales as compared to the Company’s Total Cost of Sales. Other adjustments were made to reflect the fact that a portion of the CEO’s time and related expenses is spent on non-operating business and should not be allocated to the thin client business.
(c) The estimated change in cash resulting from the disposition of the thin client business does not reflect any deduction for income taxes, based on the Company’s accrued net operating losses.
(d) Other income (expense), net (i.e., non-operating items) have not been allocated to the operations of the thin client business.
(c) Exhibits
Exhibit Number |
| Description |
|
|
|
10.1 |
| Amended and Restated Asset Purchase Agreement, dated as of October 5, 2005, by and between Televideo, Inc. and Neoware Systems, Inc. |
|
|
|
99.1 |
| Press release dated October 7, 2005, announcing that TeleVideo, Inc. and Neoware Systems have completed the previously announced transaction whereby Neoware will acquire the assets relating to TeleVideo’s thin client business. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| TELEVIDEO, INC. |
| |
|
|
| |
|
|
| |
| By: | /s/ K. Philip Hwang |
|
Date: October 13, 2005 |
| K. Philip Hwang |
|
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EXHIBITS INDEX
Exhibit Number |
| Description |
|
|
|
10.1 |
| Amended and Restated Asset Purchase Agreement, dated as of October 5, 2005, by and between Televideo, Inc. and Neoware Systems, Inc. |
|
|
|
99.1 |
| Press release dated October 7, 2005, announcing that TeleVideo, Inc. and Neoware Systems have completed the previously announced transaction whereby Neoware will acquire the assets relating to TeleVideo’s thin client business. |
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