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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 31, 2006
AXS-ONE INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 1-13591 13-2966911
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
301 ROUTE 17 NORTH, RUTHERFORD, NEW JERSEY 07070
(Address of principal executive offices, including zip code)
(201) 935-3400
(Registrant's telephone number, including area code)
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 (see General Instruction A.2. below):
[_] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On October 31, 2006 (the "Closing Date"), AXS-One Inc. entered into an Asset
Purchase Agreement with Computron Software, LLC (the "Buyer"), pursuant to which
AXS-One conveyed to the Buyer, subject to limited shared ownership rights in and
to certain intellectual property, all of AXS-One's right, title and interest in
and to the assets related exclusively to AXS-One's integrated suite of financial
management and accounting applications that include components for
accounting/general ledger, financial reporting, time and expense management and
procurement (collectively, the "Enterprise Management Solution"), as well as the
business of licensing the Enterprise Management Solution and providing its
related services (collectively, the "Enterprise Financials Business").
Under the terms of the Asset Purchase Agreement, in consideration for the
transfer of the Enterprise Financials Business to the Buyer and payment to the
Buyer at Closing of a cash amount equal to $244,043.23, which amount reflects
the revenue of the Enterprise Financials Business derived from certain
maintenance agreements, the Buyer (a) assumed certain obligations and
liabilities related to the Enterprise Financials Business, (b) paid to AXS-One
$12,000,000 in cash on the Closing Date, (c) agreed to pay to AXS-One, on an
annual basis, fifty percent (50%) of the net license revenue in excess of
$1,000,000 per year which is received by the Buyer from any third party for the
three-year period following the Closing Date in connection with the license,
sublicense or other use of the compiled software programs containing the
features and functionality for the Enterprise Management Solution, subject to
certain restrictions and limitations, (d) provided AXS-One and its affiliates
(i) a license to use the Enterprise Management Solution in connection with their
internal operations and (ii) a commitment for two years of maintenance services
in connection with their use of the Enterprise Management Solution, subject to
certain restrictions and limitations, and (e) agreed to provide to AXS-One fifty
percent (50%) of the gross proceeds actually received by Buyer, in an aggregate
amount not to exceed $1,000,000, in connection with any contract the Buyer may
enter into with a certain third party prior to the two-year anniversary of the
Closing Date whereby such third party engages the Buyer to provide certain
maintenance and support services.
The foregoing description of the Asset Purchase Agreement does not purport to be
complete and is qualified in its entirety by reference to the Asset Purchase
Agreement, a copy of which is filed as Exhibit 10.1 hereto and is incorporated
herein by reference. There are representations and warranties contained in the
Asset Purchase Agreement which were made by the parties to each other as of
specific dates. The assertions embodied in these representations and warranties
were made solely for purposes of the Asset Purchase Agreement and may be subject
to important qualifications and limitations agreed to by the parties in
connection with negotiating its terms. Based upon the foregoing reasons, you
should not rely on the representations and warranties as statements of factual
information.
On November 1, 2006, AXS-One issued a press release announcing the closing of
the sale of the Enterprise Financials Business. The press release is attached as
Exhibit 99.1 and is incorporated herein by reference.
Item 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
The information set forth in Item 1.01 hereof is incorporated by reference
herein.
Item 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro Forma Financial Information
The unaudited pro forma financial statements of AXS-One Inc. that follow give
effect to the sale of the Enterprise Financials Business to Computron Software,
LLC. The historical information was derived from our unaudited balance sheet as
of June 30, 2006, our unaudited statement of operations for the six months ended
June 30, 2006, and our audited statement of operations for the fiscal year ended
December 31, 2005. The unaudited pro forma balance sheet as of June 30, 2006
gives effect to the disposal of the Enterprise Financials Business as if it had
occurred on that date. The unaudited pro forma statements of operations for the
six months ended June 30, 2006 and for the fiscal year ended December 31, 2005
assume that the disposal of the Enterprise Financials Business had occurred on
the first day of the fiscal period then ended.
The unaudited pro forma condensed consolidated financial statements include
specific assumptions and adjustments related to the disposition of the
Enterprise Financials Business. These pro forma adjustments have been made to
illustrate the anticipated financial effect of the disposition. The pro forma
adjustments are described in the notes accompanying the pro forma financial
statements and should be read in conjunction with our historical financial
statements and related notes contained in our quarterly report on Form 10-Q for
the period ended June 30, 2006 and our annual report on Form 10-K for the fiscal
year ended December 31, 2005.
The unaudited pro forma condensed consolidated financial information presented
herein is for information purposes only. It is not intended to represent or be
indicative of the consolidated results of operations or financial position that
would have been reported had the disposition been completed as of the dates
presented. The information is not representative of our future results of
operations or financial position.
AXS-ONE INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 2006
(IN THOUSANDS)
ASSETS &
HISTORICAL LIABILITIES PRO FORMA PRO FORMA
AXS-ONE & SUBS. SOLD ADJUSTMENTS AXS-ONE & SUBS
--------------- ----------- ----------- --------------
ASSETS
Current assets:
Cash and cash equivalents ......................... $ 3,341 $11,756 (a)(b) $ 15,097
Restricted cash ................................... 44 44
Accounts receivable, net .......................... 4,300 (1,756) 2,544
Prepaid expenses and other current assets ......... 914 (89) 825
-------- ------- ------- --------
Total current assets ........................... 8,599 (1,845) 11,756 18,510
-------- ------- ------- --------
Equipment and leasehold improvements, at cost:
Computer and office equipment ..................... 2,563 (99) 2,464
Furniture and fixtures ............................ 846 (197) 649
Leasehold improvements ............................ 906 (206) 700
-------- ------- ------- --------
4,315 (502) -- 3,813
Less--accumulated depreciation and amortization ... 3,873 (487) 3,386
-------- ------- ------- --------
442 (15) -- 427
-------- ------- ------- --------
Capitalized software development costs, net .......... 661 (525) 136
Other assets ......................................... 97 -- 97
Assets held for sale ................................. -- 2,385 (2,385)(d) --
-------- ------- ------- --------
$ 9,799 $ -- $ 9,371 $ 19,170
======== ======= ======= ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable .................................. $ 1,487 $ (158) $ 1,329
Accrued expenses .................................. 3,684 (553) 950 (c) 4,081
Deferred revenue .................................. 9,503 (6,811) 2,692
-------- ------- ------- --------
Total current liabilities ...................... 14,674 (7,522) 950 8,102
-------- ------- ------- --------
Long-term liabilities:
Long-term deferred revenue ........................ 2,213 (2,204) 9
Liabilities held for sale ......................... 9,726 (9,726)(d) --
-------- ------- ------- --------
16,887 -- (8,776) 8,111
Commitments and contingencies
Stockholders' deficit:
Preferred stock ................................... -- -- -- --
Common stock ...................................... 350 -- 350
Additional paid-in capital ........................ 88,084 -- 88,084
Accumulated deficit ............................... (95,897) -- 18,147 (e) (77,750)
Accumulated other comprehensive income ............ 375 -- 375
-------- ------- ------- --------
Total stockholders' deficit .................... (7,088) -- 18,147 11,059
-------- ------- ------- --------
$ 9,799 $ -- $ 9,371 $ 19,170
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AXS-ONE INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2006
(IN THOUSANDS, EXCEPT PER SHARE DATA)
HISTORICAL DISCONTINUED PRO FORMA
AXS-ONE & SUBS. OPERATIONS AXS-ONE & SUBS
--------------- ------------ --------------
Revenues:
License fees $ 1,917 ($657) $ 1,260
Services 13,494 (9,226) 4,268
Other-related parties 64 (64) --
------- ------- -------
Total revenues 15,475 (9,947) 5,528
------- ------- -------
Operating expenses:
Cost of license fees 899 (441) 458
Cost of services 7,357 (3,264) 4,093
Sales and marketing 5,300 (333) 4,967
Research and development 4,421 (1,155) 3,266
General and administrative 2,747 (232) 2,515
------- ------- -------
Total operating expenses 20,724 (5,425) 15,299
------- ------- -------
Operating loss (5,249) (4,522) (9,771)
------- ------- -------
Other expense:
Interest income 139 -- 139
Interest expense (56) -- (56)
Equity in losses of joint ventures (70) 70 --
Other expense, net 2 2
------- ------- -------
Total other expense, net 15 70 85
------- ------- -------
Loss before income taxes (5,234) (4,452) (9,686)
Income tax benefit -- -- --
------- ------- -------
Net loss $(5,234) $(4,452) $(9,686)
======= ======= =======
Basic & diluted net loss per common share: $ (0.15) $ (0.28)
======= =======
Weighted average basic & diluted
common shares outstanding 34,301 34,301
======= =======
AXS-ONE INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2005
(IN THOUSANDS, EXCEPT PER SHARE DATA)
HISTORICAL DISCONTINUED PRO FORMA
AXS-ONE & SUBS. OPERATIONS AXS-ONE & SUBS
--------------- ------------ --------------
Revenues:
License fees $ 5,546 ($1,437) $ 4,109
Services 27,154 (19,975) 7,179
Other-related parties 108 (108) --
------- -------- -------
Total revenues 32,808 (21,520) 11,288
------- -------- -------
Operating expenses:
Cost of license fees 1,585 (504) 1,081
Cost of services 16,223 (9,386) 6,837
Sales and marketing 9,743 (2,318) 7,425
Research and development 7,828 (1,850) 5,978
General and administrative 5,129 (769) 4,360
Restructuring costs and other costs 863 (541) 322
------- -------- -------
Total operating expenses 41,371 (15,368) 26,003
------- -------- -------
Operating loss (8,563) (6,152) (14,715)
------- -------- -------
Other expense:
Interest income 156 -- 156
Interest expense (44) -- (44)
Equity in losses of joint ventures (89) 89 --
Other expense, net (483) (483)
------- -------- -------
Total other expense, net (460) 89 (371)
------- -------- -------
Loss before income taxes (9,023) (6,063) (15,086)
Income tax benefit 25 -- 25
------- -------- -------
Net loss $(8,998) $ (6,063) $(15,061)
======= ======== =======
Basic & diluted net loss per common share: $ (0.28) $ (0.48)
======= =======
Weighted average basic & diluted
common shares outstanding 31,629 31,629
======= =======
AXS-ONE INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED PRO FORMA
BALANCE SHEET AND STATEMENT OF OPERATIONS
(IN THOUSANDS)
The unaudited pro forma financial statements have been adjusted for the items
set forth below.
(a) Reflects cash received by AXS-One for the sale of the Enterprise business
segment:
Cash $12,000
(b) Reflects cash paid by AXS-One for certain prepaid maintenance related to
the Enterprise business segment:
Cash $ 244
(c) Reflects expenses accrued in connection with the sale of the Enterprise
business segment:
Accrued expenses $ 950
(d) Reflects assets and liabilities sold:
Assets held for sale $ 2,385
Liabilities held for sale $ 9,726
(e) Reflects the after-tax gain on the sale of the Enterprise business segment:
After-tax gain on the sale of the Enterprise business segment $18,147
(d) Exhibits - The following exhibits are filed as part of this report:
10.1 Asset Purchase Agreement by and between AXS-One Inc. and Computron
Software, LLC dated as of October 31, 2006.
99.1 Press release dated November 1, 2006.
SIGNATURES
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.
AXS-ONE INC.
Date: November 2, 2006 By: /s/ Joseph P. Dwyer
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Joseph P. Dwyer
Executive Vice President, Chief
Financial Officer and Treasurer
