SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT #1
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: February 1, 2001
(Date of earliest event reported)
NAVTECH, INC.
-------------
(Exact name of Registrant as specified in charter)
Delaware 0-15362 11-2883366
- --------------------------- -------------------------- ----------------------
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification Number)
2340 Garden Road, Suite 102, Monterey, California 93940
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (519) 747-9883
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Businesses Acquired.
Independent Auditors' Report
To the Directors of Navtech, Inc.
We have audited the balance sheet of Airware Solutions Inc. as at October 31,
2000 and the statements of operations, stockholders' deficiency 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform an audit to obtain reasonable assurance 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, these financial statements present fairly, in all material
respects, the financial position of the Company as at October 31, 2000 and the
results of its operations and its cash flows for the year ended October 31, 2000
in conformity with accounting principles generally accepted in the United States
of America.
/s/ Deloitte & Touche LLP
Kitchener, Ontario
April 12, 2001
AIRWARE SOLUTIONS INC.
STATEMENTS OF OPERATIONS
(in U.S. Dollars)
Three Months Ended Fiscal Year
January 31,(1) Ended October 31,
2000 2001 2000
- -------------------------------------------------------------------------------------------------------------------------
SERVICES REVENUE $ 35,895 $ 23,302 $ 137,657
OPERATING EXPENSES
Cost of services 16,162 12,410 84,478
Research and development 23,017 13,359 76,411
Sales and marketing 14,042 8,124 50,004
General and administrative 25,066 13,911 20,681
- -------------------------------------------------------------------------------------------------------------------------
Total operating expenses 78,287 47,804 231,574
- -------------------------------------------------------------------------------------------------------------------------
Loss from operations (42,392) (24,502) (93,917)
- -------------------------------------------------------------------------------------------------------------------------
Other income (expense)
Interest expense (3,205) (7,321) (12,131)
Debt forgiveness (Note 6) - 126,930 -
- -------------------------------------------------------------------------------------------------------------------------
(3,205) 119,609 (12,131)
- -------------------------------------------------------------------------------------------------------------------------
(Loss) income before income taxes (45,597) 95,107 (106,048)
Income tax recovery (Note 8) (12,931) - (43,773)
- -------------------------------------------------------------------------------------------------------------------------
Net (loss) income $ (32,666) $ 95,107 $ (62,275)
- -------------------------------------------------------------------------------------------------------------------------
(1) unaudited
See accompanying notes.
AIRWARE SOLUTIONS INC.
BALANCE SHEETS
(in U.S. Dollars)
October 31, January 31,
2000 2001(1)
- --------------------------------------------------------------------------------- ---------------- -----------------
ASSETS
Current assets
Cash $ 1,166 $ 1,874
Accounts receivable, net of allowance for doubtful accounts $0 (October 31, 38,386 24,790
2000 - $0)
Investment tax credits receivable 70,673 69,765
Prepaid expenses and other 16,891 16,305
- --------------------------------------------------------------------------------- ---------------- -----------------
127,116 112,734
Capital assets (Note 3) 30,828 29,318
- --------------------------------------------------------------------------------- ---------------- -----------------
$ 157,944 $ 142,052
- --------------------------------------------------------------------------------- ---------------- -----------------
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities $ 79,695 $ 93,528
Long-term debt - current portion (Note 4) 71,356 30,416
Due to shareholders (Note 5) 20,382 15,435
- --------------------------------------------------------------------------------- ---------------- -----------------
171,433 139,379
Due to related parties (Note 6) 281,002 198,732
Long-term debt (Note 4) - 3,325
- --------------------------------------------------------------------------------- ---------------- -----------------
452,435 341,436
- --------------------------------------------------------------------------------- ---------------- -----------------
COMMITMENTS AND CONTINGENCIES (Note 9)
STOCKHOLDERS' DEFICIENCY
Share capital (Note 7)
Unlimited preferred A shares (nil outstanding with no par value) 0 0
Unlimited preferred B shares (12,000 outstanding with no par value) 81,488 81,488
Unlimited common shares (100 outstanding with no par value) 25,562 25,562
Treasury stock (Note 7) (298,112) (298,112)
Deficit (103,429) (8,322)
- --------------------------------------------------------------------------------- ---------------- -----------------
(294,491) (199,384)
- --------------------------------------------------------------------------------- ---------------- -----------------
$ 157,944 $ 142,052
- --------------------------------------------------------------------------------- ---------------- -----------------
(1) unaudited
See accompanying notes.
AIRWARE SOLUTIONS INC.
STATEMENTS OF STOCKHOLDERS' DEFICIENCY
Total
Common Shares Preferred B Shares Treasury Stockholder's
Shares Amount Shares Amount Stock Deficit Deficiency
- ------------------------------- ----------- ---------- ----------- ---------- ------------- ------------- --------------
Balances, November 1, 1999 100 $ 25,562 12,000 $ 81,488 $ (298,112) $ (41,154) $ (232,216)
Net loss (62,275) (62,275)
- ------------------------------- ----------- ---------- ----------- ---------- ------------- ------------- --------------
Balances, October 31, 2000 100 25,562 12,000 81,488 (298,112) (103,429) (294,491)
- ------------------------------- ----------- ---------- ----------- ---------- ------------- ------------- --------------
Net earnings (1) 95,107 95,107
- ------------------------------- ----------- ---------- ----------- ---------- ------------- ------------- --------------
Balances, January 31, 2001(1) 100 $ 25,562 12,000 $ 81,488 $ (298,112) $ (8,322) $ (199,384)
- ------------------------------- ----------- ---------- ----------- ---------- ------------- ------------- --------------
(1) unaudited
See accompanying notes.
AIRWARE SOLUTIONS INC.
STATEMENTS OF CASH FLOWS
(in U.S. Dollars)
Fiscal Year
Three Months Ended January 31,(1) Ended October 31,
2000 2001 2000
- --------------------------------------------------------------- ---------------- ----------------- -----------------
OPERATING ACTIVITIES
Net (loss) income $ (32,666) $ 95,107 $ (62,275)
Adjustments to reconcile net (loss) income to net
cash provided by (used in) operating activities:
Depreciation 2,919 2,049 10,808
Debt forgiveness - (126,930) -
(Increase) decrease in operating assets and liabilities
Accounts receivable 39,062 14,121 36,858
Scientific research and experimental development credits (12,931) 2,284 8,793
Prepaid expenses and other 4,974 884 9,359
Accounts payable and accrued expenses (6,438) 12,217 6,957
- --------------------------------------------------------------- ---------------- ----------------- -----------------
(5,080) (268) 10,500
- --------------------------------------------------------------- ---------------- ----------------- -----------------
INVESTING ACTIVITY
Purchase of capital assets (1,265) - (3,796)
- --------------------------------------------------------------- ---------------- ----------------- -----------------
(1,265) - (3,796)
- --------------------------------------------------------------- ---------------- ----------------- -----------------
FINANCING ACTIVITIES
Proceeds from shareholder advances 4,367 - 5,809
Payment of long-term debt (3,588) - (5,070)
Payment of shareholder advances - (5,253) -
- --------------------------------------------------------------- ---------------- ----------------- -----------------
779 (5,253) 739
- --------------------------------------------------------------- ---------------- ----------------- -----------------
EFFECT OF FOREIGN EXCHANGE RATES ON CASH 4,642 6,229 (11,705)
- --------------------------------------------------------------- ---------------- ----------------- -----------------
Net cash flow (924) 708 (4,262)
Cash , beginning of period 5,428 1,166 5,428
- --------------------------------------------------------------- ---------------- ----------------- -----------------
Cash , end of period $ 4,504 $ 1,874 $ 1,166
- --------------------------------------------------------------- ---------------- ----------------- -----------------
Supplemental disclosure of cash flow information:
- --------------------------------------------------------------- ---------------- ----------------- -----------------
Cash paid during the period for interest $ 2,429 $ 207 $ 9,627
- --------------------------------------------------------------- ---------------- ----------------- -----------------
Cash paid during the period for income taxes $ 0 $ 0 $ 0
- --------------------------------------------------------------- ---------------- ----------------- -----------------
(1) unaudited
See accompanying notes.
AIRWARE SOLUTIONS INC.
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE BUSINESS
Airware Solutions Inc. (the "Company") is engaged in the business of providing
computerized crew management services to all segments of the aviation industry,
but principally to commercial airlines and corporate aircraft users.
2. SIGNIFICANT ACCOUNTING POLICIES
The financial statements are prepared in accordance with accounting principles
generally accepted in the United States and reflect the following policies:
Foreign currency translation
Transactions incurred in currencies other than the functional currency are
converted to the functional currency at the transaction date. Monetary assets
and liabilities denominated in a currency other than the functional currency are
converted to the functional currency at the exchange rate in effect at each
period end. All foreign currency transaction gains and losses have been included
in earnings.
Capital assets
Capital assets are recorded at cost. Depreciation of capital assets is recorded
at the following rates:
Purchased computer software 30% declining balance
Computer equipment 30% declining balance
Furniture and fixtures 20% declining balance
Asset impairment
The Company reviews the carrying value of long-lived assets at least annually
for evidence of impairment. An impairment loss is recognized when the estimate
of undiscounted future cash flows generated by such assets is less than the
carrying amount. Measurement of the impairment loss is based on the present
value of the expected future cash flows.
Research and development costs
The Company incurs costs related to research and development of its software. To
date, the Company has not capitalized any development costs under Statement of
Financial Accounting Standards No. 86, "Accounting for the Costs of Computer
Software to be Sold, leased or Otherwise Marketed" ("SFAS 86"). The Company has
defined the time of establishment of a working model and the time when the
products are marketable are insignificant. Consequently, costs that are eligible
for capitalization are expensed in the period incurred.
Investment tax credits
Investment tax credits are recorded as a reduction in income tax expense.
Revenue recognition
Systems consulting fees are recognized upon rendering of services. Custom
programming and support revenue are recognized ratably over applicable contract
periods or as services are performed. Amounts billed but not yet earned and
payments received prior to the earnings of the revenue are recorded as deferred
revenue.
Use of estimates
The preparation of the financial statement in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities as of the date of the financial statements and the
reported amounts of revenues and expenses during the reported periods. Actual
results could differ from those estimates or assumptions.
Recently issued accounting pronouncement
In December 1999, the Securities and Exchange Commission (the "SEC") issued
Staff Accounting Bulletin ("SAB") 101, "Revenue Recognition in Financial
Statements," which summarizes the SEC's views in applying generally accepted
accounting principles to revenue recognition. Implementation of SAB 101 is
required no later than the fourth quarter of fiscal years beginning after
December 15, 1999. In the Company's case this would be the Company's fiscal year
commencing November 1, 2000. There was no impact from the adoption of this
standard for the three months ended January 31, 2001.
The Financial Accounting Standards Board ("FASB") issued Statement of Financial
Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Financial
Instruments and Hedging Activities," in June 1998. SFAS No. 133 requires an
entity to recognize all derivatives and measure those instruments at fair value.
In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB
Statement No. 133." In June 2000, the FASB issued SFAS No. 138, "Accounting for
Certain Derivative Instruments and Certain Hedging Activities," an amendment of
SFAS No. 133. Based on the revised effective date, the Company will adopt SFAS
No. 133, as amended by SFAS No. 138, on November 1, 2000. There was no impact
from the adoption of this standard for the three months ended January 31, 2001.
3. CAPITAL ASSETS
October 31, 2000 January 31, 2001
- -------------------------------------------------------------------- -------------------- -------------------
Cost
Purchased computer software $ 24,514 $ 24,963
Computer equipment 117,365 119,455
Furniture and fixtures 51,381 52,323
- -------------------------------------------------------------------- -------------------- -------------------
193,260 196,741
- -------------------------------------------------------------------- -------------------- -------------------
Accumulated depreciation
Purchased computer software 24,514 24,963
Computer equipment 97,508 100,751
Furniture and fixtures 40,410 41,709
- -------------------------------------------------------------------- -------------------- -------------------
162,432 167,423
- -------------------------------------------------------------------- -------------------- -------------------
$ 30,828 $ 29,318
- -------------------------------------------------------------------- -------------------- -------------------
4. LONG-TERM DEBT
October 31, 2000 January 31, 2001
- -------------------------------------------------------------------- ------------------- --------------------
Term loan (A) bearing interest at prime plus 3%, repayable in $ 971 $ 495
monthly installments of $248 (CAD) plus interest, maturing on
April 15, 2001 and collateralized by a moveable hypothec on the
equipment purchased with the loan and personal guarantees by the
three shareholders of the Company
- -------------------------------------------------------------------- ------------------- --------------------
Term loan (B) bearing interest at 12.3%, repayable in monthly 51,808 -
installments of $1,425 (CAD) plus interest, maturing on March 23,
2003 and collateralized by all assets of the Company and by
personal guarantees totaling $50,000 by three shareholders of the
Company
- -------------------------------------------------------------------- ------------------- --------------------
Term loan (C) bearing interest at 11.3%, repayable in monthly 18,577 -
installments of $1,000 (CAD) plus interest, maturing on March 23,
2003 and collateralized by all assets of the Company and by
personal guarantees totaling $35,000 by three shareholders of the
Company
- -------------------------------------------------------------------- ------------------- --------------------
Non-interest bearing term loan (D), $35,000 (CAD) repayable in - 33,246
February 2001 followed by monthly installments of $1,000 (CAD)
beginning on April 1, 2001 and collateralized by all assets of the
Company
- -------------------------------------------------------------------- ------------------- --------------------
71,356 33,741
Less: Current portion 71,356 30,416
- -------------------------------------------------------------------- ------------------- --------------------
Long-term portion $ 0 $ 3,325
- -------------------------------------------------------------------- ------------------- --------------------
At January 31, 2001, the Company renegotiated the terms and amounts owing on
term loans B and C resulting in the non-interest bearing term loan (D) and a
debt forgiveness gain of $40,603.
5. DUE TO SHAREHOLDERS
Advances from shareholders are interest bearing at 12%.
6. DUE TO RELATED PARTIES
In October 1996, the Company agreed to purchase, redeem or finance the purchase
of shares from two shareholders with payments to be based upon 12% (6% for each)
of the Company's Gross Products Receipts and with the balance of share price to
be subject to 5% and 10% interest.
Payments ceased during 1998 per section 34 of the Canada Business Corporations
Act. The Company believes that if such payments were made, other liabilities
would be unable to be paid as they became due.
At January 31, 2001, the Company renegotiated the related party debt and two
interest bearing term loans (Note 4) resulting in a debt forgiveness gain of
$86,327. The combined liability including a provision for unpaid interest is
$281,002 at October 31, 2000 (January 31, 2001 - $198,732).
7. SHARE CAPITAL
The authorized share capital of the Company consists of an unlimited number of
common shares, redeemable, dividend-bearing at 10% preferred A shares and
redeemable preferred B shares with no par value. At October 31, 2000, there were
100 common shares issued and fully paid (January 31, 2001 - 100), 12,000
preferred B shares issued and fully paid (January 31, 2001 - 12,000) and no
preferred A shares issued.
Treasury Stock
At October 31, 2000 the Company held 44 common shares in the amount of $250,577
(January 31, 2001 - $250,577) and 7,000 preferred B shares in the amount of
$44,535 (January 31, 2001 - $44,535) for redemption pending the successful
financing of the repurchase (see Note 6).
8. INCOME TAXES
The components of the net deferred tax asset (liability) are as follows:
October 31, January 31,
2000 2001
- --------------------------------------------------------------------------------
Deferred income tax assets
Net operating losses carried forward $ 126,000 $ 84,000
- --------------------------------------------------------------------------------
126,000 84,000
- --------------------------------------------------------------------------------
Deferred income tax liabilities
Depreciation 4,000 3,000
- --------------------------------------------------------------------------------
4,000 3,000
- --------------------------------------------------------------------------------
Net deferred tax asset 122,000 81,000
Less: Valuation allowance 122,000 81,000
- --------------------------------------------------------------------------------
Deferred tax asset, net of valuation allowance $ - $ -
- --------------------------------------------------------------------------------
The provision for income taxes varies from the expected provision at the
statutory rates for the following reasons:
Year ended Three months ended
October 31, January 31,
2000 2001
- ---------------------------------------------------------------------------------------------------------------------
Combined basic statutory rate: 40% 40%
- ---------------------------------------------------------------------------------------------------------------------
Provision for (recovery of) income taxes based on the basic statutory rate $ (42,419) $ 38,043
Increase (decrease) in income taxes resulting from the following:
Non-deductible expenses 1,903 380
Non-recognition (recognition) of losses carried forward 40,516 (38,423)
Investment tax credits applied to reduce taxes payable (43,773) -
- ---------------------------------------------------------------------------------------------------------------------
$ (43,773) $ -
- ---------------------------------------------------------------------------------------------------------------------
The Company has combined income tax loss carryforwards of approximately $190,000
which expire as follow:
Expiry Year October 31, 2000 January 31, 2001
- ------------------------------ -------------------- ---------------------
2004 $ 71,000 $ -
2005 109,000 53,000
2007 101,000 101,000
2008 - 32,000
- ------------------------------ -------------------- ---------------------
$ 281,000 $ 186,000
- ------------------------------ -------------------- ---------------------
No recognition has been given to the potential benefit of this item when
preparing these financial statements.
9. COMMITMENTS AND CONTINGENCIES
Commitments
The Company is committed under a non-cancelable operating lease for computer
equipment with terms expiring at 2003. The future minimum amounts payable under
this lease agreement is as follows:
October 31, 2000 January 31, 2001
- --------------------------------------- -------------------- -------------------
2001 $ 1,193 $ 1,193
2002 1,193 1,193
2003 398 99
- --------------------------------------- -------------------- -------------------
$ 2,784 $ 2,485
- --------------------------------------- -------------------- -------------------
Contingencies
The Company is subject to various legal proceedings, claims and liabilities,
which arise in the ordinary course of its business. In the opinion of
management, the amount of any ultimate liability with respect to these actions
will not have a material adverse effect on the Company's consolidated results of
operations, cash flow or financial position.
10. FINANCIAL INSTRUMENTS
Financial instruments are comprised of cash, accounts receivable, accounts
payable and accrued liabilities.
Fair value of financial instruments
At October 31, 2000 and January 31, 2001, the estimated fair value of cash,
accounts receivable, and accounts payable and accrued liabilities was equal to
the book value given the short-term maturity of the items. The fair value of
long-term debt approximates book value as it is held at market rates for this
industry and the financial condition of the Company.
Foreign exchange risk
Foreign exchange risk is the risk that exchange rates will affect the Company's
operating results. The Company is exposed to foreign exchange risk in that
approximately 100% of the Company's sales contracts are denominated in US
Dollars while approximately 100% of the Company's expenditures are denominated
in currencies other than US Dollars. The Company is exposed to foreign exchange
risk with respect to net financial liabilities totaling $223,322 at October 31,
2000 (January 31, 2001 - $157,700), which are denominated in currencies other
than US Dollars.
Credit risk
The Company is exposed to credit risk through cash and accounts receivable. The
Company holds its cash positions with reputable financial institutions.
11. ECONOMIC DEPENDENCE
Approximately 100% of sales for the year ended October 31, 2000 (three months
ended January 31, 2000 - $100%, January 31, 2001 -100%) were to two customers.
At October 31, 2000, accounts receivable includes approximately $38,000, due
from two customers (January 31, 2001 - $25,000).
12. SUBSEQUENT EVENT
On February 1, 2001, the Company was acquired by Navtech Inc., a US public
company.
(b) Pro Forma Financial Information.
NAVTECH, INC.
PROFORMA STATEMENTS OF OPERATIONS
(unaudited)
(in U.S. Dollars)
Fiscal Year Ended October 31, 2000 Navtech Airware Adjustments Consolidated
- -----------------------------------------------------------------------------------------------------------------------------
REVENUE
Service fees $ 5,803,962 $ 137,657 $ 5,941,619
Software license fees 1,204,162 - 1,204,162
- -----------------------------------------------------------------------------------------------------------------------------
Total revenue 7,008,124 137,657 - 7,145,781
- -----------------------------------------------------------------------------------------------------------------------------
COSTS AND EXPENSES
Cost of services 4,593,141 84,478 - 4,677,619
Cost of software license fees 62,186 - - 62,186
Research and development 269,132 76,411 - 345,543
Selling, general and administrative 1,491,302 70,685 - 1,561,987
Provision for (recovery of) bad debt
- related party (904,102) - - (904,102)
Amortization of goodwill 11,200 - 42,560 53,760
- -----------------------------------------------------------------------------------------------------------------------------
Total costs and expenses 5,522,859 231,574 42,560 5,796,993
- -----------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations 1,485,265 (93,917) (42,560) 1,348,788
- -----------------------------------------------------------------------------------------------------------------------------
Other income (expense)
Interest expense (251,266) (12,131) - (263,397)
Interest revenue 64,042 - - 64,042
- -----------------------------------------------------------------------------------------------------------------------------
(187,224) (12,131) - (199,355)
- -----------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 1,298,041 (106,048) (42,560) 1,149,433
Income taxes (recovery) 193,787 (43,773) - 150,014
- -----------------------------------------------------------------------------------------------------------------------------
Net earnings (loss) $ 1,104,254 $ (62,275) $ (42,560) $ 999,419
- -----------------------------------------------------------------------------------------------------------------------------
Net earnings (loss) per share
Basic $ 0.43 $ (0.07) $ 0.36
- -----------------------------------------------------------------------------------------------------------------------------
Diluted $ 0.35 $ (0.05) $ 0.30
- -----------------------------------------------------------------------------------------------------------------------------
Shares used in computed basic net 2,552,628 209,883 2,762,511
earnings (loss) per share
- -----------------------------------------------------------------------------------------------------------------------------
Shares used in computing diluted 3,134,806 209,883 3,344,689
net earnings (loss) per share
- -----------------------------------------------------------------------------------------------------------------------------
See accompanying notes
NAVTECH, INC.
PROFORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in U.S. Dollars)
Three months ended January 31, 2001 Navtech Airware Adjustments Consolidated
- -----------------------------------------------------------------------------------------------------------------------------
SERVICES REVENUE $ 1,361,171 $ 23,302 $ - $ 1,384,473
- -----------------------------------------------------------------------------------------------------------------------------
COSTS AND EXPENSES
Cost of services 914,441 12,410 - 926,851
Research and development 95,347 13,359 - 108,706
Sales and marketing 267,201 8,124 - 275,325
General and administrative 498,930 13,911 - 512,841
Depreciation and amortization 2,800 - 10,640 13,440
- -----------------------------------------------------------------------------------------------------------------------------
Total costs and expenses 1,778,719 47,804 10,640 1,837,163
- -----------------------------------------------------------------------------------------------------------------------------
Loss from operations (417,548) (24,502) (10,640) (452,690)
- -----------------------------------------------------------------------------------------------------------------------------
Other income (expense)
Interest expense (34,814) (7,321) - (42,135)
Debt Forgiveness - 126,930 - 126,930
- -----------------------------------------------------------------------------------------------------------------------------
(34,814) 119,609 - 84,795
- -----------------------------------------------------------------------------------------------------------------------------
(Loss) income before income taxes (452,362) 95,107 (10,640) (367,895)
Income tax recovery (116,394) - - (116,394)
- -----------------------------------------------------------------------------------------------------------------------------
Net (loss) income $ (335,968) $ 95,107 $ (10,640) $ (251,501)
- -----------------------------------------------------------------------------------------------------------------------------
Net (loss) income per share
Basic and diluted $ (0.10) $ 0.03 $ (0.07)
- -----------------------------------------------------------------------------------------------------------------------------
Shares used in computed basic and diluted 3,454,757 209,883 3,664,640
net earnings (loss) per share
- -----------------------------------------------------------------------------------------------------------------------------
See accompanying notes
NAVTECH, INC.
PROFORMA CONSOLIDATED BALANCE SHEETS
(unaudited)
(in U.S. Dollars)
January 31, 2001 Navtech Airware Adjustments Consolidated
- ------------------------------------------------------ ----------------- ----------------- ---------------- -----------------
ASSETS
Current assets
Cash $ 118,805 $ 1,874 $ (108,045) $ 12,634
Accounts receivable (net of allowance for
doubtful accounts) 915,995 24,790 - 940,785
Investment tax credits receivable 102,074 69,765 - 171,839
Prepaid expenses and other 120,711 16,305 (5,454) 131,562
- ------------------------------------------------------ ----------------- ----------------- ---------------- -----------------
1,257,585 112,734 (113,499) 1,256,820
Capital assets 664,495 29,318 - 693,813
Other assets 106,838 - 425,596 532,434
- ------------------------------------------------------ ----------------- ----------------- ---------------- -----------------
$ 2,028,918 $ 142,052 $ 312,097 $ 2,483,067
- ------------------------------------------------------ ----------------- ----------------- ---------------- -----------------
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities 985,730 93,528 - 1,079,258
Income taxes payable 71,225 - - 71,225
Due to shareholders - 15,435 - 15,435
Due to related parties - current portion 132,232 - - 132,232
Long-term debt - current portion 179,928 30,416 - 210,344
Obligations under capital lease - current portion 2,675 - - 2,675
Deferred lease inducements - current portion 14,457 - - 14,457
- ------------------------------------------------------ ----------------- ----------------- ---------------- -----------------
1,386,247 139,379 - 1,525,626
Due to related parties 280,920 198,732 (198,732) 280,920
Long-term debt 139,323 3,325 - 142,648
Obligations under capital lease 5,198 - - 5,198
Deferred lease inducements 68,668 - - 68,668
- ------------------------------------------------------ ----------------- ----------------- ---------------- -----------------
$ 1,880,356 $ 341,436 $ (198,732) $ 2,023,060
- ------------------------------------------------------ ----------------- ----------------- ---------------- -----------------
Commitments and contingencies
STOCKHOLDERS' EQUITY (DEFICIENCY)
Share capital 3,967 107,050 (106,784) 4,233
Treasury stock (942,686) (298,112) 298,112 (942,686)
Additional paid-in capital 3,154,047 - 311,179 3,465,226
Accumulated other comprehensive income 47,686 - - 47,686
Deficit (2,114,452) (8,322) 8,322 (2,114,452)
- ------------------------------------------------------ ----------------- ----------------- ---------------- -----------------
$ 148,562 $ (199,384) $ 510,829 $ 460,007
- ------------------------------------------------------ ----------------- ----------------- ---------------- -----------------
$ 2,028,918 $ 142,052 $ 312,097 $ 2,483,067
- ------------------------------------------------------ ----------------- ----------------- ---------------- -----------------
See accompanying notes
NAVTECH, INC.
NOTES TO THE UNAUDITED PROFORMA CONSOLIDATED FINANICAL STATEMENTS
Below is a table of the acquisition consideration, purchase price allocation and
annual amortization of the goodwill acquired in Navtech's acquisition of
Airware:
Amortization Life Annual
Amortization of
Intangibles
------------------ ------------------ -----------------
Acquisition consideration:
Value of consideration issued:
Cash $ 108,045
Common Stock 262,354
Warrants 49,091
Acquisition costs 5,454
- ------------------------------------------------------- ------------------ ------------------ -----------------
$ 424,944
- ------------------------------------------------------- ------------------ ------------------ -----------------
Purchase price allocation:
Tangible net assets (liabilities) acquired $ (652)
Intangible assets acquired:
Goodwill 425,596 10 years 42,560
- ------------------------------------------------------- ------------------ ------------------ -----------------
$ 424,944 $ 42,560
- ------------------------------------------------------- ------------------ ------------------ -----------------
Navtech issued 209,883 common shares, valued at $1.25 per share, the closing
price of Navtech common stock on February 1, 2001. In addition, Navtech issued
warrants to purchase 56,000 shares of its common stock at an exercise price of
$1.25 per share. The value of the warrants issued by Navtech was determined by
estimated their fair value as of February 1, 2001 using the Black-Scholes option
pricing model with the following weighted average assumptions:
Risk free interest rate of 6.0%;
Dividend yield of 0.0%;
Expected life of one year;
Volatility factor for the expected market price of Navtech common stock
of 2.04.
Tangible assets of Airware acquired principally included cash, accounts
receivable, fixed assets. Liabilities of Airware assumed principally included
accounts payable, accrued liabilities and long-term debt. Cash and common shares
valued at $198,732 were used to settle two obligations owing to related parties
upon purchase.
Goodwill was determined based on the residual difference between the amount of
consideration paid and the values assigned to identifiable tangible assets. The
goodwill is being amortized on a straight-line basis over ten years.
The Company has had no independent valuation of the intangible assets acquired,
and consequently the allocation of the purchase price may change and the
resulting amortization may be materially different than that presented.
Proforma basic and diluted net loss per share are based on the weighted average
number of shares of Navtech common stock outstanding during the period and the
number of shares of Navtech common stock issued or to be issued in connection
with the acquisition of Airware. The 56,000 warrants issued in the acquisition
of Airware have not been included in the computation of pro forma diluted net
loss per share because their effect would be antidilutive.
(c) Exhibits.
Exhibit No. Description
7.1 Share Purchase Agreement dated February 1, 2001 among
Navtech, Inc., Jose Gomide, Mario Guzzi, Daniel Vatne,
Karin Vatne, James J Rowan and Les Enterprises Ligeti
Inc. (1)
(1) We hereby incorporate the footnoted exhibit by reference in accordance with
Rule 12b-32, as such exhibit was originally filed as an exhibit in our Form
8-K on February 16, 2001.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NAVTECH, INC.
Dated: April 16, 2001 By: /s/ David Strucke
-----------------------
David Strucke
Chief Financial Officer