SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------
FORM 8-K/A
AMENDMENT NO. 1 TO 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 25, 2001
EXE Technologies, Inc.
------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 0-30389 75-1719817
- --------- ------------ -----------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
8787 Stemmons Freeway, Dallas, TX 75247
------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (214) 775-6000
Not Applicable
----------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
INTRODUCTORY NOTE
On January 25, 2001, Almond Acquisition Corp. ("Almond"), a wholly
owned subsidiary of EXE Technologies, Inc. (the "Company"), merged with and
into AllPoints Systems, Inc. ("AllPoints") pursuant to an Agreement and Plan
of Merger by and among the Company, Almond and AllPoints, dated January 18,
2001. At the close of the transaction, AllPoints became a wholly owned
subsidiary of the Company. On February 9, 2001, the Company filed a Current
Report on Form 8-K (the "Current Report") to report the above-described
transaction. The purpose of this Amendment No. 1 to the Current Report on
Form 8-K is to file the financial statements of the business acquired and the
pro forma financial statements required by Item 7.
The Company hereby amends Item 7 of the Current Report to read in
its entirety as follows:
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of the Business Acquired.
The required financial statements are attached hereto on pages 3
through 19.
(b) Pro Forma Financial Information.
The required pro forma financial information is attached hereto on
pages 20 through 25.
(c) Exhibits.
2.1* Agreement and Plan of Merger, dated as of January 18, 2001, by and
among EXE Technologies, Inc., Almond Acquisition Corp. and AllPoints
Systems, Inc.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Ernst & Young LLP, Independent Auditors.
- --------------------------------
* Previously filed.
2
AllPoints Systems, Inc.
Index to Financial Statements
Page
----
Report of Ernst & Young LLP, Independent Auditors............................... 4
Independent Auditors' Report Deloitte & Touche LLP.............................. 5
Financial Statements
Balance Sheets as of December 31, 2000 and 1999................................. 6
Statements of Operations for the years ended December 31, 2000 and 1999......... 7
Statements of Stockholders' (Deficit) Equity for the years ended
December 31, 2000 and 1999.................................................. 8
Statements of Cash Flows for the years ended December 31, 2000 and 1999......... 9
Notes to Financial Statements................................................... 10
3
Report of Ernst & Young LLP, Independent Auditors
The Board of Directors and Stockholders
Allpoints Systems, Inc.
We have audited the accompanying balance sheet of Allpoints Systems, Inc. as
of December 31, 2000, and the related statements of operations, stockholders'
deficit 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. 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 statements referred to above present fairly, in
all material respects, the financial position of Allpoints Systems, Inc. at
December 31, 2000, and the results of its operations and its cash flows for
the year then ended, in conformity with accounting principles generally
accepted in the United States.
Ernst & Young LLP
Dallas, Texas
March 8, 2001
4
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders of
Allpoints Systems, Inc.
We have audited the accompanying balance sheet of Allpoints Systems, Inc. as
of December 31, 1999, and the related statements 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 auditing standards generally
accepted in the United States of America. 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 statements present fairly, in all material
respects, the financial position of Allpoints Systems, Inc. at December 31,
1999, and the results of its operations and its cash flows for the year then
ended in conformity with accounting principles generally accepted in the
United States of America.
Deloitte & Touche LLP
Boston, Massachusetts
May 26, 2000
(August 22, 2000 as to Note 3)
5
AllPoints Systems, Inc.
Balance Sheets
DECEMBER 31,
-----------------------------------
2000 1999
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 147,345 $ 278,372
Accounts receivable less allowance for doubtful accounts of $120,332
in 2000 and $171,000 in 1999 623,591 1,357,118
Prepaid expenses and other assets 64,410 65,117
-----------------------------------
Total current assets 835,346 1,700,607
Property and equipment, net 257,296 103,347
Other long-term assets 31,038 1,474
-----------------------------------
Total assets $ 1,123,680 $ 1,805,428
===================================
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
CURRENT LIABILITIES:
Line of credit $ 750,000 $ 425,000
Current portion of capital lease obligations 181,590 44,205
Accounts payable 866,544 287,388
Accrued compensation and benefits 349,013 254,346
Deferred revenue 441,227 276,413
Other accrued expenses 211,034 121,080
-----------------------------------
Total current liabilities 2,799,408 1,408,432
Capital lease obligations, less current portion 32,088 39,494
Commitments
STOCKHOLDERS' (DEFICIT) EQUITY:
Common stock, $.01 par value:
Authorized shares - 8,000,000 shares
Issued and outstanding shares - 4,105,800 in 2000 and 3,114,800 in
1999 11,754 1,844
Additional paid-in capital 599,941 -
Note receivable from stockholder (211,750) -
Accumulated (deficit) earnings (2,107,761) 355,658
-----------------------------------
Total stockholders' (deficit) equity (1,707,816) 357,502
-----------------------------------
Total liabilities and stockholders' (deficit) equity $ 1,123,680 $ 1,805,428
===================================
SEE ACCOMPANYING NOTES.
6
AllPoints Systems, Inc.
Statements of Operations
YEAR ENDED DECEMBER 31,
---------------------------------------
2000 1999
REVENUES:
Software license $ 672,794 $ 522,015
Services and maintenance 4,787,083 3,454,406
Resale software and equipment 1,533,137 1,302,938
---------------------------------------
Total revenues 6,993,014 5,279,359
COSTS AND EXPENSES:
Cost of software licenses - 147,142
Cost of services and maintenance 3,059,459 1,394,885
Cost of resale software and equipment 1,150,744 888,101
Research and development 268,224 340,050
Selling, general and administrative 4,875,754 2,242,276
---------------------------------------
Total costs and expenses 9,354,181 5,012,454
---------------------------------------
Operating (loss) income (2,361,167) 266,905
OTHER INCOME (EXPENSE):
Interest income 1,444 12,463
Interest expense (75,697) (48,784)
Other (27,999) 2,160
---------------------------------------
Other expenses, net (102,252) (34,161)
---------------------------------------
Net (loss) income $ (2,463,419) $ 232,744
=======================================
SEE ACCOMPANYING NOTES.
7
AllPoints Systems, Inc.
Statements of Stockholders' (Deficit) Equity
NOTE
COMMON STOCK ADDITIONAL RECEIVABLE ACCUMULATED
------------------------ PAID-IN FROM (DEFICIT) TREASURY
SHARES AMOUNT CAPITAL STOCKHOLDER EARNINGS STOCK TOTAL
------------ ----------- -------------- -------------- ---------------- ------------ -------------
Balance at
December 31, 1998 3,552,000 $ 1,776 $ 78,290 $ - $ 192,148 $ (149,983) $ 122,231
Cancellation of
treasury stock (444,000) - (80,749) - (69,234) 149,983 -
Exercise of options 6,800 68 2,459 - - - 2,527
Net income - - - - 232,744 - 232,744
------------ ----------- -------------- -------------- ---------------- ------------ -------------
Balance at
December 31, 1999 3,114,800 1,844 - - 355,658 - 357,502
Issuance of shares to
officer for services 692,000 6,920 525,920 - - - 532,840
Stockholder
distribution - - (143,139) - - - (143,139)
Exercise of options 299,000 2,990 217,160 (211,750) - - 8,400
Net loss - - - - (2,463,419) - (2,463,419)
------------ ----------- -------------- -------------- ---------------- ------------ -------------
Balance at
December 31, 2000 4,105,800 $ 11,754 $ 599,941 $(211,750) $ (2,107,761) $ - $(1,707,816)
============ =========== ============== ============== ================ ============ =============
SEE ACCOMPANYING NOTES.
8
AllPoints Systems, Inc.
Statements of Cash Flows
YEAR ENDED DECEMBER 31,
-------------------------------------
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (2,463,419) $ 232,744
Adjustments to reconcile net (loss) income to net cash (used in)
provided by operating activities:
Depreciation and amortization 181,888 77,506
Compensation resulting from issuance of common shares to officer 532,840 -
Provision for loss on receivables 69,000 121,740
Changes in assets and liabilities:
Accounts receivable 664,527 (690,769)
Prepaid and other assets 707 (168)
Other long-term assets (29,564) 150,662
Accounts payable 579,156 257,406
Accrued compensation and benefits 94,667 141,437
Accrued income taxes - (130)
Deferred revenue 164,814 11,413
Other accrued expenses 89,954 (160,731)
-------------------------------------
Net cash (used in) provided by operating activities (115,430) 141,110
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (105,435) (12,766)
-------------------------------------
Net cash used in investing activities (105,435) (12,766)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit 325,000 60,417
Repayments of capital lease obligations (100,423) (42,169)
Distributions to shareholders (143,139) -
Stock options exercised 8,400 2,527
-------------------------------------
Net cash provided by financing activities 89,838 20,775
-------------------------------------
Net (decrease) increase in cash and cash equivalents (131,027) 149,119
Cash and cash equivalents, beginning of year 278,372 129,253
-------------------------------------
Cash and cash equivalents, end of year $ 147,345 $ 278,372
=====================================
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid for interest $ 75,696 $ 48,784
=====================================
Purchases under capital leases $ 215,011 $ 37,421
=====================================
SEE ACCOMPANYING NOTES.
9
AllPoints Systems, Inc.
Notes to Financial Statements
1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
AllPoints Systems, Inc. (the Company) specializes in the installation of
warehouse and distribution management computer software systems and has
developed its own software product, AllPoints TM, which it sells and installs.
On January 25, 2001, the Company was acquired by EXE Technologies, Inc.
(EXE). The transaction was completed in a stock-for-stock merger in which EXE
issued 1,590,357 shares of EXE common stock and assumed options for an
additional 409,606 shares of EXE common stock in exchange for all of the
outstanding securities of the Company. In connection with the transaction,
the entire $750,000 balance due under the Company's line of credit agreement
was paid by EXE.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
REVENUE RECOGNITION
The Company's revenues consists of software license, consulting service and
maintenance revenues and revenues from resale software and equipment.
Software license revenue is recognized in accordance with the American
Institute of Certified Public Accountants Statement of Position (SOP) 97-2,
"Software Revenue Recognition." Under SOP 97-2, software license revenues are
recognized upon execution of a contract and delivery of software, provided
that the license fee is fixed and determinable; no significant production,
modification or customization of the software is required; vendor-specific
objective evidence of fair value exists to allow for the allocation of the
total fee to elements of the arrangement; and collection is considered
probable by management.
10
AllPoints Systems, Inc.
Notes to Financial Statements (Continued)
1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Revenue from services is recognized as the services are provided. Maintenance
revenue is recognized on a straight-line basis over the period of the
obligation. Revenue from resale software and equipment is recognized upon
receipt of a purchase order and shipment of the equipment to the customer
provided the following criteria are met: payment terms are fixed and
determinable; no significant production, modification or customization is
required, and collection is considered probable by management.
SOFTWARE DEVELOPMENT COSTS
In accordance with Statement of Financial Accounting Standards (SFAS) No. 86,
"Accounting for the Costs of Computer Software to be Sold, Leased, or
Otherwise Marketed," software development costs are expensed as incurred
until technological feasibility has been established, at which time such
costs are capitalized until the product is available for general release to
customers. The establishment of technological feasibility of the Company's
products and general release of such software have substantially coincided.
As a result, software costs qualifying for capitalization have been
insignificant, and therefore, the Company has expensed all software
development costs.
CONCENTRATION OF CREDIT RISK
The Company's customers are dispersed over a wide geographic area and are
subject to periodic review under the Company's credit policies. The Company
does not believe that it is subject to any unusual credit risks other than
the normal level of risk attendant to operating its business.
11
AllPoints Systems, Inc.
Notes to Financial Statements (Continued)
1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
The following table presents customers which accounted for 10% or more of the
Company's revenues for each respective period ended December 31 or accounted
for 10% or more of the Company's accounts receivable at the end of each
period:
2000 1999
------------------------------------- ------------------------------------
ACCOUNTS ACCOUNTS
REVENUES RECEIVABLE REVENUES RECEIVABLE
------------------ ------------------ ----------------- ------------------
Customer A -% -% 14% -%
Customer B - - 25 28
Customer C 25 - 18 26
Customer D 12 22 - -
Customer E - 16 - -
Customer F 23 16 - -
Customer G - 14 - -
Customer H 20 - - -
CASH EQUIVALENTS
Cash equivalents consist of short-term highly liquid investments purchased
with a remaining maturity of three months or less. The carrying value of cash
equivalents approximates, fair value.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost and depreciated using the double
declining balance method over their estimated useful lives. Equipment leased
under capital leases is amortized over the lesser of its useful life or the
1ease term. The estimated useful lives of property and equipment are as follows
(in years):
Computer equipment and software 3-5
Furniture and fixtures 3-7
Leasehold improvements 5
12
AllPoints Systems, Inc.
Notes to Financial Statements (Continued)
1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
INCOME TAXES
The Company has elected to be treated as an S Corporation under the
provisions of the Internal Revenue Code. The Company is subject to
Massachusetts excise tax based on the Company's net worth. These amounts have
been recorded as operating expenses in the financial statements. The taxable
income of the Company is directly taxable to the stockholders for federal and
state tax purposes, and the stockholders are responsible for the payment of
income taxes thereon. Therefore, no provision for income taxes has been
recorded in the accompanying statements of operations for the years ended
December 31, 2000 and 1999.
SEGMENT INFORMATION
The Company operates in a single segment as defined by SFAS No. 131,
"Disclosures About Segments of and Enterprise and Related Information," and
does not have material operations in foreign locations.
FINANCIAL INSTRUMENTS
Financial instruments held or used by the Company include cash and cash
equivalents, accounts receivable, accounts payable, capital lease
obligations, and notes and line-of-credit payables. The fair value of these
instruments, which could change if market conditions change, are based on
management's estimates. Management believes that the carrying value of these
instruments approximates their fair values.
13
AllPoints Systems, Inc.
Notes to Financial Statements (Continued)
1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
EMPLOYEE STOCK-BASED COMPENSATION
The Company accounts for its stock-based compensation plan utilizing the
provisions of Accounting Principles Board (APB) Opinion No. 25, "Accounting for
Stock Issued to Employees," as permitted by SFAS No. 123, "Accounting for
Stock-Based Compensation." The disclosure of pro forma information regarding net
income (loss) based on fair value accounting for stock-based compensation plans
has been provided as required by SFAS No. 123.
RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued SFAS No. 133, "Accounting
for Derivative Instruments and Hedging Activities," which as amended, will be
effective for the Company's fiscal year beginning January 1, 2001. SFAS No. 133
requires that all derivatives be recognized at fair value on the balance sheet
and that related gains and losses be included in net income or comprehensive
income depending on the nature of the hedging relationship. As of December 31,
2000, the Company has not entered into contracts that will be classified as
derivative financial instruments under SFAS No. 133. Management believes that
SFAS No. 133 will not have an impact on the results of operations or financial
position of the Company when adopted, however management cannot estimate its
impact on future results of operations and financial position.
2. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at December 31:
2000 1999
--------------------- --------------------
Computer equipment and software $ 766,802 $ 458,359
Furniture and fixtures 86,444 84,194
Leasehold improvements 27,592 3,369
--------------------- --------------------
Total 880,838 545,922
Less accumulated depreciation and amortization (623,542) (442,575)
--------------------- --------------------
Property, plant and equipment, net $ 257,296 $ 103,347
===================== ====================
14
AllPoints Systems, Inc.
Notes to Financial Statements (Continued)
3. LONG-TERM DEBT
The Company has a line of credit (the Agreement) with a bank providing for
borrowings of up to $750,000, of which $750,000 is outstanding at December
31, 2000. Borrowings under the line bear interest at the bank's prime rate
plus 1% (10.5% at December 31, 2000) and are collateralized by a first
security interest in all of the Company's assets. As of December 31, 2000,
the Company was not in compliance with certain covenants under the Agreement.
Therefore, the $750,000 of borrowings outstanding under the Agreement at
December 31, 2000 are due on demand.
At December 31, 1999, the Company was not in compliance with certain
covenants in a then existing lending agreement. The Company was also not in
compliance with certain covenants of the Agreement at June 30, 2000. The
December 31, 1999 and June 30, 2000 instances of non-compliance were waived
by the bank on August 22, 2000.
4. CAPITAL LEASES
The Company is obligated under a number of capital leases which expire at
various dates during the next four years. The recorded value of the assets
was $385,974 and $155,572 as of December 31, 2000 and 1999, respectively, and
the related amortization on these assets was $230,835 and $100,078 as of
December 31, 2000 and 1999, respectively. Future minimum lease payments under
capital leases as of December 31, 2000, are as follows:
FISCAL YEARS
2001 $ 107,366
2002 96,326
2003 41,757
2004 3,076
2005 2,400
------------
Total minimum payments (excluding taxes, maintenance and insurance) 250,925
Less amount representing interest (37,247)
------------
Present value of minimum lease payments 213,678
Less current maturities (181,590)
------------
Long-term portion $ 32,088
============
15
AllPoints Systems, Inc.
Notes to Financial Statements (Continued)
5. COMMON STOCK
On August 3, 2000, the Company issued 692,000 shares of restricted common
stock to an officer with a fair market value of $0.77 per share. The shares
are subject to a call option whereby the Company has the right, but not the
obligation to purchase shares at a price of $0.77 per share in the event the
officer ceases to be an employee of the Company. The officer's ownership in
the shares vests over a five-year period commencing on July 1, 2000, such
that 100% of the shares shall be vested on June 30, 2005. The shares vest in
increments of 1.66% per month until all shares have vested. Vesting of the
shares shall accelerate and all shares become fully vested upon the
consummation of a change in control of the Company. The shares issued became
fully vested upon closing of the acquisition of the Company by EXE
Technologies, Inc. The Company recorded the entire fair value of the
restricted shares issued to the officer of $532,840 as compensation expense
in the year ended December 31, 2000.
6. STOCK OPTION PLAN
The Company's Incentive Stock Option Plan (the Plan), established in 1996,
provides for grants of options to purchase up to 1,749,883 shares of common
stock. Grants may be in the form of incentive stock options or nonqualified
options. Vesting periods are determined by the Board of Directors on the date
of grant. Options generally vest ratably over a four or five year period.
Exercise prices are deemed to be equal to the fair value of the common stock
at the time of grant. The fair value of the common stock has been determined
by the Board of Directors of the Company at each stock option measurement
date based on a variety of different factors including the Company's
financial position and historical financial performance, the status of
technological developments within the Company, the composition and ability of
the current engineering and management team, an evaluation and benchmark of
the Company's competition, the current climate in the marketplace, the
illiquid nature of the common stock, and the prospects of a liquidity event,
among others.
16
AllPoints Systems, Inc.
Notes to Financial Statements (Continued)
6. STOCK OPTION PLAN (CONTINUED)
WEIGHTED
NUMBER AVERAGE
OF EXERCISE
OPTIONS PRICE
--------------------- --------------------
Outstanding at January 1, 1999 354,000 $ 0.31
Granted 222,900 0.42
Exercised (6,800) 0.37
Cancelled (135,200) 0.31
---------------------
Outstanding at December 31, 1999 434,900 0.37
Granted 611,610 0.77
Exercised (299,000) 0.74
Cancelled (51,800) 0.37
---------------------
Outstanding at December 31, 2000 695,710 0.57
=====================
The weighted-average fair market value of options granted was $0.34 and $0.18
per share for the year ended December 31, 2000 and 1999, respectively.
The following table sets forth information regarding options outstanding at
December 31, 2000:
WEIGHTED WEIGHTED
NUMBER AVERAGE AVERAGE
OF EXERCISE REMAINING EXERCISE
OPTIONS PRICE LIFE PRICE
- ------------------- ----------------- ----------------- -----------------
20,000 $0.63 8.96 $0.63
30,000 0.30 8.10 0.30
64,000 0.28 5.75 0.28
116,000 0.33 7.90 0.33
132,100 0.45 8.96 0.45
333,610 0.77 9.59 0.77
- -------------------
695,710
===================
17
AllPoints Systems, Inc.
Notes to Financial Statements (Continued)
6. STOCK OPTION PLAN (CONTINUED)
The following table sets forth information regarding options exercisable at
December 31, 2000 and 1999:
NUMBER OF WEIGHTED
OPTIONS AVERAGE
EXERCISE PRICE EXERCISABLE EXERCISE PRICE
----------------- ---------------- -----------------
December 31, 2000 $0.28 64,000 $0.28
0.33 69,600 0.33
0.45 27,220 0.45
December 31, 1999 0.28 45,600 0.28
0.33 64,400 0.33
SFAS No. 123 requires the disclosure of proforma net income (loss) computed
as if the Company had accounted for its employee stock options under the fair
value method set forth in SFAS No. 123. If compensation cost for stock option
grants granted during 2000 and 1999 had been determined based on the fair
value of the grant using the method prescribed by SFAS No. 123, the Company's
fiscal 2000 and 1999 net income (loss) would have been $(2,492,861) and
$194,103, respectively.
The fair value of the options on their grant date was estimated using the
Black-Scholes option pricing model. Key assumptions used to apply this option
pricing model are as follows:
2000 1999
--------------------- --------------------
Risk-free interest rate 5.97% 5.77%
Expected life of option grants (years) 9.75 9.75
Expected volatility of underlying stock 0.00 0.00
Expected dividend payment rate 0.00 0.00
The option-pricing model used was designed to value readily tradable stock
options with relatively short lives. However, management believes that the
assumptions used to value the options and the model applied yield a
reasonable estimate of the fair value of the grants made under the
circumstances.
18
AllPoints Systems, Inc.
Notes to Financial Statements (Continued)
6. STOCK OPTION PLAN (CONTINUED)
At December 31, 2000 1,444,083 shares of common stock were reserved for
issuance upon exercise of options under the Company's Incentive Stock Option
Plan.
7. NOTE RECEIVABLE FROM STOCKHOLDER
During the year ended December 31, 2000, the Company received a $211,750
recourse note receivable from a stockholder upon the exercise of stock
options, which bears interest at 5.87% per annum. Under the terms of the
note, unpaid principal and interest is due on December 28, 2005, or an
earlier date upon the occurrence of certain events, including termination of
employment.
8. RETIREMENT SAVINGS PLAN
On January 1, 1997, the Company established a 401(k) retirement savings plan
covering all employees who have completed 90 days of service. Under the
provisions of the plan, employees may contribute 1% to 14% of their
compensation within certain limitations. Each year, the Company will make
matching contributions of 0.25% of each participant's elective deferral up to
a maximum of 1% of the participant's yearly compensation. The Company's
contributions were $23,125 and $16,077 for the years ended December 31, 2000
and 1999.
9. OPERATING LEASES
The Company leases its office facilities under noncancelable operating leases
expiring through 2004. Escalation clauses and other incentives present in
lease agreements are recognized on a straight-line basis over the term of the
lease. Total rent expense was $340,251 and $159,678 for the years ended
December 31 2000 and 1999, respectively.
Future minimum payments under noncancelable operating leases for the years
ending December 31 are as follows:
2001 $ 252,000
2002 324,000
2003 381,150
2004 381,150
19
EXE Technologies, Inc. and Subsidiaries
Unaudited Pro Forma Combined Condensed
Financial Statements
On January 25, 2001, EXE Technologies, Inc. (EXE or the Company) acquired
AllPoints Systems, Inc. (AllPoints). The combination with AllPoints has been
accounted for as a purchase business combination by the Company. The
unaudited pro forma combined condensed statement of operations is based on
the Company's historical consolidated statement of operations and the
AllPoints historical statement of operations for the year ended December 31,
2000 and assumes the combination had been completed on January 1, 2000. The
unaudited pro forma combined condensed balance sheet combines the Company's
historical consolidated balance sheet as of December 31, 2000 with the
AllPoints historical balance sheet as of December 31, 2000 and assumes the
combination had been completed on December 31, 2000.
The unaudited pro forma information is presented for illustrative purposes
only and is not necessarily indicative of the results of operations that
would have been reported if the combination had been completed as presented
in the accompanying unaudited pro forma combined condensed financial
statements nor is it necessarily indicative of the Company's future results
of operations. The pro forma adjustments and the assumptions on which they
are based are described in the accompanying notes to the unaudited pro forma
combined condensed statement of operations and balance sheet.
The unaudited pro forma combined condensed statement of operations and
balance sheet are based on, and should be read in conjunction with, the
historical consolidated financial statements and related notes thereto of the
Company for the year ended December 31, 2000 included in its Annual Report on
Form 10-K, and the historical financial statements of AllPoints and related
notes thereto for the year ended December 31, 2000 included elsewhere in this
Current Report on Form 8-K/A.
20
EXE Technologies, Inc. and Subsidiaries
Unaudited Pro Forma Combined Condensed Statement of Operations
Year ended December 31, 2000
PRO FORMA PRO FORMA
EXE ALLPOINTS ADJUSTMENTS COMBINED
------------------- ------------------- --------------------- ---------------------
Revenue:
Software license $ 38,665,121 $ 672,794 $ - $ 39,337,915
Services and maintenance 68,708,446 4,787,083 - 73,495,529
Resale software and equipment 8,214,867 1,533,137 - 9,748,004
------------------- ------------------- --------------------- ---------------------
Total revenue 115,588,434 6,993,014 - 122,581,448
Costs and expenses:
Cost of software licenses 1,391,435 - - 1,391,435
Cost of services and maintenance 53,584,519 3,059,459 - 56,643,978
Cost of resale software and equipment 6,607,214 1,150,744 - 7,757,958
Sales and marketing 25,495,730 1,315,179 - 26,810,909
Research and development 9,577,655 268,224 - 9,845,879
General and administrative 14,444,617 3,560,575 - 18,005,192
Amortization of intangibles 4,615,507 - 5,114,391(d) 9,729,898
Warrant and stock compensation expense 2,762,438 - 472,160(g) 3,234,598
------------------- ------------------- --------------------- ---------------------
Total costs and expenses 118,479,115 9,354,181 5,586,551 133,419,847
------------------- ------------------- --------------------- ---------------------
Operating loss (2,890,681) (2,361,167) (5,586,551) (10,838,399)
Other income (expense):
Interest income 1,810,108 1,444 - 1,811,552
Interest expense (1,210,237) (75,697) - (1,285,934)
Other (1,040,796) (27,999) - (1,068,795)
------------------- ------------------- --------------------- ---------------------
Total other expense (440,925) (102,252) - (543,177)
------------------- ------------------- --------------------- ---------------------
Loss before taxes (3,331,606) (2,463,419) (5,586,551) (11,381,576)
Income tax provision - - - -
------------------- ------------------- --------------------- ---------------------
Net loss $ (3,331,606) $ (2,463,419) $ (5,586,551) $ (11,381,576)
=================== =================== ===================== =====================
Net loss per common share-basic diluted
$ (0.12) $ (0.40)
=================== =====================
Shares used to compute per share data 26,799,558 28,389,915
SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL
INFORMATION.
21
EXE Technologies, Inc. and Subsidiaries
Unaudited Pro Forma Combined Condensed Balance Sheet
As of December 31, 2000
PRO FORMA PRO FORMA
EXE ALLPOINTS ADJUSTMENTS COMBINED
------------------ -------------------- --------------------- ---------------------
ASSETS
Current assets:
Cash and cash equivalents $ 39,820,056 $ 147,345 $ (750,000) (b) $ 39,217,401
Securities available for sale 9,147,506 - - 9,147,506
Accounts receivable 33,029,674 623,591 - 33,653,265
Other receivable and advances 614,781 - - 614,781
Prepaid and other current assets 3,180,221 64,410 - 3,244,631
------------------ -------------------- --------------------- ---------------------
Total current assets 85,792,238 835,346 (750,000) 85,877,584
Property and equipment, net 8,233,891 257,296 (22,537) (e) 8,468,650
Marketable securities, long-term 10,235,457 - - 10,235,457
Other assets 2,175,655 31,038 - 2,206,693
Intangible assets 10,142,402 - 30,686,346 (c) 40,828,748
------------------ -------------------- --------------------- ---------------------
Total assets $ 116,579,643 $ 1,123,680 $ 29,913,809 $ 147,617,132
================== ==================== ===================== =====================
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 6,065,703 $ 866,544 $ - $ 6,932,247
Line of credit - 750,000 (750,000) (b) -
Current portion of long-term
debt 192,883 181,590 - 374,473
Accrued payroll and benefits 2,812,071 349,013 - 3,161,084
Deferred revenue 10,431,348 441,227 500,000 (e) 11,372,575
Accrued expenses 9,931,202 211,034 1,667,364 (e) 11,809,600
------------------ -------------------- --------------------- ---------------------
Total current liabilities 29,433,207 2,799,408 1,417,364 33,649,979
Long-term liabilities:
Long-term debt, net of current
portion 102,477 32,088 - 134,565
Stockholders' equity (deficit):
Common stock 444,875 11,754 4,150 (a) 460,779
Additional paid-in capital 149,691,336 599,941 28,308,094 (a) 178,599,371
Note receivable from
stockholder - (211,750) - (211,750)
Treasury stock, at cost (3,431,464) - - (3,431,464)
Accumulated deficit (55,677,267) (2,107,761) 2,107,761 (a) (55,677,267)
Deferred compensation (3,688,059) - (1,923,560)(f) (5,611,619)
Other comprehensive loss (295,462) - - (295,462)
------------------ -------------------- --------------------- ---------------------
Total stockholders' equity (deficit) 87,043,959 (1,707,816) 28,496,445 113,832,588
------------------ -------------------- --------------------- ---------------------
Total liabilities and stockholders'
equity (deficit) $ 116,579,643 $ 1,123,680 $ 29,913,809 $ 147,617,132
================== ==================== ===================== =====================
SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL
INFORMATION.
22
EXE Technologies, Inc. and Subsidiaries
Notes to Unaudited Pro Forma Combined Condensed Financial Information
1. GENERAL
The combination with AllPoints has been accounted for as a purchase business
combination by the Company. The accompanying unaudited pro forma combined
condensed financial information reflects an aggregate cost of the combination
of approximately $28.6 million, consisting of the fair market value of the
Company's securities issued to the shareholders of AllPoints plus costs
directly related to the combination as follows:
Fair market value of 1,590,357 shares of common stock $ 23,420,492
Fair market value of options to purchase 409,606 shares
of common stock 5,503,447
Estimated intrinsic value of unvested stock options at
consummation date related to future service (1,923,560)
Transaction costs 1,618,109
-----------------------
Total combination cost $ 28,618,488
=======================
The aggregate purchase price has been allocated to the net assets acquired on
the basis of preliminary estimates of fair values as follows:
Intangible assets $ 4,300,000
Goodwill 26,386,346
Liabilities assumed net of fair value of tangible assets acquired (2,067,858)
-----------------------
$ 28,618,488
=======================
The estimates of the fair value of intangible assets acquired and liabilities
assumed in excess of the fair value of tangible assets acquired were
determined based on information furnished by management of AllPoints. The
carrying value of AllPoints net liabilities in excess of the fair value of
tangible assets acquired are assumed to equal their fair values for purposes
of this unaudited pro forma combined financial information unless indicated
otherwise in the notes to unaudited pro forma combined condensed financial
information. These amounts are subject to revision. Although management of
the Company does not expect the final valuation of the assets acquired and
liabilities assumed to result in values that are significantly different from
the estimates included in the table above, there can be no assurance that
such differences will not occur.
23
EXE Technologies, Inc. and Subsidiaries
Notes to Unaudited Pro Forma Combined
Condensed Financial Information (Continued)
2. PRO FORMA ADJUSTMENTS
Adjustments included in the unaudited pro forma combined condensed financial
statements are as follows:
(a) To eliminate AllPoints capital stock, additional paid-in capital and
accumulated deficit and to record the issuance of 1,590,357 shares of the
Company's common stock and options to purchase 409,606 shares of the
Company's common stock in exchange for all of the outstanding common
stock of AllPoints.
(b) AllPoints had $750,000 outstanding under a line of credit agreement with
a bank which was due on demand. In connection with the combination, the
entire balance due under the line of credit agreement was paid by the
Company. Therefore, for purposes of calculating the pro forma
adjustments, the entire $750,000 balance due under the line of credit
agreement was eliminated with a corresponding reduction in cash and cash
equivalents. The impact on net interest expense was immaterial.
(c) To record intangible assets resulting from the acquisition consisting of
$26.4 million of goodwill and $4.3 million of intangible assets.
(d) To record the amortization of goodwill and intangible assets. The
acquired goodwill and intangible assets will be amortized over six years.
(e) To record the Company's estimate of transaction costs and adjustments to
the carrying value of property and equipment and liabilities assumed
based on estimates of fair value.
(f) In accordance with FASB Interpretation No. 44 (FIN 44), "Accounting for
Stock Transactions Involving Stock Compensation," the estimated fair
value of EXE stock options issued in connection with the combination
which were fully vested are included as part of the purchase price. This
adjustment records the portion of the fair value of unvested options to
purchase shares of EXE's common stock issued in exchange for outstanding
options of AllPoints which has been allocated to deferred compensation.
The $1,923,560 amount represents the intrinsic value of the EXE unvested
options issued for which future service is required subsequent to the
consummation date in order for the employee to vest in the EXE stock
option. The amount allocated to deferred compensation has been deducted
from the estimated fair value of stock option awards for purposes of the
allocation of purchase price to the assets acquired. The deferred
compensation will be amortized to expense over the remaining vesting
period of the options of four to five years.
24
EXE Technologies, Inc. and Subsidiaries
Notes to Unaudited Pro Forma Combined
Condensed Financial Information (Continued)
2. PRO FORMA ADJUSTMENTS (CONTINUED)
(g) To record amortization of deferred compensation related to unvested
options issued in the combination.
3. UNAUDITED PRO FORMA COMBINED LOSS PER COMMON SHARE DATA
The unaudited pro forma combined basic earnings per common share data is
computed by dividing pro forma combined loss by the pro forma weighted average
number of common shares outstanding. Because the combined pro forma results of
operations are a loss, the effects of the assumed exercise of stock options and
warrants does not have a dilutive effect.
25
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.
EXE TECHNOLOGIES, INC.
Date: April 10, 2001 By: /s/ Raymond R. Hood
--------------------------
Raymond R. Hood
President and Chief
Executive Officer
26
EXHIBIT INDEX
2.1* Agreement and Plan of Merger, dated as of January 18, 2001, by and
among EXE Technologies, Inc., Almond Acquisition Corp. and AllPoints
Systems, Inc.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Ernst & Young LLP, Independent Auditors.
- --------------------------
* Previously filed.
27