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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) April 5, 1999
0-7349
(Commission File Number)
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eNote.com Inc.
(formerly Webcor Electronics, Inc.)
(Name of small business issuer in its charter)
Delaware 59-345315
(Jurisdiction of Incorporation) (IRS Employer Identification Number)
185 Allen Brook Lane Williston, Vermont 05495 (Address of
registrant's principal executive office)
(802) 288-9000
(Registrant's telephone number)
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This Amendment No. 1 amends and supplements the following
items of eNote.com Inc.'s (the "Company's") Current Report on Form 8-K, filed
April 20, 1999 (the "Report").
ITEM 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
The information contained in subitems (a) and (b) of Item 7 of
the Report are hereby amended and supplemented to read as follows:
(a) Financial Statements of Business Acquired.
The audited financial statements of the business acquired in
the transaction described in Item 2 ("Navis") for the year ended December 31,
1998, and unaudited financial statements of Navis for the years ended December
31, 1997 and December 31, 1996, together with the notes to such financial
statements are set forth on the following pages. The audited financial
statements of Navis for the year ended December 31, 1998 set forth on the
following pages are different than the audited financial statements of Navis for
the same period included in the Company's Quarterly Reports on Forms 10-Q for
the periods ended June 30, 1999 and September 30, 1999; these differences result
from the correction of certain errors that the Company believes are immaterial.
137 South Street, Boston, MA 02111 o (617) 451-9720
Fax o (617) 695-0519
Kelleher & Company, Certified Public Accountants
To the Board of Directors and Stockholders
Navis Technologies, Ltd.
We have audited the accompanying balance sheet of Navis Technologies, Ltd. as of
December 31, 1998, and the related statements of income, accumulated 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 generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principals 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 Navis Technologies, Ltd. as of
December 31, 1998, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
/s/ KELLEHER & COMPANY
December 21, 1999
Navis Technologies, Ltd.
Balance Sheet
December 31,
(audited) (unaudited) (unaudited)
1998 1997 1996
ASSETS
Current Assets
Cash and cash equivalents $ (22,807) $ 49,397 $ 38,105
Accounts receivable 18,159 32,066 --
Inventories 2,770 2,770 --
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Total current assets (1,878) 84,233 38,105
Property and equipment, net 33,762 8,907 --
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Total assets $ 31,884 $ 93,140 $ 38,105
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LIABILITIES AND STOCKHOLDERS' EQUITY (Deficit)
Current liabilities
Accounts payable $ 84,343 $ 10,190 $ 12,183
Accrued expenses 113,016 4,929 --
Notes Payable (note 3) 646,947 -- --
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Total current liabilities 844,306 15,119 12,183
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Total liabilities $ 844,306 $ 15,119 $ 12,183
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Stockholders' Equity (deficit)
Common stock, $.01 par value, 1,000 shares authorized, 500 $ 5 $ 5 $ 5
shares issued and outstanding
Additional paid-in capital $ 195 195 195
Retained Earnings (Deficit) (812,622) 77,821 25,723
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Total stockholders' equity (deficit) (812,422) 78,021 25,923
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Total liabilities and stockholders' equity (deficit) $ 31,884 $ 93,140 $ 38,105
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The accompanying notes are an integral part of these financial statements.
Navis Technologies, Ltd.
Statement of Operations
For years ended December 31,
(audited) (unaudited) (unaudited)
1998 1997 1996
Net revenue $(175,147) $ 409,720 $ 117,478
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Operating expenses:
Selling, general and administrative 714,560 336,691 89,255
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Total operating expenses 714,560 336,691 89,255
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Net income (loss) $(889,707) $ 73,029 $ 28,223
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The accompanying notes are an integral part of these financial statements.
Navis Technologies, Ltd.
Statement of Cash Flows
For years ended December 31,
(audited) (unaudited) (unaudited)
1998 1997 1996
---- ---- ----
Cash flows from operating activities:
Net income $(889,707) $ 73,029 $ 28,223
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization -- 18,426 --
Changes in assets and liabilities:
Accounts receivable 13,907 (32,066) --
Accounts payable 73,418 (1,993) 12,183
Accrued Expenses 108,087 4,929 --
--------- --------- ---------
Net cash used in operating activities (694,295) 62,325 40,405
--------- --------- ---------
Cash flows from investing activities:
Purchases of property and equipment (24,855) (27,333) --
--------- --------- ---------
Net cash used in investing activities (24,855) (27,333) --
--------- --------- ---------
Cash flows from financing activities:
Proceeds from (repayment of) long-term debt 646,947 -- --
Proceeds from issuance of common stock -- -- 200
Stockholder distributions -- (23,700) (2,500)
--------- --------- ---------
Net cash provided by financing activities 646,947 (23,700) (2,300)
--------- --------- ---------
Net Increase/(decrease) in cash and cash equivalents (72,203) 11,292 38,105
Cash and cash equivalents at beginning of the period 49,396 38,105 --
--------- --------- ---------
Cash and cash equivalents at end of period $ (22,807) $ 49,397 $ 38,105
========= ========= =========
The accompanying notes are an integral part of these financial statements.
eNote.com, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1--The Company and Summary of Significant Accounting Policies:
The Company
Navis Technologies. Ltd. ("Navis") was incorporated on August 13, 1996 under the
laws of the State of Delaware. Navis was initially engaged in developing and
commercializing communication appliances, electronic point of sale devices and
infrared ("IR") subsystems for network computer ("NC") and other "thin client"
data retrieval and storage systems. Early in 1998, Navis discontinued its remote
control, contract engineering and consulting operations in order to focus
exclusively on developing the concept and technology of the TVEmail hardware,
software and related server systems.
Revenue recognition
Navis recognizes its revenue as it is earned on contracts. Navis is in the
development stage of its product TVEmail. Navis was engaged in the sale of
electronic devices from its inception until its development of the TVEmail
product. Navis expects to launch this product late in the fourth quarter of 1999
with widespread deployment commencing in the first quarter of 2000. Navis is not
considered to be a development stage enterprise.
Fair value of financial instruments
Navis' financial instruments, including cash, cash equivalents, accounts
receivable and accounts payable are carried at cost, which approximates their
fair value because of the short-term maturity of these instruments.
Property and equipment
Property and equipment are stated at historical cost. Depreciation and
amortization are computed using the straight-line method over the estimated
useful lives of the assets, generally five years or less for equipment and
furniture, and the lease term for building improvements.
Product Development Costs
Navis' development of TVEmail includes the development of internal software as
well as the purchase of software from third parties. Costs of third party
software are capitalized. All costs in the software development process which
are classified as research and development are expensed as incurred.
Use of Estimates
The preparation of financial statements in accordance 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 these estimates.
Note 2--Income Taxes:
Income taxes on net earnings are payable personally by the stockholders pursuant
to an election under subchapter S of the Internal Revenue Code not to have Navis
taxed as a corporation. Accordingly, no provision has been made for income
taxes.
Note 3--Borrowings:
Notes Payable
Notes payable consists of amounts payable to various individuals and a former
shareholder and President of Navis who is currently a shareholder and President
of Navis' sole shareholder -- eNote.com Inc. ("eNote"). Such loans are unsecured
and are short-term in nature.
December 31, 1998
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Unsecured stockholder loans, 12% interest $ 196,947
Convertible debentures, 12% interest, $1/share
conversion rate 450,000
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Total $ 646,947
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Note 4--Leasing Arrangements:
As of March 31, 1999, Navis occupied office space in a commercial building.
Navis' arrangement with the landlord regarding such space (the "Lease") was
classified as an operating lease and was an oral month to month arrangement.
Under the terms of the Lease, Navis was generally responsible for the payment of
property taxes, insurance and maintenance costs related to such property. The
rent as of March 31, 1999 was $1,300 per month. Total rent expense was $15,600
in 1998 and $7,800 in 1997.
Note 5--Subsequent Events
On April 5, 1999, eNote acquired Navis in a transaction whereby the stockholders
of Navis exchanged all of their Navis stock for 8 million shares of newly issued
common stock, par value $.01 per share ("Common Stock"), of eNote, and Navis
became a wholly-owned subsidiary of eNote (the "eNote Transaction"). The number
of shares issued by eNote in the eNote Transaction was determined by arms-length
negotiation between the parties. Before the eNote Transaction, eNote had no
material assets, liabilities or business operations. No relationship existed
between eNote and Navis prior to the eNote Transaction. In connection with the
eNote Transaction, eNote
issued 540,000 shares of Common Stock to persons designated by Capston Network
Company, 270,000 shares of Common Stock to legal counsel for the parties and
650,000 shares of Common Stock to certain financial consultants as finders'
fees. This issuance resulted in a cost of $1,460,000.
At approximately the same time as the eNote Transaction, eNote entered into a
Purchase and Sale Agreement with Freidlander International Limited
("Friedlander") dated April 6, 1999 (the "Freidlander Agreement"), whereby eNote
sold 5 million shares of convertible preferred stock, par value $.01 per share
(the "Preferred Stock"), of eNote, and warrants ("Warrants") to purchase 2
million shares of Common Stock to Friedlander for $5 million in cash (the
"Friedlander Transaction"). The Preferred Stock has a liquidation preference of
$1 per share, or $5 million in the aggregate, and is convertible into Common
Stock on a share-for-share basis. Since the Warrants are exercisable
immediately, a dividend of $740,000 has been recognized. The Warrants were
assigned a value of $.37 per share based on a Black Scholes valuation.
Since (i) at the time of the eNote Transaction, eNote had had no operations
since 1996, (ii) the management of Navis would be the succeeding management of
eNote after the eNote Transaction and (iii) the stockholders of Navis would
control approximately 80% of the voting stock of eNote after the eNote
Transaction (and approximately 53% following the Friedlander Transaction), the
eNote Transaction has been accounted for as a reverse merger and not as a
business combination. No goodwill has been recorded in connection with the eNote
Transaction. As a result, and since the eNote Transaction and the Friedlander
Transaction were substantially interrelated, the costs incurred in connection
with the eNote Transaction and the Friedlander Transaction have been accounted
for as reductions of additional paid-in-capital.
(b) Pro Forma Financial Information.
Unaudited pro forma financial information required pursuant to
Article 11 of Regulation S-X with respect to the transaction described in Item 2
are set forth on the following pages.
Pro Forma Balance Sheet
eNote.com Navis Adjustments Pro Forma
March 31, 1999 March 31, 1999 April 6, 1999 April 6, 1999
-------------- -------------- ------------- -------------
ASSETS
Current Assets
Cash and cash equivalents $ -- $ 8,512 $ 5,000,000 $ 5,008,512
Accounts receivable -- 18,159 -- 18,159
Other current assets -- 5,000 -- 5,000
------------ ----------- ----------- -----------
Total current assets -- 31,670 5,000,000 5,031,670
Property and equipment, net -- 34,197 -- 34,197
------------ ----------- ----------- -----------
Total assets $ -- $ 65,867 $ 5,000,000 $ 5,065,867
============ =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (Deficit)
Current liabilities
Accounts payable $ -- $ 41,982 $ -- $ 41,982
Accrued expenses -- 101,411 -- 101,411
Notes payable -- 810,147 -- 810,147
------------ ----------- ----------- -----------
Total current liabilities -- 953,540 -- 953,540
------------ ----------- ----------- -----------
Total liabilities $ -- $ 953,540 $ -- 953,540
------------ ----------- ----------- -----------
Stockholders' Equity (deficit)
Common stock, $.01 par value, 1,000 shares authorized,
500 shares issued and outstanding $ -- $ 5 $ (5) $ --
Common stock, $.01 par value, 25,000,000 shares authorized,
10,049,491 issued and outstanding $ -- $ -- $ 100,495 $ 100,495
Convertible Preferred Stock, $.01 par value,
5,000,000 shares authorized, issued and outstanding on
6/30/99; 5,000,000 shares authorized, no shares issued or
outstanding as of 3/31/99 $ -- $ -- $ 50,000 $ 50,000
Common stock warrants $ -- $ -- $ 740,000 $ 740,000
Additional paid-in capital 71,149 195 4,109,510 4,109,705
Retained Earnings (71,149) (887,874) -- (887,874)
------------ ----------- ----------- -----------
Total stockholders' equity (deficit) -- (887,674) 5,000,000 5,065,867
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Total liabilities and stockholders' equity (deficit) $ -- $ 65,867 $ 5,000,000 $ 5,065,867
============ =========== =========== ===========
Pro Forma Statements of Operations
Consolidated
eNote.com Navis Consolidated Nine Months Ended
March 31, 1999 Dec 31, 1998 Adjustments April 6, 1999 Sept. 30, 1999
-------------- -------------- ------------- ------------- -----------------
Net loss $ -- $ (175,147) $ -- $ (175,147) $ --
----------- ----------- ----------- ------------ -----------
Operating expenses:
Selling, general and administrative 38,267 714,560 -- 752,827 1,598,459
----------- ----------- ----------- ------------ -----------
Total operating expenses 38,267 714,560 -- 752,827 (1,598,459)
----------- ----------- ----------- ------------ -----------
Net loss $ (38,267) $ (889,707) $ -- $ (927,974) (1,598,459)
Preferred stock dividend -- -- -- -- 740,000
----------- ----------- ----------- ------------ -----------
Net loss applicable to shareholders $ (38,267) $ (889,707) $ -- $ (927,974) $(2,338,459)
=========== =========== =========== ============ ===========
The accompanying notes are an integral part of these financial statements.
eNote.com Inc.
NOTES TO THE PROFORMA FINANCIAL STATEMENTS
Pro Forma Adjustments:
On April 6, 1999 the Company entered into a reverse merger transaction with
Navis Technologies. The objective of the pro forma financial information
presented in this form 8-K/A is to show the significant effects on the historic
financial information of this transaction. The transaction resulted in the
adjustments as reflected on the preceeding pro forma balance sheet in which the
Company issued 5,000,000 shares of preferred stock and 2,000,000 common stock
warrants for $5,000,000, and became the surviving entity of the merger. This
transaction did not effect either revenues or expenses of the Company.
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, thereunto duly authorized.
eNOTE.COM INC.
By:/s/ John R. Varsames
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John R. Varsames
President and Chief Executive Officer
Date: February 14, 2000