UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): December 15, 2000
ITC LEARNING CORPORATION
(Exact name of registrant as specified in its charter)
Maryland 0-13741 52-1078263
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification Number)
13515 Dulles Technology Drive
Herndon, Virginia 20171-3413
(Address of principal executive offices)
Registrant's telephone number, including area code: (703) 713-3335
None
(Former name and address, if changed since last report)
ITEM 2. DISPOSITION OF ASSETS
On December 15, 2000, ITC Learning Corporation (the "Registrant" or "ITC")
completed an agreement, which ITC sold its London-based subsidiary, Activ
Training, Limited ("Activ") to a management team led by Phillip G. Jones. Total
consideration for the transaction was $1,000,000, of which $250,000 was paid at
closing and the balance being due over a five-year period. The remaining
$750,000 is in the form of a secured, non-interest bearing promissory note
whereby, Activ will pay ITC an additional royalty on each sale made by Activ
over the next five years until the balance is paid in full. If the additional
royalty payments over the next five years do not sufficiently pay off the
outstanding debt, then the balance outstanding at the end of the term becomes
due in full. Mr. Jones has been affiliated with ITC since Activ's inception in
November of 1995. Since 1995, Mr. Jones was Managing Director of Activ. Activ
has been the primary international distributor of ITC products in the United
Kingdom, Europe, Africa and the Middle East. Pursuant to the agreement, ITC and
Activ will maintain a strategic business partnership whereby Activ will remain
ITC's exclusive sales distributor in the United Kingdom, Europe, Africa and the
Middle East.
Item 7 of the Company's current report on Form 8-K is amended to read in its
entirety as follows.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
The following pro forma financial information concerning the Company is being
provided in accordance with the instructions to this item not later than 60 days
from the date of the Company's Form 8-K previously filed on January 3, 2000. No
separate historical financial statements of the Registrant or its subsidiary,
Activ, are presented.
(a) Pro Forma Financial Information
1) Unaudited Pro Forma Combined Balance Sheet as of September 30, 2000.
2) Unaudited Pro Forma Combined Statement of Operations for the nine
months ended September 30, 2000 and the twelve months ended
December 31, 1999.
3) Notes to the Unaudited Pro Forma Information.
(b) Exhibits
2.1 Stock Purchase Agreement between ITC Learning Corporation and Phillip
G. Jones dated December 12, 2000.
2.2 Secured Promissory Note between ITC Learning Corporation and Phillip
G. Jones dated December 12, 2000.
2.3 OEM License and Distribution Agreement between ITC Learning
Corporation and Phillip G. Jones dated December 12, 2000.
2
SIGNATURE
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.
ITC Learning Corporation
(Registrant)
By: /s/Christopher E. Mack
----------------------
Christopher E. Mack
President and Chief Financial Officer
Date: February 13, 2001
3
ITC LEARING CORPORATION
PRO FORMA FINANCIAL INFORMATION
(Unaudited)
The following unaudited consolidated pro forma statements of operations and
balance sheets for the twelve months ended December 31, 1999 and the nine months
ended September 30, 2000 give effect to the sale of Activ Training Limited
("Activ"), a wholly-owned subsidiary of ITC Learning Corporation on December 12,
2000, for $1,000,000.00, including a cash payment of $250,000 and a secured
promissory note for $750,000, as if the transaction had occurred on January 1,
1999.
The unaudited pro forma statements of operations and balance sheets are not
necessarily indicative of the results that would have occurred had the
acquisition been completed on the date indicated nor are purported to be
indicative of future results.
4
ITC LEARNING CORPORATION
PRO FORMA COMBINED BALANCE SHEETS
(Unaudited)
As Adjusted Retroactively for the Divestiture of Activ Training Limited
("Activ")
For the Period Ending September 30, 2000
Pro forma
ITC Consolidated Activ Adjustments (3) Consolidated
(Historical) (Historical) Dr. (Cr.) Pro forma
----------------- ------------ ------------------ -------------
Current Assets:
Cash $ 246,819 $ (88,743) $ 250,000 (3) $ 408,076
Accounts receivable, net 940,129 (142,476) -- 797,653
Prepaid expenses 951,986 (150,139) -- 801,847
Other current assets 309,734 -- -- 309,734
------------ --------- -------------- ------------
Total current assets 2,448,668 (381,358) 250,000 2,317,310
Note receivable 344,828 -- 750,000 (3) 1,094,328
Property, plant and equipment, net 446,805 (7,287) -- 439,518
Capitalized program development costs, net 2,634,429 -- -- 2,634,429
Intangible assets, net 1,779,245 -- -- 1,779,245
Other 1,602,534 -- -- 1,602,534
------------ --------- -------------- ------------
Total assets $ 9,256,509 $(388,645) $ 1,000,000 $ 9,867,864
============ ========= ============== ============
Current Liabilities:
Line of credit $ -- $ -- $ -- $ --
Current installments of long-term debt 2,362,578 -- -- 2,362,578
Accounts payable 2,078,997 (35,456) -- 2,043,541
Other accrued expenses 1,687,542 (831,472) 466,518 (2)(3) 1,322,588
------------ --------- -------------- ------------
Total current liabilities 6,129,117 (866,928) 466,518 5,728,707
Deferred lease obligations 17,837 -- -- 17,837
Long-term debt 1,074,068 -- -- 1,074,068
------------ --------- -------------- ------------
Total liabilities 7,221,022 (866,928) 466,518 6,820,612
Stockholders' equity:
Common stock 396,408 1,615 (1,615) (2) 396,408
Additional paid-in capital 17,083,716 -- -- 17,083,716
Note receivable from ESOP (290,002) -- -- (290,002)
Retained deficit (15,216,386) 452,850 535,097 (3) (14,228,439)
Accumulated other comprehensive loss 61,751 23,818 -- 85,569
------------ --------- -------------- ------------
Total stockholders' equity 2,035,487 478,283 533,482 3,047,252
------------ --------- -------------- ------------
Total liabilities and stockholders' equity $ 9,256,509 $(388,645) $ 1,000,000 $ 9,867,864
============ ========= ============== ============
ITC LEARNING CORPORATION
PRO FORMA COMBINED STATEMENT OF OPERATIONS
(Unaudited)
As Adjusted Retroactively for the Divestiture of Activ Training Limited
("Activ")
For the Nine Months Ending September 30, 2000
Pro forma
ITC Consolidated Activ Adjustments Consolidated
(Historical) (Historical) Dr. (Cr.) Pro forma
---------------- ------------ ----------- -------------
Revenues, net $ 4,153,439 $(1,371,279) $ 798,608(1) $ 3,580,768
Costs and expenses:
Cost of sales 3,162,458 (1,166,874) 798,608(1) 2,794,192
Selling, general and administrative expenses 6,384,362 (461,990) -- 5,922,372
Equity in earnings of affiliates (107,547) -- -- (107,547)
----------- ----------- ---------- -----------
Total costs and expenses 9,439,273 (1,628,864) 798,608 8,609,017
Gain on sale of product line 250,000 -- -- 250,000
----------- ----------- ---------- -----------
Loss before interest and income
tax benefit (5,035,834) 257,585 -- (4,778,249)
Interest income 14,730 (1,956) -- 12,774
Interest expense (631,573) -- -- (631,573)
----------- ----------- ---------- -----------
Loss before income tax benefit (5,652,677) (255,629) -- (5,647,048)
Income tax benefit -- -- -- --
----------- ----------- ---------- -----------
Net loss $(5,652,677) $ 255,629 $ -- $(5,397,048)
=========== =========== ========== ===========
Net loss per common share,
basic and diluted $ (1.44) $ (1.39)
=========== ===========
Weighted average number of shares outstanding 3,896,761 3,896,761
=========== ===========
ITC LEARNING CORPORATION
PRO FORMA COMBINED STATEMENT OF OPERATIONS
(Unaudited)
As Adjusted Retroactively for the Divestiture of Activ Training Limited
("Activ")
For the Period Ended December 31, 1999
Pro forma
ITC Consolidated Activ Adjustments Consolidated
(Historical) (Historical) Dr. (Cr.) Pro forma
----------------- ------------ ----------- ------------
Revenues, net:
Courseware $15,678,478 $(2,324,250) $1,397,604 (1) $14,751,832
Hardware 997,087 (68,190) -- 928,897
----------- ----------- ---------- -----------
Total revenues, net 16,675,565 (2,392,440) 1,397,604 15,680,729
Costs and expenses:
Cost of sales 9,341,351 (1,995,598) 1,397,604 (1) 8,743,357
Selling, general and administrative expenses 11,912,916 (745,603) -- 11,167,313
Equity in earnings of affiliates (170,289) -- -- (170,289)
----------- ----------- ---------- -----------
Total costs and expenses 21,083,978 (2,741,201) 1,397,604 19,740,381
Loss on sale of subsidiary -- -- (543,171)(1) (543,171)
----------- ----------- ---------- -----------
Loss before interest and income
tax benefit (4,408,413) 348,761 (543,171) (4,602,823)
Interest income 89,190 (5,833) -- 83,357
Interest expense (394,861) 900 -- (393,961)
----------- ----------- ---------- -----------
Loss before income tax benefit (4,714,084) (343,828) (543,171) (4,913,427)
Income tax benefit -- -- -- --
----------- ----------- ---------- -----------
Net loss $(4,714,084) $ 343,828 $ (543,171) $(4,913,427)
=========== =========== ========== ===========
Net loss per common share,
basic and diluted $ (1.21) $ (1.26)
=========== ===========
Weighted average number of shares outstanding 3,896,761 3,896,761
=========== ===========
ITC LEARNING CORPORATION
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
AND BALANCE SHEETS
(Unaudited)
The following pro forma adjustments have been made:
1. Amounts reflect sales and cost of sales associated with intercompany sales
transaction
2. Elimination of intercompany balances
3. Record the sale of Activ as if the transaction occurred on January 1, 1999.
INDEX OF EXHIBITS
The following exhibit to this report is being incorporated herein by reference
to the corresponding exhibits in the Company's Form 8-K (Commission File No.
0-13741) filed with the Securities and Exchange Commission on January 3, 2001.
Exhibit No. Exhibit Description
2.1 Stock Purchase Agreement between ITC Learning Corporation
and Phillip G. Jones dated December 12, 2000.
2.2 Secured Promissory Note between ITC Learning Corporation
and Phillip G. Jones dated December 12, 2000.
2.3 OEM License and Distribution Agreement between ITC Learning
Corporation and Phillip G. Jones dated December 12, 2000.