U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
May 6, 1997
------------------------------------------------
Date of Report (date of earliest event reported)
DATALINK SYSTEMS CORPORATION
----------------------------------------------------
Exact name of Registrant as Specified in its Charter
Nevada 0-21069 35-3574355
- --------------------------- --------------- ---------------------------
State or Other Jurisdiction Commission File IRS Employer Identification
of Incorporation Number Number
2105 Hamilton Avenue, Suite 240, San Jose, California 95125
------------------------------------------------------------
Address of Principal Executive Offices, Including Zip Code
(408) 558-0800
--------------------------------------------------
Registrant's Telephone Number, Including Area Code
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Effective May 6, 1997, the Company completed a transaction with a non-
affiliated Canadian corporation (the Buyer) pursuant to which the Company sold
its Quotexpress Software and related technology to the Buyer for cash and a
note. At closing, the Company received $4,072,500 Canadian in cash. From
this cash the Company paid finder's fees totaling $2,262,500 Canadian to two
non-affiliates leaving the Company with a net cash amount of $1,810,000
Canadian. The Company also received a note for $14,027,500 Canadian. The
note is due May 6, 2007, and bears interest at 6% per annum. The note is
collateralized by the technology.
The Company and the Buyer entered into a "Management and Marketing
Agreement" dated May 6, 1997 (the Agreement). The Agreement expires August
31, 2007, and may be extended for two additional two year terms. The
extension of the term will be automatic and the Company or the Buyer during
any extension can terminate the agreement with 90 days notice to the other
party. The significant terms of the agreement are as follows:
Until the note is paid in full, the Company will receive an annual fee
of 15% of "Direct Cost of Marketing, Distribution and Selling" technology
related services, as defined in the Agreement. The Company receives an
exclusive worldwide right to use, modify and sublicense the source code for
the technology, including application software, intellectual property and
documentation.
The Company has first right of refusal in the event the Buyer desires to
transfer all or part of the application software. The Buyer will receive,
commencing February 28, 1998, an annual "owners fee" of $475,000 Canadian,
which is to be applied as follows: pay accrued interest and the excess, if
any; a) 55% of the remaining fee applied to the note balance, and b) 45% of
the remaining fee paid in cash to the Buyer until the note is paid in full.
Buyer will receive the "net revenue less owners fee payable," as defined
in the Agreement, related to the technology sold to be applied as follows: a)
55% of the net revenue applied to the note balance, and b) 45% of the net
revenue paid in cash to the Buyer until the note is paid in full.
After the note is paid, the "net revenue," as defined in the agreement,
related to the technology sold will be distributed as follows: (a) 55% to the
Company as an agent's fee, and (b) 45% of the net revenue paid in cash to the
Buyer.
The cash received by the Company will be accounted for under the
provisions of the "Emerging Issues Task Force, 88-18: Sales of Future
Revenues." It is expected that the owners fees and net revenue allocated to
the Buyer will not be sufficient to service the note receivable principal and
interest payments due the Company and as such the note will not be recorded.
The note is expected to have no financial statement impact.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) EXHIBITS.
Exhibit 10.1 Application Software Purchase Agreement between
Datalink Systems Corporation and 605285 Ontario Inc.
Exhibit 10.2 Management and Marketing Agreement between
Datalink Systems Corporation and 605285 Ontario Inc.
Exhibit 10.3 6% Secured Term Note
-2-
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.
DATALINK SYSTEMS CORPORATION
Dated: June 6, 1997 By/s/ Anthony LaPine
Anthony LaPine, President
-3-