UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Act of 1934
Date of Report (date of earliest event reported): May 31, 1999
PALADYNE CORP.
(Exact name of Registrant as Specified in its Charter)
DELAWARE 0-22969 59-3562953
- -------- ------- ----------
(State or Other (Commission (IRS Employer
Jurisdiction) File Number) Identification Number
615 Crescent Executive Court, Suite 128
Lake Mary, FL 32746
Registrant's Telephone Number, Including Area Code:(407) 333-2488
--------------
FORM 8-K
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
This report includes the financial statements previously discussed in the
Company's form 10-QSB covering the quarter ended May 31, 1999, accordingly
reference is made to that filing (No. 0-22969) for matters incorporated by
reference.
Effective as of May 31, 1999, Paladyne Corp. closed two separate agreements
to sell the assets of two wholly-owned subsidiaries, WG Controls, Inc. ("WG")
and Primus Marketing Associates, Inc., ("PMA"). Both WG and PMA are sales
representative firms that provide field sales and business development support
for specified product lines and territories for clients in the cable TV and
telecommunications (both voice and data networking) industry. The Company has
made a strategic decision that sales representative firms no longer are part of
its central focus.
WG Controls, Inc.
Effective as of May 31, 1999 Paladyne Corp. closed a "Business Assets Sales
Contract" ("Agreement") with WG Technologies, Inc. an Illinois Corporation,
("WGT") related to the disposition by the Company of substantially all the
assets of WG Controls, Inc., the Company's wholly-owned subsidiary. WGT is
headed by Randall R. Thompson who has been the President of WG Controls, Inc,
for approximately the past year. WGT was formed for the purpose of acquiring the
assets of WG Controls, Inc. and has no legal relationship to the Company.
The total sales price of the transaction is $479,539.98. The Agreement calls for
the sale of all the assets of WG Controls, Inc. for $275,000 in cash payable as
follows: $100,000 upon signing the agreement, which was paid at the closing,
$150,000 prior to June 15, 1999, which has been received and $25,000 together
with accrued interest on or before June 1, 2001. Additionally, WGT has agreed to
assume debt payable to the original owners of WG Controls, Inc. in the amount of
$195,764. All debt holders agreed to this assignment of debt to WGT.
Additionally, WGT agreed to hire all existing employees of WG Controls, Inc. as
employees of WG Technologies, Inc. The Company and key employees mutually
released each other from any existing employment and non-competition agreements
with no harm to either party.
The Company recognized a loss on the sale of this transaction of approximately
$428,000, calculated as follows: goodwill amortization of approximately
$624,000, the book value of the assets acquired of $249,000, accelerated
amortization of non-compete agreements of approximately $26,000, offset by the
consideration paid and debt assumed of approximately $471,000.
Primus Marketing Associates
On June 28, 1999, but effective as of May 31, 1999 Paladyne Corp. closed on an
"Asset Purchase Agreement" ("Agreement") with Primus Marketing, LLC, a Minnesota
Limited Liability Corporation, ("Primus LLC") related to the disposition by the
Company of substantially all the assets of Primus Marketing Associates, Inc.,
("PMA") the Company's wholly-owned subsidiary. Primus LLC is headed by John
Primus who has been the President of PMA since the Company's acquisition of PMA
in June, 1998. Primus LLC was formed for the purpose of acquiring the assets of
PMA and has no legal relationship to the Company.
The total sales price of the transaction is approximately $52,500. The Agreement
calls for the sale of all the assets of PMA for $12,500 in cash paid at closing,
and the return of 107,143 shares of the Company's Common Stock issued when the
Company acquired PMA.
Additionally, Primus LLC agreed to hire all existing employees PMA as employees
of Primus LLC. The Company and key employees mutually released each other from
any existing employment and non-competition agreements with no harm to either
party.
The Company recognized a loss on the sale of this transaction of approximately
$311,000 calculated as follows: goodwill amortization of approximately $176,000
the book value of the assets acquired of $187,000 offset by the cash paid of
$12,500 and stock returned having a value of approximately $40,000.
The Company intends to use the proceeds from the sale of these two non-strategic
units to further the development of its core database software and services
capabilities.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Pro forma financial information.
1. Pro forma condensed consolidated statements of operations of
Paladyne Corp. (f/k/a/ Synaptx Worldwide, Inc.) for the year
ended August 31, 1998 (unaudited)
1. Pro forma condensed consolidated statements of operations of
Paladyne Corp. for the nine months ended May 31, 1999 (unaudited)
(c) Exhibits included herewith:
Exhibit 10.1 Business Assets Sales Contract by and between Paladyne Corp.
and WG Technologies, Inc. was filed as Exhibit 10.1 to a
report on Form 8-K (No. 0-22969) and the same is incorporated
herein by reference.
Exhibit 10.2 Asset Purchase Agreement by and between Paladyne Corp. and
Primus Marketing, LLC. was filed as Exhibit 10.1 to a report on
Form 8-K (No. 0-22969) and the same is incorporated herein by
reference
PALADYNE CORP. AND SUBSIDIARIES
Pro Forma Consolidated Financial Statements
Year Ended August 31, 1998
The following unaudited pro forma consolidated statements of operations for
the year ended August 31, 1998 and the nine months ended May 31, 1999 give
effect to the disposition of WG Controls, Inc. and Primus Marketing Associates,
Inc. which were effective as of May 31, 1999. The pro forma information has been
prepared as if the dispositions occurred on August 31, 1997 or more properly as
if they had never occurred at all since both of their original acquisitions were
after August 31, 1997.
The unaudited pro forma statements of operations have been prepared by
management based upon the financial statements of Paladyne Corp. and the
disposed of entities. These pro forma results may not be indicative of the
results that actually would have occurred if the combination had been in effect
since inception or which may be obtained in the future.
Paladyne Corp. is the successor company to Synaptx Worldwide, Inc. All
financial information presented up to the migratory merger into Paladyne Corp.
on March 3, 1999 is that of Synaptx Worldwide, Inc.
PALADYNE CORP. AND SUBSIDIARIES
Consolidated Condensed Pro Forma Statements of Operations
Year Ended August 31, 1998
(Unaudited)
Synaptx WG Primus Pro forma
Worldwide Controls, Marketing Adjustments Pro forma
Inc. Inc. Associates Increase Consolidation
REVENUES $ 5,798,184 $ 642,841 $ 189,084 $ - $ 4,966,259
COST OF REVENUES 4,787,349 511,655 131,175 - 4,144,519
---------- --------- ---------- ---------- -----------
GROSS PROFIT 1,010,835 131,186 57,909 - 821,740
EXPENSES
Selling, general
& administrative 2,023,173 346,429 45,068 - 1,631,676
Depreciation 98,288 3,303 3,591 - 91,394
Amortization 1,956,130 - - (52,164) 1,903,966
Interest expense (income), net 64,437 - 397 - 64,040
--------- --------- ---------- ---------- -----------
Total expenses 4,142,028 349,732 49,056 (52,164) 3,691,076
--------- --------- ---------- ---------- -----------
NET (LOSS) INCOME $(3,131,193) $(218,547) $ 8,853 $ 52,164 $(2,869,335)
========== ========= ========== ========== ===========
Cumulative convertible preferred
stock dividend requirements 27,200 - - (27,200) -
----------- --------- ---------- ---------- -----------
Net loss applicable to
common shareholders (3,158,393) $(218,547) $ 8,853 $ 79,364 $(2,869,335)
=========== ========= ========= ======== ===========
Weighted Average Shares
Outstanding 5,559,297 500,001 5,059,296
=========== ======= =========
NET LOSS PER SHARE OF
COMMON STOCK $ (0.57) $ (0.57)
=========== ==========
PALADYNE CORP. AND SUBSIDIARIES
Note to Condensed Pro Forma Financial Statement
-----------------------------------------------
Effective as of May 31, 1999, Paladyne Corp. (the "Company") closed two separate
agreements to sell the assets of two wholly-owned subsidiaries, WG Controls,
Inc. ("WG") and Primus Marketing Associates, Inc., ("PMA"). Both WG and PMA are
sales representative firms that provide field sales and business development
support for specified product lines and territories for clients in the cable TV
and telecommunications (both voice and data networking) industry. The Company
has made a strategic decision that sales representative firms no longer are part
of its central focus.
WG Controls, Inc.
Effective as of May 31, 1999 Paladyne Corp. closed a "Business Assets Sales
Contract" ("Agreement") with WG Technologies, Inc. an Illinois Corporation,
("WGT") related to the disposition by the Company of substantially all the
assets of WG Controls, Inc., the Company's wholly-owned subsidiary. WGT is
headed by Randall R. Thompson who has been the President of WG Controls, Inc,
for approximately the past year. WGT was formed for the purpose of acquiring the
assets of WG Controls, Inc. and has no legal relationship to the Company.
The total sales price of the transaction is $479,539.98. The Agreement calls for
the sale of all the assets of WG Controls, Inc. for $275,000 in cash payable as
follows: $100,000 upon signing the agreement, which was paid at the closing,
$150,000 prior to June 15, 1999, which has been received and $25,000 together
with accrued interest on or before June 1, 2001. Additionally, WGT has agreed to
assume debt payable to the original owners of WG Controls, Inc. in the amount of
$195,764. All debt holders agreed to this assignment of debt to WGT.
Additionally, WGT agreed to hire all existing employees of WG Controls, Inc. as
employees of WG Technologies, Inc. The Company and key employees mutually
released each other from any existing employment and non-competition agreements
with no harm to either party.
The Company recognized a loss on the sale of this transaction of approximately
$428,000, calculated as follows: goodwill amortization of approximately
$624,000, the book value of the assets acquired of $249,000, accelerated
amortization of non-compete agreements of approximately $26,000, offset by the
consideration paid and debt assumed of approximately $471,000.
Primus Marketing Associates
On June 28, 1999, but effective as of May 31, 1999 Paladyne Corp. closed on an
"Asset Purchase Agreement" ("Agreement") with Primus Marketing, LLC, a Minnesota
Limited Liability Corporation, ("Primus LLC") related to the disposition by the
Company of substantially all the assets of Primus Marketing Associates, Inc.,
("PMA") the Company's wholly-owned subsidiary. Primus LLC is headed by John
Primus who has been the President of PMA since the Company's acquisition of PMA
in June, 1998. Primus LLC was formed for the purpose of acquiring the assets of
PMA and has no legal relationship to the Company.
The total sales price of the transaction is approximately $52,500. The Agreement
calls for the sale of all the assets of PMA for $12,500 in cash paid at closing,
and the return of 107,143 shares of the Company's Common Stock issued when the
Company acquired PMA.
Additionally, Primus LLC agreed to hire all existing employees PMA as employees
of Primus LLC. The Company and key employees mutually released each other from
any existing employment and non-competition agreements with no harm to either
party.
The Company recognized a loss on the sale of this transaction of approximately
$311,000 calculated as follows: goodwill amortization of approximately $176,000
the book value of the assets acquired of $187,000 offset by the cash paid of
$12,500 and stock returned having a value of approximately $40,000.
The Company intends to use the proceeds from the sale of these two non-strategic
units to further the development of its core database software and services
capabilities.
Pro forma adjustments related to the disposition of the two subsidiaries consist
of amortization of the goodwill related to the original acquistions, and
elimination of the preferred stock dividend that exists only as a result of the
initial WG acquisition.
PALADYNE CORP. AND SUBSIDIARIES
Pro Forma Consolidated Financial Statements
Nine Months Ended May 31, 1999
The following unaudited pro forma consolidated statements of operations for
the nine months ended May 31, 1999 give effect to the disposition of WG
Controls, Inc. and Primus Marketing Associates, Inc. which were effective as of
May 31, 1999. The pro forma information has been prepared as if the dispositions
occurred on August 31, 1997 or more properly as if they had never occurred at
all since both of their original acquisitions were after August 31, 1997.
The unaudited pro forma statements of operations have been prepared by
management based upon the financial statements of Paladyne Corp. and the
disposed of entities. These pro forma results may not be indicative of the
results that actually would have occurred if the combination had been in effect
since inception or which may be obtained in the future.
Paladyne Corp. is the successor company to Synaptx Worldwide, Inc. All
financial information presented up to the migratory merger into Paladyne Corp.
on March 3, 1999 is that of Synaptx Worldwide, Inc.
PALADYNE CORP. AND SUBSIDIARIES
Consolidated Condensed Pro Forma Statements of Operations
Nine Months Ended May 31, 1999
(Unaudited)
WG Primus Pro forma
Paladyne Controls, Marketing Adjustments Pro forma
Corp. Inc. Associates Increase Consolidation
REVENUES $ 2,860,381 $ - $ - $ - $ 2,860,381
COST OF REVENUES 2,403,955 - - - 2,403,955
---------- --------- -------- --------- ---------
GROSS PROFIT 456,426 - - - 456,426
EXPENSES
Selling, general
& administrative 968,391 - - - 968,391
Depreciation 67,320 - - - 67,320
Amortization - - - - -
Interest expense (income), net 49,196 - - - 49,196
-------- --------- --------- --------- ---------
Total expenses 1,084,907 - - - 1,084,907
--------- --------- --------- --------- ---------
NET (LOSS) INCOME - Continuing
operations $(628,481) $ - $ - $ - $ (628,481)
======== ========= ========= ========= =========
Discontinued Operations
Income from operations of
Disposed units 56,081 98,823 121,236 (68,889) (95,089)
Loss on disposal (675,194) - - (738,698) 63,504
--------- --------- --------- --------- ---------
Loss on discontinued operations (619,113) 98,823 121,236 (807,587) (31,585)
--------- --------- --------- -------- ---------
NET LOSS (1,247,594) 98,823 121,236 (807,587) (660,066)
Cumulative convertible preferred
stock dividend requirements 30,600 - - (30,600) -
----------- --------- -------- -------- ---------
Net loss applicable to
common shareholders (1,278,194) $ 98,823 $ 121,236 $(838,187) $ (660,066)
=========== ========= ======== ========= =========
Weighted Average Shares
Outstanding 6,526,481 500,001 6,026,480
=========== ======= =========
NET LOSS PER SHARE OF
COMMON STOCK $ (0.20) $ (0.11)
=========== =========
PALADYNE CORP. AND SUBSIDIARIES
Note to Condensed Pro Forma Financial Statements
------------------------------------------------
Effective as of May 31, 1999, Paladyne Corp. (the "Company") closed two
separate agreements to sell the assets of two wholly-owned subsidiaries, WG
Controls, Inc. ("WG") and Primus Marketing Associates, Inc., ("PMA"). Both WG
and PMA are sales representative firms that provide field sales and business
development support for specified product lines and territories for clients in
the cable TV and telecommunications (both voice and data networking) industry.
The Company has made a strategic decision that sales representative firms no
longer are part of its central focus.
WG Controls, Inc.
Effective as of May 31, 1999 Paladyne Corp. closed a "Business Assets Sales
Contract" ("Agreement") with WG Technologies, Inc. an Illinois Corporation,
("WGT") related to the disposition by the Company of substantially all the
assets of WG Controls, Inc., the Company's wholly-owned subsidiary. WGT is
headed by Randall R. Thompson who has been the President of WG Controls, Inc,
for approximately the past year. WGT was formed for the purpose of acquiring the
assets of WG Controls, Inc. and has no legal relationship to the Company.
The total sales price of the transaction is $479,539.98. The Agreement calls for
the sale of all the assets of WG Controls, Inc. for $275,000 in cash payable as
follows: $100,000 upon signing the agreement, which was paid at the closing,
$150,000 prior to June 15, 1999, which has been received and $25,000 together
with accrued interest on or before June 1, 2001. Additionally, WGT has agreed to
assume debt payable to the original owners of WG Controls, Inc. in the amount of
$195,764. All debt holders agreed to this assignment of debt to WGT.
Additionally, WGT agreed to hire all existing employees of WG Controls, Inc. as
employees of WG Technologies, Inc. The Company and key employees mutually
released each other from any existing employment and non-competition agreements
with no harm to either party.
The Company recognized a loss on the sale of this transaction of approximately
$428,000, calculated as follows: goodwill amortization of approximately
$624,000, the book value of the assets acquired of $249,000, accelerated
amortization of non-compete agreements of approximately $26,000, offset by the
consideration paid and debt assumed of approximately $471,000.
Primus Marketing Associates
On June 28, 1999, but effective as of May 31, 1999 Paladyne Corp. closed on an
"Asset Purchase Agreement" ("Agreement") with Primus Marketing, LLC, a Minnesota
Limited Liability Corporation, ("Primus LLC") related to the disposition by the
Company of substantially all the assets of Primus Marketing Associates, Inc.,
("PMA") the Company's wholly-owned subsidiary. Primus LLC is headed by John
Primus who has been the President of PMA since the Company's acquisition of PMA
in June, 1998. Primus LLC was formed for the purpose of acquiring the assets of
PMA and has no legal relationship to the Company.
The total sales price of the transaction is approximately $52,500. The Agreement
calls for the sale of all the assets of PMA for $12,500 in cash paid at closing,
and the return of 107,143 shares of the Company's Common Stock issued when the
Company acquired PMA.
Additionally, Primus LLC agreed to hire all existing employees PMA as employees
of Primus LLC. The Company and key employees mutually released each other from
any existing employment and non-competition agreements with no harm to either
party.
The Company recognized a loss on the sale of this transaction of approximately
$311,000 calculated as follows: goodwill amortization of approximately $176,000
the book value of the assets acquired of $187,000 offset by the cash paid of
$12,500 and stock returned having a value of approximately $40,000.
The Company intends to use the proceeds from the sale of these two non-strategic
units to further the development of its core database software and services
capabilities.
Pro forma adjustments related to the disposition of the two subsidiaries consist
of (1) ordinary amortization of the goodwill related to the original
acquistions, (2) the loss on the transactions which includes amortizing the
remaining goodwill, and (3) elimination of the preferred stock dividend that
exists only as a result of the initial WG acquisition.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
PALADYNE CORP.
Date: July 31, 1999 /s/ Ronald L. Weindruch
RONALD L. WEINDRUCH, President and
Chief Executive Officer
Date: July 31, 1999 /s/ William E. Morris
WILLIAM E. MORRIS,
Controller